Is software product management needed in a startup?


Note: I had written this as a guest blog post last year on Subrata Majumdar’s blog called Confessions of a Digital Immigrant, that I am publishing here.

Is a software product manager needed during early stages of a startup? If yes, what should be his/her role,  given that everyone tends to wear multiple hats and the distinction between Product Management/Marketing and Architecture/Development is blurred. Is this a healthy cross-pollination or a disaster in the making?

I will offer my opinions on these questions drawing on my 13+ years of experience in the software industry and having played a role in the creation of successful products and utter failures.

1) Is a software product manager needed during early stages of a startup?

Yes, a software product manager is absolutely needed right from the early stages of a startup. A bunch of engineers can band together and write awesome software. But often, engineers fail to ask the fundamental questions – nothing against my development colleagues, they have enough to worry about to begin with.

1.    What problem does it solve?

2.    How many customers have the said problem?

3.    Are the customers willing to pay to solve the problem?

4.    Who is going to buy the darn thing and will they pay enough for us to be profitable?

5.    Does this solve the problem the way the customers expect it to work or do they have to change their ways?

It is a software product manager that will help a company to answer the above questions and make sure product development is aligned with customer problems. Only then will a company be able to create a business, sustain it and be successful.

Otherwise, you run into the infamous argument (I call it a trap) that I have heard over and over – if we build something, they will come. No – unless you have something they absolutely want at the price they want, they will NOT come. If the user experience does not save them time or money, they will keep solving the problem the old way because a) they do not have time to learn new ways and b) humans by nature are resistant to change.

There have been very successful products that created paradigm shifts, but more so because of the tremendous value and differentiation they offered the customers. For example, in mid 80’s, Pro/ENGINEER the 3D mechanical design software from PTC was the pioneer in creating this market segment by switching a lot of users from AutoCAD 2D design software to 3D. It was hard to use, it was expensive, it needed designers to completely switch their ways, but the design benefits were very obvious to those users that switched (and not to mention PTC’s very aggressive marketing and sales force). But paradigm shifts are rare. I am not suggesting that you do not innovate and create new ways to solve existing problems, but new ways should always have easily understood customer benefits. Otherwise, you will face adoption resistance.

You could also argue that one could launch a product and let the customer community take the role of helping you discover problems the product could solve. Yes and No. I would argue that it needs to solve one particular customer problem well enough to get noticed even by the early adopters. Unless you do this, no one is going to even consider buying/using your product. Unless this happens, no one is going to help you shape the future of the product to solve other problems it could potentially solve. I will draw an analogy – does anyone ever get out of the house and start driving hoping that you will end up somewhere nice by chance. Not very likely. But we are willing to take such a risk developing products, hoping that we will strike rich?

In this day and age of the internet and its free products, there are companies that have created free products that have sustained themselves for very long (Facebook and Twitter come to mind), but in the long run even these companies have to figure out ways to monetize their business to survive.

2) What should be a software product manager’s role in a startup given that everyone wears multiple hats and the distinction between Product Management/Marketing and Architecture/Development is blurred?

The roles of Product Management/Marketing are blurred primarily because the industry does not have consistent job descriptions for these roles. In some companies, Product Marketing does market sizing, segmentation, positioning and pricing decisions and Product Management figures out the customer problems in the selected segment and then works with engineering to make sure the right and usable product is being built. In other companies, all of this ends up with the software Product Manager and this is usually true during the early days of a startup.

But are there limits to what the product manager needs to do, such that he/she is not spread too thin? Yes, there are. I tend to use a very simple litmus test to determine activities in which a product manager must be involved – Does this activity help the product manager in listening to the market and making sure that the right and usable product is being built? If the answer is No, free up your time by getting it off your schedule.

I would especially shy away from getting involved in architectural and development related decisions for a very good reason. As a product manager, it is your role to think like a customer and then inform engineering what problems need to be solved and how. You can advise engineering in terms of customer expectations in terms of scalability and performance. But it should be engineering’s sole responsibility to figure out how to architect/design the product to solve the problems a product manager has identified. If you get involved in the latter, very quickly you are going to look at problems in terms of implementation details rather than from a customer’s perspective. Not a good idea.

Having said this, I will not hire a product manager if he/she is not ready to wear multiple (but relevant) hats even in a mature organization, leave alone a startup. Product manager’s role is one of the most cross-functional roles in an organization. Hence, by definition, such a role requires one to wear multiple hats, supporting sales, supporting marketing efforts, making sure the right product is being built by engineers and so on.

Thoughts? Comments? What have you learnt from your experience as to what works and what does not?

22 Responses to Is software product management needed in a startup?

  1. Elaine Chen says:

    Yes, it’s absolutely needed if the startup has transitioned from technology investigation to product development. It’s a sad state if a bunch of engineers are let loose on a development cycle with no oversight (I can say this because I was/am a development manager too.)

    Alas, a lot of folks attracted to startups are unaware product management exists as a profession. I’ve had to campaign / lobby / evangelize aggressively in my last 2 companies to justify the role and to place someone in that role. Product management is evidently still a young profession…

  2. Yoav Shapira says:

    I wonder how much of this reasoning is based on the assumption that developers do not want or cannot speak to customers (or prospects) themselves.

