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My final comments on a Twitter discussion about Design & India focused startups

Here’s the starting point of the discussion on Twitter:


Just to summarize my thought: the original referenced article talked about design being a key pillar of a startup. My contention is that that is a developed market centric view which should be applied carefully to India focused startups. It is first more important to understand the consumer’s concerns & see how design fits in there. Saying that the design sense of the Indian consumer is “not evolved” is saying that consumers haven’t yet caught up – that’s wrong. It is not the consumer’s job to “catch up”, it is the job of a company to understand what are the drivers of earning the consumer’s business. Design has become such an important differentiator in developed markets because consumer does not have issues of systemic trust.

None of this is suggesting that design is not important. But as entrepreneurs we need to allocate capital and resources correctly and figuring which problems are the biggest drivers is critical to that exercise. Design, IMHO, comes after trust has been earned, after operations are smooth … it is not a 1st order concern.

Sense of aesthetics is also fundamentally affected by surroundings: garbage on the roads, construction everywhere; the average consumer’s desire in India is just to have things work and be clean. Aesthetics is not yet a mass concern. Think of the online banking site of any Indian bank – from global standards of UI/UX they are horrible. In fact the one I use (large well known bank) is downright buggy and randomly logs me out. This has not been fixed in over 6 years; 6-long-years! You’d think this would be the death knell for the bank. But they have retail locations everywhere, they advertise heavily and for an average consumer that solves the first order problem: this bank will not run away with my money or go down tomorrow.

Take a look at these two great posts that came up in the Twitter discussion:

In short: when doing business in Rome, study Rome.

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101 Takeaways from the First ProductNation Boot Camp #PNCamp

The inaugural edition of PNBootcamp at Pune is the best thing to come out from iSPIRT yet – in my opinion.  For all the startups that missed this bootcamp, I strongly recommend staying tuned to pn.ispirt.in for the next playbooks and bootcamps.

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There were two themes in the bootcamp:

  1. ‘Discovery Hacking’ for those companies who have not yet figured out the product-market fit.
  2. ‘Scale Hacking’ for those companies who have figured out the product-market fit and are now looking to build a repeatable and scalable business model.

The participants were divided into cohorts of 15 and these cohorts took part in day long highly interactive discussions facilitated by practitioner entrepreneurs who have ‘been there, done that’.  It was very heartwarming to see the ‘pay it forward’ maxim of iSPIRT in full steam.  Successful entrepreneurs disseminated their hard-earned learning from their journeys with the intent to improve the product ecosystem in India and ‘let a thousand flowers bloom’.  Do visit the PNBootcamp website https://pn.ispirt.in/pncamp/ to look at the illustrious list of facilitators and volunteers.

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While trying to figure out how to condense the 50 pages of my notes from the bootcamp into a blog post, I felt that I could do most justice by writing down the top 101 takeaways.  Here goes:

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Discovery Hacking:

  1. The most common mistake that startups commit is to build something nobody wants.  This is also the largest risk.  The most important question to ask is – will my offering remove customers’ pain point? One must first confirm ‘the need-gap’ priority.  Use tools such as surveymonkey, competitive analysis and customer interviews to see if the need is there and also if it is important enough that people will want to pay for a solution.  People might say that this is a great product, but they may not want to pay for it.
  2. Definition of a customer:  “The person who writes the cheque”.  Even if you have users, but no one wants to pay for your offering, then you don’t have customers.  The customer is the person who pays you, and can be different from the person who uses your product.
  3. Do not confuse validation of the problem with validation of your solution. Use the Minimum Viable Product (MVP) to validate that your solution is indeed solving the problem for the customer. ‘Build, and they will come’ is not a sound philosophy.  It rarely works.
  4. If not even a single prospect is jumping out of their seats for your solution, then the product-market fit is poor.  It gets a lot harder after that.
  5. Startup journeys are typically 4-6 years.  You need to be in it for the long haul.  Startup journey is very hard. There are times when it can be frustrating for days or months at a stretch. Consider the opportunity cost and your level of seriousness before starting up.
  6. There are several distractions at each point during the startup journey.  Maintain your focus on two important things – Sell and Code. If you are not selling or coding, be 200% sure how that activity is going to help your startup.
  7. Building a business is bloody difficult. Learn from your peers and other people’s mistakes.
  8. Focus on prototyping instead of pitching. Focus on delighting your customers.
  9. Sell. Sell. Sell. Sell first even before building the product.  ‘Sales’ is serious business. It is the most important aspect of building a business.
  10. Investors are not always right.  They just have their point of view based on their experiences, just like everyone else. Build the business. Investors will follow.
  11. It is a myth that Sales involves lying and misrepresenting facts.  The best sales guys are truthful.
  12. It is a myth that one needs a business degree to do good business.  Some of the best sales people are techies.
  13. It is a myth that techies can’t sell. In the earlier days of the product, when it is not well known, it is the founder’s passion and vision that helps selling.
  14. Hiring a sales guy early on is a mistake.  Sales people should come later in the cycle when the business model is validated and you need to start scaling.
  15. You are in the driver’s seat. Never take eyes off the road, ever. Keep laser focus on your business. Avoid distractions like media and news about other companies.  There is no room for distractions in a startup.
  16. Startups are founded typically due to emotional reasons, which makes it all the more important to have a disciplined approach.  Also, friends and family encourage and we start off with a lot of personal biases.  As far as possible, decisions should be driven by metrics, score cards and analytics.  Create the discipline to value cold hard data over opinions.
  17. You have to be very scientific in your approach.  You need to have a good understanding of answers to the following questions:
    1. What is the problem you are solving? What is the validation?
    2. Who is your customer? What is your niche? Initially, you must target as narrow as possible and then expand to other target segments after you achieve success there. Become the king of a small hill first and then expand.
    3. How do you sell? What is your cost of sale? If your cost of sale is more than the Life Time Value (LTV) of the customer, then it is not going to be a profitable business.
    4. What is the size of opportunity?  This is basically to get a sense of how much your business can potentially grow to. This question is important for your own personal goals and also if you wish to approach investors.  If the size of opportunity is too small, it may not be worthwhile for you to try to build the business.
    5. Who is your competition and what are the current substitutes? This is important to see if people are going to use your product.  Remember that if you are automating something, one of the substitutes is doing it manually.
  18. Lean Startup Methodology works.  Every startup founder must be familiar with these concepts.  Great books on this topic are ‘The Lean Startup’ by Eric Ries and ‘The Startup Owner’s manual’ by Steve Blank and Bob Dorf.
  19. Use experiments instead of opinions.  Most of what we start with are “Assumptions” and “Opinions” and not “facts”.  No idea survives first impact with the actual customer.
  20. The only way to validate our opinions and assumptions is through clear metric driven experiments. Convert the assumptions into ‘verifiable statements’ i.e. numerical hypotheses.  For example, if show the paper sketch of my product to 10 potential customers, 2 of them will agree to give me a conditional advance order.  Then run this experiment and measure the response.  Based on the response, you must use your judgment to either persevere or pivot.  Design tiny experiments which can be run in the least amount of time.11268731253_d58684b4da_o
  21. Do experiments with an open mind.  Design the experiment to validate your assumption rather than just reinforce your bias.  Savor any surprise findings from your experiments as that new knowledge will help you make better judgments.
  22. Do all your experiments with your Minimal Viable Product (MVP).  You can add scalability, security and other aspects after you have got a paying customer.  A general rule of thumb is that it should not take more than 3-5 months to validate your assumptions.
  23. There are different kinds of MVPs with varying fidelities that will help validating your assumptions.
    1. Customer interviews and surveys. Low fidelity.  This might help in validating the problem, but it does not validate your solution.
    2. Landing page on your website + traffic driven using Google adwords. Also low fidelity, but helps in validating the problem and that people are looking for solutions.
    3. Concept videos.  Similar fidelity to landing page.
    4. Paper sketch.  A little more fidelity as now prospects can see how you are planning to solve the problem.
    5. Digital wireframes. More fidelity as they can visualize how your solution might be and whether it is of value to them.
    6. Concierge MVP or Fake-O-Backend.  High fidelity. This is where you manually process the customer requirements without putting any code or systems in place.  But the customer is able to use your service to solve his problem.
    7. Working prototype.  High fidelity.  Immediate feedback on whether your solution solves their problem.
    8. The product itself.  Highest fidelity.  Typically, MVPs should not have this level of fidelity.
  24. The cost of change (a.k.a pivot) increases exponentially as the product goes through idea, prototype and launch stages.  Also, the emotional commitment increases at each stage which makes it much more difficult to make those changes.  So try to make any changes as early as possible.
  25. Do not make large investments without validating your assumptions.  Among your assumptions, pick the ‘leap-of-faith’ assumption which is most important and validate it first.  If the ‘leap-of-faith’ assumption fails, everything else fails.
  26. If you are in the business of ‘marketplace’, you need to validate your assumptions from both the suppliers and the consumers.  Validate the supplier side assumptions first as they are the ones who will be making money in the marketplace.  If you cannot validate supply side assumptions, there is no need to validate consumer side assumptions.
  27. First do the value experiments to figure out if there is a real need your product is solving.  Once you have figured out that you are building something that some is willing to pay for, then run pricing experiments to figure out the right price for your product.  Pricing experiments can also be done using A/B testing.  For different sets of users, try different price points to figure out what price you want to finally decide. Simplicity is generally a very good thing, particularly in pricing models.
  28. Ideally, get an advance purchase order or a letter of intent (LOI) before writing any code.  This also validates that you have found a buyer.  Sometimes, we might a ‘user’, but that person may not have the buying authority.  In those cases, you might be building something that is difficult to sell.  It is better to sort out ‘who is the buyer’ assumption as early as possible.
  29. For startups, it might be sometimes difficult to get an advance purchase order.  In those cases, validate the buyer assumption by seeking non-monetary commitment from the customer. For example, if a pilot needs to be done, the customer might be able to offer you accommodation and food in their guest house and also commit the time of some of his employees.
  30. Focus on one BIG problem at a time. For example, do not try to solve a BIG technical problem and a BIG sales problem at the same time.  Focus on doing a few things well, instead of doing a lot of things.11268730054_1041491b59_o
  31. Make it very painless for the user to give you feedback.  This is the most valuable thing during ‘Discovery’ stage. Use this feedback and iterate.
  32. Always have a way for the customer to get a free trial.  There is no substitute to the user actually using the product to validate your assumptions.  And reduce the friction to trial as much as you can.  Make it as easy as possible and don’t make the user think or read.  Case studies, videos etc. help. But they will not buy till they experience the product.
  33. If your offering is a service (as opposed to a standalone product), do not give it for free.  If people do not want to pay for a service, it means the need is not important enough.
  34. Till such time that you have found the product-market fit and have got paying customers, do not hire a sales person. Hiring sales people is a scale problem, not a discovery problem.
  35. It is usually good if your product idea comes to you because you are facing the problem yourself. This accelerates the validation of your assumptions and reduces the risk of making mistakes.
  36. Customers will buy the product if it solves their problem, not because you are good at selling. The product should be able to sell despite a poor sales experience.
  37. Getting the target customer right is very important.  Avlesh Singh of WebEngage initially felt that engineers were his customers as it would automate work for them and keep the marketing guys at bay.  But he realized that engineers were not buyers.   They didn’t have the budgets or business reasons or the willingness to buy their product.  However, the marketing folks were really interested in their product at it solved their business need.  They also had the budget and they could see return on investment.  It would also make them less dependent on their internal engineering teams. Pivoting the customer segment from ‘Developers’ to ‘Marketers’ was a major turning point in WebEngage’s journey.
  38. Pricing model should be based on customer’s perceived value, not on some technical aspect.  For example, instead of charging for number of HTTP requests, it might be better to charge based on number of surveys completed.
  39. Derive your price based on market dynamics (current manual cost or pricing of competition) and not on your incurred costs.   Build some differentiation in your offering and use that for price arbitrage.
  40. For techie founders, one thing that needs particular attention is that techies are highly opinionated and look at things in black and white.   We need to get over our strong views. One way to achieve this is by meeting and talking to different kinds of people and getting their perspectives.11268700366_a652a671ca_o
  41. By writing good content on your blog site, you can attract customers and establish thought leadership.   If a person spends 8 to 10 minutes on your web-site, it is very likely that he will sign up for your free trial.
  42. Quora is a very good forum to attract customers.  Provide genuine answers without shamelessly promoting your product.  People hate it and you can also get blocked on Quora for directly promoting your product. One tip is to include your product name in your Quora user name – that way when people see your name, they see the name of your product too.
  43. What works for some other company might not work for you in your context.  There are several factors at play and it is difficult to figure out. The only way is to run various experiments and see what works.
  44. Think in terms of how the end user is going to use your product.  The human element is very important.  You must know your user well – really really well. Know the context in which the user is going to use the product – the user’s demographic, life style, social life, aspirations, work life schedule, how they work, and their aspirations. Create personas of the users.  There are free templates available online to create target personas.
  45. Feedback from users should shape the product.  It is common to see several bug fixes or new features between version to version. But rarely do we focus on customer delight as the focus of a release.  Customer delight should get more priority than new features.
  46. You must observe how the user uses the product to get a deeper understanding. If you ask customers pointed questions, they will give pointed answers and hence it is not very valuable.  Engineering, business development, product mgmt and UI teams should all experience first-hand how the user uses the product.
    1. Never ask customer what they need – instead observe what they do.
    2. Never ask for their feedback – instead watch them use it.
    3. Never just listen to what they say – instead observe their behaviour.
  47. There are free tools for capturing the user behaviour. They help you record the user experience through a web cam when they are using the product. Search for them online and evaluate for yourself.
  48. Sign up folks from your target segment. Call 5 folks on a Saturday and observe their behaviour with the product.
  49. Be frugal and save money. Do not splurge during initial days.
  50. Startup people have to be hands-on. Should be ready to roll up the sleeves and do all kinds of work.11268807103_4aa0e9f56f_o
  51. You have to persevere. You will hear a hundred “No”s before your first “Yes”.  Tip: People seldom refuse a cup of coffee.  Ask for that small coffee meeting. If the customer sees value in your offering, he will give you more time.
  52. Hiring good people is good. If they are good hearted, better.  Focus on getting a team that can run as fast as or faster than you.
  53. Luck is more important than competence.  Competence is a must, but you need luck also to be successful. There are several factors which are not in your control but can have a major impact on the outcome of your company.  However, you must run like the devil is behind you and not just wait for lady luck.  When a lucky event happens, you must analyze it to figure out why the lucky event happened.
  54. Sales, product management and engineering are three important pillars of a startup.  Ensure you have specific individuals who are tasked with each responsibility.  The same person can play multiple roles, but you must be clear on who is playing which role.
  55. You must qualify the companies/individuals who will be suitable for your product. Not everyone is going to be your customer.

