in Business, Experiment, Product

0 to 1 Product Manager

“0 to 1 product management is simple but very hard to get right, billions of dollars and months of time and effort could be saved if PMs follow a few basic principles”

Does product management vary between before and after product-market-fit (PMF)? This is the fundamental question that led me to research this idea of 0 to 1 product manager and how his/her role differs from a PM that is trying to grow an established product.

What is the key objective for a pre-PMF product? It’s to find and solve a customer problem in a large market.

What is the key objective for a post-PMF product? It’s to grow the business. For example, you are an e-commerce company selling shoes online, you found your customers, you are able to serve them well (sales, marketing, support). Now, how can you grow this business? There are a few options –

  1. Sell other products augmenting the shoe product line e.g clothing, caps
  2. Sell shoes to more people (expand to other markets, e.g. international)
  3. Sell analytics to healthcare companies e.g. training data

Product management can focus on creating new products to increase ARPU or introduce existing products to new markets (other countries, segments etc). When you don’t know that “shoe” is your product or “lack of shoe” is the problem to solve, does the PM role change in that context? i.e. before product market fit.

On a typical day, a PM makes many decisions, tradeoffs and prioritizes product features while keeping ROI at the center of it all. ROI framework works very well for a post-PMF product. For a pre-PMF product, if we try to optimize ROI, we will end up building a local optima. Yet we cannot ignore ROI, I have made this mistake a few times, “build it and they will come” may work but the question is “will they just come or will they also buy?”. What do I mean by that? Would I be able to convert the users to paid users? Am I providing value? Do they perceive value in the product that is worth spending money on? My point is, for a product that has not found PMF, while ROI metric is important, it alone cannot be the metric that’s driving decisions to help us find product-market-fit.

For example, at Akamai we developed a product that can be integrated into streaming apps to enable downloads for offline consumption. This is a great product, has a good market fit and a positive ROI. However, there are other factors that needed to be weighed in, competitive offerings, business model, long term company strategy, margin, customer delight. If ROI is the only metric we cared about, we would have pushed the product ahead but we decided to not pursue that product even though we had 10 paying customers and close to one million dollars in annual recurring license revenue in the first year of launch.

So how exactly is product manager’s role different before PMF? PM’s main objectives before PMF are to –

  1. Identify a customer problem in a large market, and go solve that problem. This takes building, iterating, learning, listening to the customer, there is no overnight eureka moment here.
  2. Ensure that the customer is willing to pay for your product.
  3. Be clear on who the user and customer are for your product, sometimes they are the same people and sometimes not.

When you are before PMF, focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required. When you get right down to it, you can ignore almost everything else. I’m not suggesting that you do ignore everything else — just that judging from what I’ve seen in successful startups, you can.

Marc Andreessen
https://a16z.com/2017/02/18/12-things-about-product-market-fit/

Let’s unpack that to get a sense of what frameworks, metrics and tools a PM could use to get to PMF.

First, identify a customer problem in a large market, how to do that? Through build-measure-iterate loops. Running experiments, be willing to fail and learn what the market is telling us. What value we think we are creating and does the customer see the value as well? This is validating your value-hypothesis, I’m paraphrasing Andy Rachleff.

Second, ensure that customer is going to pay for the product otherwise it’s a nice hobby but not a business. Again test-measure-learn what pricing works, what business model works the best. Subscriptions? Transactional? Bundling with other services? Giving the product away for free in order to grow another north star metric?

Lastly, be clear on user and customer. Are you selling to the end user? Are you giving the product for free to users but charging your partners? Is your user the customer e.g. Netflix subscriber or is your user just a user and your customer is a small business e.g. EventBrite. Understanding this and setting the right priorities to delight both the customer and the user in different ways is important, ignore any one of them at your own peril.