Product 

Management 101
for Startups
Dan Olsen
CEO, YourVersion
June 12, 2010 Copyright © 2010 YourVersion
 What I’m Covering
„ What is product management?
„ Understanding customer needs

„ Prioritization and maximizing ROI on 
engineering resources
„ Ease of Use

„ Using metrics to optimize your product

Will post slides to slideshare.net/dan_o
Copyright © 2010 YourVersion
 My Background
„ Education
„ BS, Electrical Engineering, Northwestern
„ MS, Industrial Engineering, Virginia Tech
„ MBA, Stanford
„ Web development and UI design
„ 19 years of Product Management Experience
„ Managed submarine design for 5 years
„ 5 years at Intuit, led Quicken Product Management
„ Led Product Management at Friendster
„ PM consultant to startups: Box.net, YouSendIt, Epocrates
„ CEO & Cofounder of YourVersion, startup building 
“Pandora for your real‐time web content”

Copyright © 2010 YourVersion
 Quick Poll of Audience
„ Work at:
„ Startup
„ Established company

„ Entrepreneurs
„ Actively working on a startup idea
„ Product live?
„ Funding?

„ Thinking of pursuing a startup idea

„ Consumer vs. B2B
Copyright © 2010 YourVersion
What is Product Management?

6 Copyright © 2010 YourVersion
 Product Management is
Critical Link in Value Creation

Market Product  Development 

• Current  Management Team
customers
• Prospective
customers
• Competitors

Copyright © 2010 YourVersion
 A Product Manager by any Other 
Name Would Smell as Sweet
„ Product managers are sometimes called
„ Product marketing manager
„ Program manager

„ Project manager

„ Label and definition of role can vary
„ Based on industry or company
„ Based on B2C (consumer) vs. B2B (enterprise)

„ Based on stage of company

„ Can be area of responsibility vs. actual position

Copyright © 2010 YourVersion
A Process View of Product Management
“Inbound”
Product “Outbound”
Management Product
Long Business Product Management
Term Strategy Strategy
Market/
Sell
Short Business Product Product
Term Objectives Objectives Development
Service/
Support

Copyright © 2010 YourVersion
 Overlap in PM and UI Design Roles
Prospective Existing
Customers Customers
External
Marketing
Listening to customers

Product  UI
Interface Management Design Support

Engineering QA

Internal
Copyright © 2010 YourVersion
 Product Management’s Job:
A Successful Product
„ Be the expert on the market and the customer
„ Translate business objectives and customer 
needs into product requirements
„ Be the clearinghouse for all product ideas 
„ Work with team to design & build great product
„ Define and track key metrics
„ Identify, plan & prioritize product ideas to 
maximize ROI on engineering resources

Copyright © 2010 YourVersion
Lean Product Management for 
Web 2.0 Products
Dan Olsen, CEO, YourVersion
O’Reilly Web 2.0 Expo SF
May 6, 2010
Copyright © 2010 YourVersion
 What’s So Great about “Lean”?
„ What’s wrong with  „ Startups are at risk until 
being not‐so‐lean? they’re profitable
„ Funding cocoon only lasts 
so long
„ Limited resources
„ Tech markets move fast
„ Time is the real enemy
„ “Time is the scarcest 
resource and unless it is 
managed nothing else can 
be managed.”
‐ Peter Drucker

Copyright © 2010 YourVersion
 What’s the Formula
for Product‐Market Fit?
„ A product that:
„ Meets customers’ needs
„ Is better than other alternatives
„ Is easy to use
„ Has a good value/price

„ Simple, right?
„ It’s easy to understand conceptually 
what we want to achieve
„ HOW to achieve it is the hard part
Copyright © 2010 YourVersion
Understanding Customer Needs

