What product managers need to know to build a product into a successful company
When I’m working with a group of product managers to help them move towards product mastery, I always ask them to introduce themselves by sharing what they love about product management. Among the numerous answers, in the last year the most frequent response is to create value for customers.
Many product managers also aspire to create their own group to accomplish this, whether it is as an intrapreneur inside an organization or as an entrepreneur founding their own company. Product managers make the best founders.
To explore what being a founder involves, I had a discussion with Ryan Frederick. He is a product manager and founder and now helps software companies build great products. He has put his lifetime of experience into a book titled The Founder’s Manual, and we discuss the key strategies.
Summary of some concepts discussed for product managers
[2:46] Tell us about your book, The Founder’s Manual.
I wrote the book to increase awareness about what it’s like to become a founder of your own company. There are a lot of similarities between building a product inside a company and starting your own company. I structured the book in three sections, Founder Flow, Startup Flow, and Product Flow. I address the human aspect of being a founder; I discuss building a successful product; and I talk about how to commercialize that product into a successful company. Flow is a state of higher productivity achieved by understanding the principles that allow you to perform at your best.
[6:17] Let’s walk through a scenario. Suppose Lisa is a product manager who has an idea that her company isn’t interested in, so she decides to strike out on her own. Where should she start?
The first thing I would say to Lisa is that she needs to look at herself as a problem solver. Entrepreneurs are problems solvers. They start with the hypothesis that they can solve the problem they’ve identified. The entrepreneurial life is a series of unending problems and obstacles. We aren’t wired to run to problems, but we need to learn to run to the fire. Lisa needs to get in the mental and emotional state not only to create her product as a solution to her customer’s problem, but also to solve the problems of getting her enterprise up and running.
[9:39] Let’s talk about Founder Flow. What are some of the ways Lisa can embrace the entrepreneurial mindset to face problems?
When deciding to become an entrepreneur, Lisa needs to understand her risk tolerance financially, emotionally, physically, and mentally. She’s coming out of a successful career, so she needs to ask herself, If my enterprise doesn’t work, am I okay with that? You can figure out your risk tolerance by taking incrementally riskier chances and tracking how you react. An easy way to start is by doing something physically challenging and uncomfortable, like taking rock climbing lessons, and tracking your progress over time. A lot of people take the entrepreneurial step without having ever assessed their relationship to risk, and then they’re in uncharted territory when they face risk as an entrepreneur. Instead, understand your risk tolerance first.
It’s also important that Lisa’s personal life is ordered. If she starts a company while she’s experiencing personal stress, it’s super challenging to make it work. No one is an entrepreneur on their own, but it’s often a lonely journey. You have team members, partners, friends, and family who are going through it with you, but being an entrepreneur is consuming, and others may not understand what you’re doing and why. At the beginning you’ll feel like it’s you against the world, so it’s important to find a community of other founders you can relate to so you can support and guide each other.
[20:50] Let’s talk about Startup Flow. What should Lisa be expecting and working on next?
When they’re trying to commercialize a company, people often start looking for crutches. They struggle to get funding from investors, and they don’t realize that the best funding is customer funding because it proves that customers value what you’re doing. Because customers can be complicated, founders often don’t pursue customer funding as much as they could. There’s no better way to get other investors to pay attention than to have customers already paying you to solve their problem. Consider converting an early customer into a strategic investor. Find a customer who is paying for your product and ask if they are interested in becoming a strategic investor and taking a royalty or equity in exchange. It might be hard for Lisa to ask a customer to become an investor because she might be afraid of losing them as a customer, but customers make good investors because they already value your product.
[25:25] What do you think about bootstrapping a company?
It depends on the founder’s goals for the company. A company that depends on growing quickly or has a really high potential will need additional funding. Bootstrapping can mean funding through customers. Sometimes when people talk about bootstrapping they mean using some other financial mechanism like a personal credit card or mortgage to fund the company, which means the founder will have to pay the debt even if the company doesn’t succeed. Funding a company out of the founder’s own money is extremely rare.
When startups are looking for investments, they should be able to answer quickly and definitively how they would use the money to propel the company forward. If they don’t know, they’re not ready for investment.
[29:41] What do we need to know about Product Flow?
Product managers understand the fundamentals of Product Flow that many founders ignore. Start at the most basic level: What is the problem and what is your level of understanding of the problem? You can’t build a successful product if you don’t understand the problem at an expert level. Our first instinct is to find a solution, but that’s the worst place to start. We need to start with understanding the problem well enough to solve it in a meaningful way. It can take months or years to get to that expert understanding. If you take your solution to customers without understanding the problem at an expert level, the customers won’t be very willing to engage with you around understanding the problem better. As product people, we need to be transparent with customers at the beginning and tell them that we don’t have the solution but are trying to understand the problem before experimenting with solutions. Then customers will engage with you and help you get that expert level of problem understanding.
[34:10] What could Lisa do to understand the problem more quickly?
First, she should consider how she identified the problem in the first place. Where did the problem originate? How long has she been aware of it? She needs to take an honest look at why she’s interested in pursuing it when her old company isn’t. It could legitimately make sense for her to pursue the problem, but she shouldn’t ignore the reasons the company had for not pursuing it. I often see people leave corporates to pursue a rejected initiative because their egos got damaged, not because it should be pursued.
There’s no better way to understand the problem than to stand next to the person who has the problem and have them explain to you why the problem exists and what the impacts of the problem are. That could be talking to people at a mall, engaging with people on a factory floor, or visiting a retail store. Putting in the time to get people to give you their problem knowledge will ensure that you’re working on something that other people really care about. Only then will you have the chance to build a solution that people will actually want to use.
Action Guide: Put the information Ryan shared into action now. Click here to download the Action Guide.
“You can’t be great at innovation without being great at product.” – Ryan Frederick
Thank you for being an Everyday Innovator and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.