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Product is Philosophy

2026-08-23

One thing I found very surprising in business school was how much I loved strategy.¹ Strategy is a sort of dark art — it exists at a level above quantifiable metrics, and yet the quality of a business’s overarching strategy (and their ability to execute on it) is a huge determinant of success. I would argue that having a bad strategy is essentially fatal, if not to continued operation at least to any chance of greatness. “Strategy” encompasses a huge range of factors, but to me the king of all strategy is product.

All great businesses are centered around a great product. You can define “product” at varying levels of specificity (does McDonalds sell burgers, or does it sell a particular dining experience rooted in the burger?) but generally the correct level is the most basic and obvious one. McDonalds sells burgers. It also sells complementary items (fries, drinks) that are good with burgers. For those times you don’t want beef, McDonalds will sell you a chicken-burger-thing. Burgers are a lunch and dinner food, so for breakfast they will instead sell you various breakfast items that look a lot like burgers. The core properties of the McDonalds burger are that (i) it is cheap and (ii) that it is convenient and portable, so the core customers of McDonalds value these properties both at McDonalds and in their broader lives. Sometimes McDonalds tries a different thing, like customizable soft drinks. If this thing imperils their core values (cheapness and convenience) it will fail, while if it advances those things it will survive or thrive.

“Product is philosophy” means two things.

1. A Great Product stands for, and cohesively integrates, broader cultural forces into a product or portfolio of products.
2. The concentrated cultural/philosophical forces that make the product great permeate the company, and the company acts in a manner consistent with them.

Obviously, on top of this you need operational discipline, execution, etc. — the things that make a company good are prerequisites for greatness. But this theory goes a long way to explaining why some companies have “the sauce” and others don’t, particularly one simple point.

You have to choose. Starbucks’s first and only Great Product was really good coffee. It was not intended to be cheap, and they weren’t trying to sell to everyone. Starbucks correctly deduced that customers who wanted good coffee had a host of other characteristics or values (affluence, a sort of global-traveler liberal vibe, a focus on craftsmanship, etc.). As they grew, they made a series of compromises to enable increased scale and improve operating margins. Those changes made the coffee worse, and ultimately the experience as well. Starbucks lost ground on the high-end to local, third-wave roasters, and responded by going downmarket. But the Great Product was really good coffee, not adequate, cheaper coffee. It may be that really good coffee is simply not something you can produce above a certain scale, in which case Starbucks was always going to be screwed at some point. But in any case, Starbucks never seemed to figure out how to affirmatively choose. They made decisions in response to stimulus (we need to reduce waste, let’s switch to flavor-locked bagged coffee rather than beans), but at no point did they stop and say — what are these changes doing to our product?

Starbucks has tried a lot of different things to revitalize the company, but it has tried them in a way where not all of them could succeed at the same time. For example, you can’t have a drive-through and a relaxed cafe experience, both because of actual space tradeoffs and because you are shooting for two different and exclusive customer-bases/vibes. Critically, it also runs throughout the company itself, in terms of who you hire and how you think about the world. And I don’t think anyone has managed to successfully articulate what Starbucks 2.0 actually is or wants to be. Their turnaround strategy is called “Back to Starbucks” and involves ceramic mugs, cozy cafe vibes, and kicking transient homeless people out of their stores. Last weekend, Starbucks sold 2 million Unicorn Frappuccinos in their best weekend ever. These are not things that can coexist in the long run. It may be that Unicorn Frappuccinos are the way forward (judging from the success of the Pumpkin Spice Latte, there’s a pretty good argument here). But you have to pick one product philosophy.

Another example — why is Google struggling with AI despite having a head start via GDM and incredible organizational resources to bear? This article is a good overview: https://www.thealgorithmicbridge.com/p/the-actual-reason-why-google-fell (shoutout to my friend August for sending this). I disagree with several points in the article — for example, I think talking about “language models” and “world models” is a distinction without a difference at enough scale — but this sums things up decently: “Google is a federation (or, intellectually, a large technological collage). Its many bets are not so much evidence that nobody knows what the company believes as evidence that Google, unlike its competitors, is too big and divided to believe only one thing and stick to it. Google’s problem is that it contains several visions rather than one.”

I think this is 95% of the way there, but saying “Google contains several visions” is the same thing as saying “Google has no vision.” You don’t get to have five different competing visions in one company. At some point, you have to have one. And the problem for Google specifically is that it does not have a great (post-Search) product that they can philosophically unite around and that can unify these different visions. They have a great business — they make an unbelievable amount of money selling ads — but culturally they don’t seem to have internalized selling ads as their core competency, in contrast with a company like Meta.² Instead, they have a huge portfolio of lots of different products that never quite make sense (remember G+? That was weird). They are really better as a venture funding operation than as a single, coherent company.

My outside impression is that Anthropic and OpenAI, despite being culturally distinct, are both obsessed with their core product. Anthropic seems to be moreso, which explains why they were able to leapfrog OAI and why I think they will continue to snowball. You want your company to be religiously obsessed with the product. If you start hiring people who aren’t obsessive about the product or whose obsession isn’t at least highly complementary (you can have someone who is obsessive about supply-chain logistics and they’ll do well at any company, basically), you start to get in trouble.

This is the root of a lot of Silicon Valley pathologies, too — you have people who are obsessed with looking like a tech company (raising money, branded shirts, etc.) but who don’t actually know how to do, or care about doing, the underlying things that tech companies are supposed to do. You raise money because you need money for product. That’s it. Product, product, product.