Chris Dixon wrote an interesting blog post titled The default state of a startup is failure that got me thinking.

Startups are tough because it’s hard to get noticed. Even established companies need to spend tens of millions of dollars to promote a new product, just to get noticed. But a startup doesn’t have millions to spend on advertising so it must rely on guerrilla techniques. Mostly, this means the product needs to be much more (3x?) compelling and valuable to the end user than any other similar product. The startup then convinces one person at a time to use their product, and then grows from there.

However, the most difficult part is getting your product to be 3x(?) better than anything else similar out there. You can also introduce a completely new product but if you need to educate your user on why they should need your product, you’re probably already dead in the water… unless you’ve got a very long runway.

The most difficult part of creating a compelling product is two things.

1. The product/service needs to add more value to the end user than what’s already out there. And it can’t be marginal better value… it needs to be a significantly bigger value-add (ie., 2 or 3 times more than the incumbents).

AND…

2. The core function of the product/service needs to be super simple and clearly communicated in the product.

#1 or #2 by themselves are manageable but #1 AND #2 together is much more difficult. The greater value-add you have in your product often means you’ve added more features in the product (ie., a mashup of a few different functions and features). This means you’ve added complexity to the product, which makes it confusing to the end user.

Viceversa, you can have #2 (simplicity) but the chances are you have a simple core function but it doesn’t give a huge value-add over existing products/services because it’s just a simple one function.

So, the big challenge of a startup is the product.

How do you create a super simple core function that gives huge value-add to the end user?

IMHO, I think much of the product innovation happens on the conceptual + prototype/mockup level. The innovator must hold the #1 and #2 convictions close at hand during the entire innovation process. Lots of iteration, discussion, trying new things and changing things. All to add value and to make things simpler.

This isn’t an easy process because it’s about creating something NEW. Thus, it’s difficult to follow a manual because the manual is constantly being redefined.

(Read more about my Startup Thoughts. Check out my other series too.)