Changing Times, Changing Blog

I got stuck at home with a flu for the better part of last week. Lying on my couch gave me ample time to think, so I seized the down time to finalize my thinking what to do about this blog going forward. For quite some time now I have a feeling that the present form of this blog works neither for me nor for my readers and that bigger changes are required. This blog started three years ago in a very different circumstances. At that time I was heading our engineering team and we only had an office in New York. Consequently my mornings were quite relax as there wasn't yet a horde of Americans typing emails the whole night that floods my inbox in the morning nowadays. Without a quiet time in the morning I don't have any suitable writing slot anymore and squeezing in a time to write in my busy schedule everyday has become quite a big source of anxiety.

The form of this blog was modeled after Fred's avc.com. It was two to three paragraphs describing some new finding, learning, technology, or thought in my head. This form worked well when I was still writing mostly about engineering matters. But last spring I took on the role of head of product development and consequently also the subjects of my blog posts changed completely. If before I could draw on my 20+ years of software development experience, I was writing lately mostly about my adventures in the beautiful world of product development and online advertising. Lacking first hand experience and in-depth knowledge in these fields my writing often felt superfluous given all the great resources already available online.

So I decided that I won't be writing posts on this blog every work day anymore as was the case for the past three years. I love writing and I consider it an essential skill that needs to be practiced on a regular basis. So I plan to continue writing but in substantially altered form. I might not do it in a regular cadence and I might choose entirely different form, but I'm pretty sure I haven't said the last word on this blog just yet.

Photo by Mario Mancuso

Going Far (Too Fast)

I have little patience for people denying science. Unless you are in the middle of some wilderness wearing skins of animals you've killed using your bare arms, everything surrounding you is direct result of work of generations and generations of scientists. Buildings, cars, roads, affordable food, safe drinking water, electricity and many more wouldn't be possible unless thousands of dedicated people would succeed in cracking the code of nature. If you're reading this on an iPhone and you're anti-waxer, climate change denier, proponent of socialistic economic order, or afraid of any other truth exposed by science, you should drop your favorite Apple device immediately since in your hands there's the devil itself. The iPhone is the pinnacle of western science and is only made possible because of quantum theory (electronic chip), theory of relativity (GPS), chemistry (battery), number theory (encryption), and myriad of other scientific advancements that are for all practical purposes indistinguishable from magic (and therefore frightening to most people). You certainly don't deserve to use such magical thing while simultaneously bashing work of so many brave people that made it possible!

The success of science is entirely due to lack of any dogmas. There's nothing holy in science and everything we hold as truth today might completely change tomorrow. I'm therefore certainly not saying people should blindly trust everything science has put forward. On the contrary, the more we question the science the stronger it becomes. So, while I really lack patience for people proposing stupid alternatives to science (think homeopathy), I think these people are asking the right questions that science is not yet able to answer. In particular questions that advanced medicine (and neuroscience in particular) is opening recently, will have to be much better explained to the general public unless we want to experience a backlash from people who are completely lost in this day and age. An African proverb comes to my mind (again)

If you want to go fast, go alone. If you want to go far, go together.

Photo by Joel Tonyan

Keeping Tabs On Competition

One of the less glamorous activities of a product manager is tracking what competitors do. Unless you're practicing a copy-cat business model your competition can't really teach you much that you wouldn't already know and tracking activity of competition therefore feels more like looking in the rear mirror. While looking what's happening behind your back is an important security precaution, most action happens in front of you and looking back feels boring most of the time.

If you're lucky you have half a dozen competitors (that is, just enough to validate your target market but not so many it would feel crowded) who release new products, make new deals, update their webpages, and do many other activities that you as a product manager must be aware of. Consequently keeping tabs on all their activities consume lots of time. At least for tracking updates to webpages there exists a nifty little service called VisualPing which tracks changes to specified web pages and notifies you by email or Slack about changes. After testing this service for a week I found out that it works quite well and, even more importantly, that also our competition is as glacial about changes to their webpages as we are with ours.

