223. Product management: from start-up to grown up

If you want to understand how tech companies work from the inside, you need to know what product managers do.

People who master this skillset go on to be successful entrepreneurs, run tech companies and become leading venture capitalists.

Microsoft CEO Satay Nadella used to be a product manager, as did Ben Horowitz, the co-founder of A16S, the VC firm behind Facebook, Airbnb and Pinterest.

In this episode, you will learn from Andrew Plato, serial entrepreneur and author of The Founder's User Manual: Practical Strategies for the Startup Leader.

Timestamps

00:00 Understanding Product Management

02:46 The Role of Founders in Product Management

05:50 Navigating Team Dynamics

09:11 The CEO vs. Founder Dilemma

13:52 Founder Vision

18:03 Lessons for Early Stage Entrepreneurs

22:13 Sales Skills

24:55 Learning from Failure 

29:59 Practical Strategies for Startup Success

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Transcript

Sophia Matveeva (00:00.202)
If you want to understand how tech companies work from the inside, then you need to know what product managers do. And what they do really differs from a tech startup to a tech grown-up. Learn what product managers do in tiny startups and massive corporates in this week's episode.

Sophia Matveeva (00:23.384)
Welcome to the Tech for our Techies podcast. I'm your host, Tech entrepreneur, executive coach at Chicago Booth MBA, Safiya Mathur. My aim here is to help you have a great career in the digital age. In a time when even your coffee shop has an app, you simply have to speak tech. On this podcast, I share core technology concepts, help you relate them to business outcome.

And most importantly, share practical advice on what you can do to become a digital leader today. If you want to a great career in the digital age, this podcast is for you. Hello smart people. How are you today? I am in Bahrain today where the sun is shining and the sea is an unbelievable turquoise. And I basically can't believe that I'm here for work.

I kicked off our non-technical founders accelerator program yesterday and then next week I'm off to Dubai. Yay. But before that, let's learn about a super useful skill set, product management. People who master this skill set tend to become really successful. So they become successful entrepreneurs, they run tech companies and become leading venture capitalists. So Microsoft CEO Satya Nadella used to be a product manager.

as did Ben Horowitz, the founder of A16Z, that's the VC firm behind Facebook, Airbnb and Pinterest and many more. So basically, it's a super useful and lucrative skill set to learn. And you're going to hear about it from Andrew Plato, who is himself an entrepreneur who built a tech business from scratch. And he talks about how this role evolved from when he was running a startup to when he was running a business that scaled up and that he eventually sold.

So if you want to understand how tech companies work from the inside, this episode is for you. And if you like learning how to succeed in the digital age, then make sure to hit the subscribe button. Tech from Techies is where you learn to thrive in a world changed by tech. And now let's learn from Andrew. Andrew, tell me, what is product management? Product management is that fun aspect of building a business where you, you

Sophia Matveeva (02:45.92)
you have to establish not only what are you building, what is the market you're serving, what are the features and capabilities of it, but then you kind of have to manage that process all along. And it's a critical component for any startup to have product management because it's easy when you're trying to build something, particularly something new and innovative that other people haven't built before, that you have control around

features, the capabilities that you're ensuring that you're aligning with the roadmap that you've established and that you're serving the market that you intend to serve. Because if you don't have that good management around it, things can kind of just go off into wild tangents, uncontrolled, and that can lead to some products that just don't work or they don't meet

customer demand or a variety of other problems. So who should be doing the product management at a startup? That is an interesting question and that is an eternal debate that goes on inside a lot of startups. So often when a startup is very small, it's the founders. The founders are the keepers of the vision of the original design. And so it makes sense that the founders would manage that product. There hits a point in a startup where you really kind of don't want

the founder and you as a founder don't want to be doing product management. Because as a founder, you tend to have a real close intimacy with your products and you tend to see them in a very particular light and you have this long history of working with them and that can skew your objectivity toward building and managing that product. once a and where that point is along the sort of startup journey is it's tough to say. But as a general rule,

Once you have customers, once you kind of hit that product market fit, you're scaling the product, it makes sense to start bringing in product managers to manage the entire life cycle of the development. And the founder should be very involved in that. And founders can play a critical role in shaping and designing what happens with a product. But you really need those people who are dedicated to the management.

