The Art

of
Product
Management

Lessons from a
Silicon Valley Innovator

Rich Mironov

Enthiosys Press
Mountain View, California
II | THE ART OF PRODUCT MANAGEMENT

All contents © Rich Mironov, 2002-2008.

All rights reserved, no part of this publication may be copied,
reproduced, or stored by any means, electronic, mechanical,
optical, or otherwise without the prior consent of the author.

ISBN 1-4392-1606-1
 THE ART OF PRODUCT MANAGEMENT | III

To Marcia, source of all good things,

and Sasha, my Chief Analogy Officer
Table of Contents

Introduction by Henry Chesbrough ...................................................... VI

Foreword by David Strom ....................................................................... X
Preface .................................................................................................. XII

SECTION ONE: Falling in Love . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Parenting and the Art of Product Management ................................... 5
Early Selling: Thoroughbreds and Explorers ........................................ 11
Burning Your Boats ............................................................................... 17
Avoiding the Post-Course Correction .................................................. 23
Why are there Serial Entrepreneurs?.................................................... 29
Owning the Gap ................................................................................... 35
Girls Getting a Head Start (-Up)........................................................... 41

SECTION TWO: Organizing your Organization . . . . . . . . . . . . . . . . . . . . . 44

Where Should PM Report?.................................................................... 47
The Roadmap Less Traveled ................................................................ 55
Crowding Out Tech Support ................................................................ 61
Product Management is Inherently Political ....................................... 69
Defensive Processes ............................................................................. 77
Growing Back into Management ........................................................ 85
Who’s Calling Customer Support?....................................................... 91
Hallucinogenic Funding ....................................................................... 97

SECTION THREE: The Almost-New-New Things. . . . . . . . . . . . . . . . . . . . . 102

The Accidental Agilist......................................................................... 105
A Planetary View of Agile Product Management ............................. 113
Burning Through Product Managers ................................................. 119
Grocers and Chefs: Software Service Models................................... 125
So Your Product Wants to Be a Service… .......................................... 131
The “Null Service”................................................................................ 137

SECTION FOUR: Getting into Customers' Heads . . . . . . . . . . . . . . . . . . . 142

Getting into Customers’ Heads.......................................................... 145
Sharks, Pilot Fish and the Product Food Chain ................................. 149
Insider Thinking ................................................................................... 157
 TABLE OF CONTENTS | V

The Strategic Secret Shopper............................................................. 163

Avoiding a Ticking B-O-M ................................................................... 169
Technical Advantage and Competitive Strategy............................. 173
Mo’ Beta .............................................................................................. 179

SECTION FIVE: What Should Things Cost?. . . . . . . . . . . . . . . . . . . . . . . . 184

“Goldilocks” Packaging ..................................................................... 187
What’s Your Pricing Metric? ............................................................... 193
Risk-Sharing and Customer-Perceived Value.................................... 199
Sales-Friendly Price Lists...................................................................... 205
Afterword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Acknowledgements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Introduction by Henry Chesbrough
HENRY CHESBROUGH
Adjunct Professor and Executive Director,
Center for Open Innovation, Haas School of Business, UC Berkeley

here are lots of books (some of them quite good) on the

T importance of innovation for business success. I myself have

written a few. Indeed, it’s hard to find anyone who has a
bad word to say about innovation these days. As we head into
choppy economic waters, though, it is not enough to know that
innovation is important. We also need to understand what specifi-
cally needs to be done, and how best to get that done.
One area where innovation gets down to business, is in the
arena of “product management”. This amorphous term is the label
applied to some of the most important work that goes on in the
innovation process when developing and introducing a new prod-
uct (or, for that matter, managing an existing product). The prod-
uct management function is responsible for uncovering and
articulating the market’s need for a new product or service. At the
same time, product managers work closely with engineering to
discern the technical possibilities and challenges facing the new
product. The product manager must dance between the technical
organization inside, and the world of the customer outside. Done
poorly, product management can waste time and money, and
deliver a product that few people wish to buy. Done well, product
management leads to products that people want, that work well
in their intended use, and become profitable businesses for the
company.
 INTRODUCTION | VII

