Product Management in a Nutshell — How Startups Win

Product management is complex, but ultimately it can be distilled into two essential functions.

There are many articles and online courses about product management. Many of them are good. The knowledge and skills around product management are both deep and wide. If you plan to pursue a career as a product manager, then you should learn and practice them all.

But in my 20+ years as a professional product-focused executive I’ve found that very few people outside the core role understand what a product manager does and why it’s one of the most critical functions of any tech or software organization.

My expertise and passion are early-stage tech. In fact, I’m probably no good for a company larger than 50 or 100 people. In truth, not interested in working with companies larger than that. And while I believe that having strong product management at any stage company is important, I’ll argue that it’s almost second to none at a startup.

The Basics

Product management is critical for startups because it ensures that the right product is being developed and that the customer’s needs are being met. In order to be successful, a startup needs to focus on creating a product that people want and that solves a real problem. Product management helps to ensure that this happens.

In a startup, functions and roles are rarely siloed. People work collaboratively and cross-functionally. To me, that means that product management is much more than hiring the right person. It is something that should be thought of holistically and culturally. Everyone in the organization should be thinking about and operating against the two primary functions of product management:

1. Deciding what to build and why
2. Managing and executing the building

There are of course nuances to the above, but in a nutshell that’s all product management is — figuring out what products and services to build and then getting those things built on time and on budget. That’s kinda it. Like much, it’s simple, but not easy.

I find it very helpful to distill the function of product management into these two statements, particularly at startups, because it gives everyone in the organization an operating framework and set of criteria for decision-making.

You’ve undoubtedly heard the term product-market fit. The idea has become ubiquitous in the startup scene over the past 10 years. Product-market fit is a term used in business to describe a condition where a product meets the needs of a particular market. When a company has achieved product-market fit, it means that its products are in demand and provide value to its customers.

Achieving product-market fit is important for startups because it allows them to focus on growing their customer base and expanding their business. Without product-market fit, a startup will likely have to spend time and energy trying to find a market for its products, which can be difficult and time-consuming.

At a more mature company, some level of product-market fit has likely been achieved, and thus other business functions are equal or more important like marketing, customer support, finance, partnerships, and so on.

So if product-market fit is the goal for most startups, then what are the actions that achieve that in the fastest possible way at the lowest cost?

What to Build and Why?

Many founders forget, fail to, or outright neglect to answer this question. That’s not entirely true. Founders and entrepreneurs that launch anything have of course made a decision on what to build and may even have an inkling as to why they should, but they rarely use the right framework to do it.

Deciding what your product or service is and what problem you aim to solve is not an inside job. In other words, to truly have confidence you know what to build and why means you have gone outside the building and talked to actual customers. This of course is called customer development.

I’m not going to dig into customer development in this post, well, because I already created an in-depth course on the topic. You can buy it on Udemy right now for a mere $14.00 😜.

I’ll just summarize the process like this:

1. Understanding customer needs: This means understanding not only what customers want, but also understanding their real problems and how your product can solve them.
2. Validating your assumptions: This means verifying that your hypotheses about what customers want and what problem your product solves are correct.
3. Building a Minimum Viable Product (MVP): This is the simplest version of your product that you can create that still solves the customer’s problem.
4. Testing your MVP with customers: This means getting feedback from actual customers about whether they like the product, how it solves their problem, and what other features they would like to see.
5. Making changes based on feedback: This means incorporating customer feedback into future iterations of your product.

The only important step, which most entrepreneurs suck at, is #1 — Talk to customers to understand real problems, for a sizable group of people, for which they are motivated to solve.

Confidence in your answer to: “what to build and why” starts with customer development, but the role of product management goes quite a bit deeper. An expert product leader can gather and organize data from a range of sources to formulate a recommended path forward.

This includes:

1. Customers (or potential customers)
2. Internal Stakeholders
3. Engineering Limitations
4. Time to Market
5. Viability Concerns
6. Cost to Build
7. Competitive Analysis
8. Revenue Potential
9. Defensibility
10. Marketability

The role of the product chief in a startup is to pull all of this information together and create a clear and concise product strategy and execution roadmap. If I were developing the perfect product manager job description, I might include statements like this:

• Understand and learn the rapidly changing needs and opportunities of customers and market dynamics
• Work with stakeholders, community members, and other sources to define the product roadmap for the org
• Validate ideas with data, comps, and feedback and propose how products should work, how we build them, and why now
• Organize information and gather consensus from stakeholders on product planning and development
• Scope products and features in manageable stages based on the capabilities and bandwidth of our team (dev, design, etc.)
• Perform financial and/or user metric forecasting to support rationale and prioritization for the proposed feature set
• Remain abreast of all competitive products and strategies to help inform the product vision
• Research new user-facing technologies and predict applicability to our existing business
• Participate in ongoing user and competitive analysis to understand landscape, positioning, and feature set

This leads us to part two of product management in a nutshell — managing and executing the work to bring your product to market. Many founders and entrepreneurs error too heavily on this function, mostly because it’s fun and more straightforward. I mean, would you rather create instruction books for Lego or just build Lego?