Sophia Matveeva (05:10.774)
and the logistics as it would be of product management. And at the very beginning, it's also tempting companies will bring in product managers and they'll have them report to sales or they'll have them report to engineering. And that too can bring out a lot of mistakes because the saying goes, if you have a product manager who reports to the sales team, then you'll wind up with a sales product. Or if you have them report to an engineering team, you'll have an engineering product.

It's really important that product management report to the CEO the founder of the kind of the rest of the executives that they have a very Sort of direct path up to leadership and this is so that they can have the authority and they can have the reach within the organization to actually manage the the details and and again the logistics of product management and if they're only reporting the engineering

It'll be really easy for that engineering team to kind of skew them off into engineering focused features and ignore things that for, for example, the sales team might be saying, really need this feature because our customers are asking for it. You know, we're losing deals because of our competitors. So that's another important dimension of the shift when, when a startup brings in a product manager or product management team. It's interesting you say that because, you know, I'm thinking of a company I know, and this is a

pretty big company where the engineers bully the product managers. And I think it just happens because at some point the product managers kind of got insecure and now there is this sort of ethos in the company that the engineers, well, they're the important ones and everybody else kind of just does what they say. And then as a result, deadlines get missed because engineers want to keep on engineering and they're not really that bothered about the customers or because...

That's not their job, right? And so I would say that product managers not only have to have an actual reporting line, but they have to have the robustness to not get bullied because essentially everybody comes to them, whether it's engineers, whether it's sales saying, okay, we have to do things my way. And at this company that I'm thinking of, yeah, it's the engineers that bully the product managers, but I'm sure in another company, there are the salespeople who bully the product managers.

Sophia Matveeva (07:38.19)
Absolutely. I saw that even in my own gut. interesting. Tell us more. So I had a somewhat similar situation in the sales team that was, and again, sales teams interact with customers. they tend to have, you know, they do know what's going on sort of in the field, but sales can be a very, like you tend to have a very narrow view of sort of what's going on in the grander picture of a market or trends. Salespeople

let's face it, I mean, they're focused on closing deals. And if they lose a deal to a competitor, then, you know, they naturally are like, well, we've got to start doing what that competitor does. And that's not always the case. mean, you lose deals for millions of reasons, some of which have nothing to do with your product whatsoever. And in my case, had a sales, I had a sales person, sales team,

that was sort of insistent that they understood what the product should be or where it should go. And it was, and that was difficult. It led to a lot of, you know, debates and arguments and such. And, and as a founder, that was a, that was an important role that I took in, kind of mitigating that because it wasn't that the sales team was wrong. It wasn't like everything that coming out of their mouth was incorrect. And many of the things they were saying were very much correct, but

certain personalities can kind of skew the process. And in this case, rather than having engineers who were the bullies, I had a salesperson who was the bully. And that salesperson, again, it wasn't that they were wrong, it's just that they were bullying and kind of pushing their perspective at the expense of everybody else's perspective. And that just, that wasn't gonna work. So as a founder, I was able to step in and kind of help

moderate that process because I had the authority as the founder, sort of the keeper of the, you the original vision. And I could, you know, I could sort of piecemeal out the areas where I'm like, okay, the salespeople are right. This is an issue we need to deal with it. Or this just simply isn't something we're ready for yet. I could, I had the ability to do that. And I think that's where product

Sophia Matveeva (09:58.074)
management teams, it's really important for them to have that tight relationship with the founder or the CEO or both. In the case, in my case, it was both at least for a while, because they can often become those arbitrators and help sort of, you know, help deal with those clashes that can happen between different teams and be able to sort of extract out the things that people are saying.

that are reasonable and really should be done. Brian Chesky, the CEO and co-founder of Airbnb has recently spoken out about the fact that he has really returned to focusing on the product. And so I think, you know, the journey was that obviously he was super focused on the product at the beginning. He is a designer by training. So designing the product and the product experience was super important. But then, you know,

It became a big company, right? And so he became a big company CEO and he couldn't focus on the product. That was literally impossible. And he then said that actually one of the reasons why he thought Airbnb started having problems was because he was focusing on strategic initiatives and being a big company CEO rather than on the product. And so he said that he is now kind of doing both.