This is where my friend and colleague of long standing, Rich

Mironov, comes in. Like me, he agrees that innovation is impor-
tant. Like me, he has “been there”, working in the trenches in a
variety of product management functions across a range of Silicon
Valley companies. His career spans nearly a quarter century (I
barely lasted a decade before moving into academia). Rich’s
experience and success have made him a thought leader among
technology practitioners. While he has extensive experience, he
also possesses a unique ability to reflect upon that experience to
uncover more systematic insights into the sources of success and
failure in developing products and launching startup companies.
And while he is highly skilled in understanding technology, his
deepest insights relate to the human heart - and how people (and
their motivations) affect technology products and vice versa. I cur-
rently teach at the Haas School of Business at UC Berkeley, and
Rich has been a frequent guest lecturer in both the MBA and the
executive education classrooms there.
When you read this book, you’ll see the wisdom he has accu-
mulated along with his considerable scar tissue. I promise you that
there is nothing else out there quite like it.
I remember reading the first installment of what was then
called Product Bytes, back in 2002. I became an immediate and
enthusiastic fan. These pieces are short, to the point, with a light
touch, that nonetheless lead to very important and actionable
insights. Most of these insights were learned the hard way by Rich.
But throughout this book, you’ll see that he never becomes cynical
or disillusioned. Like me, he believes in his heart that we must
innovate to continue to advance, though there will be plenty of
VIII | THE ART OF PRODUCT MANAGEMENT

roadblocks and snafus along the way. With this book, Rich shares
with you some of the lessons he has learned. Anyone wrestling
with developing new products, or launching a new startup com-
pany, will find this an invaluable resource to return to again and
again. I predict you’ll laugh, perhaps cry, and emerge a little
wiser each time you read from this book.
INTRODUCTION | IX
Foreword by David Strom
DAVID STROM

here are a lot of computer-related books on the market. But

T there are very few of them that actually teach you how to
market software and hardware products and not repeat the
mistakes of the past.
I’ve known Rich through several jobs over the past ten years,
and now can be outted as his unofficial writing coach. I told him
before he started his monthly newsletter, Product Bytes, that he
needed to make sure that this was something he wanted to do. I
suggested he write the first three issues, and if he still had some-
thing to say, then he was probably going to succeed at the effort.
Ten years later, he is still going strong.
Good writing is often overlooked by product people, even
though it can help you define your ultimate customer base, under-
stand your product’s feature set, and explain why you need certain
resources to tell your story and differentiate your products. Maybe I
am more sensitive to bad writing than others – after all, I didn’t start
out my career as a writer. Au contraire, I was a math and engineer-
ing major in college and it wasn’t until my mid-20s that I learned
how to write. It was a hard-acquired skill, and one that requires
daily practice if you are going to be good, let alone great, at it. I am
lucky that I am able to make a living at my writing, and that there
are still plenty of interesting products to test and write about after
being in the IT industry for more than 25 years.
 FOREWORD | XI

Anyway, enough about me. This book is well worth your time.
It is chock full of practical advice, and should be a bible for com-
puter product managers, even those that are already parents of
small children and think they are good at that unpaid job.
Part of Rich’s message is that the product is really secondary to
the people who work at the company. One of the reasons why Dil-
bert still continues to resonate with high-tech workers is that there
are so many bad managers, or managers who don’t understand
how to mentor and develop their staff.
The whirl of Web 2.0 and social networks have made this prob-
lem worse, rather than better. LinkedIn and Facebook have made
it easier to move to another job and stay in touch with your former
colleagues – I just heard from someone that I worked with 25 years
and countless number of job changes ago. Email has become sec-
ond nature. It is easier to surround ourselves with screens rather
than get out of our cubicles and have some face time with a co-
worker.
If we have learned anything from the dot-bomb bust years at
the beginning of this decade, it is that companies need to pay
more attention to the marketing of their products. We are no lon-
ger in an era of “build-it-and-they-will-download”. Take some time
to review Rich’s precepts, and see if you can do a better job of par-
enting your products.

