What comes first: Product, Soul or Traction?

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Ask any VC or a founder and they will tell you the startup wisdom.

Traction trumps everything.

While largely true, but maybe not if you are in the early stages of building a product-led business and competing in a sales-driven-soulless category.

What do I mean by ‘soul’?

Having a radically different viewpoint on a traditional industry — with a focus on increasing the overall addressable market and ‘democratizing’ the space — for a common good.

That is, disruption without calling it one.

Let me give you an example.

Language learning has traditionally been a sales-driven business for many years. Billions of dollars were spent globally by language learner on classrooms and workshops. No ‘real soul’ in the game — just sales, FOMO and more sales.

Well, a product idea was conceived in 2009. The team took 2 years to launch the closed beta. 2 years in any era is considered a ‘dead-zone’ by any standard.

Wanna guess which product are we talking about? Well, Duolingo (now going public).

Another story

This meditation app started in 2012 and for the first 4 years, didn’t have a clear moat (as per the investors).

“When that happens a few times, you can cope,” shared Michael Acton Smith, recalling those hard days. “When it happens dozens of times, it makes you question whether you’re on the right path and whether smart investors know more than you do.” Michael also heard through the grapevine that one investor had called Calm a “load of nonsense,” saying it was “never going to work,” and another described the company as a “fluffy little meditation app.” [source]

We are talking about Calm (now valued at $100Bn+).

There are many such products that go slow (rather, snail-speed slow) in the early days, get the soul of the product out (the key differentiation) and then scale (exponentially).

Because that differentiation takes time to build. It eventually serves as a moat and provides a unique leverage for the company to make others irrelevant (without competing).

Product-led companies do not compete head-on. And they don’t look sexy on day zero.

They look like a toy. And it’s literally impossible to take such products seriously.

So, what’s wrong with traction first approach?

It’s a very human tendency that we often focus on what’er that grows faster. Call it viral growth or ‘growing like weeds’ — anything that grows exponentially looks sweet.

Just that most of the times, such growth is a manufactured one — you spend on ads, customers show up. You stop throwing discounts and then they leave.

Andrew Chen rightly calls it ‘Traction treadmill’.

Sometimes you build a product that’s just doing okay. Not great, but not bad either. Users show up, and some of them stick around — but not many. Some teams look at this and are overly optimistic — it’s time to scale. Just add users, instead of increasing stickiness

The traction treadmill eventually arrives once the numbers get big. This is when you lose a % of users fast, but then just have the budget and funding to replace them- but then can’t keep grow on top. You start running hard and just staying in one place.

If things flatten for months, or a year, eventually morale becomes a problem. Options start to narrow. And the real solution — to increase stickiness — becomes too slow and complex to execute Then you fall off the traction treadmill. Game over.

Traction isn’t bad (I mean, it isn’t bad), but the wrong type of traction is bad.

The fact that you have traction without the (real) product and importantly, without the product’s soul out in the market is bad. Such traction is based on the assumption that the current traction is a representative of the soul of the product — and that may not be true. So your customers start associating you with whatever they see.

Not with who you set out to be. Definitely not with what you could have been.

For instance, if you are building a product-led Ed tech business when everyone around is building a sales-led, your soul lies in the product. Not in the sales. But to get traction, you start selling course content (put up a LMS, run ads and you see money flowing). You (and your investors) are now so happy with sales figures that you will let sales trump over everything. Including the product.

No problem, right? Just that the product and the soul is now an afterthought, somewhere in your roadmap. And like your sales-driven peers, you are just a few years away from being disrupted by.. well, a Duolingo of your industry.

So..what comes first for you?

And note that I don’t mean to say these are all vs (i.e. product vs. soul vs. traction) — but the right balance is all that makes the game worth fighting for!


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