Product or Feature?

There is a famous story about Steve Jobs meeting with the founders of Dropbox, Drew Houston and Arash Ferdowsi, back in 2009. At least I think it’s a famous story - it was written up in Forbes after all! Apparently, when Mr. Jobs’ pitch to acquire the then fledgling company failed, he told them: “you are a feature, not a product”. What did he mean by that, and why should it matter?

The idea of what Mr. Jobs was trying to convey is that some companies build solutions that solve a specific problem (or several problems), while others build technologies that make other solutions better. To solve a business problem, you need to offer a whole product. The concept of a whole product has been around since the 1980s, and it means that it provides everything you need to solve a problem. Not every technology that gets sold is a whole product.

Take DocuSign as an example. The flagship product handles e-signatures and DocuSign built a $2.8 billion empire with a $12 billion market cap. But nobody has an e-signatures problem. Electronic signing is but a small part of most agreements, whether those are job offers, mortgages, non-disclosure agreements, and myriad other types of agreements. Each agreement type represents a business problem, and e-signatures are a feature in the solution addressing the problem. A very useful feature, but a feature nevertheless!

Docusign (apparently that's the new way of writing it) was a typical feature company until it eventually expanded into contracts management by acquiring Seal Software in 2020. The recent announcement of the Intelligent Agreement Management platform and the just announced acquisition of the workflow platform Lexion are logical steps towards becoming a whole product.

Speaking of workflow, there has been a debate going on for two decades about the differences between workflow and business process automation (BPA, aka BPM, aka DPA) . The short answer is that workflow is a feature, always embedded within a business application, while BPA is a whole product, usually used to orchestrate processes across applications.

Machine learning too is a feature, delivering value while embedded into business applications to do things such as estimate travel time, recommend spare parts to bring to a repair job, detect fraudulent transactions, or alert drivers to put down their phone. Artificial intelligence, on the other hand, could become a product, especially once someone builds an AI like C-3PO, J.A.R.V.I.S., or HAL9000.

However, there are some software solutions that can be either a feature or a product. Examples include office suites (i.e., Microsoft Office 365, Google Workplace), collaboration tools (Salesforce Slack, Microsoft Teams, Zoom), and file sharing (Dropbox, Microsoft OneDrive, Google Drive). These solutions can be a product when they are used to solve the employee productivity problem, but they are a feature when they are used to solve a problem that requires integration with other applications (i.e., Zoom integrated with a Call Center application). The first thing that Salesforce has done with Slack after acquiring the company was to embed it into existing Salesforce applications – treating it as a feature.

Generative AI too can be either a product or a feature. It can be used as a productivity solution (i.e., for research, copywriting, or translations), or as part of another application (i.e., contract management, search engine marketing, or…gasp…a customer service chatbot). OpenAI recognizes that and packages the technology either as ChatGPT, which is the product sold to users and priced by user seat. But the OpenAI technology is also available as an embeddable engine with an API. That’s the same technology but packaged as a feature and priced for ISVs by counting usage.

Does it matter if software is a product or a feature?

It matters quite a bit for the go-to-market strategy (GTM). Selling a product that addresses specific business problems requires the value proposition for the target buyer in the target market. Such products are typically sold to business buyers, and successful GTM strategy must understand who they are and what problems they have. BTW, the business buyer for employee productivity is usually in the IT department.

Selling a feature requires a different GTM strategy. A feature is part of somebody else’s whole product and its addressable market. It requires playing by the rules of that market, following the solution vendor’s GTM strategy, augmenting its value proposition, going after its target buyers, and making sure that the feature delivers value no matter what moves the vendor makes. For example, if you build a e-forms solution for Sales Cloud, and Salesforce decides to shift its strategy from Manufacturing to Financial Services, you will be figuring out the forms use cases for Financial Services. The same is true for Zoom integration with Marketo and Dropbox integration with HubSpot.

Coming back to Dropbox after examining the feature vs product dilemma, is Dropbox a feature? Yes, Dropbox is a feature that is often used in integration with applications from Adobe, Autodesk, Canva, and Zoho. But like some of the other horizontal end-user applications, Dropbox can also act as a solution for the productivity business problem.

So, Mr. Jobs was only partially right. There, I said it.

The Courage to Lead

What else could be the topic of my blog post this week other than paying tribute to Steve Jobs. All the writers have written countless obituaries this week about this great man, his life and his work. Today, I want to write about a particular aspect of Apple’s strategy - Steve Jobs’ strategy - that has really impressed me over the years.

It is the ability to pursue the future by letting go of the past.

When a new technology arrives that is capable of replacing an old one, the typical approach for a technology company is to hedge its bets. Start embracing the new while continuing to support the old. You don’t want to disrupt anyone, you don’t want to leave anyone behind, you want to smoothly transition from one technology to another. That means that for several years and revisions, your product comes with duplicate, redundant technologies to make this smooth transition possible.

Image: Jonathan Mak

For example, many PCs today still ship with a built-in 56kb modem even though hardly anyone knows how to use dial-up to access the Internet anymore. But you have to support the modem in case some grandma in Minnesota still doesn’t have DSL. After all, she might select someone else’s make of PC and that would be bad, right?

That’s not how Apple operates. That’s not how Steve Jobs pursued the future. In his world, when a new technology comes around that it better than the old one, you just go for it. You want to speed up the transition. You want to drag everybody with you, even that grandma in Minnesota. A leader has to lead and Steve Jobs never hesitated to do so.