15 Copyright © 2010 YourVersion
 Problem Space vs. Solution Space
„ Problem Space „ Solution Space
„ A customer problem,  „ A specific 
need, or benefit that the  implementation to 
„
product should address address the need or 
„ A product requirement product requirement
Example:
„ Ability to write in space  „ NASA: space pen
(zero gravity) ($1 M R&D cost)
„ Russians: pencil

Copyright © 2010 YourVersion
Problem Space vs. Solution Space
Product Level
Problem Space Solution Space
(user benefit) (product)

Pen and
Prepare paper
my taxes

TurboTax
File my
taxes
TaxCut
Copyright © 2010 YourVersion
 Problem Space vs. Solution Space
Feature Level
Problem Space Solution Space
(user benefit) (feature)
Gmail
Make it easy importer
to share a
link with my
friends
Design Design Design
#1 #2 #3

Preview with  User can edit 
Allow me to Design checkboxes before import
reuse my
email #1 No No
contacts #2 Yes No
#3 Yes Yes
Copyright © 2010 YourVersion
 How Do You Prioritize User Benefits 
and Product Features?
„ Need a framework for prioritization
„ Which user benefits should you address?
„ Which product features to build (or improve)?

„ Importance vs. Satisfaction
„ Importance of user need (problem space)
„ Satisfaction with how well a product meets the 
user’s need (solution space)
„ Opportunity =
High Importance need with low Satisfaction

Copyright © 2010 YourVersion
 High Importance + Low Satisfaction =
Importance of User Need
Opportunity
High
Competitive
Opportunity
Market

Not Worth Going After

Low
Low High
User Satisfaction with Current Alternatives
Copyright © 2010 YourVersion
 Importance vs. Satisfaction
Ask Users to Rate for Each Feature
100 98
Great
95
84 87
90
Bad 86
85 79 84
55 70
80
Importance

80

75 72
80
70
75
65

60

55
41
50
40 50 60 70 80 90 100
Satisfaction

Recommended reading: “What 
Customers Want” by Anthony Ulwick Copyright © 2010 YourVersion
Kano Model: User Needs & Satisfaction
User Satisfaction
Delighter (wow)

Performance 
(more is better)

Need Need
not met fully met
Must Have

Needs & features 
migrate over time

User Dissatisfaction Copyright © 2010 YourVersion

Olsen’s Hierarchy of Web User Needs
(adapted from Maslow)
Customer’s Perspective What does it mean to us?

How easy to use is it? Usability & Design

Satisfaction
Increasing
Does the functionality
Feature Set
meet my needs?

Does the functionality work?

Absence of Bugs

Dissatisfaction
Decreasing
Is the site fast enough?
Page Load Time

Is the site up when I want to use it?

Uptime

Copyright © 2010 YourVersion
 What is Your Value Proposition?
„ Which user benefits are you providing?
„ How are you better than competitors?

Competitor A Competitor B You

Must Have Benefit 1 Y Y Y

Performance Benefit 1 High Low Med

Performance Benefit 2 Low High Low

Performance Benefit 3 Med Med High

Delighter Benefit 1 Y ‐ ‐

Delighter Benefit 2 ‐ ‐ Y
Copyright © 2010 YourVersion
 Prioritization and Scope
„ Customer value is only half the equation
„ How much engineering effort will it take?
„ Need to consider value and effort (ROI)
„ Ruthlessly prioritize: rank order
„ Be deliberate about scope & keep it small
„ It’s easy to try to do too much
„ Strategy = deciding what you’re NOT doing

„ Break features down into smaller chunks

„ Smaller scope → faster iterations → better

Copyright © 2010 YourVersion
 Prioritizing Product Ideas by ROI

?
Return (Value Created)

4
Idea D
3
Idea A Idea B
2
Idea C
1
Idea F

1 2 3 4
Investment (developer‐weeks)
Copyright © 2010 YourVersion
 Have to Prioritize Across Multiple 
Dimensions At The Same Time