I don't know how you manage to do that with a company the size of Airbnb, but I think the intent at least shows us how important, how critical it is to a company. And so have you heard Brian saying this? And if you have, or if you haven't, what do you think of this approach? You know, at a company at that level, should the CEO be really focusing on this or should he go and, you know, speak to investors and be the figurehead?

My response would be this is more of a founder issue than I think it is a CEO issue. So let me make the first big important distinction. There's a big distinction between being a CEO and being a founder. They're not the same. Now, a lot of founders are CEOs. I was. I was both a CEO and a founder, which is that's a case where you're not only building the company, you're also managing and running the company. And that's a lot harder. Let me just tell you.

Sophia Matveeva (12:19.186)
Some founders are not the CEOs. They go off and become CTOs or something else. So I think the challenge is that a CEO job has particular expectations and requirements on it. One of those is investors managing a board. There's a whole set of kind of CEO tasks that the CEO has to do. And those can become very time consuming, particularly landing investments.

I mean, that is a full-time job in and of itself. If you're having to do that and manage the product and do sales and do everything else in the company, which was my experience, I kind of was doing everything. It becomes very overwhelming. Yeah, you tend to shift to the things that are that immediate emergency. in my case, I spent a lot of time doing sales because I had to get deals closed.

And I knew that if I kept the deals coming in, that was gonna help me get the investment. So it was sort of like this chicken and the egg problem of, in order for me to get investment, I gotta close deals, in order for me close deals, it's like, so I had to kind of keep that ball rolling. So I think what happens is as a company grows and gets bigger and bigger and bigger, people who are in these CEO roles, their ability to do those kind of other things simply become, it just isn't enough hours in the day.

And I have to rely on other people, have to delegate those things, I have to rely on other teams. And you get to a point where simply you have almost no sort of as a CEO, you have almost no input or influence on what's going on in those places or very, very little, only to the point of, you know, coming in sort of for briefings and being able to say, yeah, that sounds good or no, I don't like that or A, we need to rethink that.

So you have the ability to kind of shape direction, but you really don't have the ability to get into that needy gritty. Now if you're a founder and you're the person who built that product and you're the person who the vision kind of came from, that can be really detrimental because once products get sort of separated off from their founders, if the teams don't kind of stick to that original vision,

Sophia Matveeva (14:44.692)
Or stick to a vision, should say. It doesn't even necessarily have to be the original vision. But if they don't stick to some of those original things, yeah, products will start to kind of wander off in all sorts of weird directions. And you get products that it's like, you know, what's, who, whose idea was this? you know, who came up with these weird features or, or strange capabilities or who didn't, or in many cases it's who, why didn't, why didn't you implement these capabilities? So.

What I think he's basically realizing that a lot of founders realize when their companies get really large is that there's key areas as a founder you can influence your startup once it kind of gets to a certain level. And your involvement is really important. But you need to sort of be very judicious about where you apply that sort of founder vision.

Product management is one of the key areas. I would say that's probably the most key area, aside from maybe some parts of the sales process as well. But product management is where founders can really make a fundamental and big difference. And it's the area where they should be involved. So I think what you're hearing him say is, look, we're big, but we're slipping.

I need to put my founder energy where it really should be, where I can make the biggest difference on the future. he's right. I would completely agree with that. As you say, founders have the vision. And this is not only about tech. So actually another story about another CEO of a company that everybody would have heard of, which is Starbucks. Howard Schultz, very famously, he's no longer the CEO. And he has actually been criticizing the current management for

basically relying too much on the app. And he says that the original product, which is the Starbucks coffee shop, it's now soulless because everybody is buying coffee through the app. So they're not interacting with the baristas. They're not sitting around as just, you know, go in, get your coffee shot, get your coffee shot and continue. know, whether it's kind of ethical for somebody as well known to criticize his successes. I mean,

Sophia Matveeva (17:08.326)
I'm not sure about that, but it just shows that if you've created the product, even if, know, Howard Schultz, he's made loads of money, he doesn't need anymore. But if you've created that product and then somebody else takes it in another direction, so in this case adds digital transformation to it, and then it's going to be really, really hard to stay quiet. I mean, Howard Schultz probably knows he shouldn't say it, but he probably can't help himself, which, you I understand.