Scale Hacking:

  1. Scale hacking is all about aligning and finding the business model after getting the product-market fit. The key to scale hacking is to find out what is working and do more of it.
  2. Initial sales happen because of the founder’s passion. Sales people need a template for selling.
  3. If you have a lousy product, nobody can sell it.  The product should be great and the positioning should be right. Folks should be willing to buy it in spite of the sales experience.
  4. There is no template for scaling.  You need to explore different avenues and channels. Some of them will work for you and some of them won’t. Even when some are working, you should be exploring new channels as you might be missing out a very good revenue source.
  5. You need aim to be in the top 3 players in your market if you desire to scale. You first have to be a player on par with competition.11565850805_891d74a239_b
  6. You might have to change your sales pitch multiple number of times based on reaction from the market.
  7. When the customer can visualize the benefits of your product, it makes a huge difference.  E.g. if you say that the user can jog after taking your medicine – it can be visualized by the customer and have a bigger impact than just saying it will make you healthy. Visuals are very important (good graphics). Do not expect the customers to extrapolate mentally.
  8. You have to show customers the solution to their problem. For example, freshdesk creates a site called customer.freshdesk.com and puts their logo there so the customer can see how the solution will look like. Also, they show role based dashboards based on who they are giving the demo to.  Different people like to see different things and you need to customize your demo to how it will help them.
  9. Marketplaces are something you should definitely consider for scale hacking. E.g. Google app store.
  10. Integrations are the new SAAS channel. E.g. integrate with salesforce, basecamp etc. Then write a blog on how the integration works. Write to the business person at the Salesforce side and ask them also to promote your integration.  Typically, they are also interested in promoting something that promotes their product.
  11. Positioning is very important in the mind of the customer.  For example, though Freshdesk does several things – the core positioning is that it is a customer support solution.  For example, they provide invoicing, chat, time sheet also, but they do not position them as separate products – it is all under the umbrella of customer support.
  12. Unassisted buying (e.g. purchase directly from the website) can get you only small tickets. If commitment is higher, customers need to talk to a live person and you need to invest in field sales.
  13. Importing from competition is a 1.0 feature.  Do not postpone it thinking it is not your core work. From customer’s point of view, it is very important to have his current data migrated over to your product.  Otherwise, they may not even bother to try your product. Make it very easy for your customers to come over to your solution.
  14. Customer’s attention span is very small. He might sign up for your product, but forget about it.  For example, a customer might provide his email id and sign up, but might not even bother to go to his Inbox to click on the verify link.  Hence, engaging leads is very important and focus your energies on getting them to trial your product.
  15. Nobody likes to talk to a sales guy. Have a title like ‘account manager’ etc. and this person says that he is trying to help out with the evaluation.11268639314_bf2074fbe3_o
  16. Webinars are very effective for scale hacking.  Offer a free webinar on a related topic and soft sell.  There has to be enough meat in the webinar content itself which will be attractive and worthwhile for the attendee.  In webinars, people do not want to hear your pitch. They want to see thought leadership and practical advice for them. If you can, have customers speak at your webinars.  This is better than someone from your company speaking. For example, the title of a webinar can be ‘CMO of company X speaks on how to maximize ROI on Y’.
  17. Once you start scaling, you must have support staff available in the time zone of the customer. This is very important due to global competition.  In India, companies have different shifts of support personnel working from India but during the business hours of the customer’s time zone.
  18. Pricing is a challenge.   You should look at the current cost for the customer, price charged by competition and come up with your own pricing.  If it is too high, it scares customers away and if it is too low, you end up leaving money on the table.  But this problem is unsolvable.  You can only do price experiments to figure out the price of your product in the market.
  19. ShopSocially moved to small monthly subscription + cost per social action. This way they have a very low entry cost for the customer and as the customer uses more of their product, they will pay more.
  20. Try to get a marquee customer in your portfolio.  It will have a huge impact on your credibility and growth.  Suddenly, prospective customers will look at you in a very positive way. So you need to be flexible on pricing during the initial days.  Give discounts in exchange for case studies and testimonials. Or give discounts over larger timeframes. E.g. 3 months free if they purchase a 1 year license.
  21. Evaluating a sales person is tricky, unlike an engineer where the results can be directly attributed to the efforts.  Tip: Shadow your new sales hire for 3 months to judge for yourself if is good for your business.  If there is a mismatch, let go of the sales guy as early as possible. Otherwise, the cost to your business is huge.
  22. Always collect data on how people are using your product, which features they are using and which they are not. This should be one of the main ingredients for product direction decisions. If the product manager is sitting in a cube, then it is not good. He should be talking face to face with customers and getting real world feedback.
  23. When you are trying to move customers away from a competitor who they have already purchased, you need to protect the customer’s investment so far.  E.g. when a customer had 6 month license still left with your competition, you should offer 6 months free on your product to protect their investment.  However, see if you can have the customer pay for the first month and then the next 6 months given free.  This ensures that they are serious about switching to your product and have made a commitment to you.
  24. If you are in a commodity market where there are hundreds of competitors, then execution is the key differentiating factor. Of course, it goes without saying that the product has to be very good. If you are in a niche market, then value proposition is more important than execution.  You might not have the best quality and completeness of the product, but if there is not much competition, then you should focus on the value proposition more than the execution of completeness.
  25. Think hard on how you can leverage your happy customers. Ask for referrals. At every sale, try to leverage. Ask your referrals to write guest blogs on your site, case studies and testimonials. Photo testimonials are better than just text as they are more credible.
  26. Leverage influencers. They can tweet about you.  Follow influencers and include them with @X so they will notice you. Try to get them to follow you.  Share signups and success stories through social media. As the company grows, you need one person dedicated for social media and working with influencers, establishing connections etc.  Bear in mind that influencers love praise. It also helps if you can get thought leaders from academia writing about you.
  27. Write thought leadership articles and blogs – maybe twice a month.
  28. When you sign up a customer in a vertical, find out the competitors in their space and try to make them your customers.  Folks pay more attention if they know their competition is using your product.
  29. Set up Google Alerts on keywords so you get notified of new stuff. Then go there and leave your comments. Mention.me is another site similar to Google alerts.
  30. LinkedIn groups is a good source of leads. Answer questions there. Also post questions yourselves on challenges in your domain.
  31. There are tools like pardot, marketo, data.com for follow-ups. Use them if you see the ROI on them.
  32. Conferences are not so great from a lead generation point of view. But they are good for showing your presence in the market place.
  33. Don’t innovate on the business model, particularly when you are a startup. Go with tried and tested ones. Select the right sales model for your product depending on the kind of product and price of the product. Look at how your competition is doing it. Usually, it is better to follow their model during the initial days and then experiment later.
  34. A recommended reading for all startups is “Most startups should be deer hunters”.  Essentially, there are three types of customers – elephant, deer and rabbit.  Catching elephants is very tough until you are of certain size. Catching rabbits is very tough to survive as they are spread too thin and even if you catch one, you get only very little meat. Hence try to catch deer – which are right sized for you.
  35. For cheaply priced products, educational institutions are a good place for doing pilots and getting feedback.11268730903_6c278bfcf9_o
  36. In scale hacking, have a good sense of metrics on customer conversions.  How much revenue is being generated, from how many customers, out of how many evaluations, out of how many leads, out of how many visitors?  Measure, track and improve the rate of conversion at each stage of the funnel.
  37. Once you have had success with your first product, you should consider other products for scale hacking.  Build newer revenue streams based on the incoming cash of existing successful products
