Multi-product vs Single Product
This episode might reference ProfitWell and ProfitWell Recur, which following the acquisition by Paddle is now Paddle Studios. Some information may be out of date.
Originally published: June 11th, 2018
It's a question that hits close to home for us, going from a singular product with Price Intelligently to a multi-product company with ProfitWell.
On this episode of the ProfitWell Report, Chris Hexton, Co-Founder at Vero, asks us to look at the impact on growth of companies having either a singular product focus or a multi-product offering. To answer Chris's question, we looked at just over twelve hundred companies. Here's what we found.
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Average YoY Growth Rate
To get right to the point, it's extremely difficult to get to $100M and beyond very quickly without multiple products, but it's harder to get to $10M with multiple products than with a singular products.
In the $1M to $10M period of growth, companies with singular products, no matter their target ARPU, had a much easier time growing than their multi-product counterparts.
The base cause here is likely because when you're going from $1M to $10M in ARR you're figuring out your growth vectors, while by the time you get to $10M those are fairly figured out.
Looking beyond $10M is where things start to get interesting. All of a sudden we essentially see the inverse growth rates happening with multi-product companies growing at a higher clip than their single product cousins and by a fairly wide margin.
Traditional sentiment is that there's survivor bias when you come out with your second or third product, but if you do it after the $10M mark, you likely have figured out your growth vectors, your product approach, and your operational efficiency, leading you to have enough institutional memory to make a multi-product approach successful.
Ultimately, the single and multi-product choice really comes down to the DNA of your company, the market you're in, and the type of company you want. If you're going to scale beyond the startup stage though, the easiest thing you can do if you're in a smaller market is go multi-product. After all, if your customers love you, why wouldn't you try to take more of their pain away through more offerings?
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You've got the questions
and we have the data.
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This is the ProfitWell Report.
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Hey, Patrick. It's
Chris from Vero here.
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I've been wondering for a while
whether or not companies that
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have a single product generally
grow faster than those that
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have multiple products or if
it's the other way around.
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Phenomenal question, Chris.
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Especially because this is
a little bit of a selfish
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research project for us because
we've gone from a singular
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product with price
intelligently to a multiproduct
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company with ProfitWell.
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So to answer your question,
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we looked at just over twelve
hundred companies and here's
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what we found.
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To get right to the point,
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it's extremely difficult to get
to hundred million and beyond
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very quickly without
multiple products.
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But it's harder to get to ten
million with multiple products
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than with a singular product.
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In the one million to ten
million dollar period of
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growth, companies with
singular products,
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no matter their target ARPU,
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had a much easier time growing than
their multi product counterparts.
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The base cause here is likely
because when you're going from
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one million to ten million ARR,
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you're figuring out
your growth vectors.
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Well, by the time you get to ten
million dollars in ARR and are
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going beyond that threshold,
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you've probably figured a lot out
when it comes to growth and product.
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Looking beyond ten million
is where things start to get
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really interesting.
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All of a sudden,
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we essentially see the inverse
growth rates Traditional
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sentiment is that there's
survivor bias when you come out
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with your second
or third product.
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But if you do it after the
ten million dollar mark,
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out with your second
or third product.
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But if you do it after the
ten million dollar mark,
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you've likely figured
out your growth vectors,
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your product approach, and
your operational efficiency,
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leading you to have enough
institutional memory to make a
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multi product
approach successful.
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Ultimately, the single and multi
product choice really comes down to the
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DNA of your company,
the market you're in,
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and the type of
company you want.
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But if you're gonna
scale beyond the startup stage,
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the easiest thing you can do in a
smaller market is go multi product.
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After all, if your
customers love you,
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then why wouldn't you take more
pain of theirs away through
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more offerings and
through more products?
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Well, that's all for now.
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If you have a question,
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shoot me an email or video
to p c at profitable dot com.
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Let's also thank Chris from
Vero for sparking this research
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by clicking the link below to
give him a nice little shout out.
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We'll see you next week.
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This week's episode is
brought to you by Crazy Egg.
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