The Differentiation Stack
Four ordered tests a product must pass to matter, not just exist
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 95%
A layered test for whether a product is genuinely worth building. Being different is trivially easy; being better is easy to fake by charging more. Omojola argues a product must be different, AND better, AND better in a way the end user actually values, AND in a domain large enough that the effort pays off — with the surrounding economics and pipeline working too.
Origin
Developed by Ayo Omojola from co-creating and scaling Square's Cash Card and Cash App, where 'instant' became the cut-through differentiator against Venmo.
Core principles
- 01Different is not enough — you can always build something unlike what exists by just looking at what exists and doing something else
- 02Better is not enough — you can trivially make something 'better' and charge more for it
- 03Better must matter to the end user or buyer, not just be technically superior
- 04The domain itself must be big enough to justify the expensive work of differentiating
- 05Layered small differences compound into durable advantage more than any single feature
How to run it
- 1
Confirm it is different
Establish that what you are building is genuinely distinct from what exists today. This is the easiest bar and only the entry point.
Pro tip Look at what exists, then define your product as the thing it is not — but treat this as necessary, not sufficient.
Watch out Stopping here produces novelty with no reason for anyone to switch.
- 2
Confirm it is better
The difference must be an improvement, not merely a variation. Avoid the trap of 'better' that just means more expensive.
Watch out Charging more money for a marginally different thing is not being better.
- 3
Make 'better' matter to the user or buyer
The improvement must be valued highly by the end user (B2C) or buyer (B2B). A better thing nobody values highly fails — in B2C people won't even use it.
Pro tip Find the one differentiator that cuts through the clutter. For Cash App it was 'instant' — 'try and send me a dollar that I can use now, and there's only one app you could do it with.'
Watch out A better thing that nobody values is closer to art than product — hard to scale and monetize.
- 4
Ensure the domain and economics are big enough
Even if different, better, and valued, you must be in a domain that matters and get the economics, shipping, building, and go-to-market pipeline all working.
Pro tip Audit asynchronous processes in your target market — many are slow 'just because,' which is a standing instant-differentiation opportunity.
Watch out Getting the first three right in a tiny domain leaves you with beautiful art that can't scale into a business.
In the wild
For three or four years, Cash App was the fastest and lowest-cost way to move money between any two US bank accounts. The 'instant' theme ran through every feature: instant cash out, instant card issuance, instant availability when selling stocks or Bitcoin — no circle-crossing wait states.
→ 'Instant' became the answer to 'why are you better than Venmo,' and the compounding of ~10 best-in-class things drove differential success as Cash App grew from sub-50K to 50M+ monthly actives.
Common mistakes
Confusing different with better
Teams build something unlike competitors and assume that alone justifies switching. Difference is trivially easy to manufacture and gives users no reason to move.
Pursuing 'better' the user doesn't value
You can make a genuinely superior product on a dimension nobody cares about. In B2C people won't even use it; the improvement has to matter to the actual buyer or user.
Is it for you?
Best for
Product leaders and founders building a consumer or B2B product into a market with an entrenched incumbent
Not ideal for
Pure creative/art projects where scaling economics and mass-market value are not the goal
From the transcript
“being different is not enough because very easy to build a thing that's different from what exists today because you just have to look at…”
“being better is not enough because it's also easy to say hey I'm going to make this thing better and just charge you more money…”
“it has to be better than what to say in a way that matters to the end user”
“then also get the economics right”
“when someone says hey why are you better than venmo I'd be like try and send me a dollar that I can use now and…”
From the episode
Frameworks for product differentiation, team building, and thinking from first principles
Ayo Omojola (Carbon Health, Cash App)