Every great product starts with an idea. But not every idea turns into a great product, because too many teams skip the crucial step of Product Discovery: validating the idea before jumping to its execution. If you want to build something that truly solves a problem, you need to put in the work upfront.
But before diving into more about that, I want to tell you about a product that’s my favorite cautionary tale: Juicero.
Juicero was a Silicon Valley startup that raised over $120 million in funding to create a high-tech WiFi-connected juicer (IOT was all the rage back then). Honestly, it looked pretty cool, I’d like to have one in my kitchen just for the looks (if it wasn’t for the $400 price tag). As you may have guessed, this high price resulted in the product being targeted to a niche market right off the bat.
Mind you, this wasn’t a conventional juicer with blades. Instead of using actual fruits for juicing, Juicero had to be loaded with proprietary juice packs (sold by Juicero, of course). While it saved time that you’d normally spend in making juice the old-fashioned way, that still didn’t justify the price. It wasn’t long before consumers realized that Juicero wasn’t even needed to squeeze juice out of its proprietary packets.
So when this obscenely priced “juicer” came out, there was one question on everyone’s mind:
“Who asked for this?!”
Juicero's idea gained significant financial backing from investors. However, the company's critical error was a failure to engage with potential customers and confirm the actual demand for their product. This lack of true market validation led to Juicero shutting down in 2017, just 17 months after the product was launched.
While Juicero was a physical product, such failures are rather common in the digital products space as well. Ever heard of Google+? Windows Phone? Or even Metaverse? These products lack Product Discovery in some way or form (among other issues), leading to their inevitable demise. As you’re about to find out, there are generally a few things to consider at the idea level, prior to building and launching your product.
So let’s break down the key steps of Product Discovery, and explore how to get it right. We will also look into some examples from Arbisoft’s own Products Portfolio to see how we learned and harnessed Product Discovery to yield successful products.
As Simon Sinek says, Start With Why. Why does your product need to exist? There must be a pain point or unmet need, and identifying it is the first step. This is crucial to ensure you're solving the right problem. Before building a solution, make sure there’s an actual problem worth solving. It’s easy to fall in love with an idea, but if no one genuinely needs it, it won’t gain traction. There are a few ways to go about it:
- Talk to potential users and understand their pain points
- Look for existing workarounds. Are people hacking together solutions?
- Ask "Why?" multiple times to get to the root cause of the problem
Back in 2020, Arbisoft started building Moonbeam, a podcast app. But we were well aware of the saturation in this space; the iPhone literally ships with a podcast player preinstalled! So Moonbeam had to address a different problem, and we found ours. Podcast apps often overlook the challenges faced by new listeners who are often overwhelmed by the sheer volume and variety of available content. With millions of podcasts spanning various genres, it can be difficult to determine where to start.
We therefore chose this as the problem area, and came up with the following problem statement:
“Podcast listeners find it challenging to discover content that aligns with their preferences”
It’s important to have a problem statement as you define the problem, because that’s one of the foundations on which your product will be built, and it will keep you anchored to your mission. Be sure to include your target audience as well as their pain point in the statement.
Speaking of the target audience, let’s look at how that’s identified.
Your product’s target audience is the specific group of people who are most likely going to use your product and benefit from it. These people share common traits such as demographics, behavior, needs, or challenges. Understanding the target audience helps you build a product that truly meets their needs, and ensures that it is solving a real problem. This is part of identifying your ‘Product-Market Fit’, and here are some of the ways in which you can do that:
- Define a specific group of people with a shared problem
- Identify different audience segments within the target market, based on factors such as demographics or geographic location
- Use personas to visualize your ideal users
- Conduct interviews and surveys to understand their behaviors
Arbisoft has a product called Xiangqi.com. Xiangqi, also known as Chinese Chess, is extremely popular in China with over 6 million players. We initially developed a digital version of the game, believing it would also appeal to Western audiences. However, the user acquisition and growth in the West was disappointing.
We realized that Western players did not have the same interest in Chinese Chess as players in the regions where it originated. Once we shifted our focus to the Chinese market by localizing the product and tailoring our marketing to the target demographic, we saw a substantial increase in Daily Active Users. Today, Xiangqi.com is the top search result on Google for "Xiangqi".