And I understand as well. I mean, it makes sense. When you're a founder, become very, you're very passionate about what you've built and you know, it's, it's, it's your baby, right? And so, and you have, and you tend to be able to see the whole picture, which very few people can. and in the case of Howard Schultz, he started with a very specific vision and that vision is essentially what got Starbucks to where they are today.

And to sort of change that to something else it might make sense as a business and it might make them more money overall but it does kind of stray from what his original intent was and and I think this is where companies and CEOs who kind of come in after the fact it's important for them to think about that bigger picture of where do they want to go and what was that vision because in many cases if you can

If you can manage both of those simultaneously and retain the original vision by still being able to push and move forward, you can ultimately end up building something that is quite a bit more impressive as a product and as a market. And I'll pull out the obvious example here, which would be Apple. Apple is a prime example of a company that's stuck once Jobs returned, I should say, Steve Jobs returned.

It stuck very true to his vision and his design and everything and how they're worth a zillion trillion dollars. So it was actually Tim Cook who added more shareholder value than Steve Jobs. So which is interesting, but they're such different skill sets, inventing something completely new and then basically, improvement and improving it out completely different things. so that's very much so.

Sophia Matveeva (19:34.128)
Let's move away to the other side of the spectrum. So basically the super early stage. So I am about to start running the non-technical founders accelerator and we are literally starting in a couple of days. And one of the first lessons that we're going to learn is product management. And so these are really early stage people. A lot of them don't even know that product management is a thing. So.

When you are speaking to these young entrepreneurs who've never heard the term product management, and then, you know, they're going to go and see a bunch of two-year courses and they're going to think, I don't have the time to do that. What are the key things that these people need to learn if, know, since they're starting companies, they've probably, they need to learn as much as they can in like literally a week. So what should they focus on? The early stages of a startup product management is

fundamentally a sales job. and a lot of founders, particularly non-technical ones, particularly new entrepreneurs, don't have sales skills and being able to sell an idea to people, not a product, but an idea, a concept, a design is equally, if not more important than selling the actual product. And this is so critical in that early stage is

Not only do you have to understand your own idea, but you have to be able to communicate that idea and sell it to people. You need to get people interested in what it is you're doing. So when you mean sales, you don't actually mean selling it for money. You mean selling it to get people excited and get people on board. So selling it to get co-founders on board, team members on board.

Maybe investors, maybe bloggers. Or, know, to get into my accelerator, you have to do a sales job to convince me. It's all, it's, it's all sales in those early stages. And, and if you're not comfortable in that sales role, you'll struggle. mean, I did, many founders do, because they get into the nitty gritty of building the product or its features, which are all important. it's not to say that you shouldn't.

Sophia Matveeva (21:55.292)
do that, but you can build something that is absolutely brilliant and amazing and has all these incredible features or capabilities, but if nobody knows about it, they don't understand what the heck you're trying to accomplish, then kind of all your effort was for not. You almost might as well not have done it in the first place. You have to get people kind of on board with your vision, get them to understand what it is you're doing, what are the goals, what are the things you're trying to get to.

And this only is going to get more important when you do try to get investors or co-founders because you need to convince them of why this is something that's meaningful or important or valuable. Cause that isn't going to necessarily be apparent to everybody like it is you, the founder. Oftentimes when you're a founder, have this sort of, get so involved in building it that you just inherently understand its value. Like, how could you, you

How could you not see how this is an incredible tool? Well, you can't, because you're not inside that head of the founder. And so that's why I say that sales ability, that ability to define what it is you're doing, define the problems you're solving, define your capabilities, align those with what other people need. Those are fundamental kind of components of sales.

and you need to do those in that early stage. So that's what I would tell the early entrepreneurs is you're going to have to get your sales skills improved and work on them. It's interesting because I think non-technical people when they are creating a tech product or getting into the tech world, know, say obviously non-technical founders, they're creating something, but maybe somebody wants to transition career into a digital company.

