Driving Product Strategy At An Early-Stage Company
Feb 08, 2023
Early-stage companies are a lot like a group of friends sitting around on a Friday night trying to figure out what to do. Everyone knows they want to do something. They know they will probably enjoy it. If they pick the right thing, they also know that the evening will have impact. But no one is quite sure where they will go.
Strategy in this scenario is a like the friend who wants to coordinate outfits and make sure Ubers are scheduled. They have a plan, but they have no framing for the plan, and that can lead to frustration. The same is true with product strategy in the early stages. Though, it's probably useful to define what "early-stage" means in this context.
For the sake of clarity, we'll call early-stage the stage at which a company is either still trying to find product market fit or they have found tenuous footing around PMF and are trying to maintain it. It is at this stage where companies are often able to raise pre-seed or seed funding and can start to build a team. It's at this stage where strategy may start to expand from under the strict control of the CEO to other team members, especially product-focused team members.
When strategy is based around something loose and not something concrete—like a north star—it can be frustrating. But it's possible to navigate this with the tools you probably already have. Early-stage companies have the same problems larger, more ingrained companies have. They just have them on smaller scales. For example, a large company with clear PMF still must drive product strategy based on the knowledge that PMF is a moving target. They can lose that fit. This means the product strategy at those companies isn't all about reinforcing the existing product. It can equally be about exploring new markets and new product opportunities. The difference with early-stage companies is your entire job is essentially exploring new markets and new product opportunities.
The best way to cope with the unknowns of product strategy at the early stage is to shift your perspective on when the right time to commit to something might be. At a later stage, commitment might happen when you have enough data to back up the bet. Product management, after all, is a series of bets. At an earlier stage, commitment might need to come without proof. It might need to come when you have enough insights to suggest the bet could be successful. This is what founders do when they first launch a company. They have some insight that is uniquely theirs, and based on that insight, they launch.
Developing insights is the number one job of product people, especially at early-stage companies. Those insights will drive so much more than you think. I'll give an example from the early days of Pinata.
Pinata had found solid footing among developers who wanted to upload content to IPFS. However, that product alone was not a revenue driver. We had been paying close attention to NFTs since the company started, and the insights developed over two or three years of thinking about the future of NFTs helped us commit to a fundamental shift in the way Pinata did business. Up until that point, uploads was the business. However, we decided to launch dedicated IPFS gateways and make those the revenue driver for the company. It cannot be understated how big of a shift this was.
There was no proof that it would work. There was no data to back the decision up. At the time, no one in the market provided anything besides public IPFS gateways. Think of public gateways as public goods that demonstrate the potential, but are not optimized for a world that's come to expect speed. We had insights from hundreds of customer conversations that led us to believe that launching dedicated gateways that customers owned and could brand with their own domains was going to be the right decision. We had insights that providing traditional web-scale speeds to web3 was going to be a big enough shift that people would pay money for these gateways. But again, the decision to launch was built on insights, not proof.
Dedicated gateways were a massive success for Pinata. Had we waited for proof—for the data we all naturally crave so much—it would have been too late. Instead, we launched a product that people wanted at the right time because we trusted our insights.
At early-stage companies trusting insights and launching products based on those insights alone will happen more frequently than in later-stage companies. However, as I mentioned before, later-stage companies have to maintain PMF. Sometimes, they have to make larger bets, and those bets will need to be based on insights rather than proof.
One final thought I have on driving strategy in the early stages is around the idea of trap doors. It's important and encouraged to launch products based on insights, but you should also consider whether or not you are taking the company through a two-way door or dropping it through a trap door. A two-way door represents a product that you can come back from. A trap door is a decision or product that you cannot come back from. You will be married to it forever going forward. It should be obvious that if you're basing a product decision on a trap door, you should have more data. More proof. If you're building a solution that is a two-way door, insights-based launches are probably safe.
If you want to stop sitting at home on a Friday night with your friends trying to figure out what to do, start basing more of your decisions on insights. Insights are developed over time. They are not always quantifiable, but they are almost always important.