I was in the back row when Jeff Bezos told the audience, “There are two ways to build a product. The first: a company starts with their strengths and builds to the needs of the consumer. The second: a company starts with the needs of the consumer and builds (into) the strengths of the company.”
Bezos continued. Amazon.com is an example of the first. Amazon built logistical strength and educated the customer on the benefits of ecommerce. The Kindle is an example of the second. Kindle started with the consumers need for faster delivery in a digital format and built the infrastructure of the company to satisfy that need.
Every startup needs to determine which path to pursue from the very beginning. It’s as true for Amazon’s Kindle team as it is for any 2 person company.
Each path implies different product development goals and go-to-market strategies. Each path requires different skills and different kinds of team members. Most importantly, each requires a different management style: either one of customer education or one of building a product to meet a vision.
Most of the time, market conditions determine the product development path.
If the market is nascent, like ecommerce in the mid-90s, customer education will be a large part of the go-to-market strategy, in which case, follow Amazon’s model. In such a market, a startup must iterate the product to determine the resonant customer value proposition. This is a huge task because it is a moving target! As consumers become more educated about a product, their needs and wants will change.
On the other hand if a market is established, to win market share startups must differentiate their products by better serving the customer. Clay Christensen’s Innovator’s Dilemma is the best argument that iterative product development strategies won’t win large market share in an established market. Rather, startups must find a disruptive angle, a new way of serving the customer, a unique point of differentiation that provides some barrier to competition from the incumbents.
Be aware of the market type when starting your company. Your product development and go-to-market strategies should reflect the realities of your market. Paraphrasing Shakespeare: “This above all: to thine own market be true”.