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I chanced upon this document by Laurie in which she describes a typical product development process. We follow a very similar process, except that the MRD is seldom a formal document. Based on the analysis of market requirements from various sources as described here, we write the PRD. The UI mockups are done by our UI designer who works closely with the Product Managers to understand the workflows.
When there is a need to change the layout or the UI elements, our designer provides a static mockup. For workflows, we use Axure Pro, a wonderful wire-framing/prototyping product. Axure allows us to place UI elements, create links to other pages and design a prototype that is easy for our developers to play with and understand. There are two main advantages in using such a prototyping tool -
- It forces us, the Product Managers, to think through the design a lot more. When only static mockups are provided, the development team has to many assumptions about various corner cases. Given the distance and timezone differences, it is not always possible to validate these assumptions. However, PMs have to address many of the corner cases when designing dynamic mockups and this reduces the gap between what PMs want and what development thinks PMs want. See here for details.
- These mockups can be used to demo upcoming features to prospects and customers. Axure prototypes look very similar to the real software and helps us get advance feedback about workflows and features that we are planning for future releases.
I'm told dynamic prototypes can also be created using a Visio plugin. This could save you some $ for sure, but I found it a lot harder to use. Unless I am really cash-strapped, I'd consider the $539 for 5 Axure user licenses a big bargain.
My wife's laptop recently got infected with malware, despite running an up to date version of a leading anti-virus and a spyware detector. Coincidentally, both these vendors have offices in the same street in which my wife works. Wish she could take the laptop over and tell them how badly their products suck. However, reality meant that I had to troubleshoot and fix the problem. After trying out a few other free anti-viruses and malware, none of which seemed to detect/fix the issue, I found Spyware doctor. A fantastic tool that found and fixed the problem - I ended up purchasing a 5-pack license for all our computers at home.
While on that topic, Solidcore's product was tested against nearly 16,000 viruses and malware by NSS labs. The results are available from our website here. We prevented 100% of these viruses, worms and malware. Needless to say, we were thrilled when we heard this and had celebrated in a big way. We are seeing a tremendous uptick in the demand for this product and there has never been as much excitement at Solidcore before.
Just in case you were wondering why I did not put our product on my wife's computer - I'd have done so had it not been her company issued laptop :)
Update on 10/14 - Shortly after I posted this entry, Secunia, an independent testing firm had released the results of their security tests. Symantec won, but Secunia claims in their blog entry that "Even the "high" score from Symantec was disappointing. Symantec detected a mere 64 out of 300 exploits, or less than one-fourth, leaving 236 exploits undetected!" and the report concludes alarmingly thus - "These results clearly show that the major security vendors do not focus on vulnerabilities. Instead, they have a much more traditional approach, which leaves their customers exposed to new malware exploiting vulnerabilities."
I found this hilarious description of Product life-cycle recently - enjoy!
So, how many emails do you receive daily? My email search engine reports that I have received approx. 24,000 emails and sent 4,200 mails in the last 6 months. This would work out to approx. 133 inbound emails and 23 outbound emails per day. If I just look at week days, the number is approx. 155 inbound and 27 outbound emails per working day. The first number is inflated because I am on multiple distribution lists. We use SonicWall's Email Security product for spam filtering and it has a wonderful ROI calculator. You plug in a value for the cost of every spam email and it calculates the RoI of successful spam filtering. Not a spam killer, but a great way to justify your product to the Budget Owner. Here's the RoI we have achieved so far using this product -
I get asked a lot about good books on Product Management. Here's what I have read in the past 2 years or so since I moved into Product Management.
1. Crossing the Chasm
2. Inside the tornado
3. Built to last
4. Good to great
5. Innovator's dilemma
6. Innovator's solution
7. Selling the wheel, and
8. Blue Ocean strategy
I read it approximately in the order listed here and have been greatly impressed by items 5 and 7. #8 is a great read for anyone who is evaluating new ideas. Here's a good article describing how to apply the strategy canvas to evaluate new ideas ( http://blog.hubspot.com/blog/tabid/6307/bid/54/Blue-Ocean-Strategy-A-Small-Business-Case-Study.aspx).