    I much prefer the Steve Blank / Eric Ries approach as described on their blogs and in “Four Steps to the Epiphany.”. You should also check out the #leanstartup tag on Twitter.

    There are very fundamental reasons PMs have to write blog posts like this all the time, to keep justifying their existence and the pat each other on the back like the above comment. If the need were obvious or agreed upon you wouldn’t need to evangelize it all the time…

    • gopalshenoy says:

      Yoav,

      Thanks for the comment. Couple of things
      1) I am not making an assumption that there are’nt any developers who are very business savvy who are very comfortable talking to customers and understanding the pain points which if solved will create a sustainable business. I have worked with a few such folks. On the other hand, the vast majority of the developers I have worked with are not. They think more in terms of implementation than from the user’s perspective and also not from a “is there a sustainable business here?” perspective. This is what good product managers do. I am sure there are some product managers who can write decent code since they have a development background, but that does not mean that we don’t need developers.

      2) Evangelism – Yes, product management unfortunately still needs to be evangelized. But such evangelism is not to justify my or other PM’s existence, but in fact to educate many of the value of product management. (and I feel quite secure in understanding and communicating the value I bring to my employer :-))) ). This is no different from evangelism of new ways of doing things whether it is agile development process, new ways of marketing, cloud computing etc.

      Here are some useful resources that talk about the need for a product manager in a startup or any company for that matter are:
      Inmates are running the asylum by Alan Cooper (http://bit.ly/bGNVVO)
      Interview of Bill Campbell, former CEO of Intuit posted on Saeed Khan’s blog (http://onproductmanagement.net/2009/10/05/hire-pm-first/)
      Product Inspired – great book by Marty Cagan who has worked at Netscape, AOL, ebay (http://bit.ly/b9BWad)

      All of these folks cannot be wrong about the value of PM in an organization.

  3. Saeed Khan says:

    Gopal

    Can you define what you mean by “supporting sales” and “supporting marketing efforts”?

    This is a problematic area because it can be interpreted in many ways and is a frequent reason that PMs get pulled into endless tactical, reactive support activities in a lot of companies. The means they can’t spend time in more proactive longer term planning and research.

    Saeed

    • gopalshenoy says:

      Saeed,
      By these support efforts, I mean educating the sales and marketing organizations on who the target customer is, their pain points solved by the product you have built, making these two understand the terminology the customer speaks, the value your product brings to the table etc. All these are best understood by the product manager (hopefully) from the in-depth market research that was done upfront.

      It is possible that in a startup, initially you may be asked to put together the sales collateral, do the initial product demo etc. but good organizations as they grow need to hire a full time product marketing person to do this. But I expect the product manager to wear this hat during the initial days (the 15 hour/day version :-))

  4. I think it is fair to say that software product management as a function is important for start-ups. However, I’m not sure if a software product manager as a specific role is a necessity from the get-go. Most start-ups are too lean to support the function, and product management role is fulfilled by various members of the management team. At some point, if the company is successful, it will make sense to bring on a dedicated PM.

  5. saeed says:

    I should add that Bill Campbell, former CEO of Intuit — a company with a very strong tradition of Product Management — says the following on this topic about who should be hired after the founder and CEO.

    ———-
    …And so, I know that sounds like a strange answer, Product Marketing, some people call it Product Management, but somebody who can really understand the dynamics of what goes on in a marketplace, apply technology to that marketplace, see how the technology can work, and continue to advise brilliant scientists so they can adapt their products to make sure customers are happy.
    ———-

    You can read the details on my blog and there is a link to the full interview with Campbell.

    http://onproductmanagement.net/2009/10/05/hire-pm-first/

    Saeed

  6. April says:

    Interesting post. I’m kind of with Yoav on this one, especially if you are talking about really early stage startups. Most of the startups I’m working with are taking a lean approach where the entire company is oriented around achieving product/market fit. When you have that, you don’t need to hire a separate person to be in charge of making sure development is aligned with customer problems. Would it help to have a person with a product management background be on the team? For sure, but their role is going to be looking after either the development side or the business side. PM as a separate role (like marketing) comes much later.
    April

  7. Rich Mironov says:

    Having been the first product guy at four startups (employee #18 to #35 each time), I strongly agree with Gopal’s main points. At the very earliest stage, it’s critical to have someone with strong product management skills (among others) to avoid mistakes that technical-only teams make way too often — even here in Silicon Valley where we should know better. Wearing many hats is required at any startup (I usually wear all of the marketing and product management and product marketing hats until we’re big enough to hire in), but it’s rare for the rest of the team to have experience with:

    – whole product thinking. What will it take to make customers successful? Tech teams tend to build the product piece parts, and leave out services; installation; license agreements; supportability; upgrade mechanisms; refund policies; documentation; revenue recognition; sales training; channel readiness…

    – how (exactly) will we make money at this, and how much will customers pay for it? It’s extremely rare to find an engineering team with any experience at pricing, so this gets left to the end. A coin flip for pricing units and packaging strategy and ROI tools and specific price points. IMHO, this may be a bigger determinant of success than any of the product features. Who’s responsible for tracking competitors and knowing how we’ll sell this puppy? And if we need to measure/meter the product in order to charge for usage, let’s design that in.

