Product Management 101
for Startups
Dan Olsen
CEO, YourVersion
June 12, 2010      Copyright © 2010 YourVersion
What I’m Covering
What is product management?
Understanding customer needs
Prioritization and maximizing ROI on 
engineeri...
My Background
Education
  BS, Electrical Engineering, Northwestern
  MS, Industrial Engineering, Virginia Tech
  MBA, Stan...
Quick Poll of Audience
Work at:
 Startup
 Established company
Entrepreneurs
 Actively working on a startup idea
   Product...
What is Product Management?




               6    Copyright © 2010 YourVersion
Product Management is
    Critical Link in Value Creation




Market            Product    Development 
• Current       Ma...
A Product Manager by any Other 
   Name Would Smell as Sweet
Product managers are sometimes called
  Product marketing man...
A Process View of Product Management
                                    “Inbound”
                                     Pr...
Overlap in PM and UI Design Roles
                        Prospective                        Existing
                    ...
Product Management’s Job:
       A Successful Product
Be the expert on the market and the customer
Translate business obje...
Lean Product Management for 
Web 2.0 Products
Dan Olsen, CEO, YourVersion
O’Reilly Web 2.0 Expo SF
May 6, 2010
           ...
What’s So Great about “Lean”?
What’s wrong with    Startups are at risk until 
being not‐so‐lean?   they’re profitable
   ...
What’s the Formula
       for Product‐Market Fit?
A product that:
  Meets customers’ needs
  Is better than other alternat...
Understanding Customer Needs




               15   Copyright © 2010 YourVersion
Problem Space vs. Solution Space
 Problem Space                  Solution Space
   A customer problem,            A specif...
Problem Space vs. Solution Space
         Product Level
Problem Space       Solution Space
 (user benefit)       (product)...
Problem Space vs. Solution Space
           Feature Level
Problem Space              Solution Space
 (user benefit)       ...
How Do You Prioritize User Benefits 
     and Product Features?
Need a framework for prioritization
  Which user benefits ...
High Importance + Low Satisfaction =
Importance of User Need
                        Opportunity
                         ...
Importance vs. Satisfaction
       Ask Users to Rate for Each Feature
              100                                   ...
Kano Model: User Needs & Satisfaction
              User Satisfaction
                                  Delighter (wow)


...
Olsen’s Hierarchy of Web User Needs
       (adapted from Maslow)
    Customer’s Perspective                               ...
What is Your Value Proposition?
 Which user benefits are you providing?
 How are you better than competitors?
            ...
Prioritization and Scope
Customer value is only half the equation
How much engineering effort will it take?
Need to consid...
Prioritizing Product Ideas by ROI

                                         ?
Return (Value Created)




                 ...
Have to Prioritize Across Multiple 
                  Dimensions At The Same Time

                                       ...
Ease of Use




       28     Copyright © 2010 YourVersion
User Benefits vs. Ease of Use
Q: If two products equally deliver the exact 
same user benefits, which product is better?
A...
The Design Gap at Many Startups
Level      Define      Design      Code

 1                              Engineering

 2  ...
The UI Design Iceberg
  What most
  people see
  and react to                       Visual
                               ...
Learning from Customer Feedback




                 32   Copyright © 2010 YourVersion
Iterating Your Product Vector Based on 
    User Feedback in Solution Space
      Problem Space                   Solution...
Persevere or Pivot?

  Increasing
Product-Market                        Product-Market Fit =
      Fit                    ...
What Are You Getting Feedback & 
       Learnings About?
 Problem Space            Solution Space
(your mental model)   (w...
Getting Quantitative:
Optimization Using Metrics




              36    Copyright © 2010 YourVersion
Approaching Your Business as an 
     Optimization Exercise


Given reality as it exists today,
optimize our business resu...
Define the Equation of your Business
          “Peeling the Onion”
Advertising Business Model:
Profit = Revenue ‐ Cost

  ...
Equation of your Business
          Subscription Business Model
Profit = Revenue ‐ Cost

   Paying Users x  Revenue per Pa...
How to Track Your Metrics
Track each metric as daily time series
           Unique     Page       Ad      New User 
      ...
Sample Signup Page Yield Data
                                                Daily Signup Page Yield vs. Time
           ...
Identifying the  “Critical Few” Metrics
  What are the metrics for your business?
  Where is current value for each metric...
Google Analytics
•Unique 
visitors
•New vs. 
returning
•Pageviews
•Time on site
•Top referrers
•Top geos

                ...
Measuring Key Conversions:
           Conversion Funnel
•Tie user actions to 
business goals
•Instrument key steps in 
use...
Approaching UI Design Analytically
 Typical UI design question:
 “When using web pages, do users scroll down?”
   ‐ Yes
  ...
Metrics to Validate Product‐Market Fit
 Survey results
   Importance & Satisfaction
   Net Promoter Score




