Product management, particularly in terms of planning the development of its new features, can be a real headache 🙁 That’s why specialized platforms are created, one of which has already garnered a whopping $262 million in investments! According to this startup, there’s suddenly this “huge and untapped market just waiting to be seized” 😉
The Essence of the Project
Airfocus claims to have created a platform that allows managing product development in a “new way.”
While the overall concept of management is essentially the same, it involves “roadmaps” outlining the plan for developing new product features. These maps can be viewed in different formats, such as hierarchical tables grouped by categories of new features or as calendar plans.
The key feature of the platform lies in the ease of creating roadmaps.
The crucial aspect is that before creating a product development roadmap, one must first define OKR (Objectives and Key Results) – the current goals and key results desired from rolling out new product versions. Subsequently, each proposed new product feature should be linked to a specific goal and key result to prevent the development from turning into a chaotic generation of features just because someone in the process wants to implement it 😉
Additionally, for each proposed new feature, the platform automatically calculates its priority according to a specified set of rules. This ensures aligning subjective desires of participants with a consistent system of common rules.
However, the rule system is not a dogma; human opinions also matter 😉 Therefore, the platform allows playing “Priority Poker” collaboratively and manually assigning priorities to tasks from the task list using a card game-like algorithm. This term is familiar to those who follow Agile principles in development.
Another crucial criterion for task prioritization is taking into account user opinions, feedback, and suggestions.
This is made possible by the platform’s separate interface (user portal) for collecting user feedback and product suggestions. All submissions are processed and aggregated by the platform, allowing product development participants to consider them without unnecessary complications.
A recent addition to the platform is an AI assistant specifically trained in product management.
With the help of the AI assistant, it becomes faster and easier to create documents for requesting the development of new product features (PRD, product requirements document), user stories, identify insights and user sentiments from their feedback, and create summaries from lengthy product documents.
The AI assistant can even paraphrase documents written in technical jargon into simpler language so that participants in the product development process who are not tech-savvy, such as sales representatives, marketing, and company leadership 😉 can understand them.
The basic version of the platform costs $83 per month for each “editor,” a user with the right to create and edit documents on the platform. For prices on more advanced versions, one needs to contact the startup directly.
More than 800 client companies already use Airfocus, including Caterpillar, The Washington Post, and Orange.
Currently, Airfocus has raised $7.5 million in new investments, bringing the total project investment to $14.9 million.
What’s Interesting
Similar platforms for product management already exist, with the startup Productboard being a notable example mentioned in 2021. However, it’s worth noting that Productboard attracted $261.7 million in investments, with a new round of $125 million in 2022, after the initial review.
This suggests that platforms of this nature are in demand among clients, given the substantial investments they receive 😉
Now let’s look at the specific approaches used by today’s Airfocus in their presentation to attract the current investment round.
In product development, specialists from different departments use various tools and platforms, and information needs to be individually extracted and analyzed. Some use Notion for notes, others use Excel, some create presentations in PowerPoint, some communicate via email or messaging apps, and others use different tools.
This leads to a lack of a comprehensive picture of product development for all participants because there is no single place where all this information comes together for a holistic overview. As a result, 50–70% of all new features implemented in new product versions do not bring any positive effects or even lead to negative consequences.
Airfocus aims to be a new “home” for product management, where all information related to product development plans can be consolidated.
Airfocus targets growing and large companies that develop multiple products and have many product managers and participants in the product creation process. Such companies need powerful and flexible platforms that can be adapted to their needs and business processes—something that Airfocus precisely offers.
In other words, rather than pursuing small clients with small checks that may regularly fade away, it makes more sense to target large companies, each of which can provide substantial and sustained revenue 😉
The correctness of this choice of target audience is confirmed by cohort analysis. The monthly revenue from clients fitting Airfocus’s Ideal Customer Profile (ICP) doubles within 12 months and, in some cases, continues to grow. At the same time, the churn rate of such clients is minimal.
The unique aspect is that any company, even if it doesn’t sell software products, is gradually becoming an IT company. This is because companies need to digitize their business processes, leading them to create and develop internal products.
Internal products are just as important as products for external users, so they need to be developed using the same principles. Large companies usually handle the development of internal products, and they constitute the target audience for Airfocus.
This means that in the market for product management platforms, a “global, vast, and untouched niche is emerging, waiting for someone to conquer it” 😉 And Airfocus aims to be that “someone.”
Where to Head
The first key idea is directed towards B2B product developers, emphasizing that focusing on large clients is a profitable strategy. While acquiring large clients may be challenging, once obtained, they tend to provide substantial and long-term payments. Investing in wooing such companies can be significant, justified by the potential returns from high-value contracts.
In this regard, the example of the startup Pactum, mentioned in 2021, is still impressive. They created a platform where AI automatically negotiated with suppliers for better terms and prices. Notably, they boldly stated on their website that they developed the product “for companies with revenue of 1 billion dollars” annually!
When revisiting their site in 2022, I was surprised to find that they had shifted their focus to companies with revenue exceeding 5 billion dollars annually 😉
As their strategy continues to prove successful, with clients like Walmart, Wesco, and Maersk, they have raised $35.2 million in investments.
The second interesting concept revolves around the idea that every reasonably large company from any industry should now become an IT company, at least in the realm of creating internal products.
Internal products represent a distinct market that many underestimate, but not all 😉 In 2021, I wrote about the startup Retool, which developed a platform for software development of internal products, raising $141 million in investments.
Here are some facts from their reports on the state of the internal product market for 2021 and 2023.
Companies annually spend $4.5 trillion on IT infrastructure, with an increasing portion of these funds going towards creating internal products.
77% of companies with 500 or more employees have programmers dedicated to developing internal applications.
Companies of all sizes allocate 20% to 45% of their developers’ time to developing internal applications. A significant increase in these expenditures occurs when a company’s headcount surpasses 1,000 employees.
86% of respondents believe that in the new year, their companies will spend even more time developing internal products than in the previous year.
Hence, an unexpected but promising direction is the creation of platforms to enhance the efficiency of creating and developing internal products. One option is not to delve into development tools, as Retool does, but to stay at the product management level, akin to Airfocus and Productboard. This involves creating a platform specifically tailored to the nuances of internal products, as they have their specific characteristics. For instance, all potential users of the product are known, and they can be surveyed and analyzed systematically. Task assignments for such products can also be extracted from corporate planning and performance tracking systems, which, if not sufficiently efficient, should be automated.
So, what might a specialized counterpart to Airfocus or Productboard for internal products look like? That’s the billion-dollar question! Even Airfocus acknowledges that the market for internal products is a “global, vast, and untouched market, waiting for someone to conquer it” 😉
About the Company
Airfocus
Website: airfocus.com
Latest Round: $7.5M, 10.01.2024
Total Investments: $14.9M, Rounds: 4