product management 101 for startups

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Dan Olsen Dan Olsen CEO, YourVersion CEO, YourVersion June 12, 2010 June 12, 2010 Product Management 101 for Startups

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Talk at Toolbox Workshop for Startups on Product Management

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Page 1: Product Management 101 for Startups

Copyright © 2010 YourVersion

Dan OlsenDan OlsenCEO, YourVersionCEO, YourVersionJune 12, 2010June 12, 2010

Product Management 101for Startups

Page 2: Product Management 101 for Startups
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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

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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”

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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

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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

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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”

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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 

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Getting Quantitative:Optimization Using Metrics

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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:

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( 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

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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

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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

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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

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Great way to stay on top of your interestsReal‐time discovery engine

Discovers new, relevant content tailored to your specific interestsNews, Blogs, Tweets, Webpages, VideosBookmark and share via email, Twitter, FacebookWeekly personalized email digestFree iPhone appFirefox toolbar, Chrome extension, bookmarklet

Launched at TechCrunch50, won People’s ChoiceCheck it out at www.yourversion.com

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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