Terrance Seto

product management

Product: Build vs Buy?

Posted on July 1, 2014

Whether you are bootstrapped, just getting started, or established, the decision to decide whether to try to build a feature/function yourself, or integrating something existing can be quite difficult. There are opportunity costs for either direction you take. It’s good to grow your product quickly, but you’re still limited by the resources provided to you.  No doubt, there are great tools out there you can use to quickly enhance your product.  But are they good enough for what you want to accomplish, and will it fit in with exactly what you need?  Here are a few pros and cons I suggest to consider:

Build It Buy It
Slow to deploy Quick to deploy
Flexibility of features Limitations of features
Unproven functionality Proven functionality
More developer hours Less developer hours
Flexibility of design Limited design
Opportunity cost Possible high dollar cost
Ability to iterate Limited ability to iterate
Ease of a MVP Challenging MVP. Sometimes all or nothing
Downtime at helm of developers Downtime at helm of vendor
Ability to enhance features easily Feature enhancements limited by vendor’s development pace
Agile Waterfall

 

Posted in: business | Tagged: business, efficiency, product, product management, start ups

Building Products is HARD

Posted on October 27, 2013

I’ve been involved directly with the development of products for nearly my entire career. I always knew that this is what I’ve wanted to do. It takes a team, a lot of patience and understanding to build great products. It never gets easy no matter what you build, and how simple or complex it could be. Even the simplest products are very challenging to build. But what really makes products so hard to build? Everything.

Let’s simplify the understanding of what questions need to be answered before, during and after your product’s life cycle. We’ll start with a simple product that everyone has probably used and consumed in their life time. The bottled water. Disclaimer: I have never sold nor produced bottle water before. But here are the things I would think about if I did.

What goes into a bottled water anyways? It’s just a plastic bottle, with a clear fluid inside and label, right? Yup, that’s basically it. But there’s a lot that goes into it. First of all, you’re going to need to determine who’s going to be your target market, and why? Why would they buy your brand over other brands? Once you figure that you, figure out where this target market is located. Will you go domestic? International? Let’s try domestically. How much will you sell it for? Ok, let’s settle on $1.00 MSRP. Sounds reasonable, and probably priced higher that some lower tier brands vs the upper tier brands.

Great, now you’ve got a sense of where, and who you want to sell to. Let’s look for the water. Are you going to the faucet and turning on the tap, then running it through your Brita? That could work, but you’re going to need to do that on a larger scale. But what’s setting you apart? Taste? Maybe you need to get your water directly from the source? Well, I think water should taste great, and probably come from the source. I’ll be on the hunt for that 3rd party supplier of fresh water from snow run offs or something.

Price, target, and supplier found. So, just bottle it up and sell it door to door? No, you forgot the bottle. What kind of bottle do you want? Clear? Blue? Green? Purple? What color is the twist top? Or should it even be a twist top? I think the sports flip top in a 2 mil blue bottle will work? Whao, $0.10 a bottle? That’s eating into my margins. I want this water to be focused on taste, so we’ll use a cheaper 1 mil thick clear bottle with a 3/4 turn twist top. The marketing team will have a simple sticker that goes on the bottle with our logo on it. What about this sticker though? What’s the catch? Well, I expect my water to sit in tubs of ice at parties, so it will need to stay on the bottle even when it’s soaked. I want people to know what they are drinking.

Ok, it’s time to press start on the manufacturing. Who’s going to do it? I don’t think I have the budget to build a brand new plant, so I’ll use a bottling company to do this. One would think your ‘operations’ guy will take care of this, but ultimately, it’s still your product, and this also cuts into the margins. In fact, depending on who’s bottling, it can affect everything mentioned above from where the bottles come from and how far the water needs to travel to the plant.

Time to distribute. I think I’ll go to a 3rd party distributor to sell my water. But it’s not easy to get in the door. Why do they want yours to sell to the retailers? What’s the point of having yet another brand water on their customer’s shelves? What happens when no one buys your brand? Is there a stock rotation clause in the contract? How much does it cost to ship your bottle? We picked a flimsy bottle, so we needed thicker cartons for shipping, does it weight too much and/or take up too much room?