We learned this the hard way, and now we’re sharing what we’ve learned, so you don’t have to. Knowing who you’re building for is just as important as knowing what you’re building. A product for "everyone" is a product for no one, so focus it on the right audience, and you’ll see increased growth and adoption.
Now that we have identified a valid problem and its target audience, we need to ensure they choose our product over the competition. This is achieved by identifying the Value Proposition or Unique Selling Point (USP). It's the factor that differentiates your product and makes it stand out, compelling people to choose and continue using your product over other alternatives. And here’s how to identify your value proposition:
- Clearly define the main benefit your product provides
- Compare it with alternatives (including "doing nothing" to solve the problem)
- Keep it simple: can you explain it in one sentence?
Let's revisit Arbisoft's most successful product, Moonbeam. As mentioned earlier, the podcast app market was already saturated, so we needed to differentiate ourselves. We achieved this by focusing on delivering value to our users: helping them discover podcasts they would enjoy. However, Moonbeam also targeted another user segment: podcast hosts. They’re the creators of podcasts (think of them as the audio world’s counterpart to YouTubers). These hosts want their podcasts to be discovered by the most relevant listeners.
For example, a host with a science-focused podcast would want it to be found by listeners interested in science podcasts, rather than those who listen to comedy or true crime shows. We found a way to meet the needs of both user segments simultaneously: podcast listeners and podcast hosts.
Podcast apps (at the time) weren’t doing a good job at recommending relevant content to listeners. Moonbeam leveraged a combination of readily available podcast metadata (genre, category, title, etc.) alongside more detailed information from the podcast’s content (show details and even the episode’s transcript) to deliver the most relevant content to the listeners. You know how your Instagram feed is full of memes or cat videos (or whatever you’re interested in), ever thought about how that happens? That’s what we call a recommendation system.
Moonbeam’s value proposition was its unique podcast recommendation algorithm that helped podcast hosts get their shows discovered by the most relevant listeners. We also created specialized tools to enable podcast hosts to optimize their podcasts for enhanced discoverability. Our value proposition was validated in the form of positive feedback from listeners who favored Moonbeam over other podcast apps, and podcast hosts who gained new listeners.
If you’ve identified a problem, validated it, and come up with a valuable solution, congratulations on doing that, but this journey is just getting started. You’re not the only one who has come this far, there may be others striving to address the same problem and audience, albeit in their own ways. A great product isn’t just about solving a problem, it’s about solving it better than the alternatives. This is why you need to have good awareness of what’s out there, as you work on your product. Understanding the competitive landscape helps you find and refine your edge in order to stay relevant and be chosen over others. At the very least, make sure that you:
- List direct and indirect competitors serving similar markets and addressing the same problems
- Analyze their strengths and weaknesses (what people want from them)
- Find gaps that your product can uniquely fill, even if you have to pivot
- Utilize frameworks for competitive analysis (feature comparison, SWOT analysis, etc.)
Most likely, you won’t find your competitors’ weaknesses listed in a blog like this one, so you’ll have to do some research. Luckily, it’s often not that hard if you follow some of the aforementioned tips. Sometimes, products have a publicly available roadmap of upcoming features, and you can get some valuable insights into your competitor from that. In case you’re not familiar with Product Roadmaps, we’ve got you covered!
A few years ago, Arbisoft was using a commercially available Applicant Tracking System (ATS). It got the job done (no pun intended), but our People Operations Department needed a certain level of customization and specific features. While there were other ATS apps available (Lever, Greenhouse, Workday, etc.), we couldn’t find one that was feature-rich and provided the value that we desired, at a cost that was suitable. It wasn’t long before we validated that we’re not the only one with this sentiment, and being a custom software development company, we did the thing we do best – we built a custom solution catered to our needs! It’s called Hirestream, and ever since its introduction, Arbisoft has been able to process 64% more applications, conduct 42% more interviews, and increase hiring by 32% annually (source).
The ATS market has always been pretty saturated, and it’s not getting any better. With Hirestream, we knew that we’re jumping into a very competitive space. We continue to navigate the competition regularly, and adapt the product regularly, making sure to keep our Value Proposition relevant and lucrative, while delivering more value to our customers than any other products.