Managing and Executing the Building

If you’re building a tech company, this step requires generally requires engineering and design resources, sometimes a lot more than that. But in just about every business, someone needs to manage the work. The product manager does that.

Of course, he or she may have project managers or other operational resources to help, but I’ve generally found that in a startup environment, less is way more, so I prefer to launch an MVP (more on MVP’s below 👇) with a single person quarterbacking everything. At a high level, here are some of the key functions of this phase of product management:

• Write and manage the development of PRD’s around defined product phases
• Create and manage design/UX/wireframe resources
• Drive the strategy, tactics, and delivery timelines for the product
• Organize stories, tickets, and sprints for dev resources
• Work closely with QA and testing to ensure products are working as defined
• Assess and evaluate costs to build, maintain, and scale products and services
• Communicate risks to estimated releases and propose mitigation plans
• Work with cross-functional team members to plan the go-to-market strategy of completed features
• Continually review the performance of components and flows to improve business or UX results
• Translate product goals into backlogs and prioritized features that effectively deploy resources
• Continually prioritize work by communicating critical milestones, deconstructing features into discrete tasks, and focusing on results
• Build and mentor the product management team on best practices and create a strong product culture within the company

Part two of product management it’s mainly about keeping the team on the rails. Your product leader should build clear scope documents. Create simple and understandable sprint tickets. And they should work closely with engineering and design teams to ensure they know the goal of the product. Remember, no engineer with his or her salt wants to build something they don’t think anyone wants or needs.

Create an MVP Culture

You’ve probably heard the term MVP (Minimal Viable Product). Like product-market fit, it’s a ubiquitous term in startupville. I actually prefer Henrik Kniberg’s definition of an MVP as the Earliest Testable, Usable, Lovable product. This approach essentially shifts product thinking away from viability to testability. The distinction is subtle but impactful.

Note: For simplicity, I still use the acronym MVP to represent testable, usable, loveable, well, because TUL just doesn’t have the same ring. Deal with it.

Most founders would agree that product leadership in a startup should be driving toward an initial product launch that has just enough features to be “viable”. But really, they should be aiming for something that is testable.

Testable is a more binary endpoint than viable. What does viable even mean? Viable is inherently subjective. That means that your product might be viable for one customer but not viable for another. Testable on the other hand means that anyone, customer or not, can go ahead and “test” your product. That’s all you want at first. Just build to a point where people can test.

Testable is good because it’s clear when you’ve achieved that. But it’s bad because it’s not sticky. Users are much less likely to stay if your product is simply testable. That’s ok, startups don’t win overnight. It takes time to make a product people love. Once you have something testable, then get on making it usable.

At the usable stage, people start to get interested and are more likely to stick. And from usable you aim for lovable. And lovable is the win — people can’t live without lovable.

All that is to say that the goal in phase two of product management is building a product people love.

So why is this section titled: build an MVP culture?

Put simply, when only your product manager believes in building a testable product first, and everyone else is aiming for perfection out the gate, you’re going to be heavily misaligned operationally and you are likely to achieve neither.

That’s why it’s essential that everyone in the org from the CEO to customer service buys into an MVP culture. When engineers know the goal, and designers are working toward the same outcome, it’s going to be a lot easier, faster, and cheaper to achieve to results you want.

As a founder, it’s your job to set the cultural tone of the organization. Let them know your startup is a marathon, not a sprint. Explain that you are starting with a testable product, then iterating quickly to make that product usable, and ultimately lovable.

Nutshell of the Nutshell

Product management isn’t complicated, but it is really really hard. Getting product management right in your startup is both essential and challenging. It requires buy-in from everyone in the org.

In truth, a product manager is acting as CEO until product-market fit is found. Many great startups were founded by product-centric entrepreneurs.

Dropbox for example was created by two MIT students, Drew Houston and Arash Ferdowsi, as a way for people to easily share files with each other. At the time, both students were frustrated with the process of emailing files back and forth to each other, so they decided to create a solution that would make it easier.

Houston’s philosophy on product management was to start with an MVP. Drew famously build an initial MVP of Dropbox that wasn’t a product at all, it was a video of how he imagined Dropbox would work. It was the ultimate MVP and he proved that people would “test” a product that did what the video showed.

Drew intuitively built an MVP culture at Dropbox, one that still exists today. Any startup founder can appreciate the simplicity of this approach.

Start simple. Figure out what people want and need. Build the most basic possible version of that. Test the MVP. Iterate quickly. And remember, something that starts out simple, will eventually become something else, something lovable.