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Matt Douglas, Founder and CEO of Punchbowl.com

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Drugs or Entertainment: A Useful Framework to Evaluate New Products

I’m fortunate that many entrepreneurs reach out to me for advice, guidance, and feedback. It’s a privilege I take very seriously, and I try my best to provide positive and helpful feedback. I always remind these entrepreneurs that no one can provide better guidance than their inner voice, and that no one knows the potential as well as they do.

There are several methodologies I use to guide entrepreneurs, and one that I’ve been told is particularly useful is my distinction of new products either being “Drugs” or “Entertainment.” Whenever I help an entrepreneur, I ask them “Does your product solve a real pain point or does it simply provide enjoyment or entertainment?”

The framework helps guide the conversation. Here’s how I think of the difference:

•  Drugs are necessary because they solve pain. They are something a sick person absolutely needs. When someone is ill, they have a problem and drugs typically make them feel better. The same is true for new products — some are “drugs” that actually solve a problem and make a significant pain go away.

•  Entertainment, on the other hand, is intended to be pleasurable. It’s something that is expendable when resources (time/money) are limited. It’s simply for amusement and doesn’t solve a pain point (no, boredom isn’t a pain point).

The framework is a riff on an old adage that all startups either offer a vitamin or a painkiller. I never really liked the model because it describes the difference from the perspective of a company, and not in terms of end-users:

•  Vitamins are “nice to have,” but not “need to have.” Oftentimes these are features or functionalities, and not major platforms. And just like in a drug store, preventive vitamins are optional.

•  Painkillers typically help their clients to materially drive more revenue or lower current costs out of their business. And, even better, they do so with established line item budgets.

Sometimes it’s clear from the outset whether the product is a “drug” or “entertainment,” but other times it’s not as obvious. And often we have to dig deeper to figure out who really has the pain in the market.

For example, I remember the first time I heard about the now-defunct app called “FanCred.” The Founder of FanCred is a wonderful guy named Kash Razzaghi. He came to get my feedback about his new startup in the summer of 2012. He was busy hiring a team, building the product, and working on key partnerships. I remember that his initial focus was to build out a robust community of rabid sports fans who would love using the app. While I liked the plan, I pushed him on the question of “who has the pain in the industry?” I didn’t believe that sports fans really have pain, but I believed he was on to something. As we discussed the industry in more depth, we hit upon something really interesting: marketing teams at major sports teams don’t have a reliable way to reach rabid fans that are scattered throughout the country. While they have many marketing channels to reach fans in-state and in the local TV market, they don’t have many efficient and repeatable ways to reach consumers out-of-market. Unfortunately, FanCred wasn’t successful, and I don’t make any claim as to why they shut their doors. However, this conversation illustrates how one side of the market might have enjoyment, but the other side of the market has acute pain. And Kash, if you read this post, let me know if you’re up for a whole post about what you learned over the journey of FanCred.

One point that’s important to reflect on given the above example: although it’s easy to assume that “drug” products are more likely to be successful than “entertainment” products, that’s not necessarily the case. In fact, some of the largest companies created in the past decade fall into the latter category. For example, Facebook is largely for diversion and enjoyment. It’s a service that you use when you want to connect with friends, and I would argue that it doesn’t solve a true pain point (I know plenty of people who are doing fine and never use Facebook). While it’s certainly nice to be able to quickly connect with friends and keep up to date, it’s not a necessity. Nevertheless, Facebook has built an incredible, profitable company.

Let’s take a look at a few “drug” and “entertainment” products that are focused on consumers to further illustrate the difference between the two:

“Drug” Products:

•  Products like Blue Apron, Hello Fresh, and new entrants like No Pots & Pans and OnDemand Chefs solve the “What’s for dinner?” problem. They each solve a huge pain point for busy, working parents. It may sound preposterous to people who don’t have children, but most working families struggle with how to quickly and easily make dinner on a daily basis. While some families are great about planning and shopping ahead of time, most parents are juggling so many things that often meal-planning goes by the wayside. If you are a working professional and arrive home at six or seven o’clock at night with your kids, it’s a challenge to figure out dinner every night.

