Reflecting on the Productivity Category

My most recent post on LinkedIn cross-posted here.

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Having spent the last 4 years working in the productivity category, I wanted to share some learnings from the space. Note, everything below is slanted towards an early-stage startup ultimately selling prosumer to SMB.

1/ Individually vs Group Useful
Sometimes called single-player vs multi-player mode but the premise is the same. Is your app useful to the individual or useful to a group (eg workplace).

For example, Asana is useful in a group but not so much as an individual. Evernote is useful to the individual but not so much in a group. Rare apps like Dropbox are both but this is not a requirement. Given that productivity apps typically touch personal data, they are not generally viral. Brainstorm ways to be both individually and group useful.

2/ Direct-to-Prosumer vs Top-Down
Is your app B2C or B2B – the trend is to drive prosumer adoption and then to sell to the SMB. Yammer pioneered this model; Xobni extended this model and in some instances it can even backfire such as when Microsoft asked their employees to uninstall the Xobni plugin.

If your app is direct-to-prosumer, you need to think about whether you can really get to 100s of M of users or 10s of M at a really high price-point. Evernote is probably the best example and is still struggling with accelerating freemium growth.

With SMB deployment, you can charge a higher SAAS price-point plus drive more seats. Ideally, you can achieve this without a sales team like Slack and Github have demonstrated but realistically, you will need an inside sales team and ignoring this reality is why I’ve seen many productivity app developers fail.

3/ Replacing In a Category vs Creating a Category
Are you an app the SMB already pays for or something they don’t yet pay for? Slack, as an example is a new category in that SMBs did not previously pay for chat. However, if are a “Todo” app, you are probably competing with an already existing tool such a Jira that the SMB pays for. Getting a company to switch tools is hard and thus why I recommend targeting super-SMBs when replacing in a category.

4/ Create Lock-In
Most productivity apps aggregate some cloud data (files, CRM etc). In the PIM (email, calendar, address book) category, we aggregated email accounts (Google, Exchange, iCloud). Being an aggregator means we are the presentation layer. But without any content exclusively stored in our system, the user can switch presentation layers without penalty.

To create lock-in, some options:
(a) Store some content exclusively
(b) Require upfront customization such as Salesforce
(c) Introduce paid; this will be the best thing you can ever do and will improve all of your metrics
(d) Achieve network effect. Hard to pull of but if you get it, hold on to it!

5/ Be Pervasive
Productivity is a lifestyle and is integrated across personal and work. Although mobile-first is my recommendation, don’t discount laptop usage at the workplace. Apps must be avail on all screens otherwise you are destined to fail.

6/ Have a Macro Thesis
Product management in productivity is hard – there is no 80/20. Workflows are unique to each individual and attempting to change and behave like a coach is exceptionally hard except when managed down (eg everyone has to use Expensify). It’s best to embrace the existing workflow and improve while also maintaining a macro product thesis. Without a thesis, your resultant app will look like the Settings dialogue in Office.

7/ Don’t Be Too Smart
As I’ve written previously, I believe predictive intelligence will be a new layer on all apps. But in the productivity, trust is always the #1 feature. Failing to sync an email will be an immediate deal-breaker. Optimize on precision (accuracy) vs recall (# of results) and ask the user when unsure versus being too smart. Although most contact mergers are pretty good, the 1 out of 10 times they fail is why many don’t embrace.

Is the Killer App the App Store?

In 2000, I was (for fun) building WAP pages for simple casual games. By design, casual games tended to be 3 minute games since the thought was that the mobile device was an on-the-go experience and thus users would play games while standing in line or waiting at the dentist’s office whereas today the majority of mobile phone use is actually at the home.

Anyways, later that year, when I was working at Cellmania on operator WAP stores, we had aggregated 15K WAP applications, half of which were probably casual games and the other half were a mix of simple apps. As expected, a majority of the games and apps were long-tail developers and few stood out of the pack but all of which were still downloaded and helped fufill the minutes of micro-bordeom each day.

Fast forward to today, and things haven’t changed much. Yes, instead of WAP applications, we have native applications and instead of 15K apps, we have 200K apps. Games are still being designed for a 3-5 minute experience and the long-tail of apps still tend to be independents with few standing apart in the store but all of which are getting downloads and some use.

One big difference though has been on the metrics of success. Whereas in 2000, WAP applications and later J2ME games could either be premium or free, today we have premium , ad-supported and free with ad-supported probably making up the majority of the app market. Obviously with ad monetization, impressions become the key statistic for revenue and thus the new Daily Active User (DAU) stat has become quite important which leads me to my question, what is the killer app or what is the app that will drive a high DAU?

Some obvious apps include maps, browser, address book and so forth. At first, I didn’t think voice was a killer app but now I can’t live without voice input on my phone, I use it for local search all the time. As I start thinking about what apps that I have I downloaded that I would consider killer apps, I’m often stuck – it’s not that I haven’t downloaded 100s, if not 1000s of apps, it’s just that I can’t think of any apps that I use everyday beyond some of the most obvious (eg Facebook, Yelp, Twitter, Pandora etc). Some less obvious exceptions for me are note-taking, voice recording, misc utilities such as a file manager and a slew of games but as are most people with games, I am very fickle (and thus why the mobile gaming folks see 70%+ return rates on Android’s one-click return button 🙂

In trying to answer this question, I thought of a different approach – what are consumers asking for. When I was at Kodak Mobile, I spent significant time in mobile phone shops watching what people would ask for when they came into the store to buy a phone. Interestingly, at the time, they would often ask, how many megapixels was the cameraphone and if it supported Bluetooth. Ironically, some of these folks had never owned a digital camera before and didn’t even know what Bluetooth was but they knew they had have it.

Today, when you walk into the phone store, it’s quite a different set of questions. Gone are the megapixel wars and Bluetooth has become pervasive – now, they ask if the phone can do Facebook or if it has games or if it connects to their favorite website – they are asking if the phone has apps. My Dad the other day asked for a very specific app. He wanted a calculator on his phone, something that seems quite “boring” but given that he’s a math professor (and not a techie!), it’d prove quiet useful for his occupation. For him, that’s his DAU app and for others it’s a different app.

Whether it be to fufill micro-bordeom with casual games or finding apps that connect to your favorite services, the killer app is not the app itself, the killer app is the app store (and I’m sure all the OEMs and operators realize this). Let’s just hope we don’t kill outselves with fragmentation.