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Product Management 101
for Startups
Dan Olsen
CEO, YourVersion
June 12, 2010      Copyright © 2010 YourVersion
Product Management 101 for Startups
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
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
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
What is Product Management?




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




Market            Product    Development 
• Current       Management      Team
  customers
• Prospective
  customers
• Competitors




                             Copyright © 2010 YourVersion
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
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
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
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
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
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
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
Understanding Customer Needs




               15   Copyright © 2010 YourVersion
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
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
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
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
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
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
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
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
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
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
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
Have to Prioritize Across Multiple 
                  Dimensions At The Same Time

                                                        Ease of Use
Customer Value




                                              Quality


                              Functionality


                     Customer 
                   Understanding
                                     Time
                                                           Copyright © 2010 YourVersion
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 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
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
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
Learning from Customer Feedback




                 32   Copyright © 2010 YourVersion
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
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
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
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 results
subject to our resource constraints.




                            Copyright © 2010 YourVersion
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
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
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
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
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
Google Analytics
•Unique 
visitors
•New vs. 
returning
•Pageviews
•Time on site
•Top referrers
•Top geos

                                    Copyright © 2010 YourVersion
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
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
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
Continuous
Improvement



      47   Copyright © 2010 YourVersion
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
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
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
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
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
Questions?
@danolsen
             www.yourversion.com
                    Copyright © 2010 YourVersion

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