You probably have heard of the famous rule of thumb from Venture Capitalists stating that of every 10 startups, three or four fail completely, three or four produce either losses or returns, and one or two produce significate ROIs. This is naturally just the case for startups that make it to the VCs portfolio, the general picture is more dispiriting, for it is believed that easily 90% of all startup attempts fail. Everyone knows that startups are a synonym of risk and many methods and theories have been developed to try to leverage it. Eric Ries proposed the lean startup method as a way to deliver iterative product releases and create a more effective final product through feedback. Well what happens with startups that, instead of iterating towards a final product, decide to face the market with two products at once? Statistics prove that start-ups with two founders instead of one have clearly more chances of success. Is this also the case for start-ups offering more than one product?
A second product might blur your vision
Many entrepreneurs consider you should stay with your main product and avoid diverting to a second one as long as possible. Firstly, when managing two products there are high chances that the product that brings in the cash is going to get all the attention. Moreover, different products can generate a separation of the team, where some member skew towards one of the products and some towards the other one. This would not only be counterproductive in many cases, but might also generate internal conflicts within the team. Also, depending on how different the products are from each other, this might signify intensive additional resource investments, which in many cases is a luxury for start-ups. From the perspective of the customer, more than one product might generate an overall brand confusion and will make it hard for users to clearly identify products with the company. So, should start-ups completely forget those side projects that sprout into an additional product?
Are two pillars stronger than one?
Let me tell you about our experience here at Slidelfight, a recently founded Munich start-up focusing on presentation technologies. We initially developed a tool to share presentations from PowerPoint on the devices of viewers live. After some feedback from users we soon realized many Apple users were having difficulties since they usually didn’t use PowerPoint. Therefore, we developed a second tool named Beamium, which is web based and works with PDF documents and thus is a straightforward, cross-platform solution. The response was amazing. Beamium started being employed in various universities, consulting companies and even for cases we never imagined such as sharing wedding invitations, eBooks and music notations. For our team it was hard at first to detach emotionally from our first solution and view the overall possibilities of both solutions from a broader perspective. Nonetheless, after intensive interaction with the market, private users, investors, diverse companies and the press, we slowly allocated the proper channels, targets and resources for both tools and now have a quite diversified portfolio to address various necessities.
Charles Darwin once said “It is not the strongest of the species that survive, nor the most intelligent, but the most responsive to change”. Developing two products simultaneously is indeed challenging, especially for a start-up. Nonetheless, if resources are allocated smartly and the team stands behind the diverse ideas, the start-ups adaptability in aspects such as customer satisfaction will speak for itself. Usually, with two wings you will fly higher than with one.