Rosen tells me that he has ah-ha moments everytime he reads these books.
One of the greatest advantages of sitting right next to a CFO is that I get to interact with him frequently. Over the last year or so, I have learned quite a bit about Startup Financing, Cap Structure, Stock options, etc during these interactions. There are 3 very important things that an entrepreneur has to watch -
1. Total number of Authorized shares - this is the maximum number of shares that can be issued to investors as registered with the state of incorporation. Of course, companies have the option of increasing, splitting or reverse splitting the number of authorized shares relatively easily and often do so when they raise new rounds of funding.
2. Total number of Outstanding shares - this is the number of shares that are held by stockholders. The more common use, in high tech vernacular, is Fully-diluted outstanding shares which is the outstanding shares plus the shares reserved for issuance under stock option plans (grants + cancellations + remaining to be granted) plus the amount of shares to be converted under warrants and convertible debt. Essentially, the number of shares if every right to a share of stock as converted
3. Liquidity option on Preferred stock - shares held by employees and founders are typically Common stock. VCs get preferred stock which normally as a “liquidation” preference which means in the event of a liquidity event, they have to be repaid before Common stock is. The liquidity option determines the amount to be repaid for each preferred stock if a liquidity event occurs (acquisition, bankruptcy, etc). Common stock holders get paid only after all the preferred stocks have been repaid in full.
Let's take an example and walk through these numbers.
Lets say a friend and you decide to float a company, Acme Industries. You typically incorporate in Delaware (it has the friendliest corporate law) with a total of 100 Million Common (Authorized) Shares at a par value of $0.001.
Between the two of you, you decide to hold on to at least 60% of the Common shares to ensure that you have a controlling interest. This would amount to 30 Million shares each for a total cost of $30,000. Typically, this would create the basis for you to go add sweat equity for future work on the company You'll allocate a further 20% (20 Million shares) for future stock and option grants(key employees and future issuance). The remaining 20% can be used to attract outside investors with preferred shares convertible into common should you be fortunate enough to do an IPO (more on this later).
Once you have the prototype, you start pitching to VCs to raise enough capital. Lets say KPCB decides to advance a term sheet to buy 10 Million of Series A preferred stock at a “pre-money value of $30,000,000 or $0.50 per share. You would float 10 Million Preferred shares at par value of $1 for KPCB to bring the “post money valuation” to $40,000,000. At this point, the VC firm has a 9.1% stake in your company (10M shares/110 M).
Term sheets are normally loaded in favor of the investors, esp. when presented to a first time entrepreneur. Make sure you pay close attention to the liquidity option - this is a hidden cost of the capital that you will have to pay later on. Liquidity options vary between $1 and $2 depending on market conditions. I'm told $1 liquidity options are available these days, but during the difficult 2004-05 period, $1.25 was the most common option with some going as high as $1.75.
If all goes well, you would become cash flow positive with just a Series A funding and work towards your exit plan. Acquisitions are more common than IPOs, so if your company gets acquired for $20 million, you'd repay the investors $10 million (if you've a liquidity option of $1) and share remaining $10 M amongst the shareholders.
More often than not, companies require a Series B, C, D or more funding before they are able to exit. In such cases, companies are forced to increase the number of authorized shares (because total Common outstanding + total Preferred outstanding must never be greater than total authorized). This causes a dilution in the stake of common shareholders. Top executives often negotiate “dilution protection” so that they will receive the same % of options for one round following hire so their relative position stays the same. Thus a new CEO would be incentivized to raise money right away and not wait and try to protect their stake as a % of the total dilutable options, which means that they are given enough options to maintain their stake at a certain percentage. They also ask for the Cap table or cap structure so that they know how much their stake in the company is relative to other shareholders. This is rarely done for regular employees, but something to keep in mind as you grow in your career and look for opportunities.