Ease of Use
Customer Value

Quality

Functionality

Customer 
Understanding
Time
Copyright © 2010 YourVersion
Ease of Use

28 Copyright © 2010 YourVersion
 User Benefits vs. Ease of Use
„ Q: If two products equally deliver the exact 
same user benefits, which product is better?
„ A: The product that’s easier to use
„ “Ease of use” provides benefits
„ Saves time
„ Reduces cognitive load
„ Reduces frustration

„ UI Design can be differentiator
„ Olsen’s Law: “The less user effort required, the 
higher the percentage of users who will do it”
Copyright © 2010 YourVersion
 The Design Gap at Many Startups
Level Define Design Code

1 Engineering

2 Product Mgmt Engineering

3 Product Mgmt Engineering

Product Mgmt Engineering

4 PM Eng

UI
5 PM Eng

Copyright © 2010 YourVersion
 The UI Design Iceberg
What most
people see
and react to Visual
Design What good
product
people
Interaction think about
Design

Information
Architecture

Conceptual
Design

Recommended reading: Jesse James Garrett’s
“Elements of User Experience” chart, free at www.jjg.net Copyright © 2010 YourVersion
Learning from Customer Feedback

32 Copyright © 2010 YourVersion
Iterating Your Product Vector Based on 
User Feedback in Solution Space
Problem Space Solution Space
(your mental model) (what users can react to)
Help user Help user
book travel plan travel

Mockups / Code

Customer Feedback
Copyright © 2010 YourVersion
 Persevere or Pivot?

Increasing
Product-Market Product-Market Fit =
Fit Getting enough data to
validate that you’re
climbing up the
Pivot right mountain

Pivot

Copyright © 2010 YourVersion
What Are You Getting Feedback & 
Learnings About?
Problem Space Solution Space
(your mental model) (what users can react to)

Feature Set
Customer
Understanding 
(needs & 
preferences)
UI Design Messaging 

Copyright © 2010 YourVersion
 Getting Quantitative:
Optimization Using Metrics

36 Copyright © 2010 YourVersion
Approaching Your Business as an 
Optimization Exercise

Given reality as it exists today,
optimize our business results
subject to our resource constraints.

Copyright © 2010 YourVersion
 Define the Equation of your Business
“Peeling the Onion”
Advertising Business Model:
Profit = Revenue ‐ Cost

Unique Visitors x  Ad Revenue per Visitor

Impressions/Visitor x  Effective CPM / 1000

Visits/Visitor  x  Pageviews/Visit  x  Impressions/PV

New Visitors + Returning Visitors

Invited Visitors + Uninvited Visitors

# of Users Sending Invites  x  Invites Sent/User  x  Invite Conversion Rate

Copyright © 2010 YourVersion
 Equation of your Business
Subscription Business Model
Profit = Revenue ‐ Cost

Paying Users x  Revenue per Paying User

New Paying Users +  Repeat Paying Users

Trial Users x  Conv Rate Previous Paying Users  x  ( 1 – Cancellation Rate )

( SEO Visitors + SEM Visitors + Viral Visitors )  x  Trial Conversion Rate

Copyright © 2010 YourVersion
 How to Track Your Metrics
„ Track each metric as daily time series
Unique  Page  Ad  New User 
…
Date Visitors views Revenue Sign‐ups
4/24/08 10,100 29,600 25 490
4/25/08 10,500 27,100 24 480
…

„ Create ratios from primary metrics:  X / Y
„ Example: How good is your registration page?
„ Okay: # of registered users per day
„ Better: registration conversion rate =
# registered users / # uniques to reg page
Copyright © 2010 YourVersion
Sample Signup Page Yield Data
Daily Signup Page Yield vs. Time
New Registered Users divided by Unique Visitors to Signup Page

100%

90%

80%
Daily Signup Page Yield

70%

60%

50%

40%

30% Started requiring

registration

20%
Changed Added questions
messaging to signup page
10%

0%
1/31 2/14 2/28 3/14 3/28 4/11 4/25 5/9 5/23 6/6 6/20 7/4 7/18 8/1 8/15 8/29 9/12 9/26 10/1
0

Copyright © 2010 YourVersion
Identifying the  “Critical Few” Metrics
„ What are the metrics for your business?
„ Where is current value for each metric? 
„ How many resources to “move” each metric?
„ Developer‐hours, time, money
„ Which metrics have highest ROI opportunities?

