Friday, May 16, 2008

The in's and out's of Product Management

I track the term ‘product management’ on Twitter. You can see the results of that search term by checking out a handy tool called Tweet Scan. Essentially, whenever someone mentions the words “Product” and “Management” in a tweet, I get alerted on my cell phone by way of SMS.
I’m a nerd, but I find it interesting. And, yes - this turned in to a hella long post.
Recently, and you should see this if you look at the search results, I’ve noticed a couple of folks talk about how hard a job product management is. I wanted to make some points here about this, and hopefully put to rest reservations folks may be having about exploring the possibility of getting into the job, or maybe even continuing doing the job if they are already in the thick of it.
My take is: it’s not hard.
Now, I’m not a product manager in a big, massive company. I never have been, and if I were a betting man, I’d say I never will be. That being said, I do in fact recognize that there are differences in how product management is done at say, Microsoft, and how I’ve structured it in the past. This is just due to the nature of the size of the organization where the job is sitting.
So, keep that in mind. My take on things is really related back to 20-50 (maybe 100 or less) person organizations. Anything upwards of 10,000 or 20,000 person companies really boggles my mind. So, hopefully that’s clear.
I do in fact recall when I was first put into the role. It was exciting, but at the same time, really ridiculous. Not for any other reason than, I wasn’t working for a more senior product manager to kinda guide me a long and instruct me on what to do - I was in there on my own learning as I went. It turns out, this is ideal for me, but I recognize it’s certainly not everyone’s cup of tea.
This leads me to admission number 1: The job is damn near impossible when you first start. Actually, scratch that — it’s damn near impossible when you get 3-4 months in. This is because, at least from my experience, it takes people about that length of time to really wrap their heads around what it is they are supposed to be doing. And I believe this is where most would sink and maybe start believing, “this job is WAY too hard for me, or anyone, to really do.”
And that’s 100% true. The way the job can be defined, it is impossible for someone to excel at. If you think about needing to be “proficient in Sales, Marketing (specifically, messaging and positioning), have a strong technical knowledge, excellent project management skills, well-versed in strategic alliances, and have a good foundation in finance.” Yeah. That’s a little tricky.
Let me take some of the surprise out of this description - there is no one that is “highly proficient” or “expert” in all of these things. They just don’t exist. You will either get a “tech” person, or a “sales” guy / gal, a “marketer” or a “project nerd.” But all of those wrapped into a single individual? Yeah. Not so much.
Now, this is where people may start to get down on things. How could you possibly do a job where all of those things are important? Some may say, “this is exactly what I think it’s HARD.” OK, well hold on - I’m getting to why it’s not.
Yes. those things are important. However, in a position like this, delegating is absolutely critical. That’s why you will usually see the line about “leading without authority” associated to many product management job descriptions. Why? Well, I’ll use myself as an example.


1. Am I a marketing genius? Hellz no.
2. Am I a great software programmer? Ummm, far from it. I may know a little LISP and SQL here and there.
3. Am I great with numbers? If you asked my grade 11 accounting teacher, she would say, “HAHA. No.”
And so on.
But here’s the key - if you understand *conceptually* how these things work, and maybe more importantly, how they work together, you are doing the right thing. No one person can build a great organization - it takes teams of people to do that. So, let’s re-visit those questions above with some modifications to them.


1. Do I understand marketing and have great marketing people to work with? Yes.
2. Can I give flexible requirements and wireframes to the outstanding developers and watch them develop wicked code? Yes.
3. Can I ask the finance people I work with to help me track project budgets to make sure I don’t go wildly out of control? Yes.


At the end of the day, so long as I understand the critical nature of cohesive positioning and building brand equity and help play air traffic controller to make sure marketing can do it’s thing, I’ve won. I can completely let go and push. IE, “I can give you feedback and my thoughts on positioning this product, but I need you to write the words and deliver something cohesive.” If they don’t, that’s another issue entirely. But I think you get the idea.
OK, so that’s a big long “admission # 1″ type thing. Once you cross that functional expertise hump, admission number 2 is this: The answers are right in front of you. Sure your opinion will factor a lot into the initial product release / development / design - but use those around you to vet ideas and build some momentum (no “i” in “team,” etc…). Someone actually has to DO things, but gather feedback (at least internally if you don’t have users yet, and then put something out in to the World.
Guess what? You are going to get a lot of stuff wrong. But it’s not about right and wrong. It’s about common sense and building cohesive products. The answers are always there - you just have to know where to look and how to ask.
So, is product management hard? No. The trick is not being the best marketer, accountant, UI designer, developer, Sales person all rolled in to one. The trick is to make sure that features get built, marketing communicates them, support can answer questions, and Sales can sell.
All the job is is connecting dots and knowing where to look for the data you need to make decisions. Don’t get overwhelmed by all the noise.














