Inner Workings of Product Management at Product Led Growth Companies
November 5, 2018
Product led companies flip the script on every aspect of their business. They break the mold when it comes to marketing, pricing, sales and customer success. There are lots of people talking about how to adapt these functional areas to keep up in a product led world. But what about product management? After all, product is at the epicenter of everything a product led growth (PLG) company does. So how do the product organization and its PMs need to adapt to fuel growth at these businesses?
Over the past few months we’ve chatted with product management leaders from top product led growth companies including Atlassian, Intercom, Dropbox and many more. Throughout these conversations we’ve identified five major lessons on what sets product management at these all-star companies apart:
- Design A Product To Be Bought, Not Sold
- ‘Product Led’ Does Not Mean ‘Product Manager Led’
- Always Be Communicating
- Prioritize, Evaluate, Prioritize Again
- Above All Else, You’re Here For The Customer
Design A Product To Be Bought, Not Sold
In a product led world, it is critical that your product is solving real user pain. You want to be solving a pain point so poignant that your users are actively searching for a solution. When they do a search and stumble across your company, your product needs to be so simple that the solution jumps off the page at them. This means stripping out anything noncritical and delivering value within the few first interactions.
More than ever users want to experiment with new solutions themselves. They’ve done their own research and want to experience the value firsthand. The best companies today recognize this shift in the way people want to buy and are creating an intuitive product that can be purchased via self-service. This is no easy feat. Simplicity is hard. It takes a lot of work to optimize your UX so users can be self-guided. Gone are the days when you could simply rely on your sales reps to explain to your leads the value of your product and its ROI via an hour-long demo. Some product led businesses take the extreme approach and ONLY offer their products via self-service.
Arora hits on one of the advantages of designing a product to be bought. Less sales reps (or none at all) means more resources can be invested into R&D. Atlassian uses this extra budget to gain a deeper understanding of their customers’ needs in order to continuously evolve their products. In fact, Atlassian spent 50% of its revenue in 2017 on R&D. The results have clearly paid off. Atlassian now serves 125,000+ customers worldwide and has over a 19 billion dollar market cap.
Atlassian is an outlier, but the trend is clear. We consistently see public product led growth SaaS companies spending more on R&D compared to the broader SaaS index (28.2% versus 19.4%, respectively). Check out our full Product Led Growth Index for more details.
It’s important to note that product led companies consider Design and UX as a core part of their R&D. Scott Williamson, VP of Product at SendGrid, recalls that the product team only had 3 PM’s and 1 Designer on staff when he joined the company in 2013. Williamson’s first priority upon starting was to aggressively scale his team, including both Product and Design. In fact, he recommends a ratio of 1 Designer to 1 PM to 1 Scrum team for self-service, UX-heavy product areas. This over-investment facilitates incredible user experiences and products that users actually want to buy.
This advice of designing a product to be ‘bought’ was echoed by the Head of Product at Typeform, which is known for designing beautiful and simple products:
“It was a necessity for us to build a product that’s easy to use, that has very effective onboarding and where people can basically start using it without any hands-on help.” – Milos Lalic, Former Head of Product at Typeform
Typeform creates a highly intuitive experience not just for leads to sign up, but for their customers to be successful and truly adopt the product. This also results in saved resources. With the product serving as the main educator for onboarding, Typeform can effectively service its customers in a one to many customer success environment.
‘Product Led’ Does Not Mean ‘Product Manager Led’
As products become the centerpiece for businesses, some product managers fall into the trap of thinking they are leading and everyone else is following. This attitude quickly becomes detrimental as product managers isolate themselves from other departments. A key component of product management is collaborating with other departments, incorporating broad perspectives and filtering feedback through a customer-first lens.
This is arguably even more important at a product led company where the product is the primary driver of growth at every step of the customer journey. Intercom is a stellar example of a company that takes a collaborative approach to product management:
In addition to collaborating with other departments, product managers are also working with sub-teams within the greater product organization. These sub-teams can be a product manager’s greatest resource. At Dropbox, the teamwork between PMs and the research teams plays a vital role in developing the product:
Combining research and product has led to a data-centric decision process at Dropbox. The relationship between PMs and Research is best when it is a two way street. Product managers can come to Research with predetermined hypotheses to validate and Research can proactively provide product teams with insights into unique user groups.
Whether it is incorporating insights from other departments or within the product organization, product managers should be the glue that brings together all customer insights to drive product innovation. Many businesses will actually organize cross-functional teams based on the phase of the customer journey (i.e. conversion, activation, retention, expansion). These teams will include resources from product, design, analytics and sales/CS all dedicated to influencing a key metric in the customer lifecycle.
Always Be Communicating
Effective communication is required in every product management task, from working in tandem with other departments, crafting compelling hypotheses, designing the narrative for the roadmap and more. Communication is the key discipline great product managers need to master in order to excel in their role. At Typeform, communication is an utmost priority:
“Communication for us is on top. Being able to clearly and effectively communicate the vision, the goals, defining them as well and aligning them with the company or product messages is super important.”