    – See my old post on “post-course corrections.” http://www.mironov.com/articles/post_course_correction/ The earlier we do thoughtful product planning, the easier/cheaper it is.

    – Engineers believe they know how to talk with customers and understand requirements, but they have no training and (often) weak skills on this. Typically, they confuse “what two folks told us” with “what various market segments need and will pay for.” I’ve seen/worked with dozens of tech startups that have built first and market-researched later, wasting tremendous amounts of development before finding out they really didn’t ask the right questions of the right people.

    You may not need a *full-time* product manager among the first dozen employees, but you should have someone who’s a *part-time* PM and part-time marketer to avoid the most blatant failure modes. And a full-time PM before you reach 35 employees.

    -Rich

  8. John Lawton says:

    I think one huge advantage to bringing a product managers into an early stage company is that it can free up the founder(s) to do things that they are more uniquely qualified for. A skilled product manager can execute on the founder’s vision while the founder can be more available to manage the company. At some point the founder needs to be removed from the day to day product decisions in order for the company to scale effectively. I think most startups bring in product managers too late rather than too early.

    • Phil Green says:

      This can be hazardous for some however. In many startups the founder is very hands on, has been doing the PM til now and is unable to effectively relinquish the reins to the newly hired PM.

      • John Lawton says:

        Yes, my point exactly. The longer a founder is hands on the more difficult it is for the founder to disengage from the day to day product decisions. I think the most effective founders are those who hire well and delegate well. The founder should either hire someone to manage the company or hire someone to manage the product.

  9. Phil Green says:

    You touch on it with your point about paradigm shift – in some cases the “if you build it they will come” is true. I suppose Steve Jobs would be the poster boy for this.

    http://www.aipmm.com/anthropology/2010/02/you-cant-just-ask-customers-what-they-want-steve-jobs.php

  10. Rich Mironov says:

    We’re mostly talking in generalities here. Perhaps a few throw-against-the-wall metrics?

    A startup with less than 10 people will rarely have a full-time PM, unless s/he is one of the founders.
    – These tiny companies nicely divide into [1] those with founders who have a clue about markets, ROI, how selling working, whole product thinking, pricing, etc, and can stumble through until the next stage, and [2] pure engineer-driven teams with the mystical belief that the best products win, and their idea is truly revolutionary, and any fool can see why.
    – In my experience, 75%+ fall into group [2]. They imagine themselves marketers, and much of what they build turns out not to be very useful. Crib death rate in this group is very high.

    For startups that reach 15-25 people, get something mostly build, find a few customers, etc. it’s time to hire a full-time product manager. IMHO, this should happen ahead of outbound marketing (since there’s not much to sell yet) but rarely does. One good PM will make the rest of the company much more effective and efficient. I’ve run both functions, and tilt toward PM in the earliest days and toward Marketing once we know more clearly who wants our stuff, channels, price points, competition, etc.

    Any company with 50+ employees that lacks a product manager is probably off the rails strategically.

    Rich

    • David Fulton says:

      Rich and Gopal,
      I wish I had found this post earlier. At a minimum, I would have referenced it my blog post entitled “Should a Product Manager be one of your first 15 employees in a start-up?” which can be found at http://wp.me/pRvZI-3Z
      -dave-

  11. Richard Hom says:

    There are many possible iterations to this question. Some are based upon the wisdom that a non-developer should stake out responsibility early on in order to achieve a marketable product. Some others will advocate a role later on.

    In my opinion, if the developers are using somebody else’s money (VC etc.), I believe that there would be sufficient expertise to satisfy the early stage product prototype and roll out of “1.0 release”.

    What is also true that after the “1.0 release”, that marketing has to propel this target past the early adopters into general adaptation. This is definitely where software product marketing as a function and as a role is needed. It is here that someone can take the product out of the developers’ hands and mold further the product into something that is salable. Leaving the product marketing function within development past the “1.0 release” may hinder the marketability of the product as the product is too dear to the developers to see it transformed to a marketable product.

    Lastly, the technical expertise of the team is important. Where software product management might be essential in the early stage is the non-technical entrepreneur who might want to know whether a product is marketable rather than technically feasible. In my experience, the technical entrepreneur probably has sufficient grasp of the market to get the product going. Only then when there is need for more time to dedicate to the product should the entrepreneur entertain giving up that role to a dedicated asset.

    In summary, the role and need for a dedicate software product function is dependent upon the stage of development and the technical abilities of the initial team.

    Richard Hom
    Public Policy and Marketing Consultant
    Twiter ID “grandrounds4ods”

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  13. Rory Ramsden says:

    After looking over this blog post I took a look around the site. You have done a great job gathering all this information.

  14. Jay Gundotra says:

    How much does a part time software Product Manager cost? What is the average salary for a full time one?

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