STARTUPS PULSE - Product Purgatory (they love it but still don’t buy)

Does Cursor Have a Defensible Moat? WisdomAI Revolutionizes Business Insights with AI-Driven Data Analytics Platform Product Purgatory - they love it but still don’t buy #startups, #productdevelopment, #innovation, #AI, #businessinsights, #marketingstrategy, #entrepreneurship

Episode Transcript

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Welcome to Innovation Pulse, your quick no-nonsense update covering the latest in startups and

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entrepreneurship news.
First, we will cover the latest news.
Cursor propels VS Code with AI, gaining a $10 billion valuation and 360K developers.
Wisdom AI secures $23 million to transform data analytics.
After this, we will dive deep into the concept of product purgatory, exploring how to transform

(00:34):
customer interest into action.
Stay tuned.
Cursor is an innovative startup focused on enhancing the coding experience through AI
integration.
Essentially, it's a fork of the popular VS Code editor, but uniquely built with AI at
its core.
This setup allows developers to interact with their code base in a conversational manner,

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generate and refactor code using natural language, and execute complex coding tasks with the
help of an AI agent.
This revolutionary approach has garnered attention from prominent investors and is being utilized
by engineers at major companies like OpenAI and Shopify.
Cursor's product is currently experiencing significant growth, evident from its rapid

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valuation increase from $2.5 billion to a projected $10 billion.
The company boasts an impressive annual recurring revenue exceeding $300 million and a user base
of over 360K developers.
The standout feature of Cursor's product is its seamless integration of AI, which is

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not merely an add-on, but a foundational component.
Having the coding process feel like having an expert partner available around the clock.
This capability, combined with a dedicated community that actively contributes to the
product's development, positions Cursor, uniquely in the competitive AI-driven coding

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tools market.
Wisdom AI, a data startup founded by Rubrik co-founder Soham Mazumdar, has made waves
with its novel approach to AI data analytics.
The company specializes in extracting business insights from various forms of data, including
unstructured and error-laden dirty data.

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Unlike traditional enterprise solutions requiring extensive manual input, Wisdom AI allows business
managers to directly query the system for insights, saving considerable time and resources.
For example, a chief revenue officer can quickly access pending deals and understand delays,
bypassing the need for a whole team of analysts.

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This capability has garnered significant attention, leading to a substantial seed funding round
of $23 million, led by KOTU, with participation from Madrona, GTM Capital, and others.
Wisdom AI stands out not only for its accuracy in handling messy data, but also for its ability

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to avoid generating misleading information.
A common issue in AI applications.
It achieves this by employing generative AI for crafting queries rather than answering
them, ensuring data integrity.
Early clients like ConocoPhillips and Cisco have already leveraged Wisdom AI to integrate

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seamlessly with major cloud data systems, showcasing its versatility and effectiveness.
And now, pivot our discussion towards the main entrepreneurship topic.
Alright everybody, welcome to another episode of Innovation Pulse, where we break down the

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latest ideas in business, tech, and innovation.
I'm your host, Donna, and today we're diving into something that keeps founders and product
teams up at night.
And I'm Jakov Lasker.
Today we're talking about something I call product purgatory.
That bizarre situation where customers seem to love your product, but still don't buy

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it.
It's like being stuck in limbo.
They're not rejecting you.
But they're not saying yes either.
Oh, I've definitely seen this.
It's that frustrating zone where people say things like, this looks amazing, call me back
in six months.
But then six months later, they're still not ready.
What's really going on there?
Exactly, and it's especially painful for new founders who are desperately seeking validation.

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They hear these positive reactions and think, great, my product is a winner.
When really, people are just being nice.
The classic, your baby is ugly problem.
Nobody wants to be the one to say it.
Right.
But here's where it gets interesting.
Sometimes the potential customer genuinely does love the product.