David is an international authority on network and Internet technologies. He has written

extensively on the topic for 20 years for a wide variety of print publications and websites,
such as The New York Times, TechTarget.com, PC Week/eWeek, Internet.com, Network
World, Infoworld, Computerworld, Small Business Computing, Communications Week,
Windows Sources, c|net and news.com, Web Review, Tom’s Hardware, EETimes, and
many others. He is the author of two books: Internet Messaging (Prentice Hall, 1998)
which he co-authored with Marshall T. Rose and Home Networking Survival Guide
(McGrawHill/Osborne, 2001).
 Preface
RICH MIRONOV

’m a repeat offender at technology start-ups. That includes

I being “the product guy” at four very early stage companies,

and consulting to product and technical teams at more than
two dozen other companies.

A MOMENT IN TIME
In September 2001, I left a VP Marketing/Product Manage-
ment job at my third start-up. This was a very difficult time:
throughout Silicon Valley, you could hear the whoosh of the first
Internet Bubble deflating. All that year, high-concept start-ups
were being padlocked faster than movers could haul away Aeron
chairs. The Twin Towers had just come down, and irrational exu-
berance was in very short supply. I was an unattached product
guy, and didn’t see any intriguing start-ups worthy of an emo-
tional commitment. Suddenly, I was a product management con-
sultant.
 PREFACE | XIII

After two decades in Silicon Valley technical and product

roles, I was able to tap my personal network for lots of interesting
projects. It was immediately clear, though, that very few people
knew what technology product managers really do, and why
they are critical to Silicon Valley’s success. Even savvy entrepre-
neurs and Engineering VPs had trouble recognizing the symptoms
of inadequate product management. Shockingly, most of my
product management peers were also unable to explain their
value clearly enough to get the respect they deserved.
In dozens of breakfasts and lunches, I tried and failed to
describe the essence of product managers: the honest brokers who
balance customer needs with engineering realities, market
requirements with financial goals. We were the handful of
matrixed product champions and driver-drivers who push great
things out the door. Truth-tellers in the executive suite. It became
clear to me that the product management story is best told as a
series of vignettes.
Out of this swirl, Product Bytes was born. My goal was to find a
thousand words each month that captured one small part of the
product management challenge. And it caught on. Product man-
agers added themselves to the distribution list1 because they rec-
ognized themselves in these monthly stories. Engineering and
management folks signed up to learn a little more about the
strange animals they work with.

1. This was before RSS had been widely adopted.

XIV | THE ART OF PRODUCT MANAGEMENT

This book compiles some of my most popular columns from

2002 to 2008. It includes thoughts on building and maintaining
product organizations, understanding how customers think, ideas
for how to price new products, and ways to motivate people who
don’t work for you. (Typically, no one works for a product man-
ager.) Collected into a single volume, it paints a picture of a typi-
cal interrupt-driven day.
So what is a product manager? As you’ll see, that’s a difficult
question to answer briefly. My closest analogy is to parenting: the
product manager is responsible for the long-term development
and health of a product, and is constantly faced with co-workers
(or customers or partners or company executives) who want short
cuts to good results. Every parent knows that kids need time to
grow and develop – and rushing them doesn’t usually help. I’ve
recapped “Parenting and the Art of Product Management” thou-
sands of times, and still believe that “we’re not really parents [or
product managers] until we’ve gotten some poop on our hands
and laughed about it.”
Likewise, start-ups are radically different than established
companies in ways that can be difficult to describe to non-partici-
pants. Folks at tiny companies are more invested in the day-to-
day survival of their organizations (and not just in terms of pre-IPO
stock). One of my earliest pieces on this difference was “Thorough-
breds and Explorers”, which highlights the hungry and creative
generalists that start-ups need. Over the years, I've returned to
start-ups many times – both as the first “product guy” and as a con-
sultant – for a hit of that pure entrepreneurial spirit.
 PREFACE | XV

