Creating Something from Nothing:
Product Management for v1 Products
Dan Olsen
CEO, YourVersion
Nov 2, 2009
               ...
Copyright © 2009 YourVersion
What I’m Covering
Understanding customer needs
Prioritization and maximizing ROI on 
engineering resources
Validating your...
My Background
Education
  BS, Electrical Engineering, Northwestern
  MS, Industrial Engineering, Virginia Tech
  MBA, Stan...
For a v1 Product,
   Which is More Important?


                 or


 Qualitative          Quantitative 
Information?    ...
How is developing a v1 Product Different 
from developing a Later Stage Product?
With a v1 stage product, you have
WAY MOR...
What’s the Formula
        for a Winning Product?
A product that:
   Meets customers’ needs
   Is better than other altern...
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)       ...
The Customer Benefits “Ladder”

                          …which means one less thing to 
  Higher‐level
                 ...
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
                         ...
Kano Model: User Needs & Satisfaction
              User Satisfaction
                                  Delighter (wow)


...
Importance vs. Satisfaction
       Ask Users to Rate for Each Feature
              100                                   ...
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)




                 ...
The Art of Estimating Customer Value 
    for a Particular Product Idea
For any product idea, the Customer 
Value it creat...
Have to Prioritize Across Multiple 
                  Dimensions At The Same Time

                                       ...
Case Study: Product Validation
            Summary
My consulting client, CEO of TrustedID, 
had an idea for a new product
...
Case Study: Product Validation
    Developing Product Concept
Product Concept was a “marketing report”
that let consumers ...
Copyright © 2009 YourVersion
Copyright © 2009 YourVersion
Clustering Potential User Benefits to 
        Create Product Concepts
“Shield” Concept                 “Saver” Concept


...
Case Study: Product Validation
         Recruiting People
Telephone recruit of prospective customers
  Wrote screener usin...
Case Study: Product Validation
  Findings on Concepts &User Benefits
“Shield” Concept                 “Saver” Concept



 ...
Case Study: Product Validation
      Learnings from Research
Learned that “Shield” (anti‐junk mail) concept was 
stronger ...
Copyright © 2009 YourVersion
Case Study: Product Validation
            Summary
4 weeks from 1st meeting to validated 
product concept
Cost $1,500 to t...
User Benefits vs. Ease of Use
Q: If two products equally deliver the exact 
same user benefits, which product is better?
A...
The UI Design Iceberg
  What most
  people see
  and react to                       Visual
                               ...
Elements of User Interface Design
Consists of Three Distinct Elements:
  Information Architecture
     Structure and layou...
The Value of Usability Testing
Critical to talk with customers 1‐on‐1
Gain better understanding of
  Usability issues with...
“Ramen” Usability for Startups
Anyone can do it!
Ingredients:
  1 user with their laptop
  1 desk
  1 person to conduct us...
Typical Format for Customer Session
5 ‐ 10 min: Ask questions to understand user 
needs and solutions they currently use
3...
Dos & Don’ts of Conducting Usability
Do
  Explain to the user:
     Their usability test will help improve the product
   ...
And now,
for something completely 
       different…
     Quantitative!
       (finally)


                     Copyright ...
Approaching Business as an 
    Optimization Exercise


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

  ...
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
           ...
Continuous Feedback and
      Improvement



                 Copyright © 2009 YourVersion
Adding Metrics and Feedback to your 
            Product Process
                                                         ...
Optimization through Iteration:
  Continuous Improvement
                   Measure
                  the metric


       ...
v1 Product Management Cheat Sheet
Truly understand your customer needs
Get clear on your value proposition
Prioritize your...
Great way to stay on top of your interests
Real‐time discovery engine
  Discovers new, relevant content tailored to your 
...
Questions?
@danolsen
dan@yourversion.com   www.yourversion.com
                             Copyright © 2009 YourVersion
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Product Management For Version 1 Products: Creating Something from Nothing

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Dan's talk on product management from Startonomics Hawaii, part of Re-think Hawaii.

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  • Hi Dan,
    Thanks for the informative slides, I just wonder if you can explain in more details the rank order in slide 16?
    I couldn't understand it, does it related to competitors or what?
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • 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 & Cofounder, YourVersion
    http://www.yourversion.com
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • If you like my presentation, I'm excited to tell you about an all-day workshop I'm hosting on Jun 12th in Palo Alto. It's called 'Toolbox', and we'll be covering best practices in product management, UI design, and marketing with an emphasis on startups.

    Learn more at http://toolbox.eventbrite.com. Please use promo code 'slideshare' for a big discount! Thanks!
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • At my startup YourVersion, we've built our product using the principles that I talk about in this presentation.

    YourVersion http://www.yourversion.com launched at the TechCrunch50 Conference where we won the People’s Choice Award. YourVersion is a great way to stay on top of your interests. In addition to the website, we have a free iPhone app and Firefox toolbar.

