"There are 2 types of people who start companies in Silicon Valley: Engineers and Product Managers. That's the problem with hiring a great product manager; you know that long term, they don't want to work for someone else" --Silicon Valley CEO
Having learned that PM may be the right role for me after B-school, I’ve done a lot of research on it. I’ve also bought a book that is supposed to be the “bible” for PMs, called: “The Product Manager’s Handbook” by Linda Gorchels. Here is the meat of the info:
Overview of PM role:
- A product manager, by definition, is a generalist who must rely on numerous functional specialists to get the product or service to the customer.
- A primary goal of product managers is to get all functions to focus on the market – the final customers. Therefore, they must interact with various functions in the organization, including sales, operations, finance, customer service, and top management.
- As difficult as it is, product managers must visualize innovations that anticipate and satisfy unmet needs
- Unless a company makes a deliberate effort to integrate customers into the development process, it is likely to create products that are technologically advanced and offer good value, but fall short with sophisticated customers.
- A PM needs to understand 1) what the product does (performance and technical functions); 2) what the product is (configuration, component technologies); 3) who the product serves (target market); 4) what the product means to customers (character, personality, image).
Skills Required:
- Frequently cited traits include an entrepreneurial attitude, leadership, and self-confidence. Acquired abilities should include organizational, time-management, communication skills. Sales proficiency and technical competence are also important in many industries.
PM Planning process (not a comprehensive list):
1. Where are you now?
- Market analysis, competitive analysis, and trend dynamics
2. Where do you want to go?
- Problems and opportunities, sales goals/forecasts, product objectives, and positioning strategy
3. How can you get there?
- Target market, product strategy, pricing strategy, training requirement, marketing research requirements, financial summary, and schedule
In summary, the takeaway here is that the PM role allows you to get great insight into the different functions of a company (especially in a consumer internet startup). It’s probably a great role where you can meet engineers, marketers, and sales people to help you kick off your own business one day.
Mark Pincus on PM as a stepping-stone to being a CEO:
Want to be a CEO? Try product management first | VentureBeat
I guess the part that’s left is to figure out what companies offer great PM roles. We can refer to PART 1 of the post (where we discussed sales) to understand the headcount criteria that should be applied (basically, a company should have between 3 to 4 layers of management, 6^3 =216 or 6^4 = 1,296). I also heard from a colleague (a former and future PM) that it’s important to identify companies where the PM has the influence within a team, as opposed to the engineers. Lastly, the advice from a Silicon Valley CEO was to “go for companies that are in the middle of their series B round, since they have the money, the urgency to hit targets, and are organized enough to provide you with mentorship”. This all seems like great advice!
What should I do if I'm not ready to start the next Google? (PART 2)
An Interview with someone in SALES
Sorry to cut the flow of my Part 1/Part 2 posts, but I wanted to put up a summary from an interview with a HBS alum in sales:
There are 2 types of positions at his company: Sales Rep (smile & dial) and Account Executive (carries bags) - see previous post if you're confused.
1) Sales Rep: This is the individual who just graduated college. Their job is to followup on sales leads (so the customer goes on the company website, indicates interest, and enters their contact info). This person calls the customer and if the lead is “hot” he or she passes them to the “account closer”. The “account closer” is the person who will bring the lead home and truly compete with other companies for the customer’s business.
2) Account Executive: Within this role, there are also 2 types:
- Corporate Sales: This person is tied to companies with less than 1,300 employees. If you don’t have EXPERIENCE SELLING IN A SPECIFIC INDUSTRY (e.g. technology businesses), you’ll probably end up here - especially as an MBA. In this case, most of the money you make is in the form of variable compensation.
- Field Sales: This is a job for the Big Kahunas. You work in a specific “patch” of the country and go door to door (company to company) to sell your service. This job is traditionally given to the guys with lots of experience selling in the industry, since they sell big projects to big clients and make lots of $$$ for their company. As per my interviewee, his friend who had 10 years of sales experience outside the tech sector did not get placed here – he was put to work in corporate sales.
To wrap up this short post, the takeaway is that “you’ll probably be as well off as the slick guy who graduated college and did really well. Your MBA might get you some good leads, but it’s certainly not going to do much for you when you’re a corporate salesman. It’s definitively not the best use of your education, but it may give you a leg up later in your career”.
"MAY GIVE YOU A LEG UP LATER IN YOUR CAREER???" – that’s a tough one to swallow.
What should I do now if I am not ready to start the next Google? (PART 1)
I think about this question every morning when I wake up. Having met with many professors, VCs, serial entrepreneurs, and advisers to help me figure this out, I wanted to pass along the cliff notes:
There are 3 common positions that one can take after their MBA to train them for their own internet startup:
1) Sales
2) Product Management
3) Business Development
Today, we’ll look at sales:
1) SALES JOBS:
- % of HBS Graduates in 2009: <1%
- Avg HBS Sales Salary: $104K/year (I’m assuming this includes base + performance bonus)
This is probably the most important skill one must acquire before becoming an entrepreneur; part of your job is to always be selling to your team, investors, customers, partners, etc. In addition, sales professionals are a key part of any organization since they bring in the revenue; this is critical to any startup’s survival and experience here counts. Plus, have you ever talked to someone who is good at sales? I met with Joe Lassiter last week (a legendary HBS professor who teaches entrepreneurial finance and used to work as head of sales) and it’s amazing to witness the power someone with his skill set can have in influencing others – it’s simply an art. Lastly, it’s a skill set that is never wasted, since it’s easily transferable to anything you both personal and professional.