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They're not just being polite.
They sincerely see the value in what you're offering.
And yet, still no purchase.
So what's the disconnect there?
If they truly see the value and they're not just being nice, what's stopping them
from pulling the trigger?
I think there are actually two separate issues at play.
The first one I call the magic one test.

(05:26):
Oh, I like the sound of that.
Lay it on me.
It goes like this.
Imagine I have a magic wand and when I wave it, our product will be fully implemented in
your company.
Everyone's trained.
Everything's integrated.
All processes are updated.
Security requirements, satisfied.
Best of all, it's completely free.

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Now do you want me to wave this magic wand?
I mean, who would say no to that?
Free value with zero effort?
That's what you'd think.
But shockingly, many potential customers still say no.
And that reveals something crucial about product adoption.
Wait, why would anyone say no to free value?
Because all products create friction, risk and ongoing commitments.

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Even with the magic wand, removing implementation costs, there's still risk involved.
What if it breaks something else?
What if it requires maintenance?
What if it creates security issues?
The value of the product must significantly exceed all these concerns.
So it's not just about having positive value.

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It needs to have enough positive value to overcome all the inherent friction and risk.
Exactly.
There was this startup in Austin about 20 years ago.
That's a perfect example.
They created a solution to prevent sensitive document leaks through email.
A real problem that was making headlines at the time.
That sounds useful, especially back then when email security was still evolving.

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Absolutely.
Their system would scan all corporate emails for sensitive material before they went out.
But they couldn't get customers to buy it, even though the problem was real.
Let me guess.
People didn't want another company sitting in the middle of all their email traffic?
Bingo.
Even if it was free, putting a brand new startup in the middle of all your email communications

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was just too risky.
What if they got hacked?
What if their employees could access your data?
What if bugs in their system disrupted email delivery?
Email is just too business critical to take chances with.
So the value was real, but the perceived risk was even greater.
And I imagine this is even harder for new companies without a track record.

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Precisely.
With established companies, there's at least some trust.
With newcomers, you're asking customers to bet on unknowns.
Will you still be around in two years?
Can your product handle real-world scale?
These are valid concerns.
Makes sense.
That's why even for my personal projects, I'm wary of using the newest libraries or

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frameworks.
I don't want to rebuild everything when they disappear or change drastically.
Right.
So that's the first hurdle, passing the magic one test.
But let's say your product does pass it.
People genuinely see the value exceeding the risk.
They'd take it if it was magically implemented, but they still don't buy.

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That brings us to problem number two.
Motivation and urgency.
The why now question.
Exactly.
Decision makers typically have one to three top priorities at any given time.
These are the things they're actively working on.
The projects with deadlines, the fires they're putting out, the strategic initiatives that

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leadership is monitoring.
And if you're not in that top three, you're essentially invisible.
Well, not invisible.
You might be priority number seven or ten.
You're on the radar.
That's what makes this different from failing the magic one test.
But you're not getting attention right now.
And that explains the call me in six months response.

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They're hoping their current priorities will be addressed by then.
Precisely.
The missing ingredient is urgency.
A reason why it has to be done now, not later.
Without that urgency, you're stuck in product purgatory.
Can you give us an example of how this plays out in real life?
Sure.
Website accessibility is a perfect example, making websites work well for people with

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diverse abilities and disabilities.
Think screen readers, resizable text, semantic navigation, high contrast modes, and alt tags
for images.
That definitely passes the magic one test.
Who wouldn't want their website to be more accessible if it could happen instantly?
Right.
And companies that prioritize accessibility even see concrete benefits.

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At WP Engine, they made both their website and user portal accessible, which generated
not just goodwill, but actual sales from customers who chose them over competitors.
So it's both ethically right and good for business.
But let me guess, it still doesn't make the top three priorities for most companies?

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You got it.
The harsh reality is that while accessibility might be priority number eight for most website
owners, there are probably five other website projects that would drive more immediate sales
or solve more pressing problems.
So how do you escape this product purgatory?
How do you move from priority number eight to the top three?