  38. Hiring cross-continent is a very big leap-of-faith for an entrepreneur.  You need to be very careful with the first set of people you hire in a different geography. Culture alignment is key to global success.
  39. Taking funding for scaling is a very good idea.  Investor money is like rocket fuel. You can either go up or fall down fast.  You can go from ‘darling’ to ‘donkey’ quite fast with VC money.
  40. All news is good news when you are small.  So don’t shy away from publicity of any form. Of course, do only those things that you are comfortable doing.
  41. Requirements should be driven by customers, where ever possible, instead of internally imagining and creating requirements which might not be of any value to your customers.  When a sales person gives a requirement, ask ‘why do we need this and how will it help’ five times.  If you can find a good answer, then the requirement is a real need.
  42. When deciding on which new requirement should be added to the product – consider the return on investment. This is commonly overlooked.  Usually, the latest incoming requirement is given more importance at the cost of an older one.  Have a methodology for choosing requirements – based on factors such as number of customers requesting the requirement, the ROI that the sales team believes this will generate and if the sales team is willing to stick out its neck for this requirement. Always use data to make product decisions.
  43. During scale hacking phase, ensure you have continuous customer feedback. Have a customer advisory board of your key customers and have a relationship manager who works closely with these customers.  Get their inputs on new features you are planning to build.  Having a good relationship with them also helps you know the pulse of the market, get inputs on competition and getting strong case studies and testimonials. Meet with key customers periodically.
  44. Channels are extremely important for scaling.  Be clear on how the channel can make money off of you.  Partners should benefit because of you. Either directly by making money or leading to sales of something else.  For example, in non-SAAS products, system integrators make money by implementation, customization and support.
    1. Partnerships are for successful products.  That way the partner can sell easily.  They want a winning product. If the product is new and complex and it has a long sales cycle – partnerships might not be of use to you.
    2. Partners can help you enter large enterprises as they are already on the vendor list. They can ‘white label’ your offering.  Getting on to the authorized vendor list of large companies is itself a very complex and time consuming process.
    3. Consider partnering with frameworks – e.g. building an add-on to an existing framework which has a good marketplace.   That way, your discovery problem is solved to a great extent. Many companies die because they struggle to reach their prospective customers.
    4. In SAAS kind of offering, traditional partnerships do not work as the partner does not make good money upfront. They do not want to wait for a long time to reap the rewards.  SAAS partner ecosystem is not there yet.
    5. Partnering with platform players like Microsoft, SAP, Oracle is a good idea in principle. But even there, promoting a startup’s product is not easy.  They have very high qualifying factors for them to select your product for promotion. For example, you need to already have thousands of users.  Partnering with platform players is a great strategy for scale hacking once you have a critical mass of users.11268764013_3a299b8f4f_o
  45. Engineer driven products are typically not so great in user experience. It might be worthwhile to hire/outsource to a UX expert. These days, coolness of UI is a very important factor.
  46. Mobile centric or mobile first is a very sound strategy for growth.  It is easier to find early adopters.

Conclusion

I hope that at least some of the 101 takeaways provided new data points in your startup journey.  While there is no silver bullet and each startup has to go through its unique journey, there are several common themes that are generally applicable.  And we can learn from those who have trodden the path before us.

Many thanks to iSPIRT and all the volunteers and facilitators of the Product Nation Boot Camp for this wonderful initiative.

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The Ad Business

Saikrishna Chavali posted the following question on my blog post about Data & UX being two ends of the product spectrum:

I’ve got a question: how did you understand the user when you were in the ad business? Did you ever meet real users? In PM theory, one is instructed to empathise with the user by actually “getting out of the office”.

Since it’s quite an important question, I thought I will take a shot at giving it a detailed point of view, and provoke some conversation.

While building the Ad Network at InMobi, we had 3 key stakeholders to take care of and deliver value to:

  1. Advertisers & Agencies – who had ad budgets, setup and ran the campaigns, and looked at reports & analytics to measure ROI of their ad spend
  2. Publishers & Developers – who had lots of traffic from mobile phones – mobile web, apps etc, and wanted to generate revenue by advertising
  3. Users – who were primarily using these mobile web sites and apps to get their work done, or for entertainment.

When Publishers or Developers say

I want to monetize traffic

they’re basically saying

I have users who use my sites and apps, and I want to make money from them, so that I can sustain my business, and grow it

As an ad network, you have business relationships with Advertisers, Agencies, Publishers & Developers. And as product offering, you build user interfaces and APIs for these people to use. So, by definition, you have to have ongoing dialogue with users from these customer segments. I believe products are for users, and have blogged earlier about it.

At the same time, an ad network makes money when the users (consumers) engage with the ads in some applicable manner – Viewing, Clicking, Playing etc. The effectiveness of the network is increased if we can understand the consumers well enough that we deliver the right kind of ad experiences to them in every context. That bodes the question

How do we understand the consumers effectively?

For a large part, we understand consumers from the data generated by them in our system. Ad businesses typically talk of metrics such as requests, impressions, clicks etc. If these metrics represent a user’s intent in some form, here is how they would play out.

  • Ad Requests – “There’s some space in the screen, can you show me an ad that I might like and click on?”
  • Clicks – “This ad seems really cool and helpful for me. I want to see what the product/service it is showing.”
  • Play (a video) – “I am curious about what this video is, and hence going to watch it.”
  • App Download – “I want this app.”

 

Remember, for every advertiser that wants to run a campaign on your network, the campaign will certainly reach a bunch of publishers (say 50 or thereabouts) who each have access to a few million users (say 1 million each). Assuming there’s a user overlap of about 50% (multiple publishers’ sites or apps being seen by a user), that’s an overall reach of 25Million users (50 x 1M x 50%).

Now, how many days or surveys or phone calls or chats will it take for you as the product manager, to be able to talk to 1% of this target user base?

Come to think of it, the Ad is really the “product” of the “Advertiser” that’s targeted at a “User”. On the other hand, the Advertising System / Interface is the product of the Ad Network for the Advertiser. So, in the strictest sense our loyalties should lie and stop with our customers (Advertisers, Publishers etc).

Clearly that’s not good enough, because the effectiveness of any advertising business is based on the consumers engaging with ads being shown by the advertising system. So, we have a clear objective to improve ad effectiveness with the consumers. Here’s how that gets done.

Let’s say there’s a campaign with 1 ad in it. When these campaigns get setup, and the ad starts getting served, pretty soon, the ad servers start computing answers for questions like

1. How many times did this user click an ad that was shown a few times

2. How many times did this ad get clicked when it was shown a few times, across many users

The first question gives you an indication of whether a particular user liked this ad or not.

The second question gives you an indication of the percentage of people that liked this ad, from the overall population of people who saw this ad – CTR for the ad.

With these two metrics you’re able start understanding if specific ads work for specific users or not. You then architect and instrument your systems to iterate on what ads to show a given user, based on the expected effectiveness of the ad for the given user. So, while on one hand you can design your systems for your customers, based on meaningful real world interactions with them, on the other hand you end up being highly data-driven and experiment-driven to design serving systems that deliver some kind of content to millions of users. No wonder folks with data+tech chops are in high demand among tech companies.

What do you think? What other experiences have you had?

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The evolving roles in product ecosystem

I was catching up with Avinash (@avinashraghava) earlier today and we were chatting about product startups in the country. If you’ve been in this ecosystem, and seen the evolution of product companies, some interesting changes happened over the past few years.

Back in 2001, at AdventNet, the Product Manager role was created, and so was the Usability Engineer role (which were primarily UX Designers). There used to be debates about project managers and product managers and I’ve had a chance to see these debates well into 2007-08.