    Please check it out at http://www.yourversion.com

    Thanks!

    Dan Olsen
    CEO & Founder, YourVersion
    http://www.yourversion.com
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Hi juki_7: I just tried downloading it and it worked fine. Perhaps it was a temporary SlideShare issue? If you keep running into the same issue, I'd recommend trying with a different browser (Firefox just worked for me).
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Transcript of "Product Management For Version 1 Products: Creating Something from Nothing"

  1. 1. Creating Something from Nothing: Product Management for v1 Products Dan Olsen CEO, YourVersion Nov 2, 2009 Copyright © 2009 YourVersion
  2. 2. Copyright © 2009 YourVersion
  3. 3. What I’m Covering Understanding customer needs Prioritization and maximizing ROI on  engineering resources Validating your product concept UI design Usability testing Will post slides to slideshare.net/dan_o Copyright © 2009 YourVersion
  4. 4. My Background Education BS, Electrical Engineering, Northwestern MS, Industrial Engineering, Virginia Tech MBA, Stanford PHP, MySQL, JavaScript, XHTML, CSS, UI design 18 years of Product Management Experience Managed submarine design for 5 years 5 years at Intuit, led Quicken Product Management Led Product Management at Friendster Olsen Solutions LLC, PM consultant for startups CEO & Founder of YourVersion, real‐time discovery startup Copyright © 2009 YourVersion
  5. 5. For a v1 Product, Which is More Important? or Qualitative  Quantitative  Information? Information? “When you’re Small,  start with Qual!” Copyright © 2009 YourVersion
  6. 6. How is developing a v1 Product Different  from developing a Later Stage Product? With a v1 stage product, you have WAY MORE uncertainty about: Who your target customers really are Which customer needs you should address How to best meet those needs What product design works best These are qualitative learnings/decisions Quantitative is also valuable (later) Copyright © 2009 YourVersion
  7. 7. What’s the Formula for a Winning Product? A product that: Meets customers’ needs Is better than other alternatives Is easy to use Has a good value/price Copyright © 2009 YourVersion
  8. 8. 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 © 2009 YourVersion
  9. 9. 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 © 2009 YourVersion
  10. 10. 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 © 2009 YourVersion
  11. 11. The Customer Benefits “Ladder” …which means one less thing to  Higher‐level worry about in my hectic life benefit (more abstract) …which makes me feel more in  control of my finances …which gives me a clear picture  of how much money I have Lower‐level Quicken makes it easy for me  benefit to balance my checkbook (more specific) Copyright © 2009 YourVersion
  12. 12. 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) Copyright © 2009 YourVersion
  13. 13. 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 © 2009 YourVersion
  14. 14. 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 © 2009 YourVersion
  15. 15. 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 © 2009 YourVersion
  16. 16. 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 © 2009 YourVersion
  17. 17. 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 © 2009 YourVersion
  18. 18. The Art of Estimating Customer Value  for a Particular Product Idea For any product idea, the Customer  Value it creates is higher: The higher the importance of the user need The lower the user satisfaction with the  status quo The higher the # or % of users to which the  idea applies The more frequently the product idea will  be used by users Copyright © 2009 YourVersion
  19. 19. Have to Prioritize Across Multiple  Dimensions At The Same Time Ease of Use Customer Value Quality Functionality Customer  Understanding Time Copyright © 2009 YourVersion
  20. 20. Case Study: Product Validation Summary My consulting client, CEO of TrustedID,  had an idea for a new product Team: me, CEO, head of marketing, UI  design consultant 4 weeks from 1st meeting to validated  product concept Paid prospective users $1,500 ($75 x 20) 1 round of iteration on product concept Copyright © 2009 YourVersion
  21. 21. Case Study: Product Validation Developing Product Concept Product Concept was a “marketing report” that let consumers more directly control the  direct mail that they receive Concept was fuzzy with various components,  so we broke it into 2 different “flavors”: #1 “Shield”: Service to reduce/stop junk mail #2 “Saver”: Opt in to receive money‐saving offers Within each concept, got feedback on modules  that mapped to a specific user benefit Worked with UI designer to create paper  mockups of pages for each concept (5 pages  each) Copyright © 2009 YourVersion
  22. 22. Copyright © 2009 YourVersion
  23. 23. Copyright © 2009 YourVersion
  24. 24. Clustering Potential User Benefits to  Create Product Concepts “Shield” Concept “Saver” Concept Reduce Find out what Money Compare Social Junk Mail “they” know Saving Yourself Networking about you Offers to Others Save Marketing Trees Report Marketing Marketing Score Profile Copyright © 2009 YourVersion
  25. 25. Case Study: Product Validation Recruiting People Telephone recruit of prospective customers Wrote screener using intuition for psychographic  segmentation Wanted users who work full‐time & use internet Fit for opt‐in concept: use coupons, Costco membership Fit for anti‐junk mail concept: use paper shredder, block  caller ID Recruiters used screener to recruit Scheduled 3 groups of 2 or 3 people to discuss  each concept for 90 minutes Moderated each group through the paper  mockups to hear their feedback Copyright © 2009 YourVersion
