Building the Next Big Thing: A Framework for Your Second Product

Timing

There’s no perfect formula, but generally, it should be around the time you’ve solved the initial market for your first product. You have product-market fit, you know who the buyers are, how they buy, and why they choose you. Your primary constraint is how fast you can scale your growth engine. Sales is a predictable formula: put this much money into sales and marketing, get that much revenue.

Too early, and you’ll be trying to solve two markets at once. Splitting your focus before you’ve solved your first market can kill you. Too late, and you risk saturating your initial market and seeing growth crumble before you can get something new off the ground.

This brings us to the next crucial question: what should that second product be? There are key principles that can guide you in making the best choice.

Adjacency

You don’t want to build a whole new product and a new go-to-market engine at the same time. If you do, you might as well start a whole different company.

Each additional product should do one of two things:

1. Use the same technology, repackaged for a different buyer.
2. Use a new product and technology to serve the same buyer.

You want to sell the same thing to new people or sell the same people a new thing.

If your first product has a large or fast growing market, the second product should be a new thing for the same people. These are the people you’ve already earned the right to sell to. For a two- or three-product company, your messaging is simpler if you’re always talking to the same buyers. Once you get past the first few products, you can start thinking about expanding your markets.

But if the market for your first product is small, you should instead consider taking your technology to adjacent markets. Build the necessary capabilities to sell your current tech as a new product to a new type of buyer. Once you’ve built a large enough addressable market, then you can add more products to serve the same markets.

This second product should fit the overall company vision and mission. It should be a natural extension of the brand.

As an example, imagine your first product was appointment management for dental offices. You discover that dentists have lots of part-time employees they struggle to manage, so the next product might be time cards and payroll for dental offices.

You could have chosen appointment management for hair salons because your existing appointment software would work there, but then you have a complex message and different buyers. You only want to do this if you find the dental market is highly constrained.

You started out as “[product] for [customers].” Think of that as a two-sided equation. If you find yourself changing both sides of the equation at once, you’re not doing “same people, new product / same product, new people.” You’re building something new for someone new.

The worst move is to build a new product for a different segment, like inventory management for dental suppliers. It may feel like the same industry ("it’s all dental"), but the buyers and the tech are completely different.

When choosing to sell to the Same People, it’s crucial that the buyer profiles really are the same. I see this mistake often when companies confuse the company profile for the buyer profile—targeting “enterprise retail stores” instead of “warehouse operations at retail chains with at least 15 locations.” Targeting the same buyer profile is crucial when executing the Same People strategy. Your entire go-to-market for the first product is built for them.

When choosing to sell the Same Product, it must really be the same product, used for the same purpose, but by different people. The packaging might be different, the sales motion might be different. But it needs to be the same product. I’ve seen companies make the mistake of thinking “similar problems, solved differently” is the same product. But if hair salons have completely different scheduling needs than dental offices, then you’re not truly selling them the same product.

“Same people, new product / same product, new people” sounds obvious, but it can be incredibly hard to stick with this when you’re in the day-to-day operations, evaluating what seems like a great related product.

Either / Or

The second product shouldn’t be an add-on. Customers should be able to start with either one, giving you more ways to get in the door and solve different problems. Customers with problem XYZ shouldn’t need to buy your solution to problem ABC if they don’t need it.

If your second product is an add-on, your land-and-expand motion is limited. You can only expand in one direction. With two standalone products, you can start a customer with one and expand them to the other.

This is a reason I prefer “Same People, New Product”—it opens up cross-sell possibilities.

Either / Or is still important with a Same Product, New People expansion strategy. Don’t make your second customer profile buy capabilities they don’t need, just because your first customer profile needs them.

For our dental software company, we started with appointment management software. A second product could have been SMS and phone call appointment reminders. Lots of our customers would have paid for that. But it’s an add-on. A customer can’t buy just that. It could be a fine product idea, and maybe you should also add that. But it’s a feature of your existing product. A true second product should stand alone.

