An Introduction to Product Strategy: Expansion

Part 0: An Introduction

It’s early 2013 and there’s a Hot Startup working from a one bedroom loft apartment on some side street in San Francisco’s South of Market neighborhood. Early traction—coming through personal relationships and the age-old tradition of converting their YC batchmates into customers—looks promising.


There’s growth.

There’s momentum.

The charts move up as they move to the right.


Best of all, their customers love them. I mean really love them. Love them in a way that is rather unsettling given that they’re building…payroll software. The tweets, however, speak for themselves. The glowing "thank you"s speak for themselves. The referral numbers speak for themselves.

But the future is uncertain.

Selling to small businesses is an unsolved problem—a fragmented market with relatively low revenue per customer. There are no proven, scalable growth channels to cold-start brand recognition—outside of, well, having a Twitter co-founder as your CEO.

Word of mouth alone won’t get them from SOMA to the NYSE.

And so, as some semblance of product-market fit glimmers just beyond the horizon, the great unknown stretches before them:

Where does ZenPayroll go from here?

The Big Number

When startups raise money, there is The Slide. You’ve seen it. In all likelihood—if you’re the kind of person to read thousands of words on product strategy—you’ve crafted one yourself. It’s a simple slide with nothing but some contextless billion dollar–plus number in 109pt Bold Futura.

This is your TAM, your Market Opportunity, you raison d’etre in the eyes of the VCs sitting before you that day. They are your Queen Isabella and King Ferdinand; you, the Christopher Columbus promising untold gold and glory in the El Dorados of this New World that you will conquer together.

The problem is your Big Number is perilously reductive. Your potential customers are not some homogenous horde with identical needs and use-cases and deal sizes. You can’t build one product and expect it to work for everyone.

The questions are piling up.

  • Who do you sell to first?

  • What do you build for them?

  • How is it better than what exists today?

  • How does what you build tell a story of what you are?

  • How do you expand your product to serve ever-wider swaths of that Big Number?

A running example

The answers to these questions are what we talk about when we talk about product expansion.

To give you a sense of how you might go about answering them, we'll walk through five types of product expansion to illustrate different aspects of product strategy. All you need up front is to know what the hell you’re doing. The rest will be provided along the way.

For consistency, I’ll use my experience as an early employee at ZenPayroll/Gusto as a running example through each section. You'll notice that I bounce between the names of the company. It's confusing at times, but there's a lesson there too. The name change was no accident.

A final outline

Here's what we'll cover:

  • Market expansion: Solving the same problem for more people.
  • Segment expansion: Moving up-market to increase deal size. Coming soon!
  • Solutions expansion: Deepening your relationship with the same customer profile. Coming less soon!
  • Vertical expansion: Expanding into new product verticals. We're pretty sure it will come, but not soon!
  • Account expansion: Building to expand how you reach your target customer. What is time, really?

You may read them in any order, though they are written as a series. Later parts reference and build up previous ones. The core principles, however, should get through.