  26. 26. Case Study: Product Validation Findings on Concepts &User Benefits “Shield” Concept “Saver” Concept Reduce Find out what Money Compare Social Junk Mail “they” know Saving Yourself Networking about you Offers to Others Save Marketing Trees Report Legend Marketing Marketing Score Profile Strong appeal Somewhat positive Low appeal Copyright © 2009 YourVersion
  27. 27. Case Study: Product Validation Learnings from Research Learned that “Shield” (anti‐junk mail) concept was  stronger than “Saver” People didn’t like many of the “Saver” concept  components Learned users’ concerns / questions about “Shield” concept Refined “Shield” concept: Removed irrelevant components Improved messaging to address user concerns / questions Validated revised “Shield” concept with quick 2nd round of tests No customer concerns Clear willingness to pay Copyright © 2009 YourVersion
  28. 28. Copyright © 2009 YourVersion
  29. 29. Case Study: Product Validation Summary 4 weeks from 1st meeting to validated  product concept Cost $1,500 to talk with 20 users ($75  each) 1 round of iteration on product concept Identified winning concept that users are  willing to pay $10/month for Trimmed away non‐valuable pieces You can achieve similar results Copyright © 2009 YourVersion
  30. 30. 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 Not many companies excel at UI design ‘Ease of use’ can be differentiator Copyright © 2009 YourVersion
  31. 31. The UI Design Iceberg What most people see and react to Visual Design What good PMs and Designers 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 © 2009 YourVersion
  32. 32. Elements of User Interface Design Consists of Three Distinct Elements: Information Architecture Structure and layout at both site and page level How site is structured (sitemap) How site information is organized (site layout) How each page is organized (page layout) Interaction Design How user and product interact with one another User flows (e.g., navigation across multiple pages) User input (e.g., controls and form design) Visual Design “How it looks” vs. “What it is”, often called “chrome” Fonts, colors, graphical elements Copyright © 2009 YourVersion
  33. 33. The Value of Usability Testing Critical to talk with customers 1‐on‐1 Gain better understanding of Usability issues with your product Customer needs and problems What alternatives customers are using, pros & cons of each, customer preferences QA: use cases & bugs you haven’t seen Really a “user learning” session Make test as real for user as possible Copyright © 2009 YourVersion
  34. 34. “Ramen” Usability for Startups Anyone can do it! Ingredients: 1 user with their laptop 1 desk 1 person to conduct usability Pen and paper N optional observers N+2 chairs Copyright © 2009 YourVersion
  35. 35. Typical Format for Customer Session 5 ‐ 10 min: Ask questions to understand user  needs and solutions they currently use 30 ‐ 50 min: Usability test Non‐directed as much as possible When necessary, direct user to attempt to  perform a specific task 5 ‐ 10 min: Wrap‐up Answer any user questions that came up Point out/explain features you want to highlight Copyright © 2009 YourVersion
  36. 36. Dos & Don’ts of Conducting Usability Do Explain to the user: Their usability test will help improve the product Not to worry about hurting your feelings “Think Aloud Protocol” Ask user to attempt the task, then be a fly on the wall Ask non‐leading, open‐ended questions Take notes and review them afterwards for take‐aways Don’t Ask leading questions “Help” the user or explain the UI (e.g., “click over here”) Respond to user frustration or questions (until test is over) Get defensive Blame the user Copyright © 2009 YourVersion
  37. 37. And now, for something completely  different… Quantitative! (finally) Copyright © 2009 YourVersion
  38. 38. Approaching Business as an  Optimization Exercise Given reality as it exists today, optimize our business results subject to our resource constraints. Copyright © 2009 YourVersion
  39. 39. 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 © 2009 YourVersion
  40. 40. 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 © 2009 YourVersion
  41. 41. 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 © 2009 YourVersion
  42. 42. Continuous Feedback and Improvement Copyright © 2009 YourVersion
  43. 43. Adding Metrics and Feedback 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 © 2009 YourVersion
  44. 44. 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 © 2009 YourVersion
  45. 45. v1 Product Management Cheat Sheet Truly understand your customer needs Get clear on your value proposition Prioritize your feature set based on ROI Validate your product concept with users Launch v1 Talk with users 1‐on‐1 and get feedback Learn and iterate Copyright © 2009 YourVersion
  46. 46. 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, Products Bookmark and share via email, Twitter, Facebook Launched in Sep at TechCrunch50 Free iPhone app Check it out at www.yourversion.com Copyright © 2009 YourVersion
  47. 47. Questions? @danolsen dan@yourversion.com www.yourversion.com Copyright © 2009 YourVersion
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