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Predicatability is the Ultimate Value Proposition of Marketing Automation

There's nothing executives value more than predictability. They live in their Excel spreadsheets, breathe projections, and their ultimate KPI is how successful they are at matching plans with outcomes. Marketing as it is done currently is the antithesis of predictability. Whether an advertising message will resonate with target audience is anybody's guess and selection of advertising messages is done by some gurus that no executive can stomach. Marketing automation is a trend to bring predictability into marketing in general and in advertising in particular. It would be executives' wet dreams if they could plan supply of customers with such certainty as they are able to organize supply of services and components. I'm sure such idea sounds silly to any marketing expert today - marketing is about creativity, ingenuity, and skills that cannot be replicated by machine. Or is it?

When Salesforce started pushing the idea of cloud computing in 2000, old guard was saying that web is nice for web pages but it will never be a way to distribute enterprise software because enterprises want to own their data. When Amazon launched its Web Services in 2006 system operators all over the world dismissed the idea of building their systems on top of some virtual infrastructure. But in 2015 I'm able to provision more computing resources with a click of mouse without involving a single system adminstrator. And observing the rise of cloud computing first hand over the past two decades I can also well imagine the rise of marketing automation where customers will be provisioned with the same ease as servers are provisioned today.

Photo by Souparna

The Best need the Best

A few days back I got together with some friends and our discussion somehow turned to the issue of Slovenes going abroad. Some in the group held a view that highly-educated Slovenes looking for greener pastures elsewhere are a loss for our country since the investment in their education will be reaped by others. The rest of the group disagreed and posited that somebody who grew up in Slovenia will never be able to cut ties with home and that she or he will always act as a bridge that will make everybody more successful.

I firmly belong to the second group. In my opinion we should actively encourage our best people to work and compete with the best in the world. Preferably that means bringing the best people from abroad to Slovenia. Unfortunately, that's rarely possible and our best minds must go abroad in order maximize their potential. The only way for Slovenia to loose is to put a highly capable Slovene in an environment full of incompetent people (it doesn't really matter if these people are Slovenes or not). Such set up only breeds frustration and makes everybody miserable and unsuccessful. But when a Slovene succeeds abroad we will always have a stake in it despite us not having any influence on their success. People such as Goran Dragić, Anže Kopitar, and Jure Leskovec are a vivid demonstration what is possible when the best are with the best even if you're born in Koseze, Hrušica, or Šentjošt.

Photo by Michael

Retention Rate and Sales Growth

For the past few weeks I've been fiddling with our pricing strategy to better align it with SaaS model. Defining how to charge for your services has profound effect on business health, so I had to include revenue projections in the pricing proposal. As a consequence I spent quite some time contemplating what KPIs should we use and finally settled on retention rate and sales growth as the two most important metrics with all other indicators derived from them. Retention rate is important because every lost customer must be replaced with a new customer just to keep up the current level of revenue. And retaining customers is in most cases much cheaper than attracting new ones. Sales growth on the other hand is what controls how fast your business will grow. If your ambitions are low, you can keep your sales constant and concentrate on providing good service. But if you're set to conquer the world, you must grow your sales fast. That's why in later venture rounds the majority of funding goes towards building sales.

Retention rate and sales growth are not independent variables. Loyal customers provide ample opportunities for up-sells and cross-sells and, even more importantly, they are a great source of referrals. On the other hand you can (temporarily) boost your sales just by empty promises thus acquiring customers that are impossible to retain. So product, engineering, and support teams are helping sales people by keeping existing customers happy, while sales people can influence customer satisfaction by pitching customers who are a good fit for your services. One metric for each of your teams therefore suffices since the interdependence of both metrics makes sure that interests of the teams are aligned with the overall business goal of sustainable revenue growth.

Photo by Yug_and_her

Transport is a Trillion Dollars Opportunity

One of better fortunes in my life is that I can call Violeta Bulc my friend. I first met her in 1999, I worked for her between 2002 and 2004, and stayed in contact with her ever since. Her meteoric rise last year from relative obscurity to the post of European Commissioner for Transport didn't really come us a surprise to me knowing her capabilities and determination once she sets something as her goal. The thing that sets Violeta apart from most other people is that despite her engineering background she has the most developed intuition of all the people I know. In that regard I find it extremely telling that she accepted the post of transport commissioner, a field she knew little about up until recently.

