26 July 2022

Visionary products are recession-proof

Products that are built with clear purpose and determination will win regardless of the bear or bull markets.

Are we in a recession? If you asked a dozen people around a table, there would be no unanimous answer. It takes two quarters of negative economic growth to officially call it a recession, and half way through 2022 the answer is still inconclusive. However, this piece focuses on something more everlasting - Products that transcend economic cycles - and the reasons they can do so.

 

Product-minded founders are able to create generational products in any economic cycle. In many ways, the harder the times and the more challenges those founders overcome, the more certain they can be that the product they’re building is needed in the world. Apple, Google, Slack, and Zoom, among other recession-proof companies, have been able to withstand the test of time and proven that the products that they launched meet a fundamental need.

 

A recession, or a time of contraction, forces both individuals and companies to reevaluate what really matters to them and how they should spend their finite resources, i.e. time and money. There is little room for “nice to have products or activities,” only priorities that are truly “must have or do” count. Thus, the shift in spending and behavior in a recession can be dramatic. Luckily, such shifts create new opportunities for must-have products to shine. Just like diamonds that get polished under high pressure, the best companies and products come out of the hardest times. 

 

The founders who have this notion focus on what really matters for building world-changing companies and create products that:

 

1) Solve a real problem.

2) Deeply resonate with people. 

3) Help realize the founder's vision for the future. 

 

If a product has the above characteristics, then Retention, Engagement, and Growth happen organically and do not need to be “hacked”. High retention and engagement lead to consistent growth, which in turn helps weather a downturn as people stick around for as long as they need the product.

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How does this happen exactly? 

Solving a real problem leads to high Retention.
First, what does “solving a real problem” mean? And what is the definition of “real?” While the answer to the latter question might be subjective, as different problems might appear real to different people, whether or not a product solves a problem should be binary. For example, if you have a headache and take a painkiller, does the headache go away or not? If not, the product didn’t solve the problem and you should go look for a better, more effective one. It’s that simple. 

Software products, with all their complexities, are no different. If a product only partially solves the problem or doesn’t solve it at all or solves a made up problem that’s more of a nuisance, it might be used several times but then quickly abandoned. Why should one keep coming back to something that is not working for them or delivering value? Hence, products that struggle with retention should really be examined through the lens of “does this product actually solve the problem that it promises to solve?” and not with “what features are missing or what gimmicks can be added to prevent people from churning?”

Deeply resonating with people leads to high Engagement. 
Products that go beyond solving a problem and tap into a fundamental need produce the highest possible engagement. Whether it’s the need to satisfy curiosity, connect with others, or feel safe - asking customers “how does using this product make you feel?” will reveal a lot.

And by far, the best sign of an early product-market fit is getting comments such as “I love this product!” or “I can’t imagine my life without it!”

Maslow’s hierarchy of needs* (shown below) provides a useful framework for categorizing needs and determining which category your product might fall into. In a recession, the focus typically shifts to the bottom of the pyramid to more basic physiological and safety needs. What this means for Enterprise products is that the growth in areas such as Cybersecurity, Networking, and Infrastructure is going to surge.

Having a clear vision for the future leads to consistent Growth.
However, not every cybersecurity or networking product is going to grow. Only those with founders who have a distinct vision for how the future should be and steer their companies towards it will thrive. The roadmap and prioritization become very clear once the vision is set. Even if a temptation arises to deviate from the course due to a demanding large customer’s request, it is easier to say no to that request and continue building the roadmap according to the long-term horizon. Feature prioritization becomes ruthless and resource allocation constraints can be met. 

Product visionaries understand that in order to build the future a lot of hard decisions need to be made. But as long as they work on problems that feel authentic to them and are aligned with their core values, the decision-making process gets more clear. Ultimately, they know that what matters is to execute relentlessly on their vision and solve real problems for their customers.

Such deep conviction also helps attract the right employees and investors for the company. They sign up for this long and unpredictable company-building journey because they share the vision and values of the founder. This is a unique advantage that competitors cannot replicate – in good or bad times. 

Recession or not, products that are built with clear purpose and determination will win regardless of the bear or bull markets.