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1/ If you’re company already has a successful product that is maturing and you offer a new product as part of a bundle or upsell, there’s a good chance things will get confusing as to whether the core business is growing/healthy or you are just increasing revenue. Subtle but 🔑.
2/ When a business starts to mature there are three (not exclusive) options for growth.
• attract new customers for existing product
• increase prices for your existing customers
• build a new product and business
3/ First is easy. Just keep doing more. There’s always someone you can reach somewhere. Maybe this is geographic expansion or expansion to an untapped segment (education, small biz, etc.). Key is that your product and GTM are “largely” in same direction—no fundamental changes.
4/ Raising prices for existing customers is also pretty standard but much more painful. The big fear in raising prices is “messing up” and having to roll back price increase because it seems unpopular. Many saying Apple’s history of raising prices went too far w/ XS. Debatable.
5/ All the fun and challenge is really in the third option which is to build a new product and business. Almost always challenge is not what to build, but how to sell it.

As a product matures, market makes clear all sorts of adjacent products that are prime ideas for expansion.
6/ The reason GTM is such a challenge is that as soon as something new is created, everyone looks around and says “hey we need to use this new product to ‘add value’ for existing customer”. This is really saying “add value to prevent churn”.
7/ Every new “module” of Office is like this. Office was originally W, X, PP, Mail (not outlook). Every module since then was at first an opportunity to create a new business, but then quickly became “value to existing customers”.
8/ There is both push and pull in this regard. Marketing wants to sell “new” but without the trouble of building out a whole new business—get the new thing buy buying the one you already love. And customers say “I’m a valued customer I should get that new related product”.
9/ The existing product then is a giant black hole and sucks in all the new product/code/service into the existing business.

If the company does a good job, this can do more than sustain prices but find subtle ways to increase prices as well (premium tier, etc.) but super tough.
10/ This is why existing products just keep expanding. It takes a long time to recognize that what seems healthy is eventually selling to a TAM that isn’t growing—the same customers are buying the same product.

Worst case is data shows use of the new stuff is very low. Scary.
11/ Often super interesting is that the new stuff is supposed to also compete in a category but the category doesn’t seem to get dominated by your bundle. It is frustrating to the team on that product (now a feature) but the business doesn’t mind.

“A tie is a win”.
12/ In reality, failing to compete in a category is leaving money on the table. Backing up, you ended up with an big product with minimal use of your new work and competitors that won’t go away. Worse is that the category continues to expand and starts to look like a whole biz.
13/ It is too late for that product/feature. But what about the next one?

Challenge still remains. Why? Because almost all the time what happens is the next new product is now a separate business, but it is designed and sold from the start as an “add-on” or adjacency to big biz.
14/ This is still “attach” and not a new business. The classic tech example of this is a new product that has all the same infrastructure/customer requirements as the existing products—the TAM is exactly the same.

The GTM will go after same customers with same approach.
15/ This is an “attach” model—in fact the measurement of success is almost always “how many of our existing customers ‘bought’ the new product?”.

Incrementally better, but new GTM/CAC costs and likely the pricing is much lower than say a stand-alone Co b/c you can afford it.
(Note: The attach model is an ongoing nightmare when it comes to P&L accounting and measuring ‘success’—how to ascribe costs and revenue occupies massive energy. Someday ask me about Windows Media Center…)
16/ Example. McDonalds adds premium coffee because it finds out people are going to Starbucks in the morning. It doesn’t know if people are not going to McDonalds. Adding premium coffee is an attach to McDonalds breakfast GTM. It increases per-seat revenue and satisfaction, but…
17/ Does this really compete with Starbucks? Does this attract new customers to the McDonalds platform or did it change Starbucks customer behavior? Perhaps on the margin.

To do more, McDonalds would really need a whole offering/GTM that competes (and a lot more stores).
18/ This is a lot like what we see with platform makers wanting to enter subscription businesses for services that are separate from or cross-platform.

The tendency is to build and view the subscription as “best” on the existing platform AND to sell/acquire as an attach.
19/ Such offerings compete with companies that have no bias towards an existing platform and their whole GTM is focused on the category—not just demand gen, but positioning, pricing, and more.
20/ It is never easy to tell what categories remain stand-alone and what ends up getting absorbed into bundles that ride existing massively successful products/services/platforms.
21/ Big companies assume they can just add to the bundle or continue the “attach” model.

Observers tend to assume categories are a immutable and sustainable.

There’s often a hybrid.
22/ Over time even if a big company is in a category chances are it doesn’t both dominate it and profit from it directly. Rather it just sustained existing business, perhaps raising prices some.
23/ The long term metric that matters is the number of customers in an ecosystem/platform. For a new category how many are acquiring the new category but *without* the existing biz—is the company expanding the customer endpoints or just getting more rev/endpoint? // END
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