When the first Macintosh came on the market in 1984, it had a graphical user interface (GUI) instead of the then usual command line interface. There was no command line anymore on the Mac - everything was done though the GUI. Windows 7, in contrast, still has a command line interface available just in case you feel like typing “C:>ipconfig /renew Local Area Connection 2”. OK, the "cmd" program is bit more hidden now than it used to be, but Windows has opted for a long smooth transition from DOS. Apple just went for it.

The Mac also came equipped with the relatively new 3 and ½ inch diskette drive and no longer with the then much more common 5 and ¼ inch drive. The 3 ½ “ diskettes were far superior to the “floppy disks” but PCs would be shipping for another decade with dual drives for both 3 ½“ and 5 ¼“ diskettes. Again, most PC makers opted for a smooth transition while Apple just went for it.

Shortly after that, Steve Jobs was famously ousted from Apple and not many bold moves happened until he came back. In the mean time, he became a billionaire by taking Pixar public and eventually selling it to Disney. Then he also sold NeXT to Apple and in 1997, he was back at the helm.

When the iMac shipped in 1998, it came without a diskette drive. No diskettes, only a CD-ROM drive (later a DVD drive) and a USB slot. That was bold and controversial back then. How are people supposed to exchange files without diskettes? Using the network or a flash memory wasn’t the way people usually did it back in 1998. For many more years after, that PCs used to come with a diskette drive and most people had a box of diskettes next to their PC (if you are over 30, you still have that box somewhere in the attic, just admit it).

In 2001, the iPod was launched with some amazingly bold limitations. It would only play files in the MP3 format (and in the Apple Lossless format which I am a big fan of). Remember, back in 2001, there was a plethora of audio formats used to play music including Microsoft’s WAV, Real Audio format (.RA), Sun’s AU format and others. But Apple said, forget it, we go with MP3 which was popularized by Napster and we all followed. Most of the other formats are disappearing today.

The other famous format bet that Apple made, is the bet against Flash on mobile devices. We are still not quite sure how this one ends up but the history shows that Apple usually gets its way.

Talking about mobile devices, I have to mention the iPad. When it first launched in 2010, it drew plenty of skepticism for coming only with a wireless Internet connection. No diskettes, no CDs, no DVDs, no USB slot...heck, not even a SD card slot. Many of us are still moaning that we want at least a SD card slot but we are happily buying our iPads anyway.

My final example is the Apple TV 2. When it was released in September 2010, Apple decided that the old way of hoarding content in your home library is no longer sustainable as the HD movies are too big. And so they shipped the new Apple TV without a drive for storing movies. Instead, renting is the way to go - the only way to go. Last week, Apple announced their iCloud service, and so I suspect that a cloud-only music player might be coming soon and we will stop hoarding music too.

From a vendor point of view, all these moves were incredibly courageous and for most vendors they would be considered huge gambles, well beyond the comfort level. Yet they all follow the principle that Apple and Steve Jobs embodied for decades - decide what’s best for your customers and have the courage to deliver it. Lead, don’t ask for directions! Even if it takes courage to lead.

To pursue the future, it is good to let go of the past.

Stay foolish.

Apple Gets Away With Magic

Steve Jobs delivering a keynote
Source: creative commons

Apple must not have a legal department. No other company would allow its spokesperson to get away with calling a product “magical”. Even if it’s the CEO. But the usual rules don’t apply when it’s Steve Jobs and Apple. Technically, there is nothing magical about the iPad and the Apple legal team has clearly failed to prevent this glaring lawsuit-waiting-to-happen.

Sure, the iPad is an awesome product. Fantastic. And it has taken the market by a storm, proving every doubter wrong. And Steve Jobs was rightfully proud when he claimed in his announcement that the product is “magical”. But it is pure technology, no magic. The legal department at every other company would have pointed out to the marketing team that calling it “magical” is not defensible and thus should be dropped or replaced by something generic and boring like “powerful” or “innovative”.

This is a frequent struggle today. Marketing is trying to do their job and market the product with an aggressive message that will stand out in the market place. They want to use terms such as “the leader”, “best-selling”, or “first”. But then, the legal team gets hold of the press release and checks for possible legal liabilities. And instead of “the leader”, we end up with “a leading provider”. Instead of “best-selling”, we end up with “popular”. And instead of “first”, we end up with “innovative”.

Because the legal team’s job is to reduce any risk of legal exposure from possible false advertising which such statements could represent. Unless you can prove that you actually are “the leader”, you cannot claim that. And unless you can prove that your product really is magical, your CEO should not be using such claim in his announcement. Right? That’s the way marketing teams often operate.

Of course all of this is just silly. Nobody really thinks that “the leader” and “a leader” make any real difference. Neither of these statements will make the product better nor will it justify the value of the solution. Marketing should be staying away from meaningless claims. And the legal industry around the world needs to take a chill-pill. Getting in the way of good business is not the purpose of the law.

Maybe this kind of defensive marketing is government’s making. Unlike Microsoft and now even Google, Apple has not been a target of a major government investigation yet. Apple is loved by customers and partners and rarely makes big, aggressive acquisitions. I can imagine that any experience with a legal challenge from the government changes the corporate DNA towards legal risk mitigation.

In the end, if Steve Jobs wants to call it magical, he should. And if we all believe him, we should buy 15 million iPads in a year. Which is what we did and that by itself is pretty magical.