Product Led vs Commercial Led startup… which one is better?
There are two main options when considering the best growth philosophy for a startup - being product led or commercial led. It is a decision that needs to be made early on as it forms the foundation for how the entire organisation is structured. But often the decision is taken sub-consciously by the founders. And the decision is equally relevant to B2C and B2B companies.
So, what are the two options in more detail?
A sales and service focused company is one where what the commercial team can generate (profitable and big) revenue from is what drives decision making. Often in these businesses the sales process is more lengthy with sales funnels from cold call to eventual closure being up to 3-6 months later.
This model is more suited to more complex products that are less easily understood and so, therefore, benefits from the demo and hard sell that this growth model provides. Services here also tend to be more complex and customised, often with significant post sale fulfilment and account management.
These startups put a lot of accountability pressure on the commercial team to deliver on the company’s revenue targets, and the product / tech teams are more focused on building what the commercial teams need to be able to sell.
In a product-focused company every team member and function is focused first and foremost on making the product the best it can be. This process also benefits the whole organisation, because the product is better, sales come easier, customer service receives fewer complaints and development teams have more resources to focus on the roadmap because there are fewer bugs.
The product function and tech team therefore lead the strategy and the commercial team is more about ‘selling what product makes’. Obviously this is a subtle distinction ‘on paper’, but the cultural and operational implications of how a business runs can be profound.
Most of the giant tech companies with household names use the product-focused approach for the benefits it provides them. And many startup founders prefer this approach. As previously stated though it can only truly be achieved by a commitment and focus of the entire organisation to that philosophy. And that is easier said than done.
Whether or not this is achievable for your startup, remains to be seen. There is no fault in having a commercial led focus as it is often easier to achieve revenue (especially in service orientated business models). If, however, you can align your startup to be product-led in its growth model there are many benefits that will only strengthen the organisation. Neither is “better”, but you have to pick one. Choose wisely… but choose you must.