Thread by @yemi_uc

Founders, s/w engineers, product managers, and startup marketers often get caught in these problems:

1. To optimize an existing product
2. To build a new product

I have the answer.

I have been here before and I was the guy that always chose option 1.

The thinking was flawed. Optimizations are good, but they only bring incremental value to the company. Product innovation takes time, but if done well, it brings 3X - 10X value for a company once released.

If you select optimizations, you have to be past product-market fit and there has to be enough work to do to deliver a compounding 3% - 8% growth every week.

Beware that you will reach a limit on growth through optimization, so always be innovating.

All companies start from product innovation, and many quickly forget that they acquired growth via product innovation and get stuck on optimizations just like big companies.

So your startup is not any different from a big company if you do not invest in product innovation.

The most relevant big companies today, Goog, Amazon, and FB have a culture of product innovation.

The promising startups that never became as big as you thought they would abandonned product innovation for optimizations.

I have seen companies experience more growth when they released new products.

However, releasing new products comes at high risk. The assumptions you made when building this new product could be wrong and you might lock up scarce engineering resources for 3 - 6 months.

When releasing new products, the product has to improve on the experience of your acquired users or potential users. If your guts and research does not demonstrate you are improving the experience of your users, then you might be wasting resources.

Ex: When we released /places at hotels.ng, we began to acquire new users immediately. These were people that were in the market for interesting places to visit and we could cross-sell hotels to them. We improved the experience of potential users.

I have not seen the numbers of PiggyVest (formerly Piggybank) or Carbon (formerly Paylater). But both companies tried product innovation recently. From the outside looking inward, this is what I see:

PiggyVest, a savings app, released a managed investment marketplace for its users. I do not know any user of PiggyVest that was not excited by the improved experience.

Carbon, a loan app, released a savings product for its users. People that use loan apps often do not have money to save so the savings app is hardly an improvement of the experience of their users.

Carbon has released other products, especially around utility payments and bank transfers that make their product innovation useful for their users, especially from the anecdotes I heard.

The point. In the pursuit of growth for your product, you have to be aware of your options and know the opportunity costs of picking between product innovation or product optimization.

If you pick product optimization, make sure you can compound growth at 3% - 8% every week.

If you pick product innovation, make sure the product improves the experience of the user.