Have a great weekend





Gordon

The inside of a VC company or VC 101


Venture capital fund operations

Roles within a VC firm
Venture capital general partners (also known in this case as "venture capitalists" or "VCs") are the executives in the firm, in other words the investment professionals. Typical career backgrounds vary, but broadly speaking VCs come from either an operational or a finance background. VCs with an operational background tend to be former chief executives at firms similar to those which the partnership finances and other senior executives in technology companies. VCs with finance backgrounds come from investment banks, M&A firms, and other firms in the corporate investment and finance space.
Investors in venture capital funds are known as limited partners. This constituency comprises both high net worth individuals and institutions with large amounts of available capital, such as state and private pension funds, university financial endowments, foundations, insurance companies, and pooled investment vehicles, called fund of funds or mutual funds.
Other positions at venture capital firms include venture partners and entrepreneur-in-residence (EIR). Venture partners "bring in deals" and receive income only on deals they work on (as opposed to general partners who receive income on all deals). EIRs are experts in a particular domain and perform due diligence on potential deals. EIRs are engaged by VC firms temporarily (six to 18 months) and are expected to develop and pitch startup ideas to their host firm (although neither party is bound to work with each other). Some EIR's move on to roles such as Chief Technology Officer (CTO) at a portfolio company. According to the National Venture Capital Association the typical individual believes that a venture capitalist is a rich individual ready to invest in a new business venture, an investment into a "change-the-world" idea. On the contrary the investors look for a high interest yielding opportunity.
The "associate" is the typical apprentice within a venture capital firm. After a few successful years, an associate may move up to the "senior associate" position. The next step from senior associate is "principal," typically a partner track position. Alternatively, there are many pre-MBA associate roles that are used solely for the purpose of dealsourcing, and the associate is usually expected to move on after two years.
Venture Capital may be a viable source of financing for a business. While they generally invest in businesses that are more established and ongoing, some do fund start-ups. In general they tend to invest in high-technology businesses such as research and development, electronics and computers. Venture Capitalists deal more in large sums of money, numbering into the millions of dollars, so they are generally well suited to businesses that are going grand from the start or have grown and require gigantic expansion.

Structure of the funds
Most venture capital funds have a fixed life of 10 years, with the possibility of a few years of extensions to allow for private companies still seeking liquidity. The investing cycle for most funds is generally three to five years, after which the focus is managing and making follow-on investments in an existing portfolio. This model was pioneered by successful funds in Silicon Valley through the 1980s to invest in technological trends broadly but only during their period of ascendance, and to cut exposure to management and marketing risks of any individual firm or its product.
In such a fund, the investors have a fixed commitment to the fund that is "called down" by the VCs over time as the fund makes its investments. There are substantial penalties for a Limited Partner (or investor) that fails to participate in a capital call.

Venture Capital Investing
As discussed in Private Equity Funds: Business Structure and Operations, venture capital investing involves the provision of capital to business enterprises in the early stages of the development of new products or services. Venture capital investing was especially prominent throughout the 1990s, with the boom and the subsequent collapse of speculative interest in computer and information technology, Internet and communications sectors.[6]

Compensation
In a typical venture capital fund, the general partners receive an annual management fee equal to 2% of the committed capital to the fund and 20% of the net profits (also known as "carried interest") of the fund; a so-called "two and 20" arrangement, comparable to the compensation arrangements for many hedge funds. Strong Limited Partner interest in top-tier venture firms has led to a general trend toward terms more favorable to the venture partnership, and many groups now have carried interest of 25-30% on their funds. Because a fund may run out of capital prior to the end of its life, larger VCs usually have several overlapping funds at the same time; this lets the larger firm keep specialists in all stages of the development of firms almost constantly engaged. Smaller firms tend to thrive or fail with their initial industry contacts; by the time the fund cashes out, an entirely-new generation of technologies and people is ascending, whom the general partners may not know well, and so it is prudent to reassess and shift industries or personnel rather than attempt to simply invest more in the industry or people the partners already know.
GW