When and why to launch your second product
Brex co-founder and co-CEO Pedro Franceschi previously wrote about this at length, but it's certainly a topic that we can never cover enough. It's one of the pivotal questions entrepreneurs face as their company matures and they have to look for new areas of growth.
Brex hosted Plaid Co-Founder and CTO William Hockey and IVP partner Jules Maltz alongside CEO Henrique Dubugras on a panel moderated by TechCrunch's Kate Clark to dig a little more into the process of building out a second product. Here are some of the highlights:
How to define what second product you should launch
William: "Second product is a wavy definition... you have to understand [what it means]. Are you doing that because you're facing commoditization? Are you doing this because you want to make more revenue? Are you doing this because you see competitors are entering new verticals that could potentially move?"
Henrique: "If you build a completely separate product that doesn't help your initial product, it's harder. But if there's a virtuous loop, when the first product helps the second one and the second one helps the first one, it can actually make both of them more powerful instead of competing with each other."
When to start thinking about a second product
Jules: "Great companies start thinking beyond that first act because they know that in any successful product, there's gonna be a ceiling to it... Your market size is gonna have some constraint, so you need to be thinking about what else you can do with the distribution and customer base to solve more of their needs. A lot of that should come from the customer and what are the problems [they] are having."
William: "As we think about new products, they're less 'we're gonna go to a new country.' It's more about small bits of improvements... Can we build something on top of something we've already built that can enter a new market."
Jules: "If you can build a new product around [your customer needs]... you also kind of build the muscle. Great companies aren't kind of one-trick ponies, they're ones that have this muscle of [building new products]. I think it's a really important muscle, but start with the first product, get that right, and then you sort of earn the right to even be able to think about a second product."
Why you should focus on your core product before launching a new one
William: "Making sure that you balance the need to get the sexy new product but also investing in the core, that is really hard... Everybody wants to work on the new shiny toy, everybody wants to sell something new. So it takes a lot of motivation and a lot of internal planning to make sure you don't let the old products start to kind of wither and die."
Jules: "There are no points for 'you've launched four products' if none are growing super fast. The focus should be on, do you really have product market fit. You'll know when you have product market fit when customers are coming to you organically, when the sales motion that you know is really efficient. You can hire salespeople and you those people become very efficient very quickly. You'll know based on customer feedback you have today."
Why sales are important after a product launch
William: "In Silicon Valley, we tend to overplay the concept of engineering and product and downplay sales. Engineering and product, it helps you get over the hump to product-market fit."
Henrique: "I think you know a lot of companies in Silicon Valley that take pride in, 'I spent zero on marketing, I don't have sales people, it's all self-service'. Our product supports a model of having sales and it only accelerated us... That's because our economics support that."
Henrique: [Needing a sales team] doesn't mean you don't have product market fit. It just means sometimes you know you need to make [your product] a priority, you need to create urgency. There's all these effects that sales can create that are different than product marketing that can really accelerate the business if you support it."
You can find the full video here.