You see, something simple might not really be simple to build. It takes time and lots of patience to get it right, and when you think you have it right, you’re going to be proven wrong. But what you learn from it, you’ll ultimately use to your advantage to get ahead of the rest. Or would you?

Posted in: business | Tagged: product, product management, start ups

B2B Software Companies can Learn from In-N-Out Burger

Posted on August 7, 2012

Two guys walk into a Cheesecake Factory.  They sit down and are presented with what looks to be an instruction manual for an Ikea entertainment unit.  Pages and pages of choices (and advertisements) from appetizers, pastas, samplers, main courses, steaks, burgers, veggies, fish, wine list, beer list, cocktail list and of course, 2 pages of cheesecake variations.  How do these friends narrow down to what they want?  They want to share an appetizer, so they pick through the 30+ choices.  George likes lettuce wraps, but Peter doesn’t care for the water chestnuts.  Peter recommends the buffalo wings, but George doesn’t do spicy food.  Time to compromise.  The waiter arrives, they order the appetizer, the sampler.  This fits both their taste as it has a little bit of everything they enjoy.

The evening resumes, and they continue to look through the bible of offerings and can’t decide on their main courses.  Club sandwich or big salad?  Steak or Halibut?  Ughhh…  Offering customers literally hundreds of choices to choose from does not mean they will be satisfied with the options.  They will spend more time figuring out what works, and satisfies a craving, where as another choice may satisfy another craving.  Surely, ordering both won’t be an option.

What does all this have to do with B2B software companies?  What happens when George and Peter go to an In-N-Out Burger?  They are presented with a much simpler menu.  Hamburger or Cheeseburger?  (OK, yes, I know there is a Double Double, but that’s just a Cheeseburger with 2 patties).  The answer to ordering French Fries is just ‘yes’ or ‘no’.  There are no sizes.  Order a drink.  Small, Medium, Large or a Shake.  It’s as simple as that.

So, put yourself in the customer’s position.  You are looking for a new enterprise software solution to replace your existing 25 year old DOS based setup.  You have identified your requirements and begin your search for a vendor.  Several options come up and you find one company that might be a good fit.  When looking at their product offerings, you find several different versions.  Small Business, Mid Market, Enterprise, Retail, Mega, Mid Upper Market, Super Enterprise, Medium Business, Express, Lite, Purple, Green, Yellow, Black, Gold…. the list goes for days.  This shouldn’t be that hard, right?  You have your requirements, and you start to compare it with the suite of products this company has.  Nothing seems to fit.  If it has the requirements, it’s too expensive.  If it’s the right price, it doesn’t meet the requirements.  Is your company a Mid Market?  Just because you have 500 employees, doesn’t meet the Mid Market offering will fit the bill.  Do you now look at Enterprise?  Green? Mid-Upper?

Giving the customers fewer options would simplify this process for them.  They are less confused and can select an offering that would just meet their needs at a reasonable price.  The customers may not immediately know exactly what they are looking for, but offering them more options is not the solution.  When they grow and there are more features required, they can upgrade to the next level.  Seat level restrictions need not apply.  Surely, there will be some cases when ordering a simple Cheeseburger may not fit your needs just right.  That’s when you ask about the secret menu and order it Animal Style.  But if no product line is a perfect fit, then maybe they need to look elsewhere.

Bottom line, a B2B Software won’t be able to meet all of a customer’s needs.  The customer will eventually find the right product with the right fit.  The software vendor won’t need to worry about granular customizations to close the deal, and accept the loss.  These aren’t the droids your looking for.  Move along.   Focus on perfecting the product.  You can’t order bacon and avocados at In-N-Out, there’s a reason for that.

 

Posted in: business | Tagged: b2b, burgers, business, customers, decisions, in-n-out, product management, saas, tips, work

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