Transitioning from Services to Products

Today, I had the opportunity to meet with a successful entrepreneur who is working on transitioning his 18-person company from services only to a mix of software products and services. I think this is a common occurrence with service businesses: the business owner gets tired of selling labor-intensive work and looks for product ideas related to his or her core competencies.

I offered up the following advice:

• Hire completely new people to work on the product. It is very difficult to transition existing people out of their current roles, especially if you don’t already have excess capacity in the business.
• The best new product development teams I’ve worked with combined a full-time marketing product manager and a full-time lead software engineer (you really only need two good people to prototype normal web apps).
• Plan for it to take a solid three to six months to get the first worthwhile beta release into the hands of potential users.
• Budget for 12 – 24 months of expenses to see the new product through to product/market fit.

I haven’t done it, but I can imagine transitioning from a services company to a services and products company is very difficult. I hope he’s successful!