VentureHacks is a great resource for entrepreneurs, and I check in on their posts often. Recently, VH posted “Steve Jobs does customer development: No new features.”
In the article, VH cites Jobs from a recent interview about the new iPod and the iPod Touch:
Steve Jobs: “Originally, we weren’t exactly sure how to market the Touch. Was it an iPhone without the phone? Was it a pocket computer? What happened was, what customers told us was, they started to see it as a game machine. Because a lot of the games were free on the store. Customers started to tell us, “You don’t know what you’ve got here — it’s a great game machine, with the multitouch screen, the accelerometer, and so on.”
“We started to market it that way, and it just took off. And now what we really see is it’s the lowest-cost way to the App Store, and that’s the big draw. So what we were focused on is just reducing the price to $199. We don’t need to add new stuff — we need to get the price down where everyone can afford it.”
And at the end, VH asked:
Jobs makes a second, subtler, point about customer development in the quote above. Can you find it? The best correct answer gets a shout-out in our next post.
I responded with this answer:
The subtler customer development point from Jobs is “We don’t need to add new stuff.” He realized the feature set is fine - instead of cramming in new features that most users won’t touch, Apple can instead focus on positioning the product via marketing and pricing.
Well, I was right! In the VH follow-up post, they continue…
In Steve Jobs does customer development, I asked readers to find a customer development lesson in Steve’s interview. There were a lot of good responses that I didn’t anticipate. But Reece came closest to the answer I was looking for:
“The subtler customer development point from Jobs is ‘We don’t need to add new stuff.’ He realized the feature set is fine — instead of cramming in new features that most users won’t touch, Apple can instead focus on positioning the product via marketing and pricing.”
In other words, Apple didn’t add a camera so they could deliver on their positioning (”lowest-cost way to the App Store”), increase market share (”everyone can afford it”), and maybe even increase revenue.
I think Reece made one small, important error; so let’s pick on him for the sake of our education.
“But if we just add feature X”
Reece implies that a camera is a feature “that most users won’t touch.” But adding a camera is probably a good idea. Maybe it’s the key to selling a billion more iPods. Who knows for sure?
Go to any group meeting at any startup and you’ll hear employees arguing for their own camera: “but if we just add feature X we’ll get more customers.” That’s a reasonable hypothesis. More people might buy the product with feature X. Should you build feature X?
Not necessarily. A startup’s cash-on-hand is shrinking every day. You want to add the features that will do the most to stop your losses. You don’t execute every random idea without prioritizing it.
The optimal plan may be to slow down product development, commit more resources to customer development, and find the right positioning for your product. The lesson here:
Once you reach a certain level of product/market fit, the best plan may be to add no new features, focus on positioning, make more money, and move up the startup pyramid — even though the team has a million obviously great ideas for new features that will make a buttload of money. You can improve the business without improving the product.
I responded in my defense, explaining that I didn’t mean the camera is a feature that most users wouldn’t touch; I meant that right now the most important dial to turn is the one that makes the iPod Touch the “lowest cost way to the App-store.” The camera may be the feature that sends the Touch over the top, but only so much as it pertains to the product’s fit as Apple develops it.
The point is, this is how we @OvertimeMedia develop HomeField. There are a lot of options available to entrepreneurs in finding the right product/market fit for your product. In the past year, we made a lot of changes to our feature set, but the most important change has been our price point, and we’re already seeing better adoption and word of mouth referrals because of it.
Finally, thanks to Venture Hacks for the shout out.