While interviewing with Yahoo in 2004, the recruiter was not quite sure of what they wanted me to highlight (since i didn’t come from a software programming background) and asked “have you taken any short courses on programming languages, that you can highlight in your resume?”. I had to politely decline modifying the resume – it would’ve also meant not highlighting the UX-related work I’d done while at AdventNet. Guess that was a time when the tech world was still coming to grips with the need for Product Managers in product companies.

Those days, Yahoo had a good bunch of UX Designers, and not enough companies felt the need to have good UX Designers. I was lucky and fortunate to work with some very smart designers while building products such as Yahoo! Maps, Yahoo! Local etc. Those days, there were conversations about 2-pizza teams (at amazon), 3-people teams (PM-UX-Dev at google) and emerging agile teams.

By 2006-07, the ecosystem had recognized they needed product managers and many product companies started looking for pm talent. And they were getting started on hiring User Experience Designers.

When I moved to InMobi in 2008, we built the PM team, the UX team and also realized that the way to build great products was by leveraging the data we had, to generate analytics and insights. Helping the user with understanding of what’s happening in the system with respect to their work/needs was a great way to get the user engaged with the system. This starts initially (at low data scale) with basic reporting tools – tables, charts etc. As the data grows (and boy, does it grow fast!), these tools have to evolve into more sophisticated ones. The decision systems also crunch lots more data to generate their outputs. And who better to help with those than data scientists.

By this time, most companies and the recruiting world were familiar with and looking to hire UX designers.

Getting a lead on understanding data and building newer insights helps Product Managers think about smarter ways to solve user and business problems. It also helps UX Designers to visualize newer ways to portray information as well as overall experience. It’s no surprise that companies are now looking to hire Data Scientists quite early in the game, especially the ones that want to build world class products. The VCs are also paving the way with roles like Data Scientist in Residence.

I did a small experiment last year, looking through the websites of various companies in the data services spectrum (data warehousing / analytics / data consulting etc). I went through their archived websites of 2008-09 and saw that terminology such as “data warehousing”, “data analytics” etc had given way to “Big Data” starting 2010. I think this is an important trend to understand – tech businesses are prolific at creating data. To leverage that, they need a pretty significant set of people who can understand and make sense out of it.

Now that the world’s all mobile + tablet, the new challenge is “user acquisition”. Growth hacking anyone?

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Learnings From Building A Consumer Facing Web Product

Before we got started with PriceBaba, both me and Tirthesh had almost zero experience of building a product. We are passionate about Internet and web services that create an impact. Building PriceBaba over the past two years has been a learning experience and we have been blessed to have some amazing friends who have guided us throughout the process. Here are a few learnings (while we still continue to learn and grow):

Developers cannot build in silos

To create a great product, it is great to hear feedback from the horse’s mouth. That is why our developers have a lot of interaction with our users directly. The best way to raise the product quality is to let your developers see the product in use.

We have also benefited by having the operations and dev teams sit next to each other. There is constant flow of feedback and developers accordingly iterate and prioritise their roadmap. All incoming user feedback is shared with the developers and content teams, thus everyone has sufficiently enough data points when debating new features and upgrades.

People don’t listen, keep repeating, keep listening

We often assume that communicating something once is enough to make the point. However a learning with PriceBaba has been that we need to recreate the importance of an approach repeatedly!

For example, most of our team has grown up using desktops. Especially developers who have also had pro systems with large screens and keyboards to work on. Thinking that mobile is the medium that majority of our users operate from isn’t a natural thought. Our thinking begins from a large screen while mobile remains an ‘optimisation’ task. It has taken a lot of unlearning and relearning for our team to adapt the thought of mobile first. Any new feature or interface has to be thought for mobile and tablet just as much as for desktop.

I relentlessly share our mobile usage numbers, industry reports and keep mentioning MOBILE as a keyword to my developers. They are listening and building a great mobile interface for PriceBaba 🙂

Mobile Mobile Mobile, but not Mobile App, Yet

While I already mentioned how important mobile is, we have often been tempted to build a mobile app. However we have consciously stuck to mobile web for several reasons.

Our product offering isn’t something that a user wants to use daily. In its current form, building an app would lead to very low repeat users and uninstalls. The way the app business works is that you get ‘x’ thousand downloads and a fraction of those would be active users. For an app like Zomato or Paytm this makes a lot of sense as repeat usage is very high; we love using them on a regular basis. But we need to evolve the value proposition of PriceBaba much more before we release an app.

Development resource is another big reason! While mobile is growing, mobile web is serving most use cases just fine. An app is good to show off on your resume, but not the need of the day in many scenarios (like ours). We like to focus our developer resources on the most crucial things first.

Manual first, Automate second

PriceBaba isn’t a usual technology startup. A large part of our work is to integrate offline retail with the internet. A lot of operations, back office and systems to manage the same has been built over the last two years.

Almost always we have begun our ground operations with manual work and then work towards automating them slowly. Doing things manually has allowed us to iterate quickly, learn more about our customers before making solutions and eventually prevent wasting development time.

We have realised that trying to automate things either before hitting a critical mass or a ceiling isn’t always a good idea. While we have made our mistakes of building things too early, for PriceBaba it has mostly worked better to do things manually and then automate once we have a better understanding of the landscape we operate in. Depending on the situation, you may well need to build systems in advance but do ask yourself if you can do better if it’s delay it a little.

Every feedback is not a new product feature

This is fairly simple and straightforward. Once you are out in the market there is a plethora of feedback that comes to you. Every single day users tell us what new features they want, experts suggest new cool stuff that we can do and our team brainstorms world-changing ideas while sipping tea every other day.

After a few cycles of jumping to every new cool looking feature and trying to develop it, we learnt that unless something is a really pressing need or would add significantly great value to our users, we shouldn’t launch it. That meant saying ‘no’ to adding new product categories, product reviews and some more features that are too early for us right now. We instead chose to focus on local prices and store locations; which is our key value proposition and narrowed down our focus on a single category that we could dominate.

We keenly listen to every feedback that comes our way, we note it, discuss it to death, but we don’t build it right away :). We have in fact removed a major feature few months back that we felt was half baked, needed lot of maintenance and served a very small fraction of our user base. This may sound cliche, but we are starting to learn how to say ‘NO’ to a lot of great sounding ideas.

Fake it, till you make it + an alternate to AB tests

This one is my favourites and we love doing it from time to time — adding fake buttons to our site. A simple way of testing if a new feature is worth adding to the site, we add a fake button on the site and measure how many people clicked it. It is a quick and dirty way to get a feeler of what will click with our users.

For a long time we had a fake ‘set price alert’ button on PriceBaba’s product pages. The same captured email IDs but sent them no alerts, for we had no backend built for that purpose. When we started to see significantly enough email IDs being entered everyday, we built and delivered that feature. We went an extra mile and added a SMS alert feature along with it. Today the SMS alerts are the most popular user interaction on the site.

We have often been suggested to do AB tests and we would eventually start doing that. However in early days when the user base is very small, we do a A>B>C test. We change a particular product attribute, measure user interaction and change it further if the results aren’t great. Most startups can afford to do that in the early days and move faster with their product.

Speed Is Crucial

We have learnt first-hand that speeding up your application can greatly improve usage. Earlier this year we saw a 25% spike in traffic overnight by just moving to a better hosting provider. On another occasion, removing a 300ms delay in our search’s auto suggestions saw a 60% increase in the number of searches by our users. While we wouldn’t claim to be the best in optimising for speed, a good part of our time has gone into learning and implementing ways to accelerate our page load speeds, thus improving user experience.

Disclaimer: My experiences are from building a consumer facing Internet product.

Guest Post by Annkur P Agarwal a retailer turned technology blogger who got bitten by the product bug recently. PriceBaba.com is a shopping research engine that helps consumers connect with small retailers. You can connect with him on twitter @annkur.

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DNA mysteries of Products and Services

It has been an interesting coincidence on the last few occasions in different discussions and industry forums I participated in, they have attracted a good amount of the classic “Products and Services” in IT deliberation. As such, this is not a new debate. It is common to see patrons from the products world root for it by generating IP and for the services gurus illustrate how they are able to tailor deliveries as per customer need to make good revenues.

In the various roles that I have been involved in be it front line sales, to working with target customers, to addressing markets through the channel, or driving product management for products of different types right from enterprise to small and medium businesses that are deployed on-premise or delivered as a service; I have realized it is more than “this versus that”. At the face of it, running “product or services” businesses largely seem to be two different ball-games. They do have different DNAs. However, in addition to the different focuses that are essential on some aspects; these also involve some common influences that need to be capitalized upon. And no, it doesn’t end there. An important element of success viz the customer expectation is undergoing an interesting shift. A customer increasingly expects…a solution! They are neither looking for a product or a service in isolation, but instead for a solution that delights and delivers timely value. In this post, we will explore the characteristic differences—the DNA differences between IT products and services; and some common factors that have a bearing on the business opportunities and performance.

The landscape—A holistic view

Let us start with a holistic look at some key characteristics of what constitutes a product and a service. The marketplace typically includes an offerings continuum. At one of the two ends are pure-play products and at the other pure-play services with combinations in between. It can be illustrated as below:

Offerings ContinuumThe DNA differences—A closer look

If we take a deeper look and closely evaluate this in context of IT products and services, around which this post is primarily focused, it involves some common influences, but with distinctly different DNAs to run both businesses. The evaluation of key indicators across these businesses includes consideration for common factors, but with different approaches. For instance, both product and service type of offerings involve evaluation and use of technology, assets and resource planning, cultural bearings and so on.  A comparison of DNA differences for some key indicators is included below:

Product-Services-DNACommon influences—A quick digest

As we can see, there are some distinct DNA differences. For instance, meeting a market need versus single customer requirement; transactional approach versus relationship driven, internally focused culture and processes versus tailored to customer. At the same time, aspects like technology, people, and processes are the common influences that can either enable or inhibit effectiveness in either model. They serve both as an opportunity and a challenge! The previous section has covered how the approaches vary across indicators. Let us now briefly assess the common aspects that can greatly influence outcomes.