And they're so freaked out by the fact that they're technical and what they don't know. I find often that they go too deep and then try to just only focus on the technology, know, learn all of the jargon. And actually that's not what's expected of them because, know, they're not trying to be, to get a job as a C++ developer. That's not what they're doing. yes, they need to know something like they need to be able to.

Sophia Matveeva (24:15.684)
speak to developers and you're like, I don't know, for example, explain how their customers are going to behave, what kind of internet connection they're going to be using, what kind of devices they're going to be using. And then based on that, engineers can build a tech stack, but they don't actually need to go and say, build it in this language. And I find that, you know, I've already had questions from the super keen founders who are, who want to get started early and they're saying, you know, what language should we learn about before we start? And I'm like,

You shouldn't, you know, if a non-technical founder is telling engineers what language they should be building in, know, that's nobody's going to be happy and you're going to produce something really powerful. was going to say in those early stages, you also have to give yourself the freedom to sail. And you have to give yourself the freedom to explore many different sort of ways of doing things. And that's why

And particularly this is important when it comes to the technologies you pick or the architectures you pick. You might go down the path of one particular tool or architecture or framework or whatever that may be. And get pretty far down the path into development only to realize that that isn't gonna work or it doesn't scale or there's too many clumsy components or

There's too much manual sort of nonsense you're gonna have to do or there's some weird dependency that's gonna happen later on that's gonna, there's a million different reasons and you have to give yourself the freedom to back up and kind of start over down a different path. Again, I experienced something very similar. And the kid, well, it's not always a lot of cash. It's that ability to then know, okay, this isn't working and you know,

People fall into that sunk, sunk, fast fallacy, all the time. Really bad for founders because you get really deep into something and then you think, I have to keep going all the way down this. And it's like, no, you probably should just give up and start over on a different path. Because, you know, just keep doing the same thing over and over again and beating your head against the wall. Isn't a good idea. What I meant about the cash is that in early stages, people might get

Sophia Matveeva (26:39.796)
a tiny friends and family check, or maybe some sort of grant funding from an innovation body, or if they're in a corporate startup, then the CFO is going to say, okay, I'm just going to give you a few grant to experiment with this thing. And then if that goes well, we can fund you some more. And I think, I mean, I have certainly done this. I remember when I first got my first tiny check, I was like, I know exactly what to do with all of it. Yeah. So do we know what happened next?

So I spent the vast majority of it, to be honest, on something useful, but then only as we started working, we realized that actually there's a whole bunch of other things that we need and without those other things, we can't move forward. But I was like, we've literally got 5 % of our capital left. What are we going to do?

We figured it out because when you're a founder, you figure it out somehow. But I see, I see people kind of doing similar things all the time. know, they, they get a small check and they're like, I know exactly what to do. And I'm just going to spend this, I don't know, $10,000 on this particular development or this particular feature. And once we have this, then money rain will come down upon us.

That doesn't happen. Yeah, it doesn't happen. No, it doesn't happen. And it's easy as a founder to get lost inside something that's that might be genuinely very cool or innovative, but forget that again, if people don't understand it or you're unable to demonstrate it to people, then

You've kind of wasted your time and energy and I'm thinking to my again to pull from my own experience. You know I had it up the development of a new version of our platform. We were moving it to a Microsoft platform and Microsoft in this case was a very different. Framework and environment is Azure. And when we got to sort of the latter stages of the development.

Sophia Matveeva (29:03.378)
The team had done all this great engineering work and they built all these really cool things, but there was basically no front end, there was no gooey. The visual aspect of it was like nothing. It kind of didn't even occur to them that that was an issue. I'm like, guys, nobody sees the value of what you just did. mean, you've done all this amazing work.