Finally, the best advice for entrepreneurs is that they get themselves a very good attorney with lots of experience before they start raising funds to negotiate a good term sheet. Top attorneys can get things done effectively and quickly, however, they must also balance their VC connections since they are a great source of referrals and would hate to bite the hand that feeds them :)
I attended the P-Camp today and heard Christina Noren from Splunk talk about Automating product management in an agile context. The gist of the talk was how she had customized Jira to track bugs, feature requests and problem statements and automate their prioritization and PRD creation using various metrics. Solidcore takes a very similar approach to structured Product Management and I am sharing our experience building such a tool. When we realized that we had grown beyond the stage where all feature requests and the roadmap could be tracked in a spreadsheet, we started looking for a solution that - - would streamline our requirements elicitation and capture process
- help us prioritize features and cases using various metrics like opportunity cost and customer commitments
- improve communication with various other departments like engineering and support
- would integrate with our existing systems (Salesforce.com through which we dealt with external case requests and Bugzilla, our internal bug tracking system)
We evaluated various products like featureplan, rally's requirement management, artifact's lighthouse, etc - a good list and comparison is available from the 280 group and found 2 common roadblocks we found across all these products -
- they worked best when all the data was captured using that tool
- they were expensive
Roadblock #1 meant that we had to start using these products for tracking customer cases and internal bugs also (or duplicate the data). Roadblock #2 is debatable as the benefits of these products can significantly outweigh their cost. We could have justified the cost, but as a startup, we pride ourselves on being tech-savvy and our parsimonious nature. So, we built an App that met all of our requirements at zero non-incremental cost and here's how we did it.
We customized our Salesforce.com accounts (which we use for sales, marketing and customer support) to also track feature requests. We ask our Sales Engineering and Sales team to provide a weekly report of all the ideas that they heard about (during Demos, RFI/RFP questions, customer deployments, negotiations, etc) and capture it in the system. To illustrate this, I am going to take the example of a TelePorter product and show you how we'd manage such a product. All these features are captured in the system and as you can see in the following two screenshots, we can use the system to just capture feature requests without assigning them to a release.
Every feature also has detailed feature requirements (and the requirement number) as shown below.
The system also allows product managers to target Customer cases and bugzilla bugs to specific releases and share the information with the support and engineering teams. No longer do they need to come to Product Management to get the date for the release as it is available from this association (as well as from the cases tab in SFDC).
During our regular roadmap meetings, we use reports to evaluate features based on their popularity, opportunity cost which is derived from the salesforce opportunity field, their impact on TCO for the customer, etc. and target them to specific releases.
The roadmap and the PRD are then auto-generated as reports, as shown below.
Incidentally, we realized that the reporting infrastructure of salesforce has some limitations that makes it unusable. So, we use Crystal to develop these reports and their salesforce.com connector works like a charm. We are seriously considering sharing our App in AppXchange for free and sell the report definitions for a nominal amount. If interested, please send me a note.
I had been to the barbershop yesterday and it set me thinking about their customer acquisition costs. Here's an example -
If suppose, they get a new customer, who has never been to their saloon before, their tendency is to offer the best service in order to make the customer a regular customer. Now, lets assume that the customer becomes a regular. The Barber's interest is best served when they don't cut enough hair (so that you come back sooner).
There are a lot of other companies that have this conflict of interest. We know how new cable/internet subscribers get very good deals for the first few months, which go away after the first few months in the contract.
Question is - what is the commonality between these businesses that treat new customers better than existing ones ??I posed this question to my friend Torsten, who is an economics major in Pittsburgh and got this response -
If treating new customers is costly (in the sense that it minimizes the business's utility), then one commonality could be that the businesses value a long-term business relationship, i.e. they accept high startup costs (or less profits) in exchange for making more profits with the customer over the long term.
Another commonality of such businesses could be get a foothold into a new market and getting some customers with which they can earn the trust of more potential customers ("look, we are working for IBM - if they trust us, you can do so, too). From the other extreme, a quasi-monopolist could be interested in deterring new market entrants. Say, the big existing car companies are meanwhile realizing that they have done too little on a global scale to capture the new up and coming lower and middle-income customer groups in developing countries. As a result, companies such as Tata are now introducing $2,000-3,000 cars, capturing a huge market.
However, this market deterrence does not necessarily work everywhere. Our former laundry guy in Palakkad was not known for the quality of his work, but no one could change to another laundry since these guys had contracts among themselves preventing them from doing business in each other's area. Can you think of any other examples?
