Cheerleader effect
You, a founder, want to build in the health category. A new marketplace where people can buy vitamins. Or high protein foods. But you think there is a bigger game here. Why not build in healthier habits. Maybe there is an opportunity for an AI agent that recommends ways to incorporate healthier eating habits, to help you eat more protein. The first is a marketplace. You have to create a flow that requires the least number of steps for the customer to buy your product. The second is a habit-forming product with a freemium business model. You have to understand the user’s motivation. You want them to set reminders to drink their protein shake in the morning. Your product is very similar to any meditation app, any strength training app. Obviously there will be more steps in the onboarding process. You want high intent users who will convert to premium users. The effort you put into onboarding will help you tailor a better product experience for the user.
If these were separate apps built by separate founders, there wouldn’t be an issue. But most founders today try to build everything together, all at once. They fall victim to the classic cheerleader effect, where they inflate the attractiveness of each of their product use cases by bundling them all into one mega-product from day one.
This leads to a confusing onboarding flow. A confusing first user experience.
Let’s take another example. You want to build LinkedIn for designers. LinkedIn today is a social network for professionals. A social network is monetised through advertising.
If you are building a social network, you want users to start consuming and then creating content from the moment they land on your product. But you might think, hey, you also want our designers to find jobs. That means you want a job board. A job board needs information about users. So you might want users to add more information during their onboarding. You might think that once they land on the product they might not be interested in doing that. You would want to separate recruiters and designers in the onboarding flow. Have different experiences for each. How you monetise a job board might be different. Then of course there is no Hacker News for designers. So you will also bundle a forum into your product.
You might want to sell a SaaS subscription that allows users to buy a subsidised bundle of designer tools. And also give more visibility to their posts in the forum. To drive engagement, have some design quizzes? A jobs tab. A news tab. Suddenly you have a LinkedIn for designers, but there is no single product that has PMF.
The idea looks interesting on paper. But you can’t look at the monetisation models of mega-corps like LinkedIn, Facebook, Google. They may have integrated multiple products over the years. And with those products have come different ways of monetising.
Before you scale to multiple products with multiple monetisation models, you need a single product that has the simplest user flow. The best products are linear. And their product flows reflect their business model. A transactional marketplace does not need engagement on the home page. It needs to help the user create their cart as quickly as possible. A habit-forming product might have extra steps in the onboarding process. But you as the product builder need to know the path you want the user to take. You need to have a POV.
Remember: Your revenue model defines your product. And don’t fall victim to the cheerleader effect.