  • Technology: Technological advancements are constant. With every technological paradigm shift, right from main-frames to distributed systems to the cloud, with the change in technology capabilities available, businesses have looked at methods to leverage these for maximum benefits. So for a provider, irrespective of the nature of business, they have to constantly find ways to stay abreast of technological advancements to be in a position to lead the market or advise a customer with right solutions. For instance, if we take a look at one of the hottest shifts around SMAC (social, mobile, analytics and cloud), it is not prudent for either product or services companies to ignore those. Products need to evolve to cater changing customer preferences, interaction methods and deployment models. This is not just limited to product companies. These shifts need service companies to ensure their offerings weave these in to truly to ensure customer delight in-line with newer preferences.
  • People: One of the most significant contributors to the success of any business is the people assets they have. Knowledgeable, motivated, productive and enlightened workforce is needed for runnnig both products or services successfully. Ensuring the workforce it kept current with the market and technology demands and on the soft side ensuring they’re productive is of paramount importance. This of course is an obvious one. But going wrong with this could have the entire game go south even if all else is right.
  • Process: Processes are a great tool any company can have through which preferred frameworks can be pressed into action for a more consistent and repeatable outcome. These could be applied to internal focused activities like training and development, knowledge sharing, documented development methodologies (e.g. Agile, etc.), sales methodologies and so forth. Processes can help with managing OpEx for both frameworks. Similarly, they’re applicable even to external focused aspects like processes to demonstrate thoroughness of approach, for compliance and so forth. How far to adapt really depends on appetite and culture; which varies from company to company.
  • Success factors:  While the measuring metrics might differ across lines of business, it is a fact that there is no better way to walk towards success than to be driven by results that ensure customer success and delight. This is an essential metric to keep track of that cannot be overriden or ignored in either business.

Looking at all of above, one can think of products and services as two separate circles having distinct DNA differences with some overlap of common influences. All of these put together, put organisations in a position to meet the need of tomorrow. Let’s take a look at an illustration that highlights these put together:

Product&ServicesThe Ultimate structure—Solutions shift

At the same time, given the economic challenges, the markets becoming buyer markets, general shifts in buying patterns, need to respond to businesses faster, and need to demonstrate value and return on investments (ROI), the focus is increasingly on the “customer” than just a product or a service that is up for offering. Customers today carefully evaluate every penny being spent. They expect to realize value from investments faster. Customers are tired of siloed approaches either by just having a product deployed and not having a working solution, or having a solution frame-work, but the underlying products not being stitched to deliver the value the customer expects from the investments made. Gone are the days where companies could deploy a product and take months or even years to tweak it to customer need. Or suggest a service without having their own skin in the game when it boils down to technology or products involved.  Customers today expect product companies to not just deploy a product, but to provide a working solution tailored for their needs. Customers today expect services companies to have the required levels of expertize, coordination and relationships with involved products and technology stacks, to effectively tailormake a solution to meet their needs faster. They do not expect the ball to be dropped in either of the cases to have prolonged deliveries. Customers today are looking for working solutions. Customers today are looking for faster realization of value. Customers today are looking for a positive experience to respond better to business needs rather than being tied up with large IT projects. They need to be delighted—truly!

The shift is really towards using products and services together effectively to deliver effective solutions. Irrespective of their primary DNA, every company will need to evaluate how they can work out the entire DNA strand to have a solutions structure!

The new shift focus

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Role of a Product Manager

Ensure that the right things gets done in the right sequence

A product manager helps a company to achieve its goals by helping customers get their jobs done in an unique and delightful way, and getting customers to payin some form (money, attention, information).

Let me elaborate on the key responsibilities encapsulated in the above definition.

Getting jobs done: A parent purchases your app to keep her six year old daughter entertained over a three hour train ride. The parent did not purchase the app because it uses the latest technology or she liked how your app is designed/looks. A product manager must understand what “jobs” or outcomes a prospective customer is trying to accomplish. This can also be seen from the lens of solving problems. But I prefer the “jobs approach” as it provides a richer understanding of the context in which a product/feature will be used, why are they using it, what outcomes they are hoping to achieve, and what they need to stop using to begin using your product. A product manager must ensure that the team builds something compelling enough for customers to switch away from an existing solution that they are currently using. This framework is especially helpful in understanding your real competitors or alternatives that the prospective customer has to get a job done.

Lens of solving problems -“real problems”: A product manager must ensure she focuses the team’s effort on solving real problems that will help the company achieve its goals. “Problems” that are ignored are usually not worth working on. The pain killer vs vitamin framework is a useful for assessing the intensity of the pain/problem. Des Traynor’s perspective on“Making things people want”

Making things people want involves understanding a long standing human or business need and then using technology to:

take out steps

make it possible for more people

make it possible in more situations

Flawless execution cannot save a company/product/feature that chooses to focus on jobs/problems that nobody cares about.

Unique: Prospective customers will have an array of options to get their jobs done. The product manager must pick a customer segment and a dimension (like Amazon’s delivery of ordered items within 30 minutes) that is aligned with the most important outcomes/jobs that the customer wishes to accomplish. This decision is critical in ensuring prospective customers consider your product when they want to hire a product in a specific situation.

Trying to be everything for everyone or “unique” for the sake of uniqueness is usually a recipe for disaster. Choosing a dimension that is important the customer and has very little competition helps build a defensible business.

Delightful: While thorough and thoughtful attention to detail helps, Kathy Sierra’s talk on Minimum Badass User provides sage advice. Focus on improving the user’s life and/or skills. What “badass” powers does the user get by using your product?

“People don’t use your app because they like the app or they like you, they are using it because they like themselves, and they tell their friends because they like their friends!” – Kathy Sierra

Establishing reference customers is critical for scaling any business, and you will have reference-able customers only if you have delighted them while getting their jobs done, using your product.

Pay: In a business context, the product must generate enough revenues to grow and sustain the business over the long term. The product manager must be adept at picking a business model that captures enough value for the business to thrive and remain viable.

Another critical responsibility of a product manager is validating that the solution (product) that is built is actually helping the customer get their jobs done and delighting them in the process. Some product management frameworks mandate that the product manager must focus only the “problem space”. I strongly disagree with this specific recommendation. Validation of the solution/product that has been built is as important as specifying what to build. I am not advocating the product manager specifies how to build. Does that mean the product manager does not validate other critical decisions like validating intensity of a problem? No. I am specifically calling out this aspect as a product manager plays a crucial role in deciding whether to ship a product/feature based on this validation.

Summary: Prioritizing which jobs/problems to work on, which customer segments to target, which dimensions to compete and excel on, how to access customers, how to capture value, determining what will delight users, how to scale the business, and validating what is built are key responsibilities of a product manager.

Two other perspectives on the role of product management that I like are one by Marty Cagan

Discovering a product/feature that is valuable, usable, and feasible

and the other by Satya Patel

“Product management isn’t a role or a function, it’s a set of skills. Those skills help remove obstacles and grease the wheels so that the functional experts can do their jobs best. Product management also balances the needs of users, the business and the team and makes the difficult tradeoffs needed to keep pressing ahead. In that way, Product Managers are very similar to CEOs. Very few would argue that a company doesn’t need a CEO. Product managers are simply CEOs of their products. No organization should be without someone who has ‘product management skills’ and works to make everyone else’s lives easier.”

Note: Every interaction that a prospective customer or customer has with a company is viewed as the “product”. It is not just the physical product or the service that is provided. Examples: looking for information about the product on the website, reading the user manual to understand different options/modes supported by a specific feature, sending an email query to the support address.

Next Post: Based on this role definition I will cover skills that a product manager needs to posses to be successful.

Guest Post Contributed by Pandith Jantakahalli, Sr. Product Manager at Impelsys

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Startups and Product Managers

Who is a product manager and what does a typical development cycle with a product manager look like?

Product managers are often the most overlooked job descriptions in startups. The “let’s hack together” mindset is great but might not scale after a certain point. It becomes imperative that someone is incharge of defining the “what to build” part of the problem extremely well, keeping the customer’s problems in mind.

Ben Horowitz was right when he said,

Product Managers are the CEO’s of the products.

Good product managers think about the story they want written by the
press. Bad product managers think about covering every feature and being
really technically accurate with the press.

So who is a Product Manager? A Product Manager is someone who owns the product — design, rollout, user acceptance criteria, user adoption and in many cases revenue. And in many small startups, the CEO is the Product Manager.

Who does the Product Manager work with? Typically with the customers or with the key executives. The Product Manager translates a business vision into a well defined product that solves critical customer problems and drives revenue.

What does a typical development cycle for a Product Manager look like?

  1. Define the Vision for the product.
  2. Define the use cases for the product.
  3. Define the Modules, Release Defining Features and a UI Metaphor
  4. Build Wireframes — Use tools like Pencil, Balsamiq or just sheets of white paper.
  5. If the Product Manager owns the product, he or she must be sure that he is solving the problem that he set out to solve.
  6. Build a full HTML prototype that almost works (everything but the server side code) together with a UI Engineer who is familiar with UI design patterns, UI libraries and other UI components necessary to meet the UI look and feel. The look and feel if built for the first time might require a fair amount of effort. Subsequent efforts should use an existing templates and should be much faster.
  7. Limit the above steps 4-6 to 1-2 screens or as many as the team can build and release per iteration.
  8. Build test cases with the QA team. Verify that the screens meet
  9. Transfer over to the engineering team to get to code complete status.
  10. The product manager is involved in the code-bugfix cycle.
  11. Product manager then conducts the acceptance criteria and then
  12. Approve the features to be released into a production environment.
  13. Repeat the wireframing process through a new iteration through multiple iterations until all of the release defining features have been met.

The job of a product manager doesn’t end here. It typically moves into the marketing domain where the product manager might work with marketers / growth hackers in the organization to build the packaging for the product and take it to market.

This might mean that the product manager might build press kits, landing pages, talk to press and conduct a launch.

