As the tech giants grow, more and more young CS graduates start their careers at big companies with aspirations of founding their own one day. I was one of them, and, in July, I left Google to found an internet startup with a friend. In this post, I’ll share some of my insights on what makes a good startup idea for other entrepreneurial hopefuls with an idea and itch to build something of their own.
The mindset of a Google PM: The Product Myth
When I was a product manager on Google Search, I was trained to treat product as king. It was my job, my passion, and my aspiration to launch seamless user experiences and technology. I believed that making a great product that users love was the only thing that mattered.
This is the Product Myth: If you make a great product, the users will come use it, and it will dominate the other, crappier products in the end.
Google PMs believed the Product Myth partly because it was true. Since the company has such a strong international brand, fanboys jumped on any new product merely because it was made by Google, and the press covered every feature change down to the pixel. Google PMs also rarely consider monetization, because the rich uncle of Search is always there to support initiatives that lose money. Plus, even products that don’t have a business plan - like Gmail or Chrome - seemed to pay off in the end with data and customer trust.
There were also structural reasons that the Product Myth reigned. Google physically and culturally separates the engineering + product org from the marketing, sales, support, and PR teams. PMs and engineers generally had the highest salaries, reported to the CEO,and could overrule other functions. These elements of corporate culture led PMs to ignore work outside of the engineering org.
I confess that, when I was at Google, I considered distribution and monetization less important and less difficult than engineering, more the domain of “fuzzies” and accountants than of real strategists and technologists.
But I was wrong. The Product Myth is very false. Every day that I work on growing my small company, I appreciate more and more how wrong the Product Myth was.
The Product Truth
If you’re big company PM or engineer thinking about a startup, you should know that success is not all about an awesome product. Distribution (getting people to use it) and monetization (getting paid) are equally as important as product for a successful startup. Without any of the three arms, your company and idea will collapse. You must prioritize and strategize distribution and monetization equally with product.
Distribution describes the large range of strategies to get people to use your product. If no one is using your product, its merely academic, and it can’t be a company. Unlike working within a big brand, no one will care at all about you, your company, or your product by default in the early days of a startup. You will spend a lot of your time and emotional energy figuring out how to get your product to the people that need it.
Although this is obvious, it’s rarely something that my friends with startup ideas and aspirations have thought about. I’ve heard ideas for restaurant inspiration apps, Instagram accounts selling antiques, IOT manufacturing equipment, clothing brands, better prison software, and a lot more. But when I ask “How will you get people to use it?” I often get a glazed-over, discouraged look, as if I hadn’t been listening to the product pitch.
I’ve met passionate founders who ignore the distribution question and insist their app will catch on “like wildfire” if they put it online. But it won’t. If other successful founders tell you the story of their company as if it caught on this way, they’re lying to you for the sake of the narrative.
Great products do not speak for themselves. You can have a much better Facebook hidden beneath the mountains of social networks, a much better classroom management tool that teachers don’t have time to learn, a much better diaper that moms will never discover. It happens all the time.
I recently came across this Quora question about how to market education software. Kapwing is a great video editor for teachers and classrooms, but I’ve struggled with our edtech distribution strategy. The question is “What are some marketing strategies that work well to promote a product to teachers and professors?” The most popular answer:
One word. LISTEN If you are trying to market something, then the most
important thing is to LISTEN to what people want.
This is, frankly, bad advice. Listening is not a distribution strategy. Listening to users helps you build a useful product, but it does not promote your product, and promoting your product is essential to its success.
Like Google PMs, it seems that the average person looks down on marketing and sales. Ads are the spammy scoundrels that prop up bad products, because if it was really any good you would have heard about it organically.
Since I started a company, I’ve learned that the “organic” sources like bloggers and Search Results are actually subject to the manipulation of multi-million dollar contracts, powerful partnerships, and the clever tactics of marketers smarter than me. The brands and sales processes are rigorously engineered to make new users feel that they’ve discovered a hidden gem. If you’re a product manager and aspiring entrepreneur, you need to start studying their playbook. Product development will be easy compared to the steep learning curve for growing your user base.
With Kapwing, I strongly believe that our video editor is a much better experience than iMovie, Adobe Premiere, and any other competitor. Many of our users agree. But most video creators still use iMovie, and it’s because they don’t know about us, care about us, or trust us. At Google, millions of people started using my features immediately after launch. At Kapwing, I spend most of my time persuading people to visit our homepage.
Here’s an INCREDIBLE product idea: start an app that gives people money. You would have millions of users in the first month just by emailing journalists and posting on Reddit. Despite the highly useful product and practical distribution strategy, this idea would likely be a terrible company because it will never make money. Monetization is the third arm of a good startup idea.
If you want to eat, you must make money. A job is a job. You have to pay rent either with your income, with debt, or with some other money (savings, daddy’s, or a venture capitalist's). If you don’t want to eat, you will die. If you dedicate your time to a different job, you won’t be dedicating that time to your startup.
This is true for you and your future employees or coworkers. An idea needs the attention of smart, dedicated people to turn it into impact, but humans need jobs.
Despite this obvious necessity, a lot of founders ignore monetization in the early stages. With savings from a past tech job and a network of generous venture capitalists, they prioritize product development and occasionally growth. It’s true that sometimes people start companies which do not become valuable for many years after they’re founded, but it’s very rare, very risky, and (when done successfully) requires a lot of planning. Well-funded companies fail all the time because they can’t figure out a business model. And “figuring out monetization down the road,” is something founders can say only in Silicon Valley.
With Kapwing, we didn’t raise money from investors, and, as 25-year-olds, we have limited runway. We had to make money from the start, and we had to launch something quickly. Thankfully, we carved out a sensible revenue stream under the gun of forced frugality. Otherwise, we would have had to go back to work.
I recommend scrutinizing your monetization strategy before quitting your day job. If you hand out money, people will flock to you. Don’t be fooled into thinking the flock validates your product idea.
If product is king, distribution is the kingdom and monetization is the authority to rule and conquest. Engineering is still hard, and product insight is still crucial to invent something useful. But without distribution and monetization, a product is insignificant, no more impactful than the idea it was born from. If you have an idea, scrutinize and learn more about marketing, sales, and business models
Thanks for reading! Please keep following the Kapwing blog as Eric and I ramp up on monetization and distribution to keep growing our little video editing “kingdom.”