Ready for Act Two? The Drama of Launching Your Second Product
One of trickiest and most important growth stages you will go through is launching your second product.
You’ve got a startup with a great product. Things are going pretty well. Growth is steady, customers are happy and life is golden.
But you know for growth you’re going to need to add a second product. Pretty much every successful company goes through this, it is called “The Second Act”.
You’re not exactly sure when or how to do it, - you’re more than a bit worried. It feels like a large undertaking and requires a big investment.
I’m here to tell you that not only is your worry well-placed, the situation is likely worse than you think. The challenge is not just the cost of building that second product (which might be considerable) or even the cost of distributing that product (which could also be considerable), but it’s the cost of the complexity that the second product will add.
Let me illustrate:.
You’re a chef running a busy kitchen. When you have just one main dish to prepare, it’s relatively easy to keep everything running smoothly. You can focus all your attention on making that single dish perfect, ensuring all the ingredients are just right and the cooking process is flawless.
Things are going great so you decide you can do twice as good and decide to add a second main dish to the menu. All the sudden things don't get 2x tricker, things get 6x trickier. Now you have to balance the preparation and cooking of both dishes. Each dish requires your attention, and if you focus too much on one, the other might not turn out as well. The more dishes you add, the more complex and challenging it becomes to keep your entire kitchen running smoothly without any of the dishes suffering in quality.
When a startup has a single product, it’s like running a kitchen with one main dish. You have your company and a product, and things are (generally) predictable.
But when you add that second product, it’s like adding a second main dish to the menu. Now, everything gets more complicated. Not just a little more complicated, a lot more complicated. It’s like you’re adding a whole new level of coordination.
The way this manifests in your company is that now everything has to be looked at through a two-product lens:
Splitting Budget: How much should you spend marketing/promoting the existing product A vs. the new product B?
Splitting Priorities: You hired an engineer. Do they work on A or B?
You generate charts/graphs tracking the performance of the business. Most of those will now need to be updated so you can see a breakdown by A and B.
When trying to do forecasting, you’ll not just need to predict how much Product A and B will sell — you have to do that in the context of your resource allocation decisions.
Customer Support: Your customer support team will need to handle inquiries and issues for both products. This means training your team to be knowledgeable about both products and possibly hiring additional support staff.
Inventory Management: If your products involve physical goods, managing inventory becomes more complex. You need to ensure you have the right amount of stock for both products without overstocking or running into shortages.
Sales Strategy: Your sales team will need to develop strategies for selling both products. This includes creating separate sales pitches, training materials, and understanding the different target markets for each product.
Brand Consistency: Maintaining a consistent brand image across multiple products can be challenging. You need to ensure that the messaging, design, and overall brand identity are cohesive while allowing each product to have its unique appeal.
I’m not saying you should not add more products, only that this is a trick period for a startup.
While introducing a second product is necessary for growth, it comes with increased complexity. Approaching this step with full awareness and focusing on simplifying controllable aspects, such as pricing and packaging, is crucial. Simplification is key to managing the added complexity effectively.
Best wishes for a smooth transition and continued success.
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