Three Product Challenges for Early-Stage Entrepreneurs

Three Product Challenges for Pre-Revenue Entrepreneurs
Rich Mironov
Agile Entrepreneurs
July 15, 2010

About Rich Mironov
Veteran product manager/strategist
Business models, pricing, roadmaps
“What do customers want?”
Agile meets business
Repeat offender at software start-ups
“Product Bytes” blog since 2002
Mentor capitalist

Product Challenges for Founders
Agenda
What product managers do
Three product challenges for founders (before you hire a product manager)
Seriously listening to your market
Customer-side ROI
Whole-product thinking
An organizational map

Product
Management
Executives
Development
What Does a Product Manager Do?
strategy, forecasts, commitments, roadmaps,competitive intelligence
budgets, staff,
targets
market information, priorities,
requirements, roadmaps, MRDs,
personas, user stories…
Field input,
Market feedback
Mktg & Sales
Markets & Customers
software
Segmentation, messages, benefits/features, pricing, qualification, demos…

Avoid Post-Course Corrections
When NASA wanted to put a man on the moon, they planned a series of mid-course corrections…

Agenda
Customer-side ROI

Selling & Listening
Can’t do both in the same meeting
Selling turns off prospects
Defensive, waiting for the catch
Unwilling to give you key information
It’s all about you
As soon as you pitch your product, open-ended discussion stops
Can you listen (= shut up) for 20 minutes?

Are You Selling or Listening?
You are selling when you…
Do most of the talking
Anticipate objections
Plan your arguments
Understand the material
Have a goal for the meeting
You are listening when you…
Ask open-ended questions
Take notes
Repeat for clarification
Use silence
Expect to be surprised

Extended Interviews
Get inside their heads
30+ minute in-person interviews
Open-ended questions
Record session if possible
Ask about…
How their business works
What they name things
What keeps them awake at night (pain)
Current solutions, alternatives, shortcomings, competitors
Natural units of work
Unstated requirements
How they justify spending (ROI)

Discovery vs. Theories
Markets are complex and surprising
You learn about the world from customers far from your office
“What’s the pattern?”
“Who are the outliers?”
“How would a customer fit us in?”
Rule of thumb: you need 8 to 20 in-depth interviews to start seeing patterns
Your initial theory is always wrong

You Have Time to Be Strategic
“Urgent” versus “Important”
Truly understanding customers and markets will save an entire product cycle
Customer language and stories make selling easier
Postponing market analysis may cost you the company

Agenda
Customer-side ROI

Prospects Don’t Care About You
Your products don’t matter
Your costs don’t matter
Customers don’t allocate budgets for you
Purchase approval is hard
You have to do your customer’s thinking for him
How will he justify spending money?

Start with Customer’s View
Customers buy most products to make money or save money
How do they describe value?
Quantify it for them
They won’t spend time to fully analyze your product
Assume you can capture a fraction of value
B2B: often 5% to 15%

Hard Cost Savings Example
“By using our tech support knowledge automator, you can reduce your support time per call by 30%.”

No Hand-Waving Allowed!

Telling the Pricing Story
Whywill customers buy?
Tell a story in customer’s own language
What’s the natural unit of exchange?
How do they derive value? What does the competition do?
Don’t expect them to think for you
Test, trial-close, get your hands dirty

Agenda
Customer-side ROI

You Sell Piece Parts
Your product fits here
Customers make our products into solutions
We like to over-simplify their complicated world

Whole Product Exercise
Watch a real customer install your product
What does he need?
License keys
HW/SW dependencies
Unsecured online access
Re-configuration of related products
Oracle sys admin rights
Special knowledge
Contracts, business docs

Have Someone Try An Install
Recruit an outsider
Provide only product materials
No hints, no help
Watch, listen, learn
Can you…
Program your DVR?
Read a cell phone bill?
Synch calendars?

Agenda
Customer-side ROI

The Minimal Organization
CEO/Founder
Here
CTO/ Founder
Strategy and market thinking live in the founders’ heads

Handful of Employees
CEO/Founder
Here
Solution advice
CTO/ Founder
Devs
(2)
Strategy and market thinking still live in the founders’ heads
Good time for fractional help clarifying market problem, targets, dead-simple messages

Expanded Organization
CEO/Founder
CTO/ Founder
Mktg
Sales
CFO
HR/office
Prod
Mgmt
Dev
(4+)
Product Manager should be employee #15 or earlier
Does Marketing or Engineering think more strategically?

In the Start-Up Lifecycle…

Contact Information
+1-650-315-7394
rich@mironov.com
www.mironov.com/articles/
feeds.feedburner.com/RichMironovProductBytes
@RichMironov
www.linkedin.com/in/richmironov

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Three Product Challenges for Early-Stage Entrepreneurs

by Rich Mironov on Jul 16, 2010

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