When trying to figure out what kind of investment to make in design, technology entrepreneurs and CEOs often are tempted to focus on visual design, to create a beautiful product and a sophisticated brand with indescribably cool style.

That’s understandable in an Apple-dominated tech world. There are plenty of successful companies with gorgeous products. And visual design is the most noticeable kind of design—it is what we often think of first when we think of design.

But what about those successful companies that don’t have great visual design, you ask. They appear to have succeeded in spite of their disregard for design. And in some cases, that’s true. Maybe they didn’t have any competitors, maybe their technology was so useful that it didn’t matter how it looked, or maybe they were just lucky.

Many of the successful yet “badly designed” companies used as examples—Craigslist or Google circa 2004—chose not to focus on beautiful products, but rather focused their design efforts elsewhere, in areas more critical to their business. They were doing the right design at the right time. If you’re figuring out how to invest your design resources, you’ll want to do the same. Maybe, like Craiglist, you don’t need to create a beautiful product at all.

A Hierarchy of Design

If you’re building a new website or app, where do you begin? With the color scheme? The sign-up flow? The navigation?

No. You’ll likely start by identifying a market and an opportunity, and define a product that meets that opportunity. Once you’re confident that your product will solve an important problem for a lot of people, you move on to figuring out exactly what it should do, how it should work, and how it should look.

There’s a hierarchy of design that all great companies move through:

• Level 1, Product Design: Create a product that solves a problem or satisfies a desire.
• Level 2, Interaction Design: Make it easy to understand and use.
• Level 3, Visual Design: Make it beautiful.

So, that poorly designed company that succeeded anyway? Let’s give it a bit more credit—chances are it was focused on product design, when we were expecting great visual design.

Every company makes its own decisions about where to invest in design, and when. Some companies make it all the way to Level 3. Some stop at Level 2, creating products that are functional and useful but not particularly beautiful. And others have delivered sufficient value at Level 1 that they don’t see additional design investment as worthwhile.

Three Use Cases

Craigslist: Basic product design
Craig Newmark identified a huge opportunity: use the Internet to provide free classified advertising. Because it was free, Craigslist was more attractive to advertisers, which in turn drew people who were looking for the broadest collection of jobs for hire, cars for sale, and people looking for love. The network effect kicked in, and it became very difficult for anyone to compete with Craigslist (especially newspapers, who couldn’t offer classifieds for free).

Craigslist’s product design is excellent, and their interaction design is good enough, so they haven’t thought it necessary to make further investments in design.

Uber: Started with product design; invested in interaction and visual design when necessary
When Uber launched in San Francisco in 2010, it provided a magical experience: You press a button on your phone and a car picks you up. Uber focused on getting this experience right, which meant designing the basic experience, building a balanced market so rides were always available, and maintaining high quality for drivers and cars. They were focused on product design.

Uber’s first iPhone app was pretty clunky. But it was OK—the company nailed its product design, and it didn’t have much competition.

As competition grew and the service gained features, Uber decided to invest in interaction and visual design. In late 2012, it finally launched a new version of the app that was much easier to use and more beautiful. The company has used visual design to create a high-end brand, which helps build demand throughout the market.

Square: Invested in product, interaction, and visual design from the start
Square wasn’t the first company to offer credit-card processing, point-of-sale software, online appointment scheduling, or the business products it introduced. The company had competition, and knew it wasn’t enough to provide merely functional products. Square invested in product, interaction, and visual design from the start.

The Square Reader, which plugs into a smartphone and allows merchants to accept credit card payments, succeeded on all three levels. It was the fastest and cheapest way to scan credit cards; it was easy to set up and use; it was distinctive and it looked cool.

As Square expanded its business, it knew it would face competition, so it continued its broad investment in design.

How to Do the Right Design at the Right Time

It’s easy to look back and see how successful companies have made smart investments in design based on their market, stage of life, and competition. How can you make the right investment in design for your company?

When I work with startups in the Google Ventures portfolio, one of the best things I can do is help teams identify the risks facing their business, then use design to prototype and test ways to minimize those risks.

Here are some common risk-assessing questions startups ask and some ideas for how to focus on the right design for finding the answers.

Is there a market for my product?
Focus on product design, as opposed to visual design. Build a basic product (or the marketing for a basic product) and test it with customers. Every new product and feature should start here. Once you’ve established the market need for what you’re building, you can assess what kind of design investment makes sense next.

Can we compete in a crowded market?
Good product design alone may not be enough. Unless you can figure out a new business model (as Craigslist did when it offered free classified ads) or a new way of attracting users (like Facebook did by conquering college campuses), you’ll need to focus on interaction and visual design. Talk to your competitors’ customers and look for opportunities to offer products that are more useful, easier to use, and better looking.

Will people trust us? For products where trust is very important, you may need an early focus on interaction and visual design. Two financial-services startups in our portfolio, LendUp and OnDeck, followed this playbook—their products succeed at Level 1 (better rates, faster approvals, etc.), but they made significant investments in interaction design, visual design, and copywriting to help build trust with customers.

Can we add features to our product without alienating customers?
At some point, most companies will face this challenge: How to add features to a product without confusing or frustrating customers? Companies who successfully grow their product’s footprint invest in design across all three levels. At Level 1, new features need to be useful. And at Levels 2 and 3, these features need to fit a framework or mental model that makes sense to customers. Like Apple has done with iOS, you need broad investment in design to add features successfully without frustrating your customers.

It’s OK to Focus

As a designer, I’m impressed by companies who invest and succeed at all three levels of design—their products are useful, intuitive, and beautiful. I’m often tempted to encourage startups to make the same type of investment in design. But after working with close to 100 startups in the past few years, I know that’s not always the right advice. Startups have limited time, limited money, and small teams, so they can’t do everything at once.

There are different kinds of design, and you will need to decide what kind of design to focus on at your company, and when. These decisions will influence who you hire, how you work with design agencies, how you set goals, and the priorities you set for your company.

You may not be able to invest in product, interaction, and visual design all at once. But by looking closely at other companies who have succeeded, and at your own risks and challenges, you can do the right design at the right time.

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