By now you must be thinking, that’s a lot of work already. Welcome to the world of Product Development, we’ve only begun to scratch the surface!
Even if you have the perfect idea, it needs to be financially viable. Market sizing helps you understand the potential reach and revenue opportunity. This is the process of estimating the number of potential users (or customers) for your product, and the overall value of the market. It helps in understanding the scope of the opportunity in order to make more informed decisions about the product’s viability. It also aids in figuring out if the idea is worth pursuing, and whether there’s enough demand to justify building it. The activity of market sizing is often comprised of calculating certain quantifiable metrics, which are not only useful for your own research but also critical for attracting investment.
One of the most popular market sizing frameworks involves finding out your TAM, SAM, and SOM. No, those aren’t three people, but acronyms to describe the market your product operates in, from quite broad to an actually targetable segment. First off, Total Addressable Market (TAM) is the broadest possible market suitable for your product; but it’s not realistic to think that you’ll be able to capture your entire TAM. So there’s a Serviceable Addressable Market (SAM), which is a portion of the TAM that you can realistically target; but certain factors (such as geographical location) might hinder you from achieving 100% of the SAM. Thus, the realistic segment is called the Serviceable Obtainable Market (SOM), which is the subset of SAM that you can capture initially, given your abilities and constraints. So to summarize:
- Find your TAM, SAM, and SOM
- Look at industry reports and trends
- Estimate potential revenue based on pricing and adoption rates
Back in 2014, Arbisoft started working on a real-time 360-degree performance reviews product called ListenTool. The product was a bit ahead of its time, as the real-time 360 feedback process was only embraced by early adopters, so we were already looking at a smaller market. However since conventional 360-degree feedback was already a common process used by organizations worldwide, we had a potentially larger market that could be convinced to convert to real-time 360. So in terms of TAM, SAM, and SOM (without quantifying), we were able to get a realistic view of the market we were potentially going to tap into:
TAM: All the businesses in the world making use of the 360-degree feedback process
SAM: Of the above, the businesses that had moved (or willing to transition) to real-time 360
SOM: Within the SOM, the organizations in the country that we could reach out to
Don’t worry if this feels a bit intimidating. We will dive deeper into market sizing in a future blog post as well.
After all this research, it's finally time to test your idea in the real world. No, we’re not writing code here. This is where prototyping comes in. A prototype allows you to create a low cost and simplified version of your product to gather feedback before committing to full scale development. This phase can include some of these activities:
Prototyping doesn’t necessarily mean making something functional for people to interact with. You should focus on creating something that effectively explains your solution to your target audience, no matter what the medium is. You’ve probably heard of a product called Dropbox (the de-facto cloud storage standard before Google Drive became ubiquitous).
Dropbox validated its idea with a simple explainer video, which demonstrated how Dropbox would work, and it drove massive beta signups, proving strong demand before development even started.
Arbisoft extensively utilizes prototyping for products in the ideation phase. Our Product Managers are now using AI prototyping and codegen agents to rapidly create functional prototypes that are then tested with both internal and external users. Prototyping has now become easier than ever, as some of these tools can generate a prototype in minutes using only an effective text prompt, without writing any code.
Some of these tools include v0, Bolt, Magic Patterns, Replit, Lovable, Windsurf, Cursor, and the list is growing as we speak. If you’re a Product Manager and not using AI to make your work more efficient, you’re missing out! We have already shared detailed insights on leveraging AI as a Product Manager, so be sure to check them out.
Product Discovery isn’t about guessing, it’s about validating. The initial product discovery phase is crucial to establish a solid foundation before commencing any design and development work. This guarantees that the product you’ll eventually launch will be something that your target users actually desire, and sets you up for success down the line when you prioritize the features that your users truly value.
Remember, the most expensive way to find out if your idea will be successful is to start building it right away. So before you innovate, don’t forget to validate!
This was the first in a series of blogs on the Product Development Life Cycle. Next, we will dive into Product Design, and the nuances of creating the physical concept of your product, which will later be developed, launched, and set on a continued journey of growth.
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