product management 101 for startups
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Talk at Toolbox Workshop for Startups on Product ManagementTRANSCRIPT
Copyright © 2010 YourVersion
Dan OlsenDan OlsenCEO, YourVersionCEO, YourVersionJune 12, 2010June 12, 2010
Product Management 101for Startups
Copyright © 2010 YourVersion
What IWhat I’’m Coveringm Covering
What is product management?
Understanding customer needs
Prioritization and maximizing ROI on engineering resources
Ease of Use
Using metrics to optimize your product
Will post slides to slideshare.net/dan_o
Copyright © 2010 YourVersion
My BackgroundEducation
BS, Electrical Engineering, NorthwesternMS, Industrial Engineering, Virginia TechMBA, StanfordWeb development and UI design
19 years of Product Management ExperienceManaged submarine design for 5 years5 years at Intuit, led Quicken Product ManagementLed Product Management at FriendsterPM consultant to startups: Box.net, YouSendIt, EpocratesCEO & Cofounder of YourVersion, startup building “Pandora for your real‐time web content”
Copyright © 2010 YourVersion
Quick Poll of Audience
Work at:StartupEstablished company
EntrepreneursActively working on a startup idea
Product live?Funding?
Thinking of pursuing a startup idea
Consumer vs. B2B
6 Copyright © 2010 YourVersion
What is Product Management?
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Product Management isCritical Link in Value Creation
Market• Current customers
• Prospectivecustomers
• Competitors
Product Management
Development Team
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A Product Manager by any Other Name Would Smell as Sweet
Product managers are sometimes calledProduct marketing manager
Program manager
Project manager
Label and definition of role can varyBased on industry or company
Based on B2C (consumer) vs. B2B (enterprise)
Based on stage of company
Can be area of responsibility vs. actual position
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A Process View of Product Management
BusinessStrategy
ProductStrategy
BusinessObjectives
ProductObjectives
ProductDevelopment
Service/Support
Market/Sell
LongTerm
ShortTerm
“Inbound”Product
Management“Outbound”
Product Management
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Overlap in PM and UI Design Roles
ExternalExternal
InternalInternal
InterfaceInterfaceProduct
ManagementUIUI
DesignDesign
EngineeringEngineering QAQA
MarketingMarketing
SupportSupport
ProspectiveCustomers
ExistingCustomers
Listening to customers
Engineering
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Product Management’s Job:A Successful Product
Be the expert on the market and the customer
Translate business objectives and customer needs into product requirements
Be the clearinghouse for all product ideas
Work with team to design & build great product
Define and track key metrics
Identify, plan & prioritize product ideas to maximize ROI on engineering resources
Copyright © 2010 YourVersion
Dan Olsen, CEO, YourVersionDan Olsen, CEO, YourVersionOO’’Reilly Web 2.0 Expo SFReilly Web 2.0 Expo SFMay 6, 2010May 6, 2010
Lean Product Management for Web 2.0 Products
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What’s So Great about “Lean”?What’s wrong with being not‐so‐lean?
Startups are at risk until they’re profitableFunding cocoon only lasts so longLimited resourcesTech markets move fastTime is the real enemy“Time is the scarcest resource and unless it is managed nothing else can be managed.”‐ Peter Drucker
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What’s the Formulafor Product‐Market Fit?
A product that:Meets customers’ needsIs better than other alternativesIs easy to useHas a good value/price
Simple, right?It’s easy to understand conceptually what we want to achieveHOW to achieve it is the hard part
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Understanding Customer Needs
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Russians: pencil
NASA: space pen($1 M R&D cost)
Example:Ability to write in space (zero gravity)
Problem Space vs. Solution Space
Problem SpaceA customer problem, need, or benefit that the product should address
A product requirement
Solution SpaceA specific implementation to address the need or product requirement
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Problem Space vs. Solution SpaceProduct Level
Problem Space(user benefit)
Solution Space(product)
TurboTax
TaxCut
Pen and paperPrepare
my taxes
File my taxes
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Problem Space vs. Solution SpaceFeature Level
Problem Space(user benefit)
Solution Space(feature)
Gmail importerMake it easy
to share a link with my
friends
Allow me to reuse my
email contacts
Design#1
Design#2
Design#3
DesignPreview with checkboxes
User can edit before import
#1 No No
#2 Yes No
#3 Yes Yes
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How Do You Prioritize User Benefits and Product Features?
Need a framework for prioritizationWhich user benefits should you address?
Which product features to build (or improve)?
