There’s a pervasive belief in the startup world that launching a product — particularly one with cutting-edge technology — will catapult your company to immediate success. But after years of working with startups and founding some of my own, I’ve learned that the best way to begin isn’t by jumping straight into a flashy product. Instead, it’s by focusing on the service you provide to people.
Service businesses offer founders a way to get close to customers, understand their pain points and validate ideas before investing significant time and resources into developing a product. And trust me, when you jump straight into building too much, too soon, you run the risk of creating expensive, overcomplicated products that aren’t aligned with the market’s actual needs.
Every successful company I’ve worked with has one thing in common: service is at the core of their business.
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Why service businesses lay the best foundation
Unless your product functions as an entertainment or social platform, you’re building a service business whether you realize it or not. And service-based businesses have a fundamental advantage: They are typically fast and cheap to launch. Unlike product businesses, especially hardware, which require upfront investment in development, manufacturing and distribution, a service model allows you to leverage existing skills and resources to provide immediate value to customers. This type of flexibility and speed is critical in a startup’s early stages.
When you start with services, you also gain valuable insights into what your customers really need. These insights are often missed by startups that begin by building complex hardware or software products. As a result, founders of service businesses are better positioned to pivot when necessary and ensure they’re solving the right problems.
Many successful software startups began as service companies — before AWS launched publicly, it was an internal service that Amazon developed for itself. Airbnb, Netflix and many others got their start by manually solving problems for customers. Yes, there was always a software component, but these founders were initially focused on gathering data, refining processes and offering custom solutions before turning those services into scalable software products.
Software was the means to automate and scale service functions. They weren’t building for the sake of it.
One of the clients I currently work with at Bread is a home-cooking service where customers can hire a chef to come to their house and cook meals that will last the entire week. They started with manual operations, gradually adding software to streamline their operations as they scaled. By focusing on providing great service first, they’re now able to spend time understanding what their customers want and would use in their app, which gives them more confidence in how they design it.
Related: How I Eliminated the Sales Funnel By Focusing On This One Business Strategy
The lessons I learned from building too much, too soon
I’ve been on the other side of this equation. Early in my career, I fell into the trap of overbuilding a product before the market was ready for it. One of the startups I was involved with was developing an ambitious piece of hardware. It was expensive, overly complex and frankly, a logistical nightmare. We built a product that had more features than customers needed, and in doing so, we underestimated the operational costs and overestimated the product’s appeal.
We ended up ripping out the hardware just a month after launch because it overheated and failed in the field. The product had lasers — yes, lasers — which added unnecessary complications and inflated the cost. Looking back, we could have started with something far simpler, like a camera, and focused on doing user research. That feedback would have informed how we built the physical product and how we scaled from there. Instead, we spent a lot of time and money fixing problems that could have been avoided if we had built less from the start.
The perils of premature scaling
That experience taught me an invaluable lesson: Don’t overbuild. There’s a tendency in startup culture to believe that more is better — more features, more tech, more complexity. But the reality is, the more you build, the more risks you introduce. You risk wasting capital on features that no one asked for, you risk overcomplicating your operations and you risk losing sight of your core mission.
Service businesses avoid many of these pitfalls by allowing founders to stay lean and iterate based on real customer feedback — while getting paid for it. When you deliver services, you get close to the customer. You understand their pain points intimately, and you can adjust your offerings without the massive overhead associated with hardware or product development. Once you’ve nailed down the service, you can begin to introduce software or tools that make delivering that service easier and more scalable.
The key is not to rush the transition from service to product. When you do decide to build, make sure it’s driven by customer needs, not by the excitement of creating something shiny and new. Keep things simple, validate your ideas through the services you provide and only build features that directly solve the problems your customers face.
Related: Avoid the ‘Too Fast, Too Furious’ Approach to Scaling a Startup
Start simple, scale smarter
For aspiring founders, my advice is this: Don’t start by trying to build the next big thing. Start with a service, get close to your customers and learn everything you can about their needs. Avoid the temptation to overbuild your product. A simple, well-executed service business will give you the foundation you need to scale — without burning through your resources or losing sight of your customers.
In the end, every great company begins by understanding and solving real problems. I believe the best way to do that is by starting with services, not products.
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