Further reading:

Product Managers: Who are these ‘mini-CEOs’ and what do they do?

Good Product Manager/Bad Product Manager

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Product warriors, pick your battles!

The first question that I asked iSPIRT volunteers running PNCamp, the first ever bootcamp exclusively focused on product entrepreneurs in India, was why Pune? They pointed to Dilip Ittyera whose greying strands of hair masks his passion to firmly perch Pune on the product map of India. Later during many conversations, it became evident why Pune was the destination for the “product mafia” (term courtesy Pallav Nadhani) for an extended Playbook roundtable format bootcamp, the PN Camp, for a couple of days. In its subtlety, Pune hides its product quotient. There have been global success stories from this quiet city that really doesn’t hit you on your face: QuickHeal, Druva, Pubmatic and let’s hope counting.

Pallav infused energy in his intro to the camp that would make you say “let’s make it happen” with a pumped fist. The very essence of this bootcamp was to enable lifelong bonds between entrepreneurs so that they can learn from each other’s mistakes. For entrepreneurs operating with limited resources and entrapped in a lonely journey, the peer group lending a hand makes it even more exciting.

_DSC3188

Another unique aspect of the camp was “cohorting” applicants for maximum impact. Only one out of every two applicants was accepted and then divided into cohorts matching the state in which they are in their entrepreneurial journey. The first day was for entrepreneurs just starting out to “discover” (discovery hack) the way to do it and second day was for “happy confused group” (scale hack) where the entrepreneur has figured out the product, has found a few customers and struck there, without a clue on how to take it forward.

As each cohort groups were ushered into their respective sessions, intense discussions ensued. The camp organizers had made it clear that the sessions wouldn’t be gyan but experiential discussions. A successful entrepreneur had a presentation and the questions he raised were basically discussed by the 15 to 17 entrepreneurs in each group for over three hours. The successful product entrepreneur’s success becomes a playbook for success-aspiring entrepreneurs to follow and reach heights.

Pick your battles

There are only 24 hours in a day. And it is left to the entrepreneur to choose what he or she wants to do. Picking the right battles pays you rich dividends. This is the thought behind the session ‘Picking Your Battles’ by Practo’s cofounder N.D. Shashank. Basically, Shashank’s presentation centred on four questions:

  • Do you have a compelling story around your startup?
  • Is your product really different?
  • Why is it exciting?
  • Does your product really solve a problem?

Story: If you are unable to build a compelling story around your idea and the startup, you will be less motivated to continue. So just ask yourself if the problem you are solving or your idea will keep you going for x number of years. Then build a story around the idea so that anytime you are asked why you started up, you can tell the story, which will be appealing. It’s another matter that the story will get refined over time like the events in history getting different perspectives at different points of time in future.

Differentiators: How different is your product? It would be great to create an entry barrier for a competitor to replicate your model. Here Kunal Shah of Free Charge provided an apt explanation. Create something that will become a habit for someone to use. For example, although G+ has better features than Facebook, users don’t switch because they are used to Facebook. Only when another innovation happens that changes this habit, it would be Facebook all the way. You should think of ways to appeal to the users by making a difference in the way the product serves the user that he wants to come back and use it over and over again. Sometimes customers can become your salespeople that they recommend your product to their friends and people in the network.

_DSC3464

Excitement: Taking a cue from Practo’s experience, Shashank said that among the specialists, dentists were high in number. So dentists were first targeted for PractoRay, a Practo software used by the doctor to schedule appointments with patients and keep their medical records. This proved successful as more users felt excited to find dentists in their neighbourhood. Customers will buy if they find the product useful and not make a fuss over price.

Solving a problem: You should build features in your product that are must-have and not nice to have. Then you should ask if your customers will pay for those must-have features. Unless you are solving a real problem, customers will not pay. Usually, the problem you are solving is the problem you faced yourself. Shashank got the spark of an idea on a platform like Practo after experiencing difficulty in mailing his father’s medical records to an expert in the United States. Then he studied what ails the system and built Practo to address each one of the issues he observed such as waiting times for patients (Practo helps you schedule appointments), non-digital medical records (information can be stored using Practo’s software), storing them and sending them (possible in the Practo platform).

_DSC3216Many aspects of product building, feature adding, and finding customers were discussed elaborately. Just to give one more useful example, when there is friction, it’s best to have a basic free model and then price the product for different sets of customers. Differential pricing by adding features is another

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Premium vs Freemium vs Subscription

For mobile apps, there are three dominant pricing strategies: Premium, Subscription and Freemium.

According to a report by app-store analytics company, Distimo, freemium now accounts for 71% of Apple AppStore revenues in the US, up from somewhere around 50% last year, and rising. In Asia, freemium is 90% of App Store revenues.

71% app revenue from freemium

Is freemium always the most optimal? What factors should you consider when choosing a pricing strategy?

Firstly, here is what these different pricing models mean, as applied to mobile apps:

Premium apps (or Paid apps) have an upfront price before they can even be downloaded. Similar to licensed software, except that the App Store makes all future upgrades to the premium app free once purchased.

Contrast this with freemium (a portmanteau of “free” and “premium”), where the app is free to download and use. However, some features inside the app are unavailable until you pay for them. App stores make it dead simple for developers to charge small amounts of money inside the app.

Subscriptions are a regular fixed fee the user is charged automatically via the App Store for using the app. Magazines in the iOS Newsstand are usually subscription-based. Subscriptions can actually overlap with either premium or freemium models. For example, Spotify requires you to have a subscription to even use the app (premium), while Pandora is closer to freemium where you can pay a subscription to get ad-free and unlimited hours of music.

How do you decide which to choose?

Premium has very limited use today

Perception is a large factor in how high a price is acceptable, and going premium helps create that perception. With premium, every user pays upfront, but the amount each user pays is fixed, regardless of how much utility each gets. Also, users have come to expect apps in the $2 – $5 range (a few niche apps can charge $10-$20) and there is no way to get higher ARPU.

In general, premium works in the following situations:

1. There is a strong demand for your app – niche areas are good candidates here.

2. You have a strong brand already and can establish trust with users where they are willing to pay before they download the app.

3. There is not a lot of competition that will almost certainly drive the price down.

4. You don’t care much about reach – which will be much smaller because of the “pay gate” into your app.

5. There are no ongoing feature or content costs that can drive up the average cost of of supporting a user to levels higher than what the user paid for the app.

Freemium helped create those million-dollars-per-day games

Freemium was popularized by casual games in Japan and Korea and has quickly become the winning model in mobile apps. It works really well in the following situations:

1. There is enough competition that users invariably have other cheaper or free options (low barrier to entry). This has been partly the reason for most mobile apps today moving to freemium.

2. When reach is important. You need large amount of users quickly to create network effects. For example, to drive virality or gather significant data.

3. When there are a small % of power users willing to pay significantly more than the other light users. The pay-as-you-go model facilitates this. Hard core users can drive as much as 100 – 1000 times more revenue than the other users. This is why some free-to-play games are reaching a $1MM per day revenue runrate.

chart of freemium vs fixed priceMore users in freemium, but a small percentage of them drive astronomical amounts of revenue.

The mobile app economy has progressed to a point today where all of the above usually hold true. Freemium does require some operational effort in managing your free and paying users, converting the former to the latter, and driving repeat purchases. However, this helps create a sustainable business rather than a one-time hit.

Subscriptions: the Holy Grail?

A subscription provides a guarantee of repeat transactions and hence, businesses with subscription revenues tend to be valued far higher. The subscription price is usually smaller than the one-time price to incentivize the user into a longer term commitment. As the seller, you make up for the discount by being guaranteed future transactions.

A single issue of The New Yorker costs $6, but a year’s subscription of 52 issues is $70. That is a 77% discount and is still better, revenue-wise, than selling individual copies. Of course, they make a lot of money through advertising, so a guaranteed customer in the future is far more important to them. This may not be the case in all businesses. Amazon gives you a ~15% discount to “subscribe” to certain household items.

But the subscription model does have a few drawbacks:

1. Like premium, there is a single price for all users, regardless of how much they use. There is a lot of money left on the table because hardcore users willing to pay a lot more cap out at the fixed price. There is some more money left on the table where the subscription price and commitment is too high for a large number of light users who will not sign up.

2. Tiered subscriptions does let you set different prices, but still creates ceilings on both price and consumption. Netflix has a 1 DVD plan for $8, 2 for $12, all the way up to 8 for $44. The lost opportunity? (a) A user can only do 8 DVDs. There may be a few subscribers who want much more. (b) A $44 price tag for DVD rental has a sticker shock. It is easier to charge $5.50 eight times than to charge $44 one time.

So when should you use subscriptions? Whenever you can – subscriptions are considered the holy grail of revenue models, BUT it is important to make sure you are not leaving money on the table just to get a subscription commitment from a customer.

The ideal pricing strategy

loaded grocery shopping cartEscalators are faster than stairs, even faster if you run up them.

At the risk of over-generalizing, a combination of freemium + subscription would be ideal for most apps.

Not everything being sold lends itself to subscriptions. Impulse purchases typically don’t. For example, a power-up that will help you cross this level in a game, or an Instagram filter that makes this photo of yours look exceptional. In such cases, it is best to start with a freemium model and then offer subscriptions to your  regular customers to drive  purchases further. Content (magazines, music streaming, movie streaming)  has more commonly been a subscription business. For these, it is a good idea to start with the accepted subscription, but remove any ceiling on purchases and consumption by offering more content that can be purchased in-app in addition to the subscription.

The mobile app economy is already large and growing even bigger. Get all the value you can out of it.

Drop in a comment, or shoot us an email if you want to chat about this for your app. We’re happy to help!

Update:

Marco Arment wrote his thoughts about our post:http://www.marco.org/2013/10/02/lattice-labs-freemium. Do read that too – it is an interesting debate and certainly not over yet!

