Feature < Product < Business
Often we see pitches for companies that claim to be revolutionising the way things work in a sector.
But drill down a few questions deep, and it often becomes apparent that really the core idea is a novel feature on top of an existing user experience paradigm. To be fair, it's usually a pretty cool feature, so it's hard to argue that it is indeed different and unique to the start-up. I can see why founders - particularly first-time founders - get excited that this is their ticket to the stars.
The obvious problem is that features are not defensible over time. If a new feature really drives incremental engagement, it's a pretty surefire bet that it will get copied by incumbents (Exhibit A: Meta's relentless rip-offs of Snapchat's best ideas). Sure, if you have already hit some kind of escape velocity you may be able to hang on to an extent (Snap remains a $8bn-ish market cap company to this day), but usurping the King will be nigh-on impossible (Meta's market cap is $1.7trn-ish, or ~200x Snap).
The next layer up is a new product: bundling multiple differentiating features into a new product experience. That's better than the single-feature approach, no doubt. But it still leaves vulnerabilities to incumbents that could easily reach across into your R&D roadmap and take it for themselves. Shopify is a decent example here: every time it drops its latest Editions, thousands of eCommerce start-ups die.
The best case scenario for me is hearing the pitch for a disruptive business: a full package of features, product, operating model, business model, and so on. Uber and AirBnB weren't product formats, they were entirely different businesses. Creating structural economic and business advantages over incumbents - sometimes also referred to as Counterpositioning (h/t Hamilton Helmer) - is where things get really interesting. It's much harder to come up with, and harder still to execute. But my gut feel is that it's the breeding ground for true outlier potential.