From product-market fit to scale-up: how to make the leap and grow 100X

#121 - Sep.2024

You have been working hard month after month towards product-market fit. You found your customers and they are buying and using your product.

But how do you reach the next milestone towards scaling?

This post is for you.

Taking a product from ideation to scale is a journey.

It is not a linear process. It is a path full of dead ends, the joy of seeing customers adopting your solution, frustration from bad decisions, and constant pivots.

This is what makes it so exciting yet complex.

Scaling is relative to each business. For this post, I want to share with you the core principles that have helped me scale products by 100X.

There is a lot of information out there about scaling products. I'm not offering you a new framework but rather sharing with you core principles that I've seen work in my experience.

Here is what I will cover:

• The typical lifecycle of a product
• The pivoting mindset between product-market fit and scale
• Common problems I've encountered in this transition and how you can solve them
• What happens when products are mature

Before we move on, let me clarify what I mean by "products". By products, I'm considering any digital and tech-enabled solutions that cover a customer's need. This includes B2B and B2C products. It also includes solutions for internal customers, like platforms-as-a-product that developers can use or solutions to run internal processes within companies.

While I'm covering a wide range of products, I believe these principles apply to all of them. They are based on observations and trial & error.

Let's dive in!

From regional to global

To illustrate what I mean by scaling a product here's an example. Some years ago our product team designed and developed a solution to create invoices. This was an in-house development covering only basic requirements for the company. It was a small team focused on solving a specific problem for a single country.

As we evolved the solution, we discovered that other countries where the company operated had similar invoicing challenges. We started using our knowledge and features to extend it to a new country and requirements. We started finding common features. We added flexibility to the solution by generalizing processes. We started looking more closely at our cost to implement new use cases and how we could reduce it

We noticed that invoicing was just one part of the equation. There were adjacent needs that were uncovered. We designed new features to start addressing these needs. Over the years, what started as a simple platform for issuing e-invoicing became a complete portfolio of solutions to handle invoicing end-to-end. We made the solution self-service so that other developers could build on top of it.

With a growth of 50% YoY, what started with a few thousand documents in one country became a suite of solutions processing over 1B documents per year across 17 countries.

Was this as easy as it sounds? Hell no! It was a rollercoaster.

A journey of lost & founds. We made wrong decisions, we failed many times and we pivoted our strategy as we learned.

As a product evolves, the team evolves together.

I learned that the mindset that helps you thrive in an early product will not take you to the next level. As you navigate across these blurry evolution phases, you need to use data (and instincts) to set the pace.

You need to adapt. Growth is not just about scaling your technology. You need to scale your processes. You need to scale your design approach. You need to scale the topology of your team.

Here I want to pause for an important note. In today's business culture where everything is about "scaling, scaling, scaling", I don't want to make the case that this is the only way to make your product successful. But if scaling is necessary - because of your business model, desire, or purpose - you need to make the jump.

Product evolution

Every product has a lifecycle. Products are introduced, they grow, they mature and, at some point, are taken off the shelves.

There are many frameworks explaining these phases but let's stick to a basic cycle:

• Introduction
• Growth
• Maturity
• Decline.

You introduce a product when customers can use it for the first time. You create awareness of your unique value proposition. You understand who your customer is, and you build the first iteration of a solution that solves a real problem.

When products start getting traction, they move to the growth stage. Your demand increases. You start building a name and competitors start noticing you. You start getting more customer feedback. You iterate using this feedback to improve your product. As revenue increases you start generating profit.

As the product matures, you start making the fly-wheel turn. Profits max out, demand starts to become saturated and competition is higher than ever. You continue to innovate by finding new markets and new customer segments. Your value proposition is well understood by customers. There is a high risk of falling into a status quo and stopping innovating.

All products decline sooner or later. Competition can disrupt your market. Your product starts becoming a commodity. New options are available and captivate customers. It's a pivotal moment. You stop or you reinvent your product.

The growth transition

I think this is one of the most critical transitions for a product. Many of the early products with high potential fail to grow.

