You start a tech startup with no product management experience - what should you do?
As a tech startup with limited liquidities and number of people. Focusing on the right skills at the right time can make a huge difference.
I hope this will not happen. But still, be prepared.
Roger Lee, an American entrepreneur, started tracking all tech startup layoffs during COVID-19 and after.
Based on the information from his website layoffs.fyi. Only in the first month of 2023, 174 tech companies announced that 56570 employees were or will be laid off. That's almost 40% of the total 2022 laid-offs in one month.
There can be many reasons why companies are laying people off.
Over hiring during covid-19-tech skyrocketed demand.
Is getting more expensive to borrow money.
They want to prepare for a recession.
Whatever the reasons.
As a tech startup with limited liquidities and number of people. Focusing on the right skills at the right time can make a huge difference.
And during times of crisis, this skill will be even more critical.
Then, what should a tech startup team do?
Hope for the best, prepare for the worst.
Everything starts with an idea and a team.
But let's face it - a misalignment and unfocused team will immediately lead to the failure of any idea or tech startup.
And during financial crises, the chances of failing will only increase.
Because they spend most of their energy and time on inefficient actions.
They spend time in unproductive meetings, chats, interruptions.
Doing multitasking, making assumptions, doing wrong research.
Focusing on urgent and unimportant tasks. Having lots of change requests, and ineffective working routines. Instead of focusing on what matters.
Do you resonate with something from above?
These will result in long development times, high costs, and a financial runway.
And if you want prepare for the worst, I invite you to spend time on analyzing the actions that doesn't serve you or your startup tech team.
And put on a special list the batch of actions that can bring you the most results.
Effects or root causes? Something that's often overlooked in how startups perform.
To focus on what will bring the best results we need to look at the team first.
And more precisely, we need to look to ourselves.
Based on my experience in the tech industry. Where I’m actively involved in early stage startups, global products and tech communities.
I had the chance to discuss with hundreds of startup founders and investors.
And no matter how often I heard that startups are failing because they:
Run out of cash
Don’t identify a market need
Have team problems
Have better competitors
I have observed the same root causes repeating.
CBInshights did a great job researching tech startups.
But based on working with startups where I'm involved in.
I can't agree when they present these as being the reasons of why startups fail.
Reasons, by definition refers to causes, or justification for an action or event.
To say that “running out of cash” is a reason of why startups fail is like saying “running out of shape” is a reason of why I can’t run a marathon.
This is the effect of not having healthy routines, or not working out consistently. Not the root cause of the problem.
That's why I needed to challenge the tech startup statistics above.
Where I mentioned that team problems could be a critical factor in determining why most products fail.
Something that's often overlooked.
So, to come up with a better example.
In the table below I did, through 5 why method, a breakdown of the root causes of why startups might fail.
Of course, there can be many root causes, but I have simplified the process, presenting one root cause.
And there is no doubt that behind the simple question: who does all of these? Is it a person from the team or the entire team.
*Note: We need to be realistic and consider that there are also other external factors leading to the startup failure, but most of them are related to the team.
So, then I have a question.
What does a sandwich and a tech startup have in common?
We can do both in phases.
Phase 1: Idea: I want to make a sandwich.
Phase 2: Research: Understand what you want or desire and what ingredients you need.
Phase 3: Buy: All the products that you need. (I like my sandwich to include tofu, tomatoes, cucumbers, salad, butter).
Phase 4: Build
Sub-Phase 4.1: Wash: All the vegetables.
Sub-Phase 4.2: Cut: The bread into slices, tofu in small pieces, vegetables.
Sub-Phase 4.3: Assemble sandwich
Sub-Phase 4.4: Wrap: Sandwich in a napkin or something else.
Phase 5: Clean dishes.
Phase 6: Launch: That sandwich in your stomach.
The main lesson from this part of the article is UNDERSTANDING - that all you need is to take steps in a relevant order.
Such as developing a prototype before seeking funding. Or conducting user research before launching the product.
A good product manager will understand that a focused team with clear roles and responsibilities. Good communication. Working towards the same objectives and having a reasonable learning rate. Prioritizing things when needed.
Will either, succeed with a tech startup. If not, the worst case, they fail but become better professions.
So, breaking down a startup into phases helps people structure and organize complex things in a clear way.
And by doing that. You can only expect to an increase in productivity. Better team decisions, and more results in each startup stage.
That’s why I think it’s important to spend about 80% of the time on the relevant actions for each stage.
*Note: these stages can differ from the person you ask. There is not a standard in the market, only recommendations. But what’s essential is understanding what works best for you. And what are the main actions you need to do in each stage.
Maximize Your Product Manager Skills: Prioritize What Matters and Get More Done
Our actions are rarely equal in terms of their impact.
And the Pareto principle reminds us that paying attention to what matters can make a big difference.
By focusing on 20% of our efforts, which yield 80% results. We can increase efficiency and maximize output!
I can see these approximate numbers reflected in every domain I inspected.
In running.
80% of my running sessions are low-intensity trainings. And 20% are medium and high-intensity trainings. I was spending more time on low intensity trainings. But combined, these helped me complete a marathon.
In startups.
I worked with a startup from Canada that focused its attention on the fire alarm system niche.
They had only a few processes in place. No previous experience in the software industry and building startups. And the project management setup needed many improvements. But they have a great team that's open to learning.
As any founders, they had an idea of building a product.
A platform that will match clients with certified engineers like Upwork or Freelance.com. But focused on the fire alarm system industry.
And a document management system that engineers and companies will use to pass documents rapidly from one to another. The purpose was to make all this paperwork happen in one platform, transparent and fast.
What has been used as a replacement for the freelance platform in the validation phase was a ready-made tool called Acquity. Where the following things were done:
Onboarded the engineers.
Enabled their calendars for the customers to see their availability.
Enabled the payment system. Customers to pay before booking a time with an engineer. And that was it.
In 1.5 months with this tool and organic marketing. There were 8 clients - 35 requests and more than $15k paid by those clients. But the exciting thing was that 2 of the clients had a total of 26 proposals and brought us more than $12k.
Fast forward, simple math, 25% of our clients brought 80% of the amount.
Even if the numbers can slightly differ. From my experience the numbers are most of the times around the Pareto Principle percentages.
Break Down Tech Startup Stages into Specific Actions: A Guide for Product Managers
Here we are. Based on my experience in tech startups and based on the startup stages presented above.
For each stage, I created a specific list of essential actions that will only bring you exceptional results if done at the right time.
Stage 1: Achieving Team Alignment in Tech Startups: Key Actions for Product Managers
Remember what I said above?
That the reasons why tech startups do fail are mainly because of unintentional or intentional team actions.
And this is your chance to do it right. An idea bring the team together, but the team keeps the idea alive and prospering.
Stage 2: Ideation:
Streamlining the Ideation Process in Tech Startups.
Stage 3: Unlocking Success through Research.
When doing research, I do this as a top-down approach. Why?
Because I will learn the jargons used in that industry.
Then learn about the competition.
And having this information in mind or on paper, I will definitely be able to speak to customers using their language.
So, I spited the process in 3 parts:
Market research.
Competition research.
Customer research.
a) Market research in a tech startup.
b) Research your tech startup competitors
c) Customer research for early startups:
Stage 4:
Stage 5: Product Development
5.1: Product Documentation.
One of the most underrated actions in a tech startup. But one of the most important one that will speed up everything during the development of the tech startup by making things clear and specific.
5.2: Project Management in a tech startup.
This role in an early stage startups is often done by the product manager. But depending on how complex the project is. Product management and project management can be also taken as 2 separate roles.