Pushing that analogy a bit further, I’m deeply appreciative of

the pioneering spirit of entrepreneurs and technologists worldwide.
Software development’s unofficial headquarters is still here in Sili-
con Valley, but with branch offices in Bangalore and Ramat Gan
and Shanghai and Prague and Kiev and many other places. I’m
lucky to be part of a far-flung but tightly networked community of
product managers who speak the same language, and share a
love of great solutions.
By the way, during 2008 we’ve finally seen some important
software development trends going mainstream, especially Agile
and Software-as-a-Service. There are some early discussions of
these throughout the book, in their original pre-buzz-word form.
Since Product Bytes is an ongoing conversation, you’ll be reading
more from me about Agile in 2009, so I hope that you’ll join the dis-
cussion at www.ProductBytes.com and www.Enthiosys.com.
So. Enough about my last release. Let me tell you about my
next release…

Rich Mironov
Falling in Love
Start-Ups and Product Management

SECTION ONE
Joining a start-up is like falling in love. Product managers at start-
ups need to be passionate about their products/services, spending
every minute of their days cajoling their teams to create wonderful
products [inward-looking] or telling the world how wonderful those
products will be [outward-looking]. This is hard, repetitive, and
often thankless. For me, it's never been as simple as work-for-pay.
Product managers who don't love their products should change
product lines or companies - or careers.

On the departure side, leaving a startup is like ending a serious

romance. Whether you leave voluntarily or not, you may find
yourself emotionally bruised and not quite ready to love again.
More determined to be a little choosier when picking your next
start-up. Each time I've walked out the door, I've tried to take some
time to consult, write, teach, and mourn just a tiny bit. That's even-
tually followed by dozens of meetings with entrepreneurs at new
companies (“speed dating”) and the occasional interim executive
role (“going steady”).

In any case, product managers are an odd mix of enthusiasm and

persistence, unfounded hope and grim financial realities. Their
emotional cycles start to line up with product release plans. Sane
people look at this role and shake their heads in disbelief. I hope
that you recognize yourself in the following pages.
Parenting and the
Art of Product Management
AUGUST 2003

ver the years, I’ve told variations of this story many

O times: being a product manager is a lot like being a par-

ent. We love our products, make multi-year commit-
ments to their development, hide their shortcomings, and look out
for their best long-term interests while other organizations live in
the moment. We groom our products for good mergers later in life
— and may be heartbroken by market indifference or eventual
end-of-life.
Not everyone wants to raise children or enterprise software.
Consider the following observations before volunteering for high-
tech parenthood…

BOOK LEARNING IS NO SUBSTITUTE FOR EXPERIENCE

Parents-to-be are often deluged with “how to” books offering
sage advice. These offer helpful vignettes about feeding, sleeping,
discipline, and how to get strained peas out of your hair. The real-
ity of children is impossible to distill into a book, though. Stated
more colorfully, we’re not really parents until we’ve gotten some
poop on our hands and laughed about it.
Likewise there are lots of articles about pricing strategy, posi-
tioning, market segmentation, and how to prioritize an endless fea-
ture request list. (Present company included.) When the time
6 | THE ART OF PRODUCT MANAGEMENT

comes, though, your situation is always unique. You’ll eventually

have to recommend a pricing model and defend it, so get started.
Be humble, but don’t apologize for a less-than-perfect first effort.
If you’re lucky enough to find a mentor, ask for the war stories.
“What didn’t work and why? How is this product like yours? What
templates can I borrow?” Except in the largest companies that
maintain very strong processes, book learning is over-rated.

ALLOWING TIME TO CRAWL, THEN WALK

Most babies can’t sing or pole vault or read Sanskrit. And we don’t
expect them to. We encourage their first steps, applaud “chop-
sticks,” sign them up for fingerpainting or swimming lessons. We
try to uncover their secret talents. We know that they will make
lots of mistakes. In fact, we’ve signed up for decades of bruised
knees, failed science projects, dreadful school plays and disastrous
first dates.
Technical products also grow up. It’s a rare for anything to be
complete in its first release, and even rarer for you to anticipate
the right audience for your new baby. The first year (or two) are
spent bumping into markets, fixing bugs, talking with customers,
and discovering unexpected niches for your brainchild.
(Microsoft has certainly taught us not to expect any product to
be usable before version 3.1.)
Part of your responsibility as a PM is to protect and nurture
your baby. Set appropriate expectations for beta customers. Have
a developmental roadmap that shows when more features will
arrive. Try to read product reviews calmly. Don’t throw the soft-
 PARENTING AND THE ART OF PRODUCT MANAGEMENT | 7

ware out with the bug report. If you’re not proud of your wunder-
kind, then no one will be.