There are multiple reasons for this to happen. It can be due to changes in the business context. The market environment may have evolved. You may have designed the wrong strategy. I will focus on what you can directly control.

I believe products fail to make the jump to growth for one or more of these reasons:

1. Applying the wrong mindset for the stage of the product
2. Anticipating growth over market-fit
3. Lack of balance between functional and performance features
4. Lacking the operational structure for growth

Growth is a by-product of market fit. You grow because you have customers willing to connect with you, not the other way around. You are solving a problem for them, and they trust you. That trust drives happy customers. Happy customers lead to growth.

Get product-market fit first before scaling. Having a scaling-first mindset gets you distracted from your primary focus: understanding your customer needs and creating a unique value proposition.

You can use the simple 40% rule or any other mechanism to assess, but make sure you have evidence of your customer satisfaction. This is your foundation.

This mindset also applies to engineering. The risk of over-engineering or generalizing features too early is costly. I've made this error multiple times. Is good to think long-term, but at this stage, your priority is understanding your customers and connecting with them.

Your prioritization process needs to balance functional features over performance features. You need to ensure you cover basic functional tasks and not just convenience.

I've talked about before about the Functional-Performance-Excitement matrix. Use it to prioritize. 50/30/20 is a good ratio to balance all three. Before scaling, you don’t want a product full of "wow" effects but failing to cover the basics.

Once the foundation is ready you can start scaling.

This is not a hard line. This is rather a progressive transition. Use your product adoption and customer satisfaction metrics as a guide.

Success in growth is a combination of design at scale and a strong operational structure.

Now you have a validated value proposition. You need the mechanisms and structure to support growth. Designing for a small volume of customers is not the same as designing for 100X.

Focus on strong mechanisms.

Prioritize mechanisms to market and create awareness of your product. Create solid artifacts to help your customers learn about and remember your product.

From an engineering perspective, growth is driven by a flexible architecture and a team topology that maximizes the evolution of core features while offering flexibility for customization.

Design at scale takes the commonalities across customer segments, local-specific needs, and cultural nuances into account. Expect prioritization to get more complex.

At scale, you will rely more on quantitative data to make decisions. However, never forget to dive deep into customer interviews from time to time. Anecdotal data is gold. (check out other design tools you can use in my free e-book).

I've found the following as being key levers for designing at scale:

• Focus on defining principles and tenets to scale decisions across the team
• Pay closer attention to the early architectural decisions
• Create a feature repository and reduce parity gaps across customers and regions. Parity gaps generate inefficiencies
• Build mechanisms to connect with customers and share insights with the entire team
• Build a strong process to validate when a feature should become part of your product foundation or remain specific to a customer segment.

As a quick recap:

• Use the right mindset at each stage: Focus on achieving product-market fit before growing. Avoid a "scaling-first" mindset that distracts from understanding customer needs and refining your value proposition. Ensure there is customer trust and satisfaction before expanding.
• The foundation for scale: Build strong mechanisms and structures to support scaling, including flexible engineering architecture, robust marketing strategies, and decision-making processes.
• Design at Scale: Keep your solution customer-centric by combining quantitative and qualitative feedback from customers. Create principles to scale your design decisions.

A mature product

This might sound counterintuitive. Managing a mature product is much more difficult than dealing with the ambiguity of early ideas.

Extending the lifecycle of a product at this stage requires rethinking what's important for customers. 

Things to consider:

• Diversification (evolving into new products or features)
• Decluttering (going back to the essentials).

Either way, you need to act fast. This is one of the most demanding stages for a product team. You will need to deal with the expectations of a well-established customer base.

The most innovative companies can reinvent themselves over and over. Hear your customers and make them lead you to the next iteration.

Scaling a product is a challenging journey that requires a strong foundation.

Stay customer-centric, listen closely to feedback, and be ready to reinvent as your product matures.

It is challenging. It is thrilling. It is what makes the journey worth it.

¡Saludos!

César Rodríguez
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