•  Products like CurbsidePostmates, and Instacart all enable you to find and buy items available at nearby stores like Target, Walgreens, and CVS without ever entering the store. For a mom with young kids or someone who is sick and can’t leave their house, these services solve a real pain point. For example, with Curbside, if your baby is napping in the car but you really need diapers and formula, this app provides a simple way to get what you need without waking your baby. Or as anyone with young kids knows, sometimes just going into the store is an ordeal in itself. Rather than having to deal with your child as they throw a tantrum in the checkout line, mom can avoid the whole situation. Regardless of the circumstances, these service provides an elegant solution to a real pain point for consumers.

•  Products like Uber, Lyft, and Curb all take the pain out of getting reliable transportation. Someday I’ll tell my children about how I used to have to stand out in the rain and “hail” a cab. I can remember many times standing on a street corner in New York City during rush hour. Sometimes, I’d get lucky and find a cab. More often than not, I would get wet and frustrated. Now, I just take out my cell phone and in seconds can summon a car to my location. The transportation industry has been forever changed because all of these companies (and dozens more) married great technology with a significant consumer pain point.

•  Products like Ovuline, Glow, and many others help women track their ovulation cycle. Although it’s not typically discussed openly, most of us know someone that has had a difficult time conceiving a child. For some, it’s an intensely personal issue and a deep pain point. These apps use data science to help couples get pregnant. That’s the kind of “drug” product that can make a real difference in someone’s life.

“Entertainment” Products:

•  Gaming products are pure entertainment, and the industry is very large. In fact, the industry will generate close to $17B in revenue in 2016, with console companies like Sony, Activision Blizzard, and Microsoft leading the way. In addition, there have been several games on iOS that have been huge hits. For example, Clash of Clans is one of the highest grossing iOS games, and is reported to generate at least $1,118,457 revenue every day.  This “war strategy” game is free but offers users opportunities to use their real money to buy in-app items such as $100 worth of gems to gain a competitive edge. It’s a huge business, and provides entertainment and diversion for millions of people.

•  There are several apps that have created large audiences in the beer and wine market. I love the app Untappd, which enables me to rate different beers I have tried, and see what my friends are drinking. If you’re a wine enthusiast, I’ve heard great things about Tasting Guide from Wine Enthusiast, the leading publisher of wine-related content. These apps are a ton of fun, and help you discover new beers and wines to drink.

•  I’m a fan of baseball, pro football, college basketball, and I have tried most of the services and apps available. I currently use NBC SportsTalk, CBS Sports, ESPN, and MLB Mobile and several team specific apps to get my sports news. None of them solve any particular pain points, but they are fun diversions when I want to get updates on my favorite teams.

•  There are a ton of iOS apps that are pure amusement. A friend of mine recently showed me Bitmoji, which enables you to create your own personalized emojis to share. Definitely fun. One of my favorite amusing apps is still Ocarina by Smule, which turns your phone into a pan flute/recorder. To play, you simply blow into your phone and press the buttons that appear on the screen. The coolest part of the app is that you can listen to other people all over the world who have created unique music using the app. Ridiculously entertaining.

Why is it important to distinguish between “Drug” products and “Entertainment” products?

From my experience, I believe it’s MUCH harder to build a successful new “entertainment” product than a “drug” product. There are so many services and apps all vying for our attention, and it’s really hard to scale a new product or service. On the other hand, if you’re solving a real pain point and if there are enough people with a similar pain, then there is plenty of room in the market for multiple solutions.

As an entrepreneur, I’ve learned that I really like working on solving pain points. Although I love entertainment and being amused, I would much rather spend my career solving real pain points for people. In my role as CEO of Punchbowl, I help solve the pain of planning a party. On the surface, it might appear that planning a party is the definition of “entertainment” but I wholeheartedly disagree. Celebrations, birthdays, and milestones are an important part of life. And we help make it easier.

This framework of “drugs” or “entertainment” has helped me evaluate new products and opportunities with a different perspective. Hopefully, it’s a useful framework for you too — whether you’re a manager in a large company, an entrepreneur with an early concept, or an investor in startups. On that note, I’d love to hear examples of how this framework helped you evaluate a specific opportunity. Did the thought-experiment to classify the new product as “drugs” or “entertainment” provide you some clarity? Why or why not?

Thanks for reading — I’m grateful for your time.

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©2017 Matt Douglas