IN IT FOR THE LONG TERM

As parents, we’re committed to deferred gratification and
multi-year planning. We show our faith in the future by moving
into good school districts, saving for college, and insisting that
geometry is worth learning. Part of our job is to make some long-
term plans and thoughtfully trade off the present for the future.
Children want immediate gratification, so we have to make some
choices for them.
As a product manager, you’re in similar territory. Faced with
an infinitely long list of feature requests, you must help developers
stick to the important items and minimize “feature creep.” Sketch-
ing out the next half-dozen releases can comfort pouting custom-
ers who want everything right away.
A good friend with a 7-year-old reminded me that preparing
dinner once for your child can be fun, but making the 2,550th din-
ner is heroic.
It’s also impossible to make every decision perfectly. In an
uncertain world with limited time, we must pick a few issues wor-
thy of serious thought. Should we skip her to the next grade? Does
he feel feverish to you? Are the twins old enough for hockey? Rais-
ing kids is a real-time sport, so many choices have to be made
with neither data nor analysis. Arguing carrots versus peas as the
dinner vegetable rarely makes my list.
When you put on your product hat (or apron), you’ll need to
focus your thinking time on what’s truly important. At the top of
8 | THE ART OF PRODUCT MANAGEMENT

your menu is a business model built around customer require-

ments, pricing and competition. Even though this will never be
completed to your satisfaction, you’ll eventually have to serve it.
Dithering won’t get food on the table or software out the door.
(Sometimes the potatoes may taste a little odd.)

SETTING LIMITS IS IMPORTANT (AND DIFFICULT)

Modeling the right kinds of behavior – at the right stages of devel-
opment – is an art and a science. We want to set ground rules first,
then build on them as our children grow. No hitting. Keep your
clothes on in public. We’ll read one story before bedtime. Don’t
touch the steering wheel. Life is complicated, though, and every
rule has its exception. Lots of parents wrestle with one-time excep-
tions that instantly reset boundaries. [Remember “you can stay up
a half hour later tonight, but tomorrow night you have to be in bed
by 8:30PM” and “if you really don’t feel well enough to go to school
today…”?] Creating clear policies and deciding when to break
them is nerve-wracking.
Product managers face this daily dilemma with sales teams
(who bring in the revenue that pays our salaries). Moments after
we’ve carefully defined precisely what we sell and how it’s priced,
we’re approached with requests for special discounts or unique
packaging or custom features. No exception ever stays a secret,
however: other customers and resellers always find out about one-
time deals, so exceptions are really new policies. Yet life demands
flexibility. Our role is to set reasonable thresholds and stay open-
minded. (“For deals over $100,000 or in these two new markets…”)
 PARENTING AND THE ART OF PRODUCT MANAGEMENT | 9

Waffling on your policies has longer-term costs. Sales teams

and customers learn to “game” your system, describing their spe-
cial situations to fit your new rules. You’re also encouraging them
to bring you other kinds of exceptions on the hopes that you’ll
relax other limits. (“Here’s why this deal is strategic…”) Every par-
ent knows: never let your teenager realize that everything is nego-
tiable.

Great product managers develop an emotional relation-

ship with their products. Like first-time parents, they learn to
nurture their products, plan for the future, and make deci-
sions every day with limited experience. Don’t be afraid to
commit. Once you’re cleaned up a few dirty MRDs and sent
your firstborn off to revenue, there are many more products
at your company hoping to be adopted.
Early Selling:
Thoroughbreds and Explorers
SEPTEMBER 2002

tart-up selling is different from selling established products.