   Survey.io...
Continuous
Improvement



      47   Copyright © 2010 YourVersion
Adding Metrics and Optimization to 
             your Product Process
                                                    ...
Optimization through Iteration:
  Continuous Improvement
                   Measure
                  the metric


       ...
Product Management 101
           Cheat Sheet
Clarify problem space by iterating in the 
solution space & getting user fee...
Great way to stay on top of your interests
Real‐time discovery engine
  Discovers new, relevant content tailored to your 
...
My Workshop Topics
Hands On                     Mini‐talks
  Clarifying your product      Case study on product 
  vision ...
Questions?
@danolsen
             www.yourversion.com
                    Copyright © 2010 YourVersion
Product Management 101 for Startups
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Product Management 101 for Startups

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  • Excited that Dan will be giving this course again during Product Weekend San Francisco Oct 10-12 http://bit.ly/14ZagOP
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  • If you enjoyed this SlideShare, I'll be teaching a 4-hour workshop in San Francisco on August 10, 2013: 'Building Great Products the Lean Startup Way'.
    More info at bit.ly/132S8R5
    Hope to see you there!
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  • very nice for entrepreneurs especially
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  • Hi. If you like my presentations, I encourage you to check out my startup YourVersion http://www.yourversion.com where I've been applying the product management principles that I talk about in my SlideShares.
    YourVersion is 'Pandora for your real-time web content': a personalized discovery engine that brings you the latest relevant news, blogs, tweets, and videos tailored to your specific interests.
    We launched to the public at the 2009 TechCrunch50 Conference where we won the People’s Choice Award.

    In addition to the website, we also offer a free iPad app http://bit.ly/yv-hd, a free iPhone app http://bit.ly/yv-app, and a free Android app so you can discover on the go. We also offer free browser extensions for Firefox, Chrome, and Safari browsers. Learn more at http://yourversion.com

    I'd love to hear any feedback or suggestions you have on our products.

    Thanks!

    Dan Olsen
    CEO & Founder, YourVersion
    http://www.yourversion.com
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Product Management 101 for Startups

