» Product Management for the Busy Entrepreneur #

Paul R. Brown @ 2009-03-16

I was talking with a budding entrepreneur in the open source "big data" space (with my Entreprementor hat on), and we talked about his sales pipeline and potential customers. He had a list of a couple dozen companies that had expressed some interest, and that much was great. Just the same, I asked about the elephant in the room: Interest in what? Interest in your wonderful open source doohickey might get you Internet Famous like the Star Wars Kid but isn't likely to pay your bills let alone be something to build a company on.

This brings me to the subject of product management for the busy entrepreneur.

Product Versus Business

It's easy to get confused about the difference between a product and a business. A business is a machine that turns something you have into money. (One that produces more money than it consumes is a good business...) A product is a describable, sellable thing that your business can produce over and over and customers can consume over and over without too many changes. Products can be broad, like professional services, or very specific, like machine parts, but the aspects of commonality in description and delivery need to be there.

The point of a product is that the commonalities enable scale in a business's internal processes, from production to sales to accounting. It is also that commonality that makes a business an investment prospect because you can make reasonable inferences about capital in versus capital out (ergo value). Defining a product involves a bit of intuition and guesswork, but refining that definition is simple: Ask potential customers if they would spend money on it. I've never been able to understand the relative reluctance of some entrepreneurs to get on the phone or hit the street with an idea, maybe out of a reluctance to have their idea trashed by reality, but the customer's money is the one source of Truth. If it's difficult to explain, if it's not something that the customer's business can readily consume, or if the customer doesn't "get" it, then it needs to change.

Rows and Columns

Once you have a panel of potential customers assembled, it's time to sit down with a spreadsheet and figure things out. Customers go down column "A", and potential products go across row 1. Put an "x" and maybe a note in a cell if that customer would pay for that product, and then look for the column with the most x's. Alternatively, you can use the price that the customer would pay as the value for the cell in the column and try to make a more refined decision based on the profitability of the offerings, but the idea is the same — Get real data on what customers want.

There's an aspect to survey design that's important when interviewing a potential customer. To get a real response, ask specific questions and set the expectation with that potential customer that you'll very likely be back to get a check from them. You should expect to iterate on the process a few times, as customers may help you add columns to the spreadsheet, but you should avoid open-ended questions.

Real product management is quite a bit more involved and detailed but equally necessary as your product and base of customers grows and evolves. Nonetheless, this should be enough to get started.

Basic product management is one of those times where stating the obvious is useful: Data is helpful in making decisions.

 

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