Importance vs. SatisfactionImportance of user need (problem space)
Satisfaction with how well a product meets the user’s need (solution space)
Opportunity =High Importance need with low Satisfaction
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High Importance + Low Satisfaction =Opportunity
Impo
rtance of U
ser N
eed
Impo
rtance of U
ser N
eed
User Satisfaction with Current AlternativesUser Satisfaction with Current Alternatives
CompetitiveMarketOpportunity
LowLow HighHigh
LowLow
HighHigh
Not Worth Going After
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Importance vs. SatisfactionAsk Users to Rate for Each Feature
98
8784
8679 847055 80
7280
75
4150
55
60
65
70
75
80
85
90
95
100
40 50 60 70 80 90 100
Satisfaction
Impo
rtan
ce
Recommended reading: “What Customers Want” by Anthony Ulwick
BadBad
GreatGreat
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Kano Model: User Needs & Satisfaction
User SatisfactionUser Satisfaction
User DissatisfactionUser Dissatisfaction
Performance (more is better)
Delighter (wow)
NeedNeednot metnot met
NeedNeedfully metfully met
Must Have
Needs & features migrate over time
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Is the site up when I want to use it?
Is the site fast enough?
Does the functionality work?
Does the functionality meet my needs?
Olsen’s Hierarchy of Web User Needs(adapted from Maslow)
Customer’s Perspective What does it mean to us?
Uptime
Page Load Time
Absence of Bugs
Feature Set
Usability & Design
Decreasing
Dissatisfaction
Increasing S
atisfaction
How easy to use is it?
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What is Your Value Proposition?
Which user benefits are you providing?
How are you better than competitors?
Competitor A Competitor B You
Must Have Benefit 1 Y Y Y
Performance Benefit 1 High Low Med
Performance Benefit 2 Low High Low
Performance Benefit 3 Med Med High
Delighter Benefit 1 Y ‐ ‐
Delighter Benefit 2 ‐ ‐ Y
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Prioritization and Scope
Customer value is only half the equation
How much engineering effort will it take?
Need to consider value and effort (ROI)
Ruthlessly prioritize: rank order
Be deliberate about scope & keep it smallIt’s easy to try to do too much
Strategy = deciding what you’re NOT doing
Break features down into smaller chunks
Smaller scope → faster iterations → better
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Prioritizing Product Ideas by ROIPrioritizing Product Ideas by ROI
Investment (developer‐weeks)
Return (V
alue
Created
)
Idea C
Idea B
Idea D
Idea A
Idea F
1
1
2
3
4
2 3 4
?
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Have to Prioritize Across Multiple Dimensions At The Same TimeCu
stom
er Value
Custom
er Value
TimeTime
Customer Customer UnderstandingUnderstanding
Functionality
Quality
Ease of Use
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Ease of Use
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User Benefits vs. Ease of Use
Q: If two products equally deliver the exact same user benefits, which product is better?A: The product that’s easier to use“Ease of use” provides benefits
Saves timeReduces cognitive loadReduces frustration
UI Design can be differentiatorOlsen’s Law: “The less user effort required, the higher the percentage of users who will do it”
Copyright © 2010 YourVersion
The Design Gap at Many Startups
Define Design Code
Product Mgmt Engineering
Product Mgmt Engineering
Product Mgmt Engineering
PM Eng
EngPM
UI
Level
2
3
4
5
Engineering1
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The UI Design IcebergThe UI Design Iceberg
VisualDesign
InteractionDesign
InformationArchitecture
ConceptualDesign
Recommended reading: Jesse James Garrett’s“Elements of User Experience” chart, free at www.jjg.net
What most people seeand react to
What good product people think about
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Learning from Customer Feedback
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Iterating Your Product Vector Based on User Feedback in Solution SpaceProblem Space
(your mental model)Solution Space
(what users can react to)
Help userbook travel
Help userplan travel
Customer Feedback
Mockups / Code
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Persevere or Pivot?
Increasing Product-Market
Fit
Pivot
Pivot
Product-Market Fit =Getting enough data to validate that you’re climbing up theright mountain
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What Are You Getting Feedback & Learnings About?
Problem Space(your mental model)
Solution Space(what users can react to)
CustomerUnderstanding
(needs & preferences)
Feature Set
UI Design Messaging
36 Copyright © 2010 YourVersion
Getting Quantitative:Optimization Using Metrics
Copyright © 2010 YourVersion
Approaching Your Business as an Approaching Your Business as an Optimization ExerciseOptimization Exercise
Given reality as it exists today,Given reality as it exists today,
optimize our business resultsoptimize our business results
subject to our resource constraints.subject to our resource constraints.