Metric A Metric B Metric C

Good ROI Bad ROI Great ROI
Return

Return

Return
Investment Investment Investment

Copyright © 2010 YourVersion
 Google Analytics
•Unique 
visitors
•New vs. 
returning
•Pageviews
•Time on site
•Top referrers
•Top geos

Copyright © 2010 YourVersion
 Measuring Key Conversions:
Conversion Funnel
•Tie user actions to 
business goals
•Instrument key steps in 
user flow
•See where users are 
dropping off
•Quantify improvement 
from changes

Copyright © 2010 YourVersion
Approaching UI Design Analytically
„ Typical UI design question:
“When using web pages, do users scroll down?”
‐ Yes
‐ No

„ UI questions are never yes/no! (not binary)
„ Should ask: “What percentage of users …?”
„ UI changes impact your metrics
„ Impact can be positive, negative, small, large
„ Seek high‐ROI UI changes

Copyright © 2010 YourVersion
Metrics to Validate Product‐Market Fit
„ Survey results
„ Importance & Satisfaction
„ Net Promoter Score

„ Survey.io
„ “How would you feel if you could no longer use Product X?”
„ Very disappointed, Somewhat disappointed, Not disappointed
„ User behavior
„ Prospects sign up (high conversion rate)
„ They keep using it (high retention rate)
„ They use it often (high frequency of use)
Copyright © 2010 YourVersion
 Continuous
Improvement

47 Copyright © 2010 YourVersion
 Adding Metrics and Optimization to 
your Product Process
Site Level
Business Product Prioritized 
Plan Objectives Objectives Feature List

Scoping Feature 
Level

Requirements 
Design & Design

Code Test Launch

Develop

Metrics & User 
Optimize Feedback
Copyright © 2010 YourVersion
Optimization through Iteration:
Continuous Improvement
Measure
the metric

Analyze
Learning the metric
Gaining knowledge:
• Market Identify top 
• Customer opportunities
to improve
• Domain
• Usability Design & develop  
the enhancement

Launch the
enhancement
Copyright © 2010 YourVersion
 Product Management 101
Cheat Sheet
„ Clarify problem space by iterating in the 
solution space & getting user feedback
„ Revise feature set, UI design, and 
messaging to improve product‐market fit
„ Ruthlessly prioritize based on ROI

„ Define equation of your business

„ Identify and track key metrics

„ Launch, learn, and iterate
Copyright © 2010 YourVersion
„ Great way to stay on top of your interests
„ Real‐time discovery engine
„ Discovers new, relevant content tailored to your 
specific interests
„ News, Blogs, Tweets, Webpages, Videos
„ Bookmark and share via email, Twitter, Facebook
„ Weekly personalized email digest
„ Free iPhone app
„ Firefox toolbar, Chrome extension, bookmarklet
„ Launched at TechCrunch50, won People’s Choice
„ Check it out at www.yourversion.com
Copyright © 2010 YourVersion
 My Workshop Topics
„ Hands On „ Mini‐talks
„ Clarifying your product  „ Case study on product 
vision validation
„ Identifying customer  „ Case study: in‐depth 
benefits feature analysis
„ Prioritizing features „ Case study: using 
„ Evaluating your  metrics to optimize
product’s UI design „ UI Design 101 for PMs
„ Optimizing your new  „ Working with developers
user flow „ Creative bootstrapping
„ Google Analytics „ Myers ‐ Briggs

Copyright © 2010 YourVersion
Questions?
@danolsen
www.yourversion.com
Copyright © 2010 YourVersion