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That's the million dollar question.
The key insight is that your product isn't a top priority for everyone, but it is for
some specific subset of customers.
Your job is to find those customers.
So instead of trying to convince everyone your product should be a priority, find the
people for whom it already is.
Exactly.

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For instance, when does accessibility suddenly become urgent?
For companies selling to government agencies that require it.
For businesses being sued over lack of accessibility.
For companies integrating with major platforms like Walmart or Amazon that mandate accessibility
standards.
So you narrow your target market even further, not just people who would benefit from this

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product, but people who need this product right now.
Precisely.
And there are patterns to look for.
Urgency typically comes from four main sources, strategic initiatives, emergencies, competitive
pressures and financial pressures.
Can you break those down a bit?
Sure thing.
Strategic initiatives might include regulatory compliance, entering new markets, integrating

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an acquisition or modernizing legacy systems.
These are planned top down priorities.
And emergencies?
Those are unexpected crises, getting sued, experiencing a PR disaster, suffering a security
breach, losing a key employee or facing regulatory investigation.

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Suddenly solving a specific problem becomes critical.
Competitive pressures would be things like new rivals entering the market or existing
competitors announcing major new features.
Exactly.
And financial pressures include things like needing to use a budget before year end, new
funding creating new expectations or public changes in financial goals.

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Hmm.
So the trick is to find customers experiencing these conditions and target your marketing
and sales efforts toward them.
That's it.
You look for signals.
Official announcements, CEO interviews, customer complaints and reviews, shifts in company messaging,
leadership changes, new job postings, analyst reports, regulatory changes or even major

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life events for key decision makers.
But what if that target segment is really small?
What if there aren't many companies in that desperate need right now category?
That's a common fear.
But here's the encouraging part.
For every customer who's in the perfect bullseye, there are many more who will find it useful
enough to buy anyway.

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The customers at the center create momentum, testimonials and case studies that convince
the next layer out.
And I suppose a small group of highly motivated customers is better than a large group of
mildly interested ones who never buy.
A hundred times better.
It's scary to focus so narrowly, but that's how you escape product purgatory.

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Find the people for whom your solution is an urgent priority, not just a nice to have.
This reminds me of the saying, when you're selling painkillers, not vitamins.
Vitamins are good for you, but you can always take them tomorrow.
Painkillers solve an immediate urgent need.
That's a perfect analogy and the same product can be a vitamin for one customer and a painkiller

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for another.
Your job is to find the ones with the headache.
So to wrap this up, if you find yourself in product purgatory where people genuinely like
your product but aren't buying, you need to ask two questions.
First, does it pass the magic wand test?
Is the value clearly greater than the risk and friction?
And second, for whom is this an urgent priority right now?

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Who has the strategic imperative, emergency, competitive pressure or financial incentive
to act immediately?
And focus your entire go-to market strategy on finding and serving those customers, even
if it means a much narrower target market.
Exactly.
Don't be afraid to focus.
It's better to be the perfect solution for a small group than a maybe someday solution

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for everyone.
This has been so insightful, Yaakov.
I think a lot of founders and product leaders will recognize themselves in this product
purgatory scenario.
I hope it helps them find their way out.
The good news is that most products do have an audience for whom they're a top priority.
It's just a matter of finding them.
Well, there you have it, listeners.

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Next time you hear, this looks great, call me in six months.
Remember to ask yourself if you're in product purgatory and how you might escape it.
And if you're a buyer saying those words, maybe ask yourself, am I genuinely interested
but just not ready?
Or am I being nice to avoid an awkward conversation?
A little honesty goes a long way.

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That's it for today's podcast.
We explored Cursor's innovative AI integration encoding and Wisdom AI's revolutionary approach
to data analytics, along with strategies to overcome product purgatory in product marketing.
Don't forget to like, subscribe and share this episode with your friends and colleagues
so they can also stay updated on the latest news and gain powerful insights.

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Stay tuned for more updates.