Tuesday, January 26, 2016

Vitamin, Medicine, Drug

I worked with a good friend of mine on a product idea a few months ago. The number of disengaged employees at large enterprises is staggering, we both have witnessed this during our professional career. We tried measuring employee engagement and happiness by frequent, short surveys, providing a real-time engagement thermometer to management.

I talked with two investors about our idea and one of them told me this: "There are two types of products, vitamins and medicines. While vitamins are good to have for a company, it's not absolutely essential. The company can survive and even thrive without it. However, a medicine is a must have, companies can't live without it. I tend to invest in medicine-like product ideas, and I am sorry, yours is a vitamin. It can get big, but selling the idea will be hard."

The Vitamin

A vitamin product might be important for management, but the perceived value for the employee is unclear. Unless we were able to provide some kind of value for the person who fills out our survey, the employee would never be engaged.

I once had to track my hours on projects at a large enterprise just to provide data for the army of project managers to calculate actual project cost. Although this had value to the employer, it had very little value to me or my peers. We were constantly nudged by management to log the hours by the end of each week.
Now, if the company is in consulting and the employee won't get paid unless she provides the hourly breakdown of billable hours, it's a different story. The employee has vested interest in providing the data, otherwise, she will never get paid.

Selling the Vitamin can take an army of sales people for cold calling prospects. The referral rate is low, users are not very engaged.

The Medicine

The medicine product has real benefits for both the employee and the employer.
I have witnessed SalesForce shifting from vitamin to medicine category before. Initially, it wasn't taken seriously by the sales teams, but as soon as it was leveraged for financial reporting, it became essential for the company.
Basecamp is another good example for medicine, which is adopted by the enterprise (mostly) through employee demand. I've read about people using Basecamp for their freelance projects, and when they join larger companies, they suggest this tool.
Github is so good, it's pushing the boundaries of medicine. I have worked with many software engineers, however, I have never met a single sales person from Github trying to talk us into submitting our credit card and signing up for private repositories.

Medicine is easy to sell, users are recommending it to other potential customers. Companies with a medicine-like software have a smaller sales team. The reputation of the product is selling itself.

The Drug

There is a third category this investor did not mention to me, but it exists out there. People are so hooked, they get angry when they don't have access to it. It's Facebook. The company did an exercise just recently to train for the battle against Google, they made Facebook inaccessible for Android users to investigate what they would do. Users tried to restart the app on their mobile device a couple of times. When that did not work, they opened their browsers and logged on through that. No matter what, they did not want to miss anything that was happening with their friends.

Finding the drug is super hard. But medicine-like products can be invented, and vitamins can transition into medicine.

When you're searching for a new gig, or you are thinking about your new idea, skip the vitamins, and start out with the medicine.