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Approaching Mobile UX – A Product Manager’s Perspective

When building the mobile interface for their existing products, Product Owners are faced with quite a few perplexing questions, especially related to the user experience on mobile. A report from ZDNet says UX is one of the most critical concerns for enterprises looking to develop mobile apps while another study points out that users prefer usability and good user experience over brand names.

Before we start discussing about Mobile UX, let us first understand what User Experience is.  User Experience is not only about visual design. It is actually much broader — it involves the scientific research of users and can answer important questions about the audience for both new and existing products. These include:

• Who are your real users and what do these real users care about?

• How do they actually interact with your existing product?

• How will users interact with a new version or new feature?

MobileUX

While there are several UX design best practices from the desktop world that can be brought to mobile, this piece focuses on mobile specific issues.

The foremost thing to remember when building a mobile interface for your product is that while mobile UX design has similarities with web and software design, simply stripping down your desktop or web experience is not going to do it. While drilling down is fine on the Web, mobile users tend to act more linearly a mobile application. To design a good app, you need to start from grounds up, identifying the customer experience you want, and enhancing it with the right features of your existing product. Great mobile apps are uniquely mobile, they couldn’t be done the same way anywhere else.

When choosing whether to design for brand or device, put your preference on device. Your users have been using the device much before they start using your application. Developing custom interfaces will confuse users, slow down adoption, and put a significant obstacle in the way of engagement. Instead, take the principles of the OS-native interface kit, and subtly style your interface elements without altering the underlying functions.

password-engineA classic example is the Password Engine iPhone app. iPhone users are used to certain ways to access settings or placement of the Back button. By not following them, the app increases the learning curve for users.

Mobile apps will always be subjected to interruption, whether by an incoming call or the user’s station arriving. Design your applications such that it is easy for users to pick up from where they left off  – save states, break larger tasks down into smaller chunks, and put context throughout. Usually users on mobile will on the move, and hence subjected to lots of distractions. Organize content in a way so that it is easy for consumers to browse through.  Take the example of the Gmail iPhone app.

google

 

All the fields and Call to Action (CTA) are vertically aligned on the left side and thus the user’s eye needs to move in one consistent direction.

 

 

efilecabinetWhile the iPhone app from eFileCabinet forces the user’s eye to scan all around the screen. It has less CTA’s and hence a lot of the real estate on phone screen that could have been used.

Mobile devices generate a lot of information about the user apart from the traditional data generated from a web solution. This includes things like movement, location, sensor data etc. Think about using this data intelligently to pleasantly surprise the user. Customer satisfaction is great but customer delight is even better.

yelpYelp has recently updated its Nearby feature that now offers suggestions based on user’s location, previous Yelp check-ins and reviews, and Yelp friends as well as other data like the time of day and even the weather. This is a great update because it allows Yelp recommendations to be truly contextual. On a cold morning, it can recommend a good coffee shop while on a sunny day it can point to ice-cream parlours near you.

 

 

 

 

And finally, understand the limitations of mobile devices – constrained hardware resources, screen size and network bandwidth. Consuming too much power or designing buttons for cursors rather than fingers and thumb will lead users to delete your application. Prioritize and present core features from other channels that have especial relevance in a mobile environment and enable mobile users to navigate to the most important content and functionality in as few taps or key presses as possible.

Measuring UX performance

Like any product feature, you need to constantly measure UX and keep improving. A couple of ways to measure UX are:

1. Data

Identify some of the key KPIs for your app. Example of some of the common ones are:

  • Adoption: Track data such as DAU or 7 day actives
  • Retention: Analyze the users who are coming back
  • Engagement: Number of visits or time spent are good indicators of engagement
  • Task Success: Use the funnel analysis to figure out dropouts

 

2. Usability Test

Observe users using the product.  Ideally, you would compare these usability tests to ones done on your prior product.  Does the new design achieve the intended goals, such as being more intuitive and driving users towards specific actions?

Resources

A great resource to start learning about the UX principles for mobile is the iOS Human Interface Guidelines. Another great resource for learning the basics of iOS UX and UI is Tapworthy: Designing Great iPhone Apps: Josh Clark. Android too has a few Design Guidelines, and it is always good to have a look at them when developing apps for Android.

Conclusions

The mobile user experience encompasses the user’s perceptions and feelings before, during and after their interaction with your mobile presence. Creating mobile user experiences that delights a user forces us to rethink a lot of what we have taken for granted so far with desktop design. Mobile user experience is still a developing field, and opportunities for improvement continue to emerge. But dissecting the mobile user experience into its key components, and placing the user’s expectations at the centre, gives us a conceptual framework for building and evaluating good mobile experiences.

Guest Post by Rajat Harlalka at PlayApps Inc He has over 8 years of experience in the mobile industry in different roles – technology, strategy and product management. He has worked with companies such as Marvell, ST Ericsson and Exicon  etc. and is currently a Product Manager developing mobile educational games and apps. You can find him on Twitter @RajatHarlalka

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Nurturing Product Managers & Entrepreneurs

More than 3000 product companies generating revenue of $2 Billion – that may sound miniscule compared to $100 Billion IT services industry.  It is pertinent to look at how the eco-system needs to be developed to create $100 Billion Software product industry from India over the next decade. Ambitious ? Yes, but not impossible. There are few fundamental building blocks which needs to be laid to make this as a reality.

Over the years as an entrepreneur and as a mentor, I have interacted with a number of product startups on how they view their startup and more often than not, conversation revolves around one of these questions especially when the startup is in their early/idea stages.  I am beginning to sense few recurring themes during my interactions with product startups ;

  • Problem definition
  • Business Model
  • Competitive landscape
  • Product positioning

 

Problem definition: What problem we are trying to solve?

As a startup, in my mind entrepreneurs tend to focus too much on solving the problem versus spending adequate time and effort in defining the problem they are trying to solve.

In most cases, for a services company, the customers discover the problem and provide it to a services company. Half the battle is won ; the remaining challenge is to find a best-fit solution.

But the product company has to identify a problem that is large enough to solve with their product while at the same time looking for a space which is solveable as a startup…

As product companies we make a few common mistakes in this aspect –

  • We think there is a problem and look around for confirmation ; differing opinions are quickly discarded – a classic confirmation bias problem
  • We spend a very small portion of the time defining the problem and eager to jump to the solution ;

It is key to pullback and spend the effort in defining the problem clearly. It is all the more difficult if it is a new / different area than the entrepreneur’s core expertise. It is essential to observe the domain landscape, network extensively and validate the problem with practitioners before trying to solve the problem.  While it is said that newcomers have an innate ability to look at an existing industry problem very differently, but, it is quite critical to understand what is going on before relooking at the problem with some fresh set of eyes and ears.

Business model : What business we are in?

Business model is the guiding light , will always be in the back of our mind. Granted it gets ignored for certain short term gains at times. As product startups/entrepreneurs, we get caught between the million dollar question : short term survival mode and long term vision.

I am guilty of this dilemma in my startup as well.  We end up choosing a path “for now” over what we will “eventually” do. As we all know, the “eventually” never happens! An example could be  B2B vs going Direct to the consumer or an e-commerce company finding themselves in an identity crisis : Am I in a consumer experience business or a in a logistics business?.

If this cannot be explained in simple English with clarity, it is better to go back to basics and start refining the business model;

Keep asking the questions; Mentors and other startups play a very crucial role in unraveling and validating the business model. As entrepreneurs we either take it for granted or don’t see it all.

Competitive landscape: Who else is working on this problem already?

Ths is one of my pet peeves –  Entrepreneurs tend to have a tunnel vision and do not look around for existing players in their own problem domain. Time and again, I find the entrepreneurs with no knowledge of other startups or product companies who may be doing exactly the same thing or something complimentary in their respective areas be it in India or outside.  Going back to my first comment on problem definition, they would either have a cognitive dissonance or try to portray it as we do this as well as that but that company is not focusing on what we do.

While we as entrepreneurs need to be obsessive and passionate about what we do, we also have to be equally paranoid about what else is happening in our own domain. There is nothing called “Blue ocean” in our times I guess! Someone in the team must be thinking 24×7 about what else is happening in their area and at times it is perfectly normal to be cynical I guess! J

Production positioning: How does our product fit in the marketplace?

As startups, we focus on the here-and-now when building our products, we miss out on how we can be part of an eco-system of connected products / apps.

It means intense research, trying out different apps, looking at product features of others more closely etc. It is worth the effort to look at the landscape and eco-system , understand the product fitment holistically.

It is better to ask (or get asked) some real tough questions around where do we add value to the eco-system, how does our product fit in the existing scheme of things, why would customers pay to buy our product and what is one thing which makes them use our product etc.. during the initial stages of the product development stage.

There is a huge opportunity to look at product positioning and marketing (similar to how Lean Startup approach evangelizes) along with the product development and engineering.

Revenue model and product marketing are two areas I have still not touched upon in this article. Hope to cover it sometime later!

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Bangalore: 30th Nov 2013 | Design Thinking round table with Eskild Hansen

On a typical Saturday morning in Bangalore, a small group of design practitioners and product folk got together at the Fusion Charts office in Koramangala. They were attending an informal round table discussion on the topic ‘Design driven innovation to help make the world a more beautiful and pleasurable place.’

As part of a design tour being organized by the Danish Government and the Ministry of Foreign Affairs, Eskild Hanson (a prominent Danish designer) was visiting Delhi and Bangalore. Members of iSpirit, Indian designers and design thinkers were invited to meet and engage with him on areas of common interest.

