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.

To Win Enterprise, Target the Consumer

Disclaimer: I’m not preaching below, just an observation – I’m living through this and hoping to learn from others!

Over the past month, as a mentor at 500 Startups and while attending AppNation Enterprise, I’ve met a number of startups focused on enterprise mobility targeting the “prosumer.” A pretty consistent theme among these mobile apps is the focus on trying to achieve a direct-to-employee sales model. This makes absolute sense; investors are looking for the next Evernote or Dropbox where an app develops organically and is used by prosumers (whom have money) without the need of developing an expensive sales organization.

What I have fond ironic is that many of these startups are having to hire that “one” sales rep because their traction in a direct-to-employee model hasn’t panned out. This is the result of a multitude of reasons:

  • Employees organically connecting Salesforce via OAuth is great in concept but hasn’t really materialized (en masse) – it still requires awareness and “selling-in” of the product into the organization (and you can certainly argue that the apps just haven’t been compelling enough)
  • Other prosumer-facing OAuth enabled enterprise apps (eg Yammer, Basecamp) are just too small in marketshare. You effectively need to support a vast array of different enterprise cloud services to cover a large enough segment but also resulting in an app that may become less focused and have a painful on-boarding process
  • Although most SMBs do not customize their enterprise cloud services, some do, creating unfortunate scenarios where a user can’t use your mobile app and/or you ultimately have to customize for the user’s company
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    And the real bummer with all of this is the company keeps trying to add horizontal features to target the prosumer instead of doubling-down with vertical-specific features for the segment their app is succeeding within. They are doing this because because investors won’t invest unless they can get rid of that “sales rep,” ultimately putting the startup in a perpetual state of “straddling” where straddle = FAIL.

    I’ve concluded that you can’t straddle between prosumer and enterprise. You either double-down on enterprise and choose a specific vertical or you actually target the consumer. I know that sounds completely left-field but the reality is that Dropbox and Evernote, being the representative prosumer success stories started as consumer apps that were widely adopted in the enterprise. Targeting the prosumer may be the ultimate goal but the aha moment for me was that the use cases need to appeal to the consumer.