Reflecting on the Productivity Category

My most recent post on LinkedIn cross-posted here.


Having spent the last 4 years working in the productivity category, I wanted to share some learnings from the space. Note, everything below is slanted towards an early-stage startup ultimately selling prosumer to SMB.

1/ Individually vs Group Useful
Sometimes called single-player vs multi-player mode but the premise is the same. Is your app useful to the individual or useful to a group (eg workplace).

For example, Asana is useful in a group but not so much as an individual. Evernote is useful to the individual but not so much in a group. Rare apps like Dropbox are both but this is not a requirement. Given that productivity apps typically touch personal data, they are not generally viral. Brainstorm ways to be both individually and group useful.

2/ Direct-to-Prosumer vs Top-Down
Is your app B2C or B2B – the trend is to drive prosumer adoption and then to sell to the SMB. Yammer pioneered this model; Xobni extended this model and in some instances it can even backfire such as when Microsoft asked their employees to uninstall the Xobni plugin.

If your app is direct-to-prosumer, you need to think about whether you can really get to 100s of M of users or 10s of M at a really high price-point. Evernote is probably the best example and is still struggling with accelerating freemium growth.

With SMB deployment, you can charge a higher SAAS price-point plus drive more seats. Ideally, you can achieve this without a sales team like Slack and Github have demonstrated but realistically, you will need an inside sales team and ignoring this reality is why I’ve seen many productivity app developers fail.

3/ Replacing In a Category vs Creating a Category
Are you an app the SMB already pays for or something they don’t yet pay for? Slack, as an example is a new category in that SMBs did not previously pay for chat. However, if are a “Todo” app, you are probably competing with an already existing tool such a Jira that the SMB pays for. Getting a company to switch tools is hard and thus why I recommend targeting super-SMBs when replacing in a category.

4/ Create Lock-In
Most productivity apps aggregate some cloud data (files, CRM etc). In the PIM (email, calendar, address book) category, we aggregated email accounts (Google, Exchange, iCloud). Being an aggregator means we are the presentation layer. But without any content exclusively stored in our system, the user can switch presentation layers without penalty.

To create lock-in, some options:
(a) Store some content exclusively
(b) Require upfront customization such as Salesforce
(c) Introduce paid; this will be the best thing you can ever do and will improve all of your metrics
(d) Achieve network effect. Hard to pull of but if you get it, hold on to it!

5/ Be Pervasive
Productivity is a lifestyle and is integrated across personal and work. Although mobile-first is my recommendation, don’t discount laptop usage at the workplace. Apps must be avail on all screens otherwise you are destined to fail.

6/ Have a Macro Thesis
Product management in productivity is hard – there is no 80/20. Workflows are unique to each individual and attempting to change and behave like a coach is exceptionally hard except when managed down (eg everyone has to use Expensify). It’s best to embrace the existing workflow and improve while also maintaining a macro product thesis. Without a thesis, your resultant app will look like the Settings dialogue in Office.

7/ Don’t Be Too Smart
As I’ve written previously, I believe predictive intelligence will be a new layer on all apps. But in the productivity, trust is always the #1 feature. Failing to sync an email will be an immediate deal-breaker. Optimize on precision (accuracy) vs recall (# of results) and ask the user when unsure versus being too smart. Although most contact mergers are pretty good, the 1 out of 10 times they fail is why many don’t embrace.

Sales 2.0: The Bottoms-Up Sales Model

Sales 2.0 is the new way of selling mobile enterprise apps and services. Instead of selling to the enterprise via an expensive sales force, you sell directly to your target customers, often employees at the enterprise.

Last week at the MobileBeat conference, I moderated a discussion with John McGeachie from Evernote, Nancy Ramamurthi from TripIt and Jason Mills from Expensify on some of the strategies they took to achieve bottoms-up success – let me summarize below:

  1. UX/UI is still the #1 feature. One of the historical advantages of enterprise sales was the focus on functionality over user experience. This works if you have a sales force demonstrating each feature to an enterprise buyer but when an app is being downloaded directly by your target user, you are held to the same bar as a consumer app meaning the user is short-attention-spanned, fickle and will get frustrated easily.
  2. Like a consumer app, iterate and A/B test as much as you can with your target audience. Prosumers are ultimately consumers.
  3. Freemium is common and free-to-paid works (eg Webex, SurveyMonkey, QuickOffice) but paid-only is challenging. John w/ Evernote specifically mentioned how some of the greatest conversion came after 3 or 6 months of use of the application. Achieving freemium means converting a small percentage of a large number.
  4. Mobile results in awesome customer acquisition. Jason from Expensify mentioned that mobile was their largest customer acquisition channels and ironically one of their biggest challenges was actually making mobile users aware of their online experience.
  5. Mobile is also accounting for a greater percentage of paid conversion. As opposed to the desktop, the app store is challenged because of the lack of support for subscription billing but this can be remedied by offering longer-term plans (eg 3 months, 6 months, 1 year).
  6. On the topic of privacy and enterprise data, transparency and having clear guidelines reigned. Be clear to the enterprise what you do/don’t with the data and be ready to honor some take-down or data-removal requests.
  7. When it came to features, focus on the 80%. When the topic of bottoms-up sales and how it may butt-heads with an eventual direct enterprise sales team, the panel universally agreed that the features that made the roadmap were those that benefited their bottoms-up users (the 80% bucket!). And this meant even saying no to some enterprises as painful as that may be.
  8. There is a right time to begin enterprise sales along-side bottoms-up. When you have a critical mass of prosumers at common companies using your product, start selling group editions. Nancy with TripIt mentioned how they signed-up ~1300 companies in a relatively short amount of time with TripIt Pro but only brought this product to market 18 months ago or 5+ years since they started!

And now some observations:

  1. Most of these startups (Evernote, TripIt etc) didn’t know how successful they were going to be amongst prosumers in the enterprise at the onset. They launched consumer focus and got pulled into the enterprise. In the case of Expensify, they targeted the prosumer and got pulled into consumer with customers using Expensify as an alternative to Mint.
  2. The use cases addressed by each of these companies are very horizontal. They are not job persona or industry vertical specific but rather broadly useful and applicable putting them closer to the consumer category.
  3. All of them seemed to have taken shots in the dark with their price point but some price elasticity testing was done with Flash sales.

It was an awesome panel and I look forward to seeing more enterprise mobility apps take advantage of bottoms-up sales!