In today’s episode of The Startup Chat, Steli and Hiten talk about product expansion for your business.They highlight the next steps to product development and how to expand or diversify. They also review other businesses and the effects that product expansion decisions have made to their business.

Product expansion strategies, can create new opportunities, which can help to build up your business brand image, increase sales and grow your business. Being clear about your product strategy, can help your business to understand if you should diversify or modify your product range.

Tune into this week’s episode of The Startup Chat to understand how to structure product expansion within your company. Steli and Hiten, consider 2 main factors, the product and the market, while looking at the decisions that sit behind different product strategies.

Time Stamped Show Notes:

00:32 Questions around the idea of expansion.

01:03 Different strategies around product expansion.

02:23 Reasons behind product expansion.

02:48 Case study of how other businesses have used product development.

04:20 The benefits of multiple products.

06:43 The power of one brand.

07:41 The down sides of multiple products.

08:10 Building your strategy based  on your market.

08:26 What the market dictates.

11:45 A success story case study.

3 Key Points:

  • Being able to consolidate into 1 brand name is so much more powerful.
  • Do you want to create features that are strongly branded or do you want to create a strong brand.
  • You can take the idea for that first product and repeat the process for other products.


Steli Efti: Hey, everybody, this is Steli Efti. 


Hiten Shah: And this is Hiten Shah, and today, on The Startup Chat, we’re going to talk about after you have a successful sort of product that’s growing, what do you do next? How do you think about expansion? Do you create more features? Do you create a new product? Do you do what? I think, Steli, this comes from a question that kind of you had about multiple products and creating those. I think really the important piece here is like, “What do you do, how do you expand when you,” I think a lot of people have the impulse that they want to create something else, something new, right?



Steli Efti: Yeah.



Hiten Shah: How do you expand is really the question.



Steli Efti: Yeah, I think that especially in SAS, there’s been both playbooks, right? There’s been the playbook of, “You build one product and you just expand that, and you make it more and more kind of a little complete suite, any maybe you expand it to become a platform, right, and then eventually an ecosystem,” right. You start with one very specific thing you’re doing, and just adding more and more and more features and you’re making it a bigger and bigger thing, or, slash, and, there have been companies or have been strategies where a SAS company will come up with product A for market A, and then see some success in it, and then launch product B to sell to market A, and then product C, and these products might be somewhat related, but they’re distinct products that people can purchase individually. They might have different names, they have different landing pages, they have different teams working on them, and so I’ve always been curious to hear like what decision making goes into that. There’s famously some companies in the past few years, might be one of the most prominent ones, that went from a, starting with a single product, expanding to a product suite, and then going back to killing off a ton of these products and going back to like the original product or the biggest, the flagship product, and just dedicating themselves to one product again. I see some new startups popping up that are launching many different products they’re selling, instead of just maybe expanding a feature set on a product. I’m curious, I know that one part, which is what you mention, one part can be very founder driven. Founders just getting bored with working on just one product and wanting to launch something new, something cool, something exciting, also fulfill their kind of entrepreneurial needs. I want to talk about the, how do you make that strategic decision, “Should this be an extension of your existing product? Or should you just launch separate products and try to sell to the same market?” Famously, or relevantly, I think 37signals had like shutdown a ton of products and they rebrand it to their core ship product, they’re being called Basecamp, but they’d also I think, what was the, was their CRN product, right. Highrise, they actually found a team to run independently, but then last week, I don’t know if this is public knowledge yet or not, this is actually a good point, but anyways, I know from rumors, I might or might not be wrong, but I think I’m pretty right, that they’re going to be shutting down Highrise and letting go of all the people that work there. You are such a historian of SAS, and such as a practitioner of products, you’ve launched a ton of products in your life, but I don’t think you’ve ever had like one brand that launched multiple products, or one company that launched multiple products within that one single corporate entity.



Hiten Shah: We have. We have.



Steli Efti: Okay.