Eskild is a part of the Danish government strategic think tank that is developing and strategizing the ‘Danish Design Society.’
His previous workplaces include CISCO and Coloplast.
At CISCO, Eskild was responsible for establishing their first European Design Center in Copenhagen and during this period helped bring a fresh air to their previously ‘boring and bulky’ Wireless Routers. He won a Red Dot in 2011 for one of his designs.
More about his work at www.eskildhansen.com

Here are a few pictures capturing the event:

Roundtable Discussion
Participants introduce themselves at the start of the event
Eskild talking about a trend in executive roles - CCO (Chief Creative Officer) / CDO (Chief Design Officer)
Eskild talks about a trend in executive roles – CCO (Chief Creative Officer) / CDO (Chief Design Officer)
Making a point about the importance of competing on factors apart from price, features and technology. (COMPAL and Quanta Computer - Virtualy unknown but producers of most of the worlds laptops!)
Making a point about the importance of competing on factors apart from price, features and technology. (COMPAL and Quanta Computer – Virtually unknown – but producers of most of the worlds laptops!)
Technology as an 'enabler of innovation' (As opposed to 'technology as a driver')
Technology as an ‘enabler of innovation’ (As opposed to ‘driver of innovation’)
User research - A tool to drive and validate innovation.
User Research – A tool to drive and validate innovation.

The interactive session was a great forum to hear each other’s thoughts on topics related to design and design thinking.
It also gave participants an opportunity to learn more about the Danish Design approach and their innovation related initiatives in India – www.icdk.um.dk.

To know more about the session, check out this sketch note created by Rasagy Sharma, an NID student – https://twitter.com/rasagy/status/407165458303836161/photo/1/large

 

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Owning the Transaction – Why Marketplaces Need to Think Like SaaS Businesses

Marketplaces are difficult businesses to get off the ground. A marketplace without buyers cannot attract sellers and vice versa. In fact, the infamy of this proverbial chicken and egg problem detracts entrepreneurs from the challenges that a marketplace presents after it has successfully gained adoption and is successfully matching buyers with sellers. After all, marketplaces for products, like Ebay and Etsy seem to have it all working for them once they gain adoption.

Why the EBay of Remote Services Behaves Differently

Services marketplaces, however, present a unique challenge. Most services marketplaces cannot facilitate a transaction before the buyer and seller agree on the terms of the service. Also, actual exchange of money often follows the delivery of the service and the delivery of the service requires the buyer and seller to directly interact with each other. Connecting buyers and sellers directly before facilitating the transaction cut weakens a marketplace’s ability to capture value. The party that is charged is naturally motivated to abandon the platform and conduct the transaction off-platform.

Marketplaces that fail to capture the transaction often resort to a lead generation, paid placement or subscription-based revenue model. The classifieds model has traditionally worked on paid placement. Dating websites and B2B marketplaces work on a subscription-based model while several financial comparison engines work on a lead generation model. However, lead generation models are attractive only at very high levels of activity and subscription-based revenue models make the chicken and egg problem worse than it already is. If your monetization model involves extracting a cut from the buyer-seller transaction, you need to figure out a way to own the transaction.

Solving the buyer Decision-Making Problem

Services marketplaces like Fiverr, Groupon and Airbnb try to solve this problem by preventing the users from directly connecting before the actual transaction. These marketplaces typically try to provide all the information that a buyer needs to make a transaction decision. Groupon features services from sellers that are largely standardized. While less standardized, Airbnb and Fiverr try to provide enough information for the buyers to make a decision without having to contact the seller.

Additionally, some marketplaces charge the buyer ahead of the transaction and remit money to the service provider after the provision of services, thus providing some insurance to the buyer, encouraging her to transact.

The Two-Pronged Challenge of Professional Services Marketplaces

Unfortunately, the above strategies fail with professional services marketplaces for two reasons.

First, it is much easier to take the transaction off-platform in the case of marketplaces connecting professionals. Freelancer marketplaces like Elance or expert marketplaces like Clarity are particularly prone to off-platform transactions for two reasons:

a) Clients need to know information about service providers before making a transaction decision

b) Once the end users know each other, they can potentially connect directly on LinkedIn or other networks, thus avoiding the platform cut

Second, professional services marketplaces require discussions, exchanges and workflow management during the provision of services before the actual charge can be levied. As a result, charging the buyer ahead of the transaction is all the more complicated.

So how do professional services marketplaces own and retain the transaction?

To own the transaction, professional services marketplaces need to think like SAAS businesses!

This may sound counter-intuitive. After all, a marketplace’s goal is to connect the two sides, complete the transaction and get out of the way, isn’t it?

Clarity’s early success illustrates that a marketplace’s role may be a lot more than just connecting buyers to sellers. Clarity connects advice seekers with experts. Traditionally, such marketplaces would connect the two sides, charge a lead generation fee and allow them to transact off-platform. Clarity provides additional call management and invoicing capabilities that serve to capture the transaction on the platform. Since the call management software manages per-minute billing, advice seekers have the option to opt out of a call that isn’t proving too useful. For the experts, the integrated payments and invoicing provides additional value. There is enough value for both sides to prevent them from leaving the platform to avoid the cut.

Clarity is one of many examples of platforms which are using workflow management solutions to capture the transaction. Services marketplaces like Elance focus on providing work-tracking and billing solutions that provide value to both sides and capture the transaction on-platform.

When marketplaces behave like SAAS businesses, the following design principles are commonly observed:

1. The SAAS workflow tools should create additional value for both sides, not just for one. This prevents either side from abandoning the platform for the transaction.

2. The SAAS tools should remove frictions in the interaction.

3. The interaction management tools should feedback into some form of on-platform reputation. Reputation is an added source of value that ensures stickiness to the platform. Clarity calls are followed by a request for rating the other side. Over time, the rating increases discoverability of an expert on the platform and acts as social proof for further callers.

The Added Benefit of Engagement and Stickiness

Workflow and interaction management tools also help make the platform more sticky. The traditional marketplace model has a very transactional use case. There is no need for a user to return often to such a marketplace. Users turn up only when they’re looking for something specific. With workflow management tools, the post-matching interactions are also captured on the platform, which encourages users to return often and to actively use the platform.

Secondly, a marketplace is only as good as the liquidity of available suppliers. As a result, there is no real need for a buyer to stick to a particular marketplace, transaction after transaction, especially if two or more competing marketplaces have similar liquidity and choice. Workflow management solutions help create stickiness because the requirement of on boarding on and learning new workflow management tools acts as a greater barrier to switch and can potentially keep users loyal to a particular marketplace.

The SaaS-First Marketplace

In recent times, we have been seeing the model flipped. Businesses are now building SAAS workflow solutions first to get entrenched among the demand side and then opening out the marketplace, to get suppliers in. An invoicing service spreads out to become a B2B order management platform. A payroll software provider expands to append a marketplace that can bring in freelancers which are then managed using the same payroll software. This also solves the chicken and egg problem by staging the launch of the marketplace.

Summary

In general, if you run a marketplace that requires services to be exchanged remotely, provisioning workflow management solutions to facilitate this exchange is a great way to own the transaction and create greater engagement and stickiness for users.

Tweetable Takeaways

Owning the transaction is the key success factor for a marketplace. Tweet

SAAS tools for workflow management help retain the transaction on a marketplace. Tweet

The new durable marketplace model: Start with a SAAS business, open up one side to create a marketplace. Tweet

This article was first featured on Sangeet’s blog, Platform Thinking (http://platformed.info). Platform Thinking has been ranked among the top blogs for startups, globally, by the Harvard Business School Centre for Entrepreneurship

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In Product Management, It’s All About Location, Location, Location!

Over the last few months, while talking to a range of Indian and Global tech companies, I noticed an interesting trend in the determination of location for key functions, specifically product management.

Global MNCs: During conversations over the last few months with some North America based technology MNCs, I observed that a lot of them plan to create product management functions for local markets and ensure better insights by placing the product managers in the local markets.  By this, they plan product functionality and global roadmaps accordingly.

Most people who have worked with global MNCs will, time and again, have observed that products are not created for Indian (or emerging) markets.  Most product managers continue to design products for their home markets (typically the more mature markets), with limited focus on local market insights.

India Based Product Companies: In a majority of these companies, more so the startups, senior management executives are either based out of, or are relocating to their largest markets (read North America, maybe South East Asia).  The logical reason is to be close to the key markets and customers.

The rest of the functions (operations, product management and engineering, service delivery, shared services), continue to be based in India.

And this is where I started thinking about the ideal location for product management.

Typically, Indian product startups focus on building a customer base (and credibility) in India, and once established, extend to more mature and higher revenue markets e.g. North America.  As they expand, they locate their sales teams there, but continue to have their product management teams based in India.

Extending the logic of creating products suited for the key markets, shouldn’t product management at Indian product companies be based in the potentially largest markets?  The refrain often is that they cannot afford to have product managers based out of the higher cost markets.I recognize that there is no easy solution, and companies choose different approaches to manage this.

Location Options
Typical Company
Advantage
Challenge
Located with Development
About 50-60% of companies, Indian and Global
Ensure that the product development matches product definition
Not enough market exposure for the product managers
Split between Development and   Market locations
Taken by SI firms, where the product manager travels specifically for large opportunities
Balance between development and market needs, being an effective bridge
Customer meetings are for closures, not for discovery – thus, not able to really get deep proactive insights into the market
Extended Product Management teams in the market
Taken by about 15% of companies, having an advanced roadmap
Get market feedback and also be able to effectively engage with the development teams
Presales / solution responsibilities are pushed onto local product managers, limiting market feedback and insights
Located in the Market
About 5-10% of companies (mainly Global)
Capture direct and deep market feedback to ensure product truly meets market needs
Limited engagement with the development teams
My belief is that while there may be no one answer, it is fundamentally linked to the stage the company is in, and the ability to effectively capture market feedback into the company’s product management teams.

The Location Matters

For product startups, however, it becomes extremely critical to get the right market insights (on an ongoing basis) so that they can actively differentiate and continue to retain their market edge as compared to some of their better entrenched competitors.  Having local market feedback could well be the key differentiator that could help them build and deliver significant value to their customers.  And could result in the long term growth and survival.  When one evaluates the employee costs of keeping the product management function in the key markets against the opportunity costs, it becomes apparent that the benefits derived can easily justify the investments.  However, the choice of the right product manager is also critical, otherwise you may end up getting pre-sales and reactive insights, which is not what the goal is.

Of course, an extreme option could be to follow Dogbert’s advice:

dogbert_consulting
Look forward to your insights on approaches that have worked for product companies across multiple markets.