Product creators often tend to think of products in terms of features. I’m not talking about the traditional myth of “more features is better” that got debunked a long time back. Product creators still think of features because they try to deliver a certain functionality. Instead, a product should actually be visualized as an answer to a pain point. Users don’t use products because they need certain features. Users use products because they have been trying to do something but were facing a barrier while doing it so far and the product helps lower the barrier.
A pain point can often be stated in the following terms:
I am a <USER DESCRIPTION>
Trying to <DO XYZ>
But I’m unable to do so because of <A BARRIER>
Products that lower (or completely remove) the barrier to getting something done tend to create entirely new market segments that had never existed earlier.
The Skill Barrier
Lack of skills is one of the biggest barriers to getting something done. We hire the carpenter, plumber etc. to get stuff sorted owing to the skill barrier. Products that help ‘unskilled’ users do something they couldn’t have done before break the skill barrier and open up a new segment of users.
WYSIWYG website creators and editors enable creation of landing pages and websites without the need to know HTML. WYSIWYG editors help non-coders launch landing pages with little effort and create a new market in the process.
Instagram lowers the skill barrier required to create arty pictures that earlier required photoshop prowess.
In all such cases, the lower barriers lead to greater adoption than would have come through direct competition. A me-too Photoshop competitor, even if it was free, would never have gained the adoption that Instagram did.
The Time/Effort Barrier
People are strapped for time. A value proposition based around time savings or lower effort is an attractive one. Bloggers needed to invest time and effort to write posts that would stand out. Twitter brings down that barrier and allows publishing with very low investment of time and effort. Since everyone has the 140 character limit and given how democratic the real time feed is, there is no humungous effort required to stand out anymore.
Another common theme that disrupts the time/effort barrier is aggregation. Platforms that aggregate multiple providers often provide a compelling value proposition as a one-stop entry point. In the early days of the web, Yahoo provided value as the home page of the web. As the web grew and portal-based navigation grew clumsier, Google emerged as the one-stop solution to accessing anything on the web. Meta search engines (e.g. Adioso) act as the one-stop entry point and allow a user to search across multiple providers, thus drastically reducing the time to get her job done.
The Money Barrier
Online services are increasingly trying Freemium offering a basic level for free to the more amateur producers with limited needs. These tools were only available for a fee earlier. Having them available for free creates an entirely new market. Users from the existing market also deflect towards a free alternative. Over time, some of them migrate to a paid tier. While lower price has never been a sustainable competitive advantage, completely free has the potential to disrupt an existing market.
Unbundling is another way the internet brings down the money barrier. Music was traditionally sold as albums. Users would have to buy an entire album even though they liked only 1-2 songs in it. iTunes disrupted this market by allowing per-song billing. In doing so, it made the market a lot more efficient and consumers who would ordinarily not have purchased an entire album to get a particular song also ended up buying the song.
The Resource Barrier
Let’s take an example closer home. Entrepreneurship has become mainstream like never before. There are several reasons that contribute to this phenomenon but one of the most important is the drastic reduction in the resources required to get a company up and running. One of the many contributors to this change is the rise of Amazon Web Services which lowered the resources and upfront investment required to get your service up and running. While a startup would have had to get a minimum level of infrastructure upfront earlier, it can now dip into Amazon’s vast resources on-demand.
The Access Barrier
Platforms often disrupt gatekeepers by allowing producers direct access to potential consumers.
Most media businesses (publishing, performing arts etc.) are industries with gatekeepers determining which producers get market access. Platforms like Amazon Kindle Publishing, YouTube, CDBaby disrupted these industries to varying degrees by allowing producers direct access to a market of consumers tho whom they could market themselves.
This applies equally well to marketplaces. The long tail of sellers on online marketplaces wouldn’t have existed in the real world as they wouldn’t have had access to the niche market that would be interested in their product. eBay created a large segment of sellers which never existed previously by lowering he access barrier.
The investment community (angel investors, VCs etc.) is not necessarily an equal-access community and the right connections and introductions can open many doors that would otherwise not have existed. Kickstarter seeks to democratize access to investment by allowing anyone to set up a project, state funding requirements and raise money online.
These examples repeatedly demonstrate the fact that lowering barriers to get something done creates new markets for the product. Competition on the internet is no longer about fighting tooth and nail over price or features as was the case with traditional businesses. In today’s age, competition is about offering a value proposition that is offered by no one else and creating an entirely new market of consumers who had a latent need but no readily available solution to solve that need. Companies that do this effectively win.
What are your thoughts?
[About the Author: Sangeet Paul Choudary writes regularly on strategies for online two-sided markets: platforms, marketplaces and communities, at "http://platformed.info/" and works closely with startups in these spaces in India, Singapore and the US. Follow him on Twitter @sanguit]