Hiten Shah: At Kissmetrics we launched a thing called KISSinsights, and then we ended up selling it. Then we sold it to a gentleman named Sean Ellis, and he turned it into Qualaroo, and then ran it for a few years. He runs GrowthHackers as well, and then he sold it last year. Here’s the deal, if we’re talking about SAS, because we’re talking about SAS, when 37signals was launching multiple products, it made SAS. They had a popular blog, a popular brand, they were a agency before they launched Basecamp, and then they turned into a software business. It was just a time when if you had an audience, multiple products was really helpful, because you could market it to this audience that was really rampant and really into you and your brand, the brand 37signals, right. They didn’t think of 37signals as a software company in the same way that they thought of 37signals as the folks who created Ruby on Rails. They were the, they really ushered in modern sort of SAS product development, and helped really that movement of like building fast, iteratively focused on design as well as user experience, and having a backbone of tech that was good enough. They built the brand not for their software, but for themselves. Launching multiple products where the markets weren’t that crowded, and ideas were much easier to come up with, to be honest, and they already had the platform and tooling with Rails to build stuff fast, made sense. What they I think learned overtime, is the brand gets diluted when you do that, and when in a world where things start looking more of the same and things look more and more commoditized, being able to consolidate into one brand name is so much more powerful, which also usually means one product, one unit. I actually feel like they’re just going with the sign of the times, and they’ve always been very good at doing that. They had a blog, they had an agency, they had a blog, then they built this sort of, the technology as they were building their first product, which actually designed to help them at their agency, because it felt like everything else was too bulky for project management, so they build Basecamp. Then they started building Ta-da List, and then they built Campfire, and they built Highrise eventually, and they built probably two or three other things, I barely remember the name of right now, and then they started shutting these things down many years later. Some of them, like Highrise were making very good revenue, and then they figured out how to either sell them off, shut them down or whatever it is that made sense. They even popped out another one called Know Your Company, that’s a separate entity run by a lady over there, who has taken it over as CEO from the last time I checked and was working on that. These folks are very creative, and they have ideas, and they have the technology and the team that’s, because they’re not venture funded or anything, self-funded, and they have the teams to do that. Really, I think the power today comes in them having one brand and consolidating it, to the point where 37signals, I still call them that, so do you. They are called Basecamp, my friend. They’re called Basecamp, and that shows you the brand equity they had with 37signals that they were willing to lose in order to go all in on one product. One of the reasons is, that product competes with so many other things now, but when they came out it was fresh. It was brand new, there was nothing like it, and their positioning didn’t have to include Slack. Now if you look on their site, they talk about Slack. What the heck does Basecamp have to do with Slack? Oh, yeah. They had that thing, Campfire, that came before Slack, and they merged it into Basecamp. If you look at Basecamp, it’s a merging of a lot of the things that they learned from the other products they built. You can consider those experiments. Sorry for the rant, but like they’re just going with the sign of the times. There might be a world again where doing multiple products makes sense again. Another thing I’ll say is, in SAS, multiple products is harder than ever, because then you’re not consolidating your brand equity, and brand’s more important than ever because most markets you enter in SAS are super fucking crowded. Like I can’t even say that enough, to enough people. Brand and your positioning and your marketing, and these things on how you get out there and what your brand represents, are like a 100 times more important than let’s say 15 years ago or 10 years ago. That’s what’s up. Now, if you’re not SAS, or you’re just thinking about this in general, I would say a lot of the rules, that I just said, are the way the world is today of having one brand to focus on that brand and that product, is probably thrown out the door, and you should rethink the strategy based on your market. The market for SAS today dictates that if you’re not focused on a brand, and with a razor sharp like focus on that brand and that product, you could run into some trouble as a single company.



Steli Efti: One last thing I want to bring up before we wrap this episode up today is, I just, the last three weeks, I had a conversation with a bunch of really senior marketers that were working at very big SAS companies, very successful SAS brands, and one thing they all brought up in different discussions was, one mistake that they felt prior companies they’d worked for had made, was launching even, not even just separate products, but launching features within the product, and giving these features very distinct brands and brand naming, and promoting them very differently or distinctly from everything else, and maybe in a way that is not industry standard. They said that that seemed like such a smart idea in the beginning to create more excitement and to give this more significance, but then they would ultimately run into all these problems, because people didn’t really understand what that meant, people were confused it wasn’t part of the product or a separate thing they would have to pay for or how it related to the plans that it went it. Also, like just maintaining all kinds of documentation from support, to emails, to sales, to webinar videos, to how-to videos, and maintain kind of very distinct language and branding and styling of certain features, so certain big things within the product that they launched. They all seemed to have like regretted that strategic move from a marketing perspective, which is interesting, which is basically like, “How distinct do you want to make, do you want create features that are strongly branded, or do you want to create a strong brand and then just launch features within that?”



Hiten Shah: Yeah, and there’s always anti-examples to the rule. Like is literally killing it doing a multi brand of single business strategy. They almost treat each brand separately, but yet you still have the Atlassian feel to them, but people can enter from any of them. Now they have Trello, and I’m really curious how they merged Trello into their sort of suite of products and businesses. Because that will be an interesting case, it’s almost an anti-case to what we’re talking about right now. I mean another way to think about it, is if you’re, and I got to give Atlassian some mad props here, because they’re probably one of the most strategically sound companies out there, in terms of how they think about expanding their product suite based on the needs of the one demographic they really have a good foothold with, which is developers, and how they just kept continuously doing that. I would say that what we’re saying holds true in SAS, for sure right now, where one brand, one product, more features, is probably smarter, than having multiple brands, one business, and having to deal with that. You can set up a company that can work on that, where you have all the things you mentioned, like support documentation and everything, but it takes the idea that whatever you created for that one first product you did, you’re able to repeat for other things. The way you would think about your business, if you feel like that’s the right strategy, would be about repetition and repeating the whole brand strategy for another brand that falls into the product suite. Atlassian has been brilliant at that, I think 37signals was great at that for a while, but they always used their blog as the main thing that got them the sort of traction on those new things, and kept getting them that, about getting update about all these products, but now they realize that they have so much heat and competition on their core business, it probably makes the most money and revenue and houses a lot of potential, an almost unlimited potential to be honest, or project management is always going to be a program, right. Now they have Asana, and then even Trello, and then all these other things like competing for attention from the customer, that like they have to do something and change their sort of methodology around what they do. Their idea of focus I think makes a lot of sense, and I’m not surprised that they’re shutting down more things.



Steli Efti: Beautiful. All right. This is it from us for this episode. We will hear you guys very, very soon.



Hiten Shah: Bye.