If your second product is payroll and time cards, it shouldn’t require your appointment management product. It should be the best payroll and time card solution for dental offices. Not just an OK product. Every dental office should aspire to use it, whether or not they use your appointment scheduler.

For Either / Or to work, you need two products, sold independently, with significant overlap in the ideal customer profile.

Better Together

Your two products shouldn’t be so standalone that your customers don’t benefit from buying both. They need to work better with each other than they do with a competitor’s product. You need to give customers a reason to choose your second product over something else.

Better Together usually only applies to Same People expansions, but not always. If both your markets interact with each other, you can make interactions between the parties Better Together.

Because each product is Either / Or, this needs to work both ways. A purchaser of your second product should have compelling reasons for later buying your first product as well.

This combination creates a unique market position. Those competitors that popped up for your first product won’t have the same combination of products and value that you do.

Since your products are Better Together, customers will value them differently. They’ll know they can add your second product and get more for their money and effort.

For our dental software example, the appointment scheduler knows when the busier times are, so it can automatically create shifts and schedules for the time card software if a customer uses both. This is a reason for an appointments customer to buy the payroll product. It’s also a reason for a payroll customer to buy the appointments product.

No matter which product the customer starts with, there are compelling reasons to buy the other.

You want as many of these cross-product capabilities as you can find. Each one drives more reasons to buy.

Think Bigger

Your second product should be bigger than your first. It’s a paradox, but the market for your first product is usually a lot smaller than the market for your second.

You attacked a very specific niche for your first product. A startup needs a small audience of raving fans. You were successful because you aimed for a large chunk of a small market. That’s how startups thrive. But with the second product, you need to think differently. You can target larger markets because you have built-in buyers from your first product. You’ll sell to them plus new buyers that weren’t a fit for the narrowly focused first product.

You can make bigger bets because you can fund them with revenue from the first product. You’re a bigger company now. You have some name recognition. You can afford to go after a more traditional market.

In fact, you don’t have a choice. As a bigger company, your costs are higher. Sell to a small market now and you won’t make a profit.

Everything about you is now bigger. yearly growth of $1 million was impressive when your annual sales were $1 million. But now if you’re over $20 million in revenue, $1 million in growth doesn’t get anyone excited. At this size, Your second product needs to sell $5-8 million in the first year.

If everything about your company is now a lot bigger, then the markets it serves have to be a lot bigger as well.

Look for a broader or higher-potential market for the second product. Your first product has earned you the right to sell to these customers. Use that permission to sell to the broader market.

Market Expansion

Once you have a few products in your portfolio, you can shift to a second market. The challenges of messaging to a new market aren’t as large once you have a more complete product portfolio. The multi-market messaging is easier, and a more complex message isn’t as harmful now that you’re an established business with a well-understood value proposition.

The shift to “Same Product, New People” lets you pursue a broader market with your existing product strengths.

This market expansion can take two forms. One is to move up- or downmarket within your existing customer type. If you sell to small businesses now, reaching larger companies and enterprises will expand your market. The example dental software company started selling to independent, single-location dental offices. Adding features to support multi-office dentists could let you target large dental chains.

The second type of expansion is to find related industries. Maybe optometrists have similar problems to dentists and have been buying your existing products even though they are dental-centric.

The key is to identify who else needs the capabilities you offer. This is often a related customer base already buying the product, even before you target them.

Look for these adjacent markets among your customers. By mapping their needs to your capabilities, you can find the strongest fit for your next market.

Bringing It All Together

To choose your second product, use a strategic approach:

1. Solve your first market first.
2. Find an Adjacency (preferably a new product for the Same People) ...
3. ... where customers can start with Either product ...
4. ... that can be Bigger than the first product ...
5. ... and make them Better together.
6. Finally, expand the market by identifying raving fans outside your ideal customer profile.

These steps help your second product build on success, strengthen your position, and open new growth avenues without complicating operations or messaging.

Thanks to Aaron Klein, Keith Casey, and Jason Goecke for feedback on early drafts of this post.