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August 2012

Product Managers on the Road, Hollywood Edition

I recently had to make an emergency visit to a customer in Los Angeles. They were having some messaging problems and we decided that it would be best to observe the issues first-hand so that we could resolve them. Here, in short form, are my highlights from this one-day trip.

  • It's 4 AM and I'm getting up so I can leave at 4:45 AM for the airport… Why do Product Managers always get the sucky travel assignments?
  • 4:45 AM: "Hi I'm Josh, I'll be your driver." Thanks Josh. Don't think I'm rude as I try to get a little sleep on the way to San Jose airport.
  • In the security line. Some people carry an awful lot of gadgets with them.
  • The one redeeming virtue of traveling out of SJC this early is that I get to go to the Illy Espressamente coffee bar. My body needs that cup of coffee, even if it is decaffeinated (don't ask me how that works).
  • At 6:20 AM passengers are getting anxious, as the flight leaves in 15 minutes and there have been no boarding announcements. The Southwest gate agent comes on and announces that, as there are only 20 people on the flight, we will be boarding en masse. Looks like paying for that "go to the front of the line" privilege wasn't such a great idea.
  • We arrive at the customer's site a little before 8 AM. Perfect! Except that the receptionist isn't in yet, the company contact we thought we were meeting took the day off, and most of the people we want to meet will be in an all-morning meeting starting at 9 AM.
  • It's now about 4 PM and we need to get to Burbank airport. On my way out the door I see a sign above a printer: "This printer is named Bob Marley, because it's always jammin'!"
  • Now to find a taxi. News flash: this is LA, home of "if you don't have a car, you don't deserve to be here." Luckily, we're a short walk from Hollywood and Vine, and where there are tourists there will be taxis.
  • Our cabbie swears off taking the freeway to the airport (he can't be from around here)… Turns out, he knows what he's talking about: we get to the airport in half the time it took to go the other direction this morning.
  • Our cabbie likes to talk. A lot. We don't mind, because he seems to know where he's going (unlike cabbies in DC). And he punctuates stories he's particularly proud of by giving me a thumbs-up in the rear-view mirror. OK!
  • Among other topics of conversation in our cab:
    • His solution for handling Chinese drivers
    • What it takes to sell jewelry
    • Why he doesn't allow passengers to have sex in his cab
    • The joke about the white guy, the Jew and the Armenian
  • And—naturally—he's an agent for a singer. Check her out here.

Product Management may be many things, but "dull" is never one of them!


Will Change Define You?

What is the Emerging Character of Today's Silicon Valley?

I happened upon some posts recently that share a common theme—the current reinvention of Silicon Valley. Change is nothing new in these parts—it's what defines the place. And while it's easy to bemoan the changes that are occurring (and conversely, to celebrate what's new as if it was invented for the first time) that kind of discussion is pointless. The discussion that does have merit is represented by these posts. You could title them collectively as "Is this what we want to become?"

The first post is by Steve Blank, one of my heroes. He writes that social media is crowding out all other sectors for venture capital investment, because its (potential) returns are so large and realized so quickly. He notes that other investment sectors, such as clean-tech and life sciences, are being passed over in favor of "Web 2.0" (even that term seems dated now) startups such as Facebook, Google, Zynga and others. 30 years ago, a venture capital firm would invest multiple millions of dollars in a semiconductor company and not expect to see a return for ten years or more.  Today, a VC invests a few hundred thousand dollars (at early stages) in a social media startup and might see a payoff in two or three years.

The second post, by William Davidow (another hero) notes the culture change occurring, as the CEO's setting the values for Silicon Valley shift from the likes of William Hewlett and David Packard to Mark Zuckerberg, Marc Pincus, and Larry Page. Where Hewlett and Packard built a business focused on pristine customer service, the new breed of CEO's are building businesses based on the exploitation of customers (more specifically, their data). It wouldn't be fair to imply that these current CEO's don't care about customer service. It's just that their businesses operate (to varying degrees) with a "free" model that focuses on attracting users and mining their data, with the paying customers being the companies that buy targeted advertising on these sites.

And, as if experiencing the zeitgeist, Vinod Khosla also joined the discussion, exhorting today's entrepreneurs to focus on building lasting value vs. "flipping" their startups.

Do This...

These commentators share a common theme—build your company to last, build it to change the world—because they come from a shared history and experience with "the Valley." Their sentiments are more (much more) than mere nostalgia for the Valley as they once knew it. They've given voice to feelings people like me have had as we've witnessed the emergence of these new style startups, requiring us to reinvent ourselves to remain relevant and valuable to today's startup community.