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Profit = Profit = RevenueRevenue ‐‐ CostCost
Unique VisitorsUnique Visitors x x Ad Revenue per VisitorAd Revenue per Visitor
Impressions/VisitorImpressions/Visitor x Effective CPM / 1000x Effective CPM / 1000
Visits/Visitor x Visits/Visitor x PageviewsPageviews/Visit x Impressions/PV/Visit x Impressions/PV
New VisitorsNew Visitors + Returning Visitors+ Returning Visitors
Invited VisitorsInvited Visitors + Uninvited Visitors+ Uninvited Visitors
# of Users Sending Invites x Invites Sent/User x Invite Conv# of Users Sending Invites x Invites Sent/User x Invite Conversion Rateersion Rate
Define the Equation of your BusinessDefine the Equation of your Business““Peeling the OnionPeeling the Onion””
Advertising Business Model:
Copyright © 2010 YourVersion
( SEO Visitors + SEM Visitors + Viral Visitors ) x Trial Conve( SEO Visitors + SEM Visitors + Viral Visitors ) x Trial Conversion Ratersion Rate
Paying UsersPaying Users x x Revenue per Paying UserRevenue per Paying User
New Paying UsersNew Paying Users + + Repeat Paying UsersRepeat Paying Users
Previous Paying Users x ( 1 Previous Paying Users x ( 1 –– Cancellation Rate )Cancellation Rate )Trial UsersTrial Users x x ConvConv RateRate
Profit = Profit = RevenueRevenue ‐‐ CostCost
Equation of your BusinessEquation of your BusinessSubscription Business ModelSubscription Business Model
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How to Track Your MetricsTrack each metric as daily time series
Create ratios from primary metrics: X / YExample: How good is your registration page?Okay: # of registered users per dayBetter: registration conversion rate =
# registered users / # uniques to reg page
DateUnique Visitors
Page views
Ad Revenue
New User Sign‐ups …
4/24/08 10,100 29,600 25 490
4/25/08 10,500 27,100 24 480
…
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Sample Signup Page Yield DataSample Signup Page Yield Data
Daily Signup Page Yield vs. TimeNew Registered Users divided by Unique Visitors to Signup Page
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1/31 2/14 2/28 3/14 3/28 4/11 4/25 5/9 5/23 6/6 6/20 7/4 7/18 8/1 8/15 8/29 9/12 9/26 10/10
Dai
ly S
ignu
p Pa
ge Y
ield
Changedmessaging
Added questionsto signup page
Started requiringregistration
Copyright © 2010 YourVersion
Identifying the Identifying the ““Critical FewCritical Few”” MetricsMetrics
What are the metrics for your business?Where is current value for each metric? How many resources to “move” each metric?
Developer‐hours, time, moneyWhich metrics have highest ROI opportunities?
Return
Return
InvestmentInvestment
Return
Return
InvestmentInvestmentRe
turn
Return
InvestmentInvestment
Metric AMetric AGood ROIGood ROI
Metric BMetric BBad ROIBad ROI
Metric CMetric CGreat ROIGreat ROI
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Google Analytics
•Unique visitors
•New vs. returning
•Pageviews
•Time on site
•Top referrers
•Top geos
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Measuring Key Conversions:Conversion Funnel
•Tie user actions to business goals
•Instrument key steps in user flow
•See where users are dropping off
•Quantify improvement from changes
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UI questions are never yes/no! (not binary)Should ask: “What percentage of users …?”UI changes impact your metrics
Impact can be positive, negative, small, largeSeek high‐ROI UI changes
Typical UI design question:“When using web pages, do users scroll down?”
‐ Yes‐ No
Approaching UI Design Analytically
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Survey resultsImportance & SatisfactionNet Promoter Score
Survey.io“How would you feel if you could no longer use Product X?”
Very disappointed, Somewhat disappointed, Not disappointed
User behaviorProspects sign up (high conversion rate)They keep using it (high retention rate)They use it often (high frequency of use)
Metrics to Validate Product‐Market Fit
47 Copyright © 2010 YourVersion
ContinuousContinuousImprovementImprovement
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Adding Metrics and Optimization to your Product Process
PlanPlan
DesignDesign
DevelopDevelop
BusinessObjectives
ProductObjectives
Prioritized Feature List
Scoping
Requirements & Design
Code Test Launch
Site Level
Feature Level
OptimizeOptimize Metrics & User Feedback
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Optimization through Iteration:Optimization through Iteration:Continuous ImprovementContinuous Improvement
Measurethe metric
Analyzethe metric
Identify top opportunitiesto improve
Design & develop the enhancement
Launch theenhancement
Learning
Gaining knowledge:
• Market
• Customer
• Domain
• Usability
Copyright © 2010 YourVersion
Product Management 101Product Management 101Cheat SheetCheat Sheet
Clarify problem space by iterating in the solution space & getting user feedback
Revise feature set, UI design, and messaging to improve product‐market fit
Ruthlessly prioritize based on ROI
Define equation of your business
Identify and track key metrics
Launch, learn, and iterate
Copyright © 2010 YourVersion
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My Workshop Topics
Hands OnClarifying your product vision
Identifying customer benefits
Prioritizing features
Evaluating your product’s UI design
Optimizing your new user flow
Google Analytics
Mini‐talksCase study on product validation
Case study: in‐depth feature analysis
Case study: using metrics to optimize
UI Design 101 for PMs
Working with developers
Creative bootstrapping
Myers ‐ Briggs
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Questions?@danolsen
www.yourversion.com