I’ve always felt like the “why” behind SendGrid is that we help our customers, particularly startups, grow and scale their businesses. Typically, SendGrid’s role in that growth is delivering dependable and engaging customer communications.
Another massive factor in a company’s early stage growth is finding product-market fit. Having piled up a bunch of product management experience myself at three companies that successfully found product-market fit, I thought I’d try to do my part to help startups grow and scale by offering up some product advice.
The following guidance is intended for time-starved startup founders or very early startup product people who may not have had formal product training, but recognize the huge importance of getting early stage product work done effectively and want to beef up their skills in the area.
Any good Product Manager starts with the problem, and the overall problem here is that 92% of startups fail within three years (Startup Genome Report). Beneath that, the majority of reasons that startups fail can be tied back to a lack of product-market fit (CB Insights).
These are overwhelmingly slim odds, and most of the failures tie back to not getting the product experience right. Can we all agree that something is seriously broken with the way most startups attempt to find product-market fit?
Improving your odds
I’m convinced that good Product Management (PM) practices can dramatically improve the odds of early stage company success. But most startup founders don’t have formal PM training, nor can they be fully dedicated to learning the PM craft given that they wear many functional hats in the early days of a startup’s life.
And while it takes years of dedicated focus to become a world-class PM, I believe there are certain high-level tenets of great PM practice that can dramatically improve early stage product outcomes for startups. These tenets are inspired by some of the best product teams on the planet, such as Amazon, Intuit, Intercom, and Pixar, and are currently working wonders for us at SendGrid. Let’s dig in!
Tenet #1: Start with the customer and work backward
You are not your customer! Get out of the building and get to know them! Ask them open-ended questions. Watch them work in their environment. Do not be tempted to assume that you know them or that your target customers think like you do.
Once you develop a deep understanding of your target buyers and users, capture them in persona descriptions so that the rest of the company (and especially any engineers working on the product) can develop a visceral sense of who these people are on the other end of your product and what makes them tick.
Tenet #2: Focus on jobs to be done
As you meet with customers, frame your interviews around deeply understanding the jobs your customer is trying to do and the problems they have. Do not think in terms of features, as this boxes in your solution thinking.
Market changing products address the full job a customer is trying to do, and considers the full experience to do that job, some of which may take place outside the product itself (signup flow, support, docs, etc).
A good example of this (as covered in Clayton Christensen’s book, Competing Against Luck) is from Southern New Hampshire University (SNHU). A number of years ago, SNHU saw an opportunity to serve mid-career people who wanted to get a college degree to help them switch careers. The job was essentially “I need to hire a university to help me switch careers, but I am time constrained.”
SNHU then completely oriented their operations around getting hired to do this job. They set up after-hours call centers, recognizing that seekers would be shopping around after their work day or on weekends. They enabled their financial ops teams to turn around tuition estimates within minutes, recognizing that seekers would in many cases be self-funding their education and would need answers very rapidly to determine if college was financially viable for them.
The heavily leveraged emerging online education technology makes attending classes more convenient for time-starved part-time college students. The result was that SNHU’s part time/online education business grew massively. You can see the positive impact that focusing on the job to be done can expand your thinking and result in a differentiated customer experience.
At SendGrid, we use an artifact called an “opportunity canvas” to ensure we have a clear understanding of the target user (you should pick only one) and determine:
• The job they are trying to do and the problems therein
• How they do their job today
• How we would do the job differently
• Why it’s urgent to focus on the job now
This validation phase is oftentimes painful and time-consuming and may involve a number of pivots in your thinking on the target user and the job. Don’t shortchange this phase. Gaining clarity on these topics up front dramatically improves your odds of developing a winning product experience down the line.
(Useful reference: Competing Against Luck)
Tenet #3: Design the product around the price
Most product teams ignore pricing until very late in the product development cycle. This is a mistake, as otherwise, you may find out too late that the product you designed won’t support the unit economics required to build a business around your product.
Instead, consider pricing before you start building the product. Once you understand the target user, the job they are trying to do, and the market segment(s) they can be found in during customer validation, you should be able to determine the approximate value your product will provide them.
Use that insight to determine an ideal price point up front and confirm that the unit economics for the product make sense for your business. Then as you design a solution, make sure the value delivered in the solution justifies the price point.
In solution validation, you should be testing willingness to pay the target price along with testing the product experience.
A good example of this (as covered in the book Monetizing Innovation) is the Porsche Cayenne vs. the Dodge Dart. The Porsche team knew in advance which segment of the market they were targeting, the value the product would have in that segment, and the target price.
They then designed the vehicle to justify the target price, and have had massive success with the Cayenne. In contrast, the Dodge team built the Dart first and only later attempted to figure out which segment they should target, and what price they should charge. Let’s just say the Dart has not been a massive success.
Tenet #4: Work iteratively
Once you understand the job your product is trying to do for your target customer, use a build-measure-learn approach to quickly arrive at a Minimum Viable Product. Avoid big bang releases with long gaps between customer feedback.
As you’re iterating toward an MVP, take the approach of testing your riskiest assumptions first, a concept that’s known as Riskiest Assumption Testing, with the awesome acronym RAT. Your riskiest assumptions will bite you in the ass later if you fail to address them early in the process.
For example, if your riskiest assumption is that customers will pay for your premium feature set, find a quick way to test willingness to pay early in the development cycle, such as forcing customers to pay to get on a beta waiting list. This way you’ll have an early clue if your product is unable to command the price point you need, and you can adjust your MVP thinking accordingly.
At SendGrid, we use story maps to articulate what we need to build to help the customers do their job and where the MVP line is. We also use clickable prototypes driven by a product called Invision to articulate our solution to target customers to get feedback.
Tenet #5: Have a smart target metric
Once your product gets in the hands of customers, identify a target metric that drives the customer behavior you seek (i.e. retention), and then work iteratively to move the metric in the right direction.
Many product teams focus on vanity metrics such as page views, downloads, etc. While those are interesting to understand, you shouldn’t make product decisions to move them. You should prioritize your product work on things that you think will truly drive the business.
For example, Slack discovered that once their customers sent 2,000 messages as an organization, their churn plummeted. All their product decisions were aimed at getting customers to that magical 2,000 message threshold.
I hope this advice has been helpful. I also have a blog series devoted to scaling product management at your organizations which breaks down how we’ve built out and scaled the product team here at SendGrid.
In the meantime, may you find early product-market fit and may your startup dreams come true!