December 14, 2011 4 Comments
Reduced down to the core basics, a successful business involves building a product (anything of value) and selling it. Both building and selling are core to most businesses. However, typically one of these areas is the main differentiator, which makes a company the leader in its space, while the company ‘checks the box’ in the other area.
Amazon, Facebook, Google, Apple and most other global consumer Internet leaders today are product driven companies. Product is their core strength. They are (usually) good at sales too, but that’s not where they differentiate. They are simply outstanding at building products, and consumers self-discover their products/services and stick with them.
The Indian tech landscape has looked different historically. The first wave of IT and Internet leaders in India excelled at sales and execution, while (often barely) meeting the baseline on product. Market leaders emerged from innovative use of offline sales forces, larger marketing spends, offline presence, stronger sales teams, partnerships and better distribution. Product development was secondary. And rightfully so, given the market dynamics that existed.
There have been both demand and supply side reasons for this. On the demand side, the online consumer base was small, non-so-discerning and spread-out. Good self-discovery mechanisms didn’t exist. So market leadership was established primarily through sales, distribution and reach. On the supply side, there wasn’t enough availability of product talent or venture money. I blogged a few years back about this.
I think we are starting to see an inflexion point in this dynamic now. As customers get more savvy and approach a critical mass, they figure out ways to beat down a path to the product that works best for them. In the era of social, this is easier than ever. The game is changing quickly from constant paid acquisition and re-acquisition of customers to virality and retention. On the supply side, the number of ‘product’ persons (engineers, architects, UX designers, visionaries) is slowly building up, propelled in part by global osmosis. Venture money is abundant now, even for product plays. Consequently there is an increasing number of Indian offerings now with great products and user interfaces.
This momentum will only accelerate, as the above is a virtuous cycle – Consumers become more discerning after using better products. We’ll see an era of intensely product focused businesses disrupting the Indian online space. Some of these products will also go global. Those companies that don’t pay sufficient attention to product and continue to play by the old rules would do so at their own peril.