At Typeform, communication skills are prioritized for ensuring the product manager can connect overarching company goals with their product positioning. There is a necessity for translating the company vision into messaging that can be used on a daily basis. Product leaders at top PLG companies are testing for strong communication in addition to technical skills in the interview process. Intercom has even incorporated a written exercise into the PM interview process to account for this:
“We have a written exercise early in the interview process. It exposes folks who veer towards the fluffy compared to clear, concise, sharp thinkers. Sometimes even after a onsite presentation interview, we’ve referred back to the initial written exercise to validate their communication skills. When your company is small, PMs can sometimes get away with weaker written skills. But that weakness is ruthlessly exposed as your company grows.” – Brian Donohue, Director of Product Management at Intercom
The role of a product manager requires a wide range of skills for the variety of hats they will wear. It’s clear, be sure to put communication skills at the top of what you are looking for in your next PM candidates.
Prioritize, Evaluate, Prioritize Again
You can’t have a ‘set it and forget it’ mentality when it comes to your product roadmap. A product manager’s job is to prioritize what will have the highest impact given the work required. Many product managers will spend a good amount of time determining the prioritization of a project or feature when they first review the request. However, prioritization needs to be a continual process that is strewn throughout your entire project timeline, providing feedback at every step of the journey. SendGrid uses a comprehensive system of prioritization that encompasses the entire project lifecycle, from beginning to end:
“Have a consistent prioritization system, so you can compare the value of very different projects, force priority decisions out into the light, and pressure test assumptions.” – Scott Williamson, Vice President of Product Management at SendGrid
The first important point here is to compare very different projects side by side. As most product managers can relate to, there will be product requests coming in from every direction. Each project should be weighed against the other, no matter how different they may seem.
In terms of how to prioritize effectively, your team should always be thinking in terms of the company vision. Without doing so, teams can begin to prioritize based on their local perspectives and lose the collaborative aspect and big picture view. Donohue describes the issue here:
“People can easily be on different routes, all the teams need to be moving broadly in alignment and in tandem. Teams’ natural tendency is to steer into a direction that locally makes sense but veers away from the bigger strategic picture.” – Brian Donohue, Director of Product Management at Intercom
As Donohue points out, there is a natural tendency to follow what makes most sense from a departmental perspective. For example, you may hear from your sales team that they have prospects who could be seven figure deals, but they require custom functionality. What sales may not know is that custom work would derail your product roadmap and wouldn’t help the vast majority of your users. You have to represent the broader goals of your company in your decision making process. It doesn’t mean you have to say no to enterprise deals, but you have to draw clear lines internally on what you will and won’t do to close and retain them. The relevance of the previous insights also comes into play here. Through collaboration with other departments and constant communication, product managers can ensure the product improvements they drive are in sync with the company’s broader vision.
Above All Else, You’re Here For The Customer
All of the product leaders stressed one thing above all else: the role of a product manager is a customer-first role. The more you understand your customer, the better product manager you will be. Greg Keller, Chief Product Officer at JumpCloud, describes how the customer-first approach is at the core of all his product managers:
Keller articulates the importance of holding the customers’ needs at the center of your decision making process. JumpCloud, a highly technical product, has found success over legacy solutions such as Microsoft by developing a deep understanding of the customers’ specific pain points and desires. Keller implicitly describes a layer of humility required in product managers, as it is not their goal to create a product they want, but to create a product that perfectly fits the users’ ideal vision. At Typeform, they share JumpCloud’s respect for the customers’ needs:
“We don’t want product managers to be solution-focused. We rather want them to be problem-focused, understanding deeply what the problem of the customer or the business is. Only then can they begin to develop a solution or multiple solutions to test and validate.” – Milos Lalic, Former Head of Product at Typeform
If there is one thing to learn from these companies’ customer-first approaches, it is that this strategy extends beyond what projects you prioritize. It requires creating a company-wide respect and understanding of the customer. This is something that Slack has always valued. Merci Grace, an early Product and Growth leader at Slack, stresses the importance of becoming obsessed with real customers, rather than a mythical persona that doesn’t exist in real life. This means real 1:1 user interviews, onsite with sales, shadowing CS calls, using your own product, etc.
“Personas are a great idea, like Communism, but they don’t work in real life. You’re putting thoughts in the heads of people who don’t actually use your product…When creating a product, close your eyes and pretend you’re a human being.”
These product leaders have had success employing these 5 key principles to their own companies which serve diverse markets. Product led growth can be adopted across varying software categories from developer tools to collaboration tools to enterprise-grade solutions. No matter where you are in your product led growth maturity, applying these principles will help you accelerate your growth.
Thanks to Kyle Poyar and Tristan Eid for helping with the research.