I think Violeta intuitively feels transportation is one of the industries most ripe for complete disruption in the next decade or two. Can you imagine that in the age of smartphones there still exists taxis driving around aimlessly, in the age of personalization we still have 50-seat buses as the main public transportation backbone for rural and suburban areas, and in the age of robotic cars we still consider a car as a status symbol? Very few people are more suitable to spearhead the transformation that information technology is about to bring to venerable field of transportation than Violeta who not only has deep understanding of IT (Nokia 9000 Communicator was her trademark already in 1999), but excellent feeling for people and systems. I expect companies such as Uber, GoOpti, Tesla, and Google to completely transform how we commute and travel sooner than we imagine. They will have a highly competent partner in Brussels, indeed.

Cutting Scope

You imagine a new feature. You spend weeks designing it. You are very careful to limit the scope to the bare minimum. You prepare a detailed specification. You show the specification to engineers. Shock! According to engineers it will take 430 man-days to implement the feature you thought required not more than a man-month or two of work! The first reaction is to curse engineers, of course, and to question their judgement. But decades of experience tells you engineers are never pessimists, so questioning their judgement has never turned out as a good idea. We can't afford to invest 2 man-years into this particular functionality, so what now. Scraping the functionality altogether or...

...start cutting the scope. The first iteration of cutting non-essential functionality brings us to 200 man-days. Much better but still far cry from 50 man-days we've hoped initially to spend on this functionality. Second round of cutting - 130 days. Not there yet, but making progress. Third round of cutting - 80 days. Ok. It seems will have to add another engineer to the team but at least the situation doesn't look hopeless anymore. And looking at the trimmed down list of functionalities, the effort estimates don't look unrealistic anymore. Maybe engineers were right and product managers weren't as successful in cutting down scope as we initially thought.

Photo by gufm

Product Pricing

One of the things that define the product the most is its price. Price is not just amount of dollars or euros that customer needs to exchange in order to get access to your product, but influences every aspect of your product and the business built around the product. For a product manager, the price is one of the primary tools to convey value of the product to customers and how your product compare with its competitors. For a sales manager, price level defines whether to build a complex or simple sales cycle. A business owner can decide to extract majority of value from the market early through price skimming or invest in market share through penetration pricing. And there are bunch of other elements influencing pricing strategy.

Way to often I see people defining the price of their products and services in terms of their costs. For example, they say "my production costs are X so I'll be selling my products for X+30%." The only connection between costs of producing the product and price of the product is that at too low price you're either selling at loss, not generating profits for your owners, or breaking the dumping laws! But once the price of your product surpasses the threshold of basic profitability, the price should disregard costs of production entirely and should be based only on the value you deliver (as perceived by your customers), business objectives, and market circumstances. If you can sell your product for 10x your production costs, you should sell it at that price! If you have any philosophical, moral, religious, or other reservations to do so, call me and I'll be glad to provide you with some counseling.

Photo by Roadsidepictures

 

 

Mind the Product - San Francisco

Coming from the field of software engineering I find it as quite surprising the lack of conferences targeted at product managers. In engineering there's a bunch of outstanding conferences such as QCon or Velocity where people can upgrade their skills and meet like minded people to share experience. Also the field of user experience has a few interesting events and trainings available such as Lean UX NYC or UX Week. But in the field of product management there were only a few local events addressing the particular needs of product people. But fortunately the situation is changing. productcamp and ProductTank are growing horizontally to more and more cities, while Mind The Product is about to stage the first conference in San Francisco after several highly successful events held in London.

The early bird tickets for Mind The Product San Francisco sold out in 2 seconds! Obviously there's a great need among product people to expand our knowledge and capabilities. The program of the conference is not yet know, but if the program of past events held in London can be of any guidance, it will be very compelling. And since San Francisco and Silicon valley are places where some of the most successful products of all times were born, my expectations run extremely high. That's why I feel very fortunate that I'm one of the lucky ones who already have the tickets for the event :)

Photo by Roo Reynolds