Groundbreaking ideas aren’t lightbulb moments that happen overnight. Neither are they new, unique, or attributable to a single person’s genius. Repetitively developing, improving, and executing the ideas of others is what separates the wheat from the chaff, and winners from losers.
Continuous iteration is the secret sauce of Silicon Valley’s most successful companies. In start-ups’ VUCA business landscape, the newest or most original concept doesn’t necessarily win. It’s the vision that undergoes cycles of evaluation and evolution that triumphs at the finish line.
Far from being the world’s first social network, Facebook bested its predecessors by providing better privacy features for a specific target market. It’s now a global community of approximately 2.8 billion active users monthly.
Neither was AirBnB the first online housing rental service. It was a well-designed and user-friendly interface, transparent system of accountability, and social networking features that attracted 7 million listings as of 2021.
From Apple to Zoom, the biggest iterative companies are characterized by hard work, an appetite for taking risks, and resilience in the face of failure. But what else drives their success, and how do they think?
In a recent TechCrunch panel, some of today’s most successful start-ups shared their insights on product iteration and the organizational culture needed for an iterative mindset.
Here are the four answers they had in common.
1. Iterative companies prize user experience and customer feedback.
An estimated 305 million start-ups are founded annually, and it’s a fact that nine out of ten start-ups end up failing across all industries—10% within the first year. With such grim odds of survival and success, what makes that one start-up out of ten thrive?
It’s simple: people have to love your product. Successful iterative start-ups deeply listen—and respond—to people who use their products. They clearly understand and identify customer problems before investing in workable solutions.
“The first part of our master plan is to build a product people love,” says Tamar Yehoshua, chief product officer at Slack. “Customer focus is a very integral part of what we do, so we want to make sure that [all the things] we’re building are actually things people are using. You have to be very attuned to what they’re saying.”
Slack gained rapid popularity since its launch in 2013 as a comprehensive business communication platform. By integrating emails, phone calls, meetings, and instant messaging, it became one effectively designed application that caught people’s attention. The company was valued at US$27.7 billion as of December 2020 and is now used by sixty-five Fortune 100 companies.
A whopping 10+ million people use Slack every day to communicate and collaborate. So do Slack employees, who perhaps benefit the most from their own platform.
While developing products, Yehoshua’s team shows customer data through Slack Connect to get feedback early and in real-time. This “tight feedback loop,” she says, has immensely transformed how Slack does product development.
2. Iterative companies stay agile and prioritize efficiency.
In an era of disruptive technologies, COVID-19, climate change, and political instability, market conditions have become more unpredictable and volatile than ever.
Agility is the new dominant business paradigm. Companies need to flexibly respond and adjust to changing circumstances, especially in tech, where the failure rate for start-ups is higher than any other industry.
“This entire ecosystem of builders has become faster and more generative,” says Eugene Wei, product development advisor and angel investor. “More products are being launched all the time, and the faster the iteration, the higher the stakes. It’s not enough to quickly iterate a prototype when a dozen teams are out there doing the same thing.”
Being agile doesn’t necessarily mean being fast. It also means knowing how to prioritize and recalibrate around what’s important and what isn’t.
“One framework that’s helped us is asking ourselves how much time and energy it is we want to spend on a specific time horizon,” says Julie Zhuo, co-founder of InSpirit. InSpirit is a virtual science platform for K-12 students and teachers modeled after the sandbox video game Minecraft.
“The answer is unique for different companies at different stages in development. What you’ll want to accomplish in the next three months looks different from what you’ll want [in] the next year.”
As circumstances change, people’s needs evolve, preferences change, and what customers value today may not be valued tomorrow. Successful start-ups and products are rarely intact in the ways their founders originally envisioned and are instead shaped by users over time.
3. Iterative companies focus on their core and strategy (not the competition).
When a million start-ups are competing for attention, it becomes harder to stand out from the crowd and easier to get lost in trying to outsmart the competition. Surprisingly, videoconferencing app Zoom broke through by simply knowing where it stood and playing to its strengths.
“We try to keep our edge, and what we’ve done over the years is to really focus on the video experience and making it the best,” says Oded Gal, chief product officer at Zoom. “There’s an arms race with what’s happening in our space, but we’ve found that our core expertise—the in-meeting video experience—drives our product so that we’re always running ahead of the curve.”
It was nine years before Zoom reached massive, seemingly overnight success by staying its course with an eye on the prize. All it took then was for market conditions to change. A few months after the Coronavirus pandemic hit, forcing people worldwide to stay at home, the app was downloaded 2.13 million times in a single day.
By focusing on what it does best, Zoom’s core advantages proved to be its competitive advantages.
“A company doing 1,000 different things is never going to be as focused as you are on the core of what you’re trying to do,” Yehoshua adds. “Just because your competition does something doesn’t mean it’s good or that you should copy it. You have to do what’s right for your customer.”
4. Iterative companies strategically leverage data—but remain intuitive.
Artificial intelligence, big data, and automation are revolutionizing businesses everywhere. But with more than 2.5 quintillion bytes of data generated daily, companies face the task of interpreting and using data correctly to drive innovation and create value.
“When you have millions or billions of users globally, you hit a point where you can’t scale to service each customer manually—and so algorithms have become a huge part of the toolkit,” Wei says. “Machine learning, deep learning, and algorithms trained on massive data sets have really changed the philosophy around design. When you build a product these days, you have to consider how you’re going to capture the right data.”
“Data is transforming the way we do product development,” Zhuo adds. “As we build more and more software, we get a better sense of how people are using our products. Data helps us identify opportunities and benchmark what ‘good’ actually looks like.”
As simple as it sounds, getting the right product-market fit still starts with understanding the customer and their needs. Data, however, can only add so much value.
“I like the moniker of data-informed, not data-driven,” Yehoshua says. “You have to be careful. Data is great, but it isn’t going to leapfrog you into completely different things. All the tools in the world do not supplant intuition. Talking to your customer directly and asking the right questions helps you understand the problem you’re trying to solve. You might be totally off the mark.”
Every iterative startup, at any stage of its evolution, is a work in progress. Iteration is a reminder that hard work doesn’t end with success but continues with each step of the journey.
The process isn’t always efficient, and failure is inevitable. But having a customer-first mindset, the agility to efficiently prioritize points of action, and intuitively leverage relevant information (without losing sight of your core strategy and vision!) are the tools you need to iterate toward success.