Investors Don’t Care About The Quality of Your Product

Posted on February 2, 2011
Filed Under Entrepreneurship |

The single most common mistake that I see entrepreneurs make is waiting on their product to improve. On a regular basis I have conversations with startups who aren’t promoting their product or aren’t talking to investors because they want to wait until they release some new functionality, and THEN they will go after the market and the investment.

The problem is, there is always a temptation to push that stuff off one more release cycle. And it is almost always the wrong decision. Investors in particular, care about traction, not product. Most of them seem to believe that if you can get market traction, you can always hire more or better engineers and get your problems fixed. The hard thing to do is get that market traction in the first place.

Here are just a couple of random thoughts and things I’ve learned about this at Backupify.

1. You will never be satisfied. At Backupify, we have released some features (like one click google apps restore) that people consider pretty damn awesome. It doesn’t matter. As a founder, I always feel like the product sucks no matter how much it improves. You will feel that way too. So don’t wait until it is “better.” It will never be good enough in your mind.

2. It’s ok to have unhappy users. In the early days, Dharmesh used to tell me that people will sign up, hate the product, and leave… that I should expect it, I should not get upset about it, but that I should use those data points to continually improve the product. We all know the release early release often mantra, but it is hard to do in practice because we want to wait until it is perfect so people don’t say negative things about our products. Negative things are ok.

3. The world is a big place. Just because some people bad mouth you on twitter because they don’t like your product doesn’t mean you will never sell anything again. The world is a big place, and despite our belief that negativity spreads like wildfire through social networks, my experience is just the opposite. Bad press will encourage some people to still check you out. Plus, the world is a big place. Everyone hasn’t heard of you, no matter how long you’ve been around. New customers don’t care about how your product was, they care about how it is. So having a few negative comments from a year ago is no big deal.

4. Backupify got money for a partially working product. When we raised our seed round, Chris Sacca actually sent me an email saying he signed up and our Gmail backup wasn’t working. I told him I knew it was broken, and we were trying to get it fixed. He still became an investor.

5. You will always fight this battle. Most product/engineering people who work for startups want to be the next Apple or Dropbox, and build an elegant product that everyone talks about. You will constantly have to push for speed over perfection. Do exactly that.

6. Perfect products are a better strategy for mature markets, not startups (unless you are a startup in a mature market). You know why Microsoft kicked Apple’s ass for the first 25 years they were both around? Because Microsoft’s strategy was to get something out the door and dominate the market. Apple’s strategy, by contrast, was to wait until the product was perfect. In new and rapidly growing markets, Microsoft won. It wasn’t until the PC market matured that people started choosing Apple. Apple was late to the mp3 player market and late to the phone market. Understand which type of ecosystem you are in so you can choose the right strategy.

7. Dropbox’s success wasn’t because of their kick ass product. I know that is heresy to say on the web these days, but I’ve used a bunch of sync tools, many just as good as Dropbox. Their innovation was actually their dual sided incentive invites. People believe they raised money and grew so fast because they had such an elegant product and everyone talked about it. That did help, but their real genius was around marketing, not product.

So push your stuff out the door. Talk to investors early. Do anything and everything to get traction. A high quality product is not a business by itself.

Comments

One Response to “Investors Don’t Care About The Quality of Your Product”

  1. Nick Huhn on February 2nd, 2011 1:53 pm

    Very pragmatic and sound insights, Rob. Aside from the ‘minimum viable product’ mantra, would you agree that ‘minimum viable traction’ is more difficult to attain and/or validate? That seems to be a recurring struggle for many in my experience. i.e. who cares if you have a better mouse trap… why would people prefer yours and does it actually accomplish the original simple goal of killing a mouse?

    If a new product as-is does not create meaningful traction, do you think it is a function of marketing (PR) or not responding to or creating a need in the marketplace (biz strategy)?

  • About Rob

    Rob is co-founder of Backupify.com. He likes value investing, the Rolling Stones, college basketball, artificial intelligence, economic history and people who think independently.