  1. 1. Product Management 101 for Startups Dan Olsen CEO, YourVersion June 12, 2010 Copyright © 2010 YourVersion
  2. 2. What I’m 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
  3. 3. My Background Education BS, Electrical Engineering, Northwestern MS, Industrial Engineering, Virginia Tech MBA, Stanford Web development and UI design 19 years of Product Management Experience Managed submarine design for 5 years 5 years at Intuit, led Quicken Product Management Led Product Management at Friendster PM consultant to startups: Box.net, YouSendIt, Epocrates CEO & Cofounder of YourVersion, startup building  “Pandora for your real‐time web content” Copyright © 2010 YourVersion
  4. 4. Quick Poll of Audience Work at: Startup Established company Entrepreneurs Actively working on a startup idea Product live? Funding? Thinking of pursuing a startup idea Consumer vs. B2B Copyright © 2010 YourVersion
  5. 5. What is Product Management? 6 Copyright © 2010 YourVersion
  6. 6. Product Management is Critical Link in Value Creation Market Product  Development  • Current  Management Team customers • Prospective customers • Competitors Copyright © 2010 YourVersion
  7. 7. A Product Manager by any Other  Name Would Smell as Sweet Product managers are sometimes called Product marketing manager Program manager Project manager Label and definition of role can vary Based on industry or company Based on B2C (consumer) vs. B2B (enterprise) Based on stage of company Can be area of responsibility vs. actual position Copyright © 2010 YourVersion
  8. 8. A Process View of Product Management “Inbound” Product “Outbound” Management Product Long Business Product Management Term Strategy Strategy Market/ Sell Short Business Product Product Term Objectives Objectives Development Service/ Support Copyright © 2010 YourVersion
  9. 9. Overlap in PM and UI Design Roles Prospective Existing Customers Customers External Marketing Listening to customers Product  UI Interface Management Design Support Engineering QA Internal Copyright © 2010 YourVersion
  10. 10. 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
  11. 11. Lean Product Management for  Web 2.0 Products Dan Olsen, CEO, YourVersion O’Reilly Web 2.0 Expo SF May 6, 2010 Copyright © 2010 YourVersion
  12. 12. What’s So Great about “Lean”? What’s wrong with  Startups are at risk until  being not‐so‐lean? they’re profitable Funding cocoon only lasts  so long Limited resources Tech markets move fast Time is the real enemy “Time is the scarcest  resource and unless it is  managed nothing else can  be managed.” ‐ Peter Drucker Copyright © 2010 YourVersion
  13. 13. What’s the Formula for Product‐Market Fit? A product that: Meets customers’ needs Is better than other alternatives Is easy to use Has a good value/price Simple, right? It’s easy to understand conceptually  what we want to achieve HOW to achieve it is the hard part Copyright © 2010 YourVersion
  14. 14. Understanding Customer Needs 15 Copyright © 2010 YourVersion
  15. 15. Problem Space vs. Solution Space Problem Space Solution Space A customer problem,  A specific  need, or benefit that the  implementation to  product should address address the need or  A product requirement product requirement Example: Ability to write in space  NASA: space pen (zero gravity) ($1 M R&D cost) Russians: pencil Copyright © 2010 YourVersion
  16. 16. Problem Space vs. Solution Space Product Level Problem Space Solution Space (user benefit) (product) Pen and Prepare paper my taxes TurboTax File my taxes TaxCut Copyright © 2010 YourVersion
  17. 17. Problem Space vs. Solution Space Feature Level Problem Space Solution Space (user benefit) (feature) Gmail Make it easy importer to share a link with my friends Design Design Design #1 #2 #3 Preview with  User can edit  Allow me to Design checkboxes before import reuse my email #1 No No contacts #2 Yes No #3 Yes Yes Copyright © 2010 YourVersion
  18. 18. How Do You Prioritize User Benefits  and Product Features? Need a framework for prioritization Which user benefits should you address? Which product features to build (or improve)? Importance vs. Satisfaction Importance 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 Copyright © 2010 YourVersion
  19. 19. High Importance + Low Satisfaction = Importance of User Need Opportunity High Competitive Opportunity Market Not Worth Going After Low Low High User Satisfaction with Current Alternatives Copyright © 2010 YourVersion
  20. 20. Importance vs. Satisfaction Ask Users to Rate for Each Feature 100 98 Great 95 84 87 90 Bad 86 85 79 84 55 70 80 Importance 80 75 72 80 70 75 65 60 55 41 50 40 50 60 70 80 90 100 Satisfaction Recommended reading: “What  Customers Want” by Anthony Ulwick Copyright © 2010 YourVersion
  21. 21. Kano Model: User Needs & Satisfaction User Satisfaction Delighter (wow) Performance  (more is better) Need Need not met fully met Must Have Needs & features  migrate over time User Dissatisfaction Copyright © 2010 YourVersion
  22. 22. Olsen’s Hierarchy of Web User Needs (adapted from Maslow) Customer’s Perspective What does it mean to us? How easy to use is it? Usability & Design Satisfaction Increasing Does the functionality Feature Set meet my needs? Does the functionality work? Absence of Bugs Dissatisfaction Decreasing Is the site fast enough? Page Load Time Is the site up when I want to use it? Uptime Copyright © 2010 YourVersion
  23. 23. 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 Copyright © 2010 YourVersion
  24. 24. 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 small It’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 Copyright © 2010 YourVersion
  25. 25. Prioritizing Product Ideas by ROI ? Return (Value Created) 4 Idea D 3 Idea A Idea B 2 Idea C 1 Idea F 1 2 3 4 Investment (developer‐weeks) Copyright © 2010 YourVersion
  26. 26. Have to Prioritize Across Multiple  Dimensions At The Same Time Ease of Use Customer Value Quality Functionality Customer  Understanding Time Copyright © 2010 YourVersion
  27. 27. Ease of Use 28 Copyright © 2010 YourVersion
  28. 28. 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 time Reduces cognitive load Reduces frustration UI Design can be differentiator Olsen’s Law: “The less user effort required, the  higher the percentage of users who will do it” Copyright © 2010 YourVersion