My initial impression was to fully focus my time on finding a Sales Job. I mean, why not? You go work somewhere for a couple of years and have them teach you everything you need to know about the art of selling. Sound simple enough? Take a look at the advice I received:
- STAY AWAY FROM SMALL COMPANIES: In a small company, you will not receive formal training and will have to learn on your own. This can be dangerous, since it may take you a while to come up to speed and could cause you to learn “bad habits”. Therefore, any companies with less than 150 employees should be off the table (unless you can find a fantastic mentor that is willing to teach you everything!).
- STAY AWAY FROM LARGE COMPANIES: Large companies are also off the table since no rising rock star performers work at large companies. By definition, a large company is very inefficient (the opposite of a startup) and decaying (as Joe Lassiter put it), also causing you to learn “bad habits”.
- STAY AWAY FROM COMPANIES WITH COMPLEX PRODUCTS: Going to work at Oracle, SAP, or any other large tech company that sells large technology implementation projects is also a bad idea. You will need to spend a great deal of time learning the product and the sales cycle will be too long for you to get significant sales experience within only a couple of years.
- STAY AWAY FROM B-2-C COMPANIES: This is a no-brainer as B-2-C sales are either retail or door-to-door selling.
So what on earth is left? Possibly only a hand-full of cool companies that are medium sized and sell simple B-2-B products. Well, here’s where it starts getting even more complicated for the MBA folk. During my conversation with a VC from Advanced Technology Ventures last week, he mentioned that he was struggling with the same dilemma after his MBA. He pointed out that are 2 types of sales people out there: 1) Those who carry bags and 2) Those who smile & dial. If you want to be one of the guys who carries bags, you are heading for long-term sales careers and require the long training. If you’re looking to smile & dial, congratulations: you just spent 200K on an MBA for no reason. You’ll be making $50K + performance bonus sitting next to 23 year olds who just graduated college and not leveraging your degree for much. Lastly, if you’ve got enough of the entrepreneurial bug, you probably already have the basic sales skills you’d need to sell a project (assuming you’re passionate about it) to others – so you may already be “skilled enough”. Exhausting, isn’t it?
My conclusion: While sales skills are invaluable to an entrepreneur, I am starting to believe that a sales position (one that gives you the adequate training; probably where you smile & dial) may not be the best role for a recent MBA graduate.
THOUGHTS?
On to PRODUCT MANAGER!
The 3 ingredients to a successfull startup. When should you add co-founders to the mix?
"People who don't know how to sail won't be able to get the most thoroughly designed ship in the world out of the dock. On the other hand, the best crew in the world could sail a makeshift boat anywhere in the world"
So we've been discussing in a class called Founder's Dilmena several cases of entrepreneurs who started businesses at different times in their lives. We saw examples of 3 types of individuals:
1) Humphrey Chen: who wanted to start a business right out of the MBA program and did not have much experience
2) Barry Nalls: who had 25 years of experience in several different functions of one big company
3) Curt Shilling: who was a MLB player and wanted to start a company in the gaming space without any experience (but he had lots of money and some contacts).
These 3 examples sparked a conversation with a classmate (Fabio Katayama HBS MBA '10) and we designed a framework describing what founder(s) need to have in order to be successful.
It works like this: As a new entrepreneur, one must have at least 1 of these 3 characteristics in order to bring on new hires as opposed to co-founders. I would consider these the 3 ingredients required in an entrepreneurial success recipe; the more you or your team has, the better your chances.
A) Money - having accumulated a large sum and be willing to lay it down
B) Entrepreneurial Skills - having started other businesses or knowing sales, product management, etc.
C) Domain Expertise - having worked in the industry and established a network
Now let's take a couple of cases and test them against this framework:
1) Humphrey Chen (ConneXus): Had none of the 3 himself. Therefore, picked up a co-founder who only had some tech experience. His startup did not do so well.
2) Barry Nalls (MASERGY): Had lots of skills and domain expertise. He did really well!
3) Curt Shilling (38 Studios): Had lots of money a some domain expertise (contacts) - but no enrtrepreurial skills. Was able to recruit a team, and is doing really well!
4) Steve Jobs and Steve Wozniak (Apple): Both had none of the 3. Therefore, they had to co-found with Ron Wayne (who soon quit) and then Mike Markula (a successfull executive at intel who received equal equity stake to Jobs and Wozniak; Mike had the money and domain expertise)
5) Vivek Khuller (Smartix): Had none of the three and dissolved the company after 1 year.
Thus, for now, I will conclude that the more of these 3 RESOURCES you have as a sole founder or founding team, the higher the likelihood that you can start a business successfully. However, I'd like to end this post with something a little more inspirational, since I don't think one should only start when he or she has lots of all 3 ingredients. If you absolutely have the itch to start something, I guess sometimes you just have to go for it.
"Life is too short to work on something you don't care about"
-- Jen MacLean, 38 Studios CEO
