Is Your Startup a Product or a Feature?

28/11/2011 14:09 GMT | Updated 27/01/2012 10:12 GMT

There are a lot of startups out there and many of them have great ideas that will likely get somewhere, given time and resources to do so. One thing that I see a lot in the startups and products I'm asked to review are technologies being billed as products that are, in reality, just a feature.

As an example: Dropbox. Is this most useful of technologies, allowing you to easily store, share, and even back up files in the cloud, a product? Or is it a feature of a larger product? Steve Jobs turned down buyout queries from Dropbox's founder, Drew Houston, when the service was still very new, but growing quickly in user base. Jobs told Houston, point blank, that he saw Dropbox as merely a feature that should be something included in any file sharing or backup system and nothing unique.

Whether or not Jobs was right is an important question. Is Dropbox, as an example of one of today's hot startups, a full fledged product or is it merely a feature? Considered objectively, I think that Dropbox is a feature with potential to become a full product.

The rationale is simple: a service that offers full off-site file storage, sharing, and collaboration is a product. Apple, Amazon, and Microsoft all have cloud services like this. They allow built-in integration with other popular products and act as a central hub for the e-products sold by those companies. Dropbox, by comparison, is primitive and not nearly as user-friendly (i.e. automated).

On the other hand, Dropbox has something the other three don't: independence. It's loneliness is its greatest selling point and the fact that it's growing in user base amongst the tech demographics is a testament to this. In fact, it's one of the few that is totally cross-platform: it works on iOS, Windows, and Linux and in exactly the same way on all three ñ it also works on most mobile platforms to boot.

Plenty of other startups are offering apps, services, etc. that are, when you boil them down, just features that belong on larger, more integrative products. Some may be deliberately so, hoping for the future buyout. Others, like Dropbox, are a great idea that just needs time to move from feature to product status, but who face serious struggles during that transition. Dropbox, for instance, has a lot of users, but only a very small percentage are paying anything for the service.

For a startup to really succeed, it must answer the question of whether it's a feature or a real product. In my experience dealing with startups, very few can objectively answer the fundamental question of whether they are a feature or product. If the former, it must either make a plan and move forward towards becoming a product or it must aim to be a future acquisition by a larger product for which it should be a feature.

Being honest with yourself as the founder of a startup is the first major step towards success. Entrepreneurs who refuse to see past their own marketing hype are doomed to fail by it. Venture capitalists and potential investors are not going to be so rosy-eyed.