And Not That

These writers, and those of us who have been here since the 1990's, remember the "dot bomb" era of the late 1990's/early 2000's.  At that time you had companies with no proven business model being valued and sold at incredible prices. It was a common joke that you could drive up your company's market capitalization by simply adding a leading "e" or "i" or a trailing ".com" to the company name.  I remember taking calls from Internet companies trying to sell me advertising: the callers had no knowledge of what my company was about and couldn't tell me why I needed their advertising. I also remember interviewing a new college graduate for a Business Development role. He had no experience, but was confident that he could command an $80K starting salary. Such were the times.

Bubble? Or No Bubble?

Department of Obscure References

And so those (especially in the media) who witnessed this implosion as it happened now play the parlor game of "Bubble? Or No Bubble?" as they observe the multi-billion dollar valuation of companies like Box, Dropbox, Groupon and others. One difference with today's hot startups is that these companies tend to have an identified and validated business model. They often aren't cash flow positive as yet, but are trending in the right direction. The "Bubble!" crowd wrings their hands and wags a finger at today's startup CEO's: "Just wait! You'll get your just reward!" The "No Bubble!" crowd smoothes their hoodies and says "Wait! This time it's different!" The audience voting falls along the lines of who thinks they will profit from or get crushed by any such bubble.

The discussion of economic implications has largely been theoretical. That changed with the recent news regarding Zynga's secondary stock offering and subsequent earnings dive. To torture a phrase, there may not have been any fire here, but there sure is a lot of smoke.

What Really Matters

But I'm not so interested in the "Bubble? Or No Bubble?" discussion. These are the questions that are worth asking.

  1. How can a startup leverage the knowledge and experience of a Silicon Valley veteran?
  2. How can such a veteran embrace new ways of thinking and working?

Let's take the first question. I was talking about this over coffee recently with a colleague and former manager. He's younger than me, but still would be seen as outside the age demographic for today's startup founders.  His perspective was that today's company founders are running so fast, they haven't figured out what they don't yet know. A few will learn without doing lasting damage to their companies. Some will realize that this is the point where they need to bring in some experienced help. And others… let's just say it won't be pretty. Remember, some of the "dot bomb" disasters were failures of execution (WebVan) as much as failed business models.

My advice to today's startup community would be this.

  • Figure out—quickly—what it is that you don't know, but need to know. Then discover who does have that knowledge, and ask for their help. If your software company finds itself manufacturing devices to run the software, realize that you're now faced with manufacturing and supply chain questions… and you'll get to market faster by engaging with someone who's already solved those problems.
  • Remember that humility is a survival strategy. Your success so far is as much about luck as it has been about your idea and the execution of that idea. Acknowledging that fact will make it easier to ask the "what do I need to know?" question.

Regarding the second question, what does it take for a Valley veteran to succeed in today's startup environment?

  • It's likely that those who could use your knowledge and skills aren't fully aware of their need. So while it might be obvious to you, it's not to those who would hire and pay you. I recall the moment that I realized I had knowledge of how hardware, software and firmware combined to form a "system" and that was exactly the knowledge needed to solve the logistics and design problems faced by our startup. I had to explain the problem to the founders before I could go on to solve it.
  • Humility is valuable here as well. Don't expect the respect of others on the basis of your experience or knowledge. It's all about what you do with that experience and knowledge that will earn you respect. I knew all about setting up 3rd-party interoperability programs, but that's not what mattered. Acting on that knowledge to set up an interoperability program and show people how it helped us move more quickly with fewer Engineering resources required for the task--that's what mattered.

I've been quite deliberate in embracing new ways of working (hello, Agile!), new technologies (too many to mention) and most importantly new methods of decision-making (ask me about split tests). I've been careful not to start sentences with "Back in my day…" But I've also been amazed when I realized that some of what I thought "everyone" knew was not nearly so widely known. Ask me about regulatory testing, hardware/software lineups, feature prioritization or user interface design.

So if it feels like a brave new world, maybe that's because it is… again.  You can question what values today's startups are embracing. Or you can go out and show them what values will be needed to succeed.  Which choice will you make?


Why Social Media Matters

Check out this report from the McKinsey Global Institute.  It points out something Microsoft (with its purchase of Yammer) and other companies are begnning to understand:  that social media can improve productivity of enterprise employees.

We can all still enjoy LOLCats and all the other diversions that social media provides us as consumers.  But people are starting to "get" that we don't leave our social instincts at the door when we go to work... and that there's money to be made helping employees engage in meaningful ways to get work done.


Way to Go Caltrain

Maybe I picked the wrong organization to pick on.

Back in May I published a post discussing how organizations like Caltrain could learn about marketing and customer service by paying attention to companies like Staples.

Well, they must have listened! (Warning: statistical inference violation occurring.)

Actually, through no help from me it looks like Caltrain is doing great; read about it here.