And if I, as an outsider, look at this, I'm gonna go, what the, this is nothing. And I said, you're sort of, you're hiding all of your ingenious engineering here. And so you've got to kind of develop a better looking GUI. And this particular product, they were kind of like, come on, why do we need this? You know, we're all engineers, we can do everything on the command line. And I'm like, because it's not gonna sell. Nobody's gonna.

buy this. and again, that's that, that sort of tunnel vision that could happen in the process. And in my case, being the founder, was able to kind of see that bigger picture and help them through that, mistake that they almost made. And ultimately the product turned out fine. It was all good. yeah, I mean, it's, easy to, yeah, it's easy when you're sort of at the beginning of these, just think you got it all figured out, but

You can miss one or two things and those mistakes, those failures that you make along the way are fantastic opportunities to learn what you should be doing. And as I would tell every developer, every, every, everybody, don't waste a failure. But if you have a mistake or you, or something goes wrong, don't waste it. Learn what you can from that because the secret to your future success.

is embedded in every single failure you make. You just have to be willing to look at that failure, analyze it, and think about why you failed. And inside there are the answers you need. And a lot of people get sort of hung up on this, failed and I'm an idiot and I'm no good. And I'm like, that's not a healthy way to deal with failure. Failure is a fantastic opportunity to get better for the next revision.

Sophia Matveeva (31:26.388)
You know, I often think that the only way I learn is through failure. And I'm now trying to learn from the failures of others because I'm thinking, know, it always have to be my failure? Because it's really, it's a really painful way to learn lessons. So now I'm trying to be okay. Let's let other people pay the cost. maybe I can lower my cost of learning a little bit.

I would say I'm still not there yet. I'm mostly learning by falling flat on my face and embarrassing myself in public, but here we go. So you actually have a lot of useful startup advice in this book that you sent me, The Founder's User Manual, Practical Strategies for the Startup Leader. And it's a super practical book. So could you say just a couple of words about who it's for and how people should use it? Well, speaking of failure.

That book is really a catalog of all my failures. And I failed a lot. I ran a business for 26 years, and I did pretty much everything wrong the first time. I I hired the wrong people, I said the wrong things, I focused on the wrong things. I made all those mistakes. And at some point, after I became successful and I was able to exit my company,

I realized I had sort of this huge database of best practices that I had learned from all those failures. And like you just mentioned, I was hoping that maybe I could help other founders learn from my mistakes. that requires a certain level of maturity, I will say. It's difficult to get to that place sort of as a person where you can reflect on your own

failures, but also then look at other people's failures and see them in sort of context to what you need to do. And so my book is designed for those young entrepreneurs, new, you know, new startup people or leaders really in any size organization who want to, who want some of that practical, you know, behind the scenes sort of ways of building and growing a business. And some of the things

Sophia Matveeva (33:53.552)
in there, they might seem a little obvious when you read them. Like I always mention the one like you've got to get paid all the time, every time with absolute consistency. And it might seem like a kind of a, well, duh, like of course you need to get paid kind of thing. I am often amazed at how many founders I meet. And it's like they just do not prioritize invoicing their customers and getting paid. And I'm like, I'm sorry, that's like priority one.

You have to get paid all the time, every time, without failure. And if you have customers not paying you, then you're not a company, you're a charity or something else. And so it's a very basic principle of running a business that you have to just instill upon yourself and the people around you that you have to do those basic kind of things. And there's a lot of good practices on how to do that so they can collect effectively.

I collected 99.9 % of the invoices I put out as a company. Now, part of that was, you know, I insisted on doing good work. But the other part of it is that I had a process. And I had a process because I didn't have a process for many years. And I failed many, many times. And I realized I can't keep doing that because I need to get paid. So.

So that's who the book is designed for. And I've tried to lay it out in sort of a user manual style of just, you here's the way to do it. Rather than a lot of theories and frameworks and kind of flowery concepts, I try to give people like, look, here's just sort of a practical way of doing this. I've been enjoying reading it. I'm learning from your mistakes. Andrew, this has been a super enlightening conversation.

Well, thank you, Sophia. It's been great chatting with you today and I appreciate it. Wasn't that interesting? I hope you enjoyed this episode, which you probably did because you are still here. So, have you left this show a rating and a review in your podcast app? If not, how about scoring some karma points and moving that lovely thumb of yours towards the five star rating? Well, thank you in advance, my dear smart listener.

Sophia Matveeva (36:18.396)
And now you have some karma points and you might be rewarded in heaven. we don't know, but you might as well just, you know, give it a go. Anyway, I wish you a wonderful day and I shall be back in your clever ears next week. Ciao.