Why Feature Parity is the Enemy for Startups
When you’re a startup selling B2B, it’s easy to get distracted by your prospects’ feature checklists during the sales process. It’s not that they’re trying to throw you off – as an objective buyer, it just feels like a logical first step in a genuine apples to apples comparison vs. alternatives.
Let’s be clear – as an early stage startup, you’re not going to be at feature parity with your competitors for a while, and frankly, the more you try, the more your product will succeed in delivering yesterday’s mediocrity tomorrow. They’ve been doing this longer than you and have more resources than you. If you accept this fact, avoiding parity can become your strongest weapon. Constraints are the one asset startups have aplenty – they force you to focus on the one pain point that you can solve 10x better than existing solutions.
The beauty of having one thing to focus on is that not only are you putting all of your energy into nailing that thing that is most important to your prospective customer, but you’ve got no baggage. This leaves you wide open to discovering unintended and potentially powerful use cases you never imagined. A startup’s present constraint becomes their future opportunity.
Here are 3 reasons why avoiding feature parity is to your benefit:
- Your new 10x solution may inadvertently render other tangential problems irrelevant because they were simply by-products of the original problem you solved
- From your new vantage point, the root of a tangential pain point will become more clear to both you and your prospect – it almost certainly will not be what you had initially hypothesized
- The template of your new solution will allow you to iterate faster on tangential problems that may be solved applying a similar methodology
At Abacus, we began as the fastest way for companies to reimburse their employees. With that intensely narrow product focus, we began observing our customers as they hacked the system to use Abacus in ways we never imagined.
Pinterest: Two months after launch, we were sitting with the finance team at Pinterest. Despite already using an expense management tool to reimburse employees, they were reimbursing interview candidates via a combination of emailed receipts and wire transfers. Getting an ephemeral user like an interview candidate onto their existing system would be like trying to swat a fly with a bulldozer. However, with Abacus, they found a simple solution that inadvertently addressed two of the key pain points in delivering a better candidate experience – quick onboarding and integrated payments. Since then, Dropbox, Flatiron, Stripe and others have taken a similar approach and are creating a more modern interview candidate experience with Abacus.
Zesty: The month before Abacus launched, one of the founders of Zesty contacted us to get bumped off the waitlist because someone needed to file 3 months worth of backlogged expenses. We got the team going and quickly noticed that the majority of expenses were not for employees at all, but rather Zesty’s distributed team of drivers who were delivering healthy, delicious meals and incurring expenses for everything from parking to poster stands. Typically, to scale this type of business would have required setting up a corporate card program and incurring massive company liability, but because Abacus could reimburse drivers the day after approval, it enabled Zesty to scale without needing to issue hundreds of corporate cards. Since then, Abacus has helped companies like Homejoy, Managed by Q and many others scale their payments workflow to their distributed teams minus the extra liability.
By avoiding parity, we realized that Abacus isn’t just about helping companies reimburse employees, it’s about helping companies reimburse anyone. While our competitors sought to recreate the physical expense report online, constraints helped us understand that companies aren’t looking for expense reports at all – they’re looking for quick ways to reimburse people. The core of Abacus has nothing to do with generating an expense report – we focus on the simplest workflow required to help companies and individuals (whether it be their employees, interview candidates or contractors) quickly manage their expenses.