November 14th, 2022

Product positioning for early-stage tech startups

In its simplest form, product positioning is about defining the value you offer to your users, and how that differs from your competitors. This step is absolutely fundamental, however, in practice, it is often skimmed over. This is likely because so many elements of early-stage startup life are in flux. This article provides a guide to product positioning in a dynamic environment.

There are many tools and methods that are often proposed at this stage (mission statements, value propositions, etc.) but in a dynamic environment, these can often feel brittle. A new change sweeps through and the whole lot falls to bits. If that’s the case, could there be a better way? In my experience, a more versatile approach is to frame your thinking as hypotheses. As you gather more data, the hypotheses update.

What value are you delivering?

As they say, beauty is in the eye of the beholder. With this in mind, the big question is, who are your (potential) users, and what makes them tick? The deeper you understand these people, the better we can serve them. Solving a select set of problems they face is the first step, but to really have them fall in love with your product, we’ll need to delight them. Delight in this context means to surpass their expectations in a wonderful and unexpected way. This is the kind of user experience that people tell their friends about, and that is the start of viral growth.

How do we know what will delight them? This is where the hypotheses come in. ‘Jobs to be done’ is an excellent framework for empathising with users, and can often form the basis for feature sets. However, it is critical that the total experience exceeds the sum of its parts. If it doesn’t, a product can feel vapid and thrown together.

If features were spokes of a wheel, the central user experience would be the hub. Our objective is to have this resonate as intensely as possible with our user base. Smooth intuitive navigation is important, but ultimately, the users need to experience something they’ve never seen before.

It is critical that the total experience exceeds the sum of its parts. If it doesn’t, a product can feel vapid and thrown together.

How much innovation

Innovation is uncertain and time-consuming. However, it’s also essential. So the question emerges, how much is enough? As a rough approximation, the 80/20 rule can be a good rule of thumb.

  • 80% solving problems - familiar UX patterns
  • 20% x-factor - unique differentiation

From a product perspective, this ensures we’re not biting off too much. And interestingly, it’s great for users too. If everything is too novel, the barrier to entry can become too high. In most cases, it’s important to maintain a base level of familiarity for users, and top that off with something special.

How to differentiate from competitors

If you’re an early-stage tech startup, your product is your company. Consequently, when done correctly, your product positioning should affect everything downstream. It operates as the kernel from which everything is extrapolated.

From a product perspective, your competitive advantage should be baked into the very core of your user experience. On a functional level, this allows users to experience what makes your product different just by interacting with it. This can then be accentuated with branding. Your company’s identity and the values it represents should resonate on an emotional level. Finally, the narrative that your marketers spread to the world should also hit the same note. When product, identity, and narrative are all in-sync, the effect is incredibly powerful.

So, how do you differentiate yourself from your competitors?

You need to offer something desirable, that others aren’t, and have your team magnify this truth. Competitor analysis is of course an important tool to survey your market landscape. But don’t expect to find insights here. Delightful experiences are derived from deeply understanding your user’s needs. And true differentiation comes from understanding your user’s needs in a way your competitors don’t understand or have overlooked.

True differentiation comes from understanding your user’s needs in a way your competitors don’t understand or have overlooked.

Pulling it all together

Product positioning is all about the offer. Your offer needs to resonate with your users in a way that’s both unique and exceeds their expectations. For every unit your positioning is off-target, your team will work threefold to compensate.

So, how to refine a precise offer? The answer lies within your users. If you’re just starting out, you may not have actual users yet. You’ll be carving out a market segment. In either case, get to know them. Get to know them well. Some of these people will be able to articulate the frustrations they experience, and a few of them may have ideas on what could help. But the truth is, to create a truly exceptional experience, you’ll need to know these people—in the area you’re servicing—better than they know themselves.

With a deep understanding of your audience, you can then frame hypotheses for how to serve them. A single overarching product vision (a top-level hypothesis) can be extremely useful. It will likely have supporting hypotheses that become value pillars and/or feature sets. Exactly how you structure the document is a personal choice, but most important, is that it is done. With this, you have a central point of truth that aligns teams and can evolve with you throughout your product journey.