8 Rules Of Great Products

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After building products for more than 200,000 paying customers, here’s what I’ve learned (so far) about making them great…

Building great products requires a mix of vision, customer feedback and continuous iteration. I’ve found this to be true regardless of what your product is — software, professional services, physical goods or anything else.

great productsSince I started my first company in 2001, I’ve tried to learn as much as I can about what makes great products. While I’m still learning, there are 8 “rules” I keep coming back to when I start, advise or invest in a new company — and I wanted to share them with you here.


This acronym stands for (B)uild (F)or your (B)est (C)ustomers. Simply put, it means you give a higher weighting to product feedback from your best customers — the ones who spend the most money with you over time.

This leads you to build additional products (and improve existing ones) for your best customers, who are much more likely to pay more for those new and improved products, thus helping grow your revenue faster with fewer customers and less customer support.

The key thing here is that not all customer feedback should be treated equally. If one customer pays you $2,000 a month and another pays you $20 a month, the feedback from the $2,000 a month customer is actually more valuable if you use it in your marketing and product strategy to attract MORE customers like them and/or if it gets them to spend more money with you via upgrades or additional products.

Simply put — it doesn’t take 10x the effort to get a $2,000/month customer as it does to get a $20/month customer. It probably takes 2–3x the effort but gives you 10x the revenue.

Cost (Create & Sustain)

When you build anything new, it’s tempting to just think about the initial cost to build, source or manufacture the product. What trips most founders up, though, is the ongoing cost to sustain that product once it’s live.

You might get a quote from an agency to build a product for $20,000, but quickly after you launch you’ll realize you need additional cash to build it out based on customer feedback, so you can improve your conversion rate, average order value, reduce customer churn, etc.

I’ve never seen version 1.0 of any product win a market — or generate significant (7–8 figures of annual) revenue. It always takes years of iteration based on customer feedback to generate that kind of revenue, which of course needs to be funded from somewhere — either profits or investors.


When you’re building a new product, it’s tempting to wait until it’s perfect and “fully featured” before you put it in front of customers. Turns out, this is the absolute wrong way to build a product.

Instead, you should build the simplest version that solves a single problem and put that in front of customers for feedback ASAP — even if it’s not your best work. You can then build upon that iteration of the product with customer feedback which you get much earlier in the process.

This is called building a cupcake.

Most startups try to build the wedding cake (the big final product) on their first iteration instead of starting small with a cupcake, then turning it into a cake (based on customer feedback) and then finally into a wedding cake (again, based on customer feedback).

I first came across the cupcake strategy on Intercom’s blog and it made so much sense it became one of my rules that I now use whenever I’m building or advising on the creation of any new product, be it software, a restaurant, a fitness supplement or even my latest training program for startup founders.

Solve (Tier 1) Problems

The best products solve tier 1 problems. I’ve written about that here in extreme detail, but it bears repeating — your product should solve a tier 1 (or top 3) problem for your potential customers.

Never, ever build a startup that solves a “nice-to-have-fixed” problem — that’s what we call a vitamin. It’s nice to have, but not absolutely necessary for your customers to pay for a solution.

If you build a vitamin or don’t solve a tier 1 problem, people will use your product but never pay for it. And that will rip you apart.

How do you know if your product solves a tier 1 problem for your customers? Well, here are a few positive signs:

  • You get regular feedback from customers who are ELATED by your product
  • Your conversion rate is trending up over time and your churn/refund rate is trending down
  • You have at least 40% product-market fit with existing customers


You can’t manage what you don’t measure, so it’s critical to determine what your top 3 metrics are and make sure 1) your product, website, etc is instrumented to track them and 2) you have a way to see them on some sort of dashboard every day.

I always like the analogy of a pilot flying a plane. If he can’t read his instruments, even for a few minutes, his plane probably won’t be flying for much longer. Startups are the same. If you’re “flying blind” then sooner or later you’ll crash into a mountain, without even realizing it’s in front of you.

So which metrics should you track? It really depends on your business, but you can’t go wrong with revenue, AOV (average order value) and conversion rate (both website to lead and lead to customer) as a starting point.

Our brain processes things in groups of 3, so I recommend having 3 primary metrics and 3 secondary metrics, which might be refund rate/churn, profit and Net Promoter Score.

User Experience

It doesn’t matter what you sell — design is your most important “feature”. Even if you sell professional services, the experience a potential clients gets when they visit your web site or arrive at your office is all part of their user experience, which will help them form an opinion of you even before they get your advice.

Never sacrifice user experience and always opt for simplicity and ease of understanding over a more “fully featured” product or service offering. If you can’t easily explain your products or services to the average person, then they’re probably too complicated.

One thing I like to do when I bring on a new founder (I coach startup founders & CEOs) or invest in a new startup is do an end-to-end audit of their product’s user experience. I put myself in the shoes of a potential customer and walk through the entire process to find, learn about, buy and get support for their product.

Every time the user experience is great (and continues to be great over time), that startup’s revenue grows like a weed. Every time it’s confusing, revenue growth is much tougher and in most cases very, very slow.

Themed Releases

Aim to improve a specific part of your product with a single release, instead of putting out tiny improvements to many different parts of it.

To do this, group customer feedback and ideas for new features thematically and then prioritize which theme you’ll work on, based on:

  1. Customer happiness
  2. Revenue impact
  3. Ease of implementation

This makes your product marketing a lot easier when you launch the improvements. Instead of a sprinkle of small improvements, you make one big improvement which will be felt by more customers.

Outsource Non-Core

In 2016 there’s no reason to do your own payroll, web design, social media updates, internal IT, telephony, etc. Startups have a better shot at winning when they are extremely focused on a single mission — and anything that gets in the way should be delegated.

Necessary business processes that doesn’t differentiate you from your competition should be outsourced to an agency or third party provider. This will give you and your team more brain cycles to focus on what matters — building great products that delight your customers and drive revenue.

This post was first shared with my private email list for founders. If you want to learn how to grow from small startup to thriving company (from someone that’s built 5 companies with $200M in total revenue), click here to subscribe.

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