S It includes navigating new product waters and locating

islands of early adopters—and calls for different skills than
classic quarter-driven account selling. Knowing which you need is
critical. (I’ve seen organizations repeatedly hire the wrong sales
force, with terrible results.)
I divide sales teams into thoroughbreds (race horses) and
explorers. Thoroughbreds outrun the competition along smooth
paths by selling well-understood products. Explorers hike rough
terrain to discover early customers. It’s important to know the lay
of the land when picking your team.

So, which of these two sounds more like your situation?

• Surveying the territory: So far, your first three customers have

three unique uses for your product. They have nothing in com-
mon except demands for free consulting. You need to invent a
market map, define the competitive landscape, and position
your product.
or

• Starting the quarterly quota race: You’ve closed a few dozen

deals, have a good description of target customers, and are
building a consistent sales process. You can sort mainstream
12 | THE ART OF PRODUCT MANAGEMENT

opportunities from dead-end tributaries. Boosting deal size and

shortening sales cycle are key goals.

Clearly, the first organization needs to discover a market and

find repeatable product solutions. The second organization wants
to run ahead of the competition, arriving first to dominate its mar-
ketplace. Now, let’s match these organizations against their broad
choices for sales teams.

THOROUGHBREDS
Top sales people at established companies already think of
themselves as thoroughbreds. I agree. So what can we learn
about salespeople from racehorses?

• Without them, racing wouldn’t exist.

• They are very expensive, but the best earn millions.
• They are great at what they do: running like the wind for 1
and 1/4 miles. They don’t plough or blaze trails.
• They need controlled conditions. Champions don’t run on
rocky, uneven, badly maintained tracks.
• They need a big support staff.
• If you have too many thoroughbreds or too few races, they
have to run against each other.

Likewise, top sales people with established companies get top-

tier comp packages and live for the end-of-quarter adrenaline
rush. They are always well groomed (and wear expensive shoes).
Most expect the supporting team to provide a complete selling
environment: leads, collateral, awareness, pricing, competitive
knockoffs, demo units, pre-sales consulting. You'd love to hire a
 EARLY SELLING: THOROUGHBREDS AND EXPLORERS | 13

winner with specific experience on your terrain (e.g. mid-market

CRM for automotive). And in the President’s Circle, they hold up
the trophy on behalf of the whole team.
Warning: don’t fill a stable with top sales people before you
can afford them. You’ll need a repeatable sales process and
receptive market to pay for the oats.

EXPLORERS
So, some companies are not ready for herds of thoroughbreds.
They don’t know the right customer segments or killer application.
Perhaps some vertical markets will turn out to be quicksand, and
others rich with hidden minerals. These companies need a few
sales explorers to map the customer terrain and find a path to suc-
cess.
When Lewis & Clark set out in 1804 to explore the Western US,
they had no map. Thomas Jefferson provided start-up capital and
staffing, but no guidance en route. What can we learn about sell-
ing from this?

• Lewis & Clark had a mission, but changed tactics and paths
frequently.
• Getting lost was expected. Discovery was hard to schedule.
• They carried everything with them. Solutions were custom-
crafted with no help from Washington.
• The long, unpredictable journey favored a mix of skills, back-
grounds and outlook.
• This was a long-term commitment. Replacing team members
was not easy.
14 | THE ART OF PRODUCT MANAGEMENT

Early-stage sales champions have to help find the destination

en route. Many discover customer opportunities that Marketing
missed. They are comfortable with muddy boots, uncertain sales
cycles and changes in product message. Explorers sort prospects
early to keep focused on the few with real potential. In partnership
with Marketing and Engineering, they keep reconfiguring the
available product.
Since the destination isn't yet clear, most explorers have broad
industry experience. Someone who's sold Manufacturing ERP as
well as channel-driven SME networking gear (or hospital systems
or security services...) is a great asset. There's time later to find mar-
ket-specific stallions.

Consider the maturity of your market when choosing early-

stage sales people. Changing explorers into thorough-
breds is difficult, and the reverse nearly impossible.