  29. 29. The Design Gap at Many Startups Level Define Design Code 1 Engineering 2 Product Mgmt Engineering 3 Product Mgmt Engineering Product Mgmt Engineering 4 PM Eng UI 5 PM Eng Copyright © 2010 YourVersion
  30. 30. The UI Design Iceberg What most people see and react to Visual Design What good product people Interaction think about Design Information Architecture Conceptual Design Recommended reading: Jesse James Garrett’s “Elements of User Experience” chart, free at www.jjg.net Copyright © 2010 YourVersion
  31. 31. Learning from Customer Feedback 32 Copyright © 2010 YourVersion
  32. 32. Iterating Your Product Vector Based on  User Feedback in Solution Space Problem Space Solution Space (your mental model) (what users can react to) Help user Help user book travel plan travel Mockups / Code Customer Feedback Copyright © 2010 YourVersion
  33. 33. Persevere or Pivot? Increasing Product-Market Product-Market Fit = Fit Getting enough data to validate that you’re climbing up the Pivot right mountain Pivot Copyright © 2010 YourVersion
  34. 34. What Are You Getting Feedback &  Learnings About? Problem Space Solution Space (your mental model) (what users can react to) Feature Set Customer Understanding  (needs &  preferences) UI Design Messaging  Copyright © 2010 YourVersion
  35. 35. Getting Quantitative: Optimization Using Metrics 36 Copyright © 2010 YourVersion
  36. 36. Approaching Your Business as an  Optimization Exercise Given reality as it exists today, optimize our business results subject to our resource constraints. Copyright © 2010 YourVersion
  37. 37. Define the Equation of your Business “Peeling the Onion” Advertising Business Model: Profit = Revenue ‐ Cost Unique Visitors x  Ad Revenue per Visitor Impressions/Visitor x  Effective CPM / 1000 Visits/Visitor  x  Pageviews/Visit  x  Impressions/PV New Visitors + Returning Visitors Invited Visitors + Uninvited Visitors # of Users Sending Invites  x  Invites Sent/User  x  Invite Conversion Rate Copyright © 2010 YourVersion
  38. 38. Equation of your Business Subscription Business Model Profit = Revenue ‐ Cost Paying Users x  Revenue per Paying User New Paying Users +  Repeat Paying Users Trial Users x  Conv Rate Previous Paying Users  x  ( 1 – Cancellation Rate ) ( SEO Visitors + SEM Visitors + Viral Visitors )  x  Trial Conversion Rate Copyright © 2010 YourVersion
  39. 39. How to Track Your Metrics Track each metric as daily time series Unique  Page  Ad  New User  … Date Visitors views Revenue Sign‐ups 4/24/08 10,100 29,600 25 490 4/25/08 10,500 27,100 24 480 … Create ratios from primary metrics:  X / Y Example: How good is your registration page? Okay: # of registered users per day Better: registration conversion rate = # registered users / # uniques to reg page Copyright © 2010 YourVersion
  40. 40. Sample Signup Page Yield Data Daily Signup Page Yield vs. Time New Registered Users divided by Unique Visitors to Signup Page 100% 90% 80% Daily Signup Page Yield 70% 60% 50% 40% 30% Started requiring registration 20% Changed Added questions messaging to signup page 10% 0% 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 10/1 0 Copyright © 2010 YourVersion
  41. 41. Identifying the  “Critical Few” Metrics What are the metrics for your business? Where is current value for each metric?  How many resources to “move” each metric? Developer‐hours, time, money Which metrics have highest ROI opportunities? Metric A Metric B Metric C Good ROI Bad ROI Great ROI Return Return Return Investment Investment Investment Copyright © 2010 YourVersion
  42. 42. Google Analytics •Unique  visitors •New vs.  returning •Pageviews •Time on site •Top referrers •Top geos Copyright © 2010 YourVersion
  43. 43. 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 Copyright © 2010 YourVersion
  44. 44. Approaching UI Design Analytically Typical UI design question: “When using web pages, do users scroll down?” ‐ Yes ‐ No 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, large Seek high‐ROI UI changes Copyright © 2010 YourVersion
  45. 45. Metrics to Validate Product‐Market Fit Survey results Importance & Satisfaction Net Promoter Score Survey.io “How would you feel if you could no longer use Product X?” Very disappointed, Somewhat disappointed, Not disappointed User behavior Prospects sign up (high conversion rate) They keep using it (high retention rate) They use it often (high frequency of use) Copyright © 2010 YourVersion
  46. 46. Continuous Improvement 47 Copyright © 2010 YourVersion
  47. 47. Adding Metrics and Optimization to  your Product Process Site Level Business Product Prioritized  Plan Objectives Objectives Feature List Scoping Feature  Level Requirements  Design & Design Code Test Launch Develop Metrics & User  Optimize Feedback Copyright © 2010 YourVersion
  48. 48. Optimization through Iteration: Continuous Improvement Measure the metric Analyze Learning the metric Gaining knowledge: • Market Identify top  • Customer opportunities to improve • Domain • Usability Design & develop   the enhancement Launch the enhancement Copyright © 2010 YourVersion
  49. 49. Product Management 101 Cheat 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
  50. 50. Great way to stay on top of your interests Real‐time discovery engine Discovers new, relevant content tailored to your  specific interests News, Blogs, Tweets, Webpages, Videos Bookmark and share via email, Twitter, Facebook Weekly personalized email digest Free iPhone app Firefox toolbar, Chrome extension, bookmarklet Launched at TechCrunch50, won People’s Choice Check it out at www.yourversion.com Copyright © 2010 YourVersion
  51. 51. My Workshop Topics Hands On Mini‐talks Clarifying your product  Case study on product  vision validation Identifying customer  Case study: in‐depth  benefits feature analysis Prioritizing features Case study: using  Evaluating your  metrics to optimize product’s UI design UI Design 101 for PMs Optimizing your new  Working with developers user flow Creative bootstrapping Google Analytics Myers ‐ Briggs Copyright © 2010 YourVersion
  52. 52. Questions? @danolsen www.yourversion.com Copyright © 2010 YourVersion
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