Podcast Summary
Casey Winters' Advice for Product Management Success: Product managers should take risks and not rely too heavily on frameworks or tools. Stay curious, leverage network effects, and stay on top of emerging technologies like GPT-4.
Casey Winters is a distinguished product and growth expert who has advised several companies such as Pinterest, Canva, Airbnb, and Reddit, to name a few. In his interview with Lenny, he emphasizes the importance of taking risks in product management instead of focusing too much on the "right way" of doing things. He explains that the frameworks and tools that Reforge provides should be used selectively and not as a strict guide to follow. Winters also talks about various topics such as interviewing product managers, leveraging network effects, and the impact GPT-4 may have on product management. He currently advises startups, invests in marketplaces, and is revamping the product strategy program for Reforge.
Casey Winters on Navigating the Challenges of Being a CPO: As a CPO, it's important to show that you care about all aspects of the company and constantly assess your team and product. Reach out to experts like Casey Winters for guidance.
Casey Winters advises that people should reach out and see if he has time to help, as he enjoys talking to startups about how he can help companies. As a CPO, he believes that the role is challenging, and it is hard to keep product-market fit as a CPO within a company for a long time. CEOs frequently have visions that can change and get misaligned with the product leader. Mistakes and any little missteps can blow up in a major way. Winters believes that a product leader needs to show that they are caring and create the perception that they care about sales, marketing, and legal. They also need to diagnose the strengths and weaknesses of their team and product without bias.
Finding the Balance: Frameworks and Creativity in Great Leadership: Transparency, risk-taking, and user research are crucial for successful product management. Prioritize areas of uncertainty and high leverage for results, and don't focus too much on following the right way. Balance frameworks and creativity for growth.
Great leadership involves being transparent about the team's strengths and weaknesses, as well as their current goals and where they want to be in the future. However, in today's product management world, there is a trend for product managers to focus too much on the right way to do things and not take risks. Instead of relying on infinite resources and time like Google, it might be better to focus on shipping to learn and to look at what competitors have done. It's also essential to prioritize user research in areas with extreme uncertainty and high leverage for getting results, rather than spending resources on redesigning something like a login page. Overall, it's essential to strike a balance between frameworks and creativity to encourage growth and success.
The Importance of Creative Problem-Solving and Quick Decision-Making for Product Managers: Product managers today must prepare to rely on their own abilities to make swift and innovative decisions, as the current resource-rich environment will soon shift. Seek companies where experimentation and quick learning are encouraged.
Casey Winters, an experienced product manager, warns that many product managers in today's startup environment lack the ability to creatively solve problems and make decisions under uncertainty. He argues that the current zero interest rate phenomenon has allowed companies to operate like public companies with billions of dollars, resulting in an abundance of engineers, research teams, and analysts. However, Winters predicts that this resource-rich environment will soon change, requiring product managers to rely more on their own abilities to make quick and creative decisions. His advice to product managers is to focus on companies where they can learn quickly and experiment, rather than just following established frameworks.
Balancing Research, Shipping, and Feedback for Business Growth: Successful businesses need to balance strategic research with shipping and customer feedback to improve as designers and create impact for customers and the business.
To add value to customers, businesses need to focus on shipping products and getting feedback from users. Research is important, but it should be used strategically in high-leverage areas where problems are big or not well-defined, and solutions aren't sure to hit the mark. In consumer products, the focus should be on trying things and measuring the impact, while in enterprise products, talking directly with customers and knowing what they're willing to pay for is important. The key is to balance research with shipping and feedback to improve as a designer and have an impact on customers and the business.
The Pitfalls of Scripted Interviews for Project Managers: When hiring project managers, it is important to assess their ability to problem-solve quickly and make good decisions for the company and customers. Avoid relying too heavily on scripted interviews and be wary of using AI in the current product management cycle.
Casey Winters, a product leader, suggests that interviewing for project managers has become too scripted and performative, with candidates being selected based on prepared responses rather than assessing their ability to do the job. He takes a contrarian approach and provides real scenarios for candidates to work through, rather than asking about their work history. He focuses on their ability to come up with reasonable ideas quickly and their willingness to test those ideas without analyst support. Winters believes that the role of product manager is the least likely to be replaced by AI because it requires subject matter expertise and the ability to make good decisions for the company and customers. However, he cautions against using AI as a tool in the current iteration of the product management cycle.
Using GPT-4 as a PM Tool and the Importance of Founder Intuition and Team Leadership: GPT-4 can help with PM tasks but use with caution. Founders should trust their intuition and maintain control until the team can make better decisions. Understand situational leadership and adjust accordingly.
GPT-4 can be a valuable tool for PMs for tedious tasks like formatting, modeling, and Zapier integration. However, it's important to be aware that it may not always provide accurate information, and PMs should have a low-risk approach when using it. In terms of the founder intuition versus team expertise debate, founders should not give up control too quickly, even when hiring experienced senior leaders. Founders have developed an intuition about their customers and business that is hard to explain or even subconscious, and they should continue to direct their team until they can make better decisions than the founder would. It's important to understand where each team member fits in the situational leadership framework and adjust accordingly.
How Founders Can Ensure Company Growth Through Effective Delegation: Founders need to trust and empower their employees as the company grows. Employees have valuable expertise that can surpass the founder's, and knowing when to delegate tasks is crucial to prevent bottlenecks and promote company growth.
Founders should recognize and delegate to their employees' expertise as their company scales. Team expertise can surpass that of the founder's, and it's important for employees to proactively signal when they need direction or can take on a task confidently. As a startup grows, founder intuition may ebb in effectiveness over time due to a breadth of responsibilities, while employees can dive deep into certain areas. A chart outlining the different phases of a startup highlights the importance of founders recognizing when product-market fit has been achieved and shifting from iterating to scaling. Failure to delegate effectively can cause bottlenecks and slow down company growth.
Dealing with a Founder Who's Set in Their Ways: Respect the founder's vision but don't hesitate to present your ideas with a strong case. Understand the CEO's preferred feedback and trust in their vision, even if it may seem suboptimal.
As an employee at a company with a founder who is set in their ways, it's important to remember that it's their company and their vision. However, if you disagree with their approach or ideas, it's important to build a strong case and find ways to be contrarian and prove your point. Different founders respond to different forms of feedback, so it's important to figure out what influences the CEO and build your case around that. Sometimes, founders want to do things suboptimally or focus on building cool things rather than what customers want. However, it's important to trust in their vision and know that sometimes they may be right, as was the case with Grubhub's delivery driver app which ended up being necessary in the long run.
Leveraging Restaurant Authority for Network Effects: Businesses can use restaurant authority to drive adoption of their products, leading to network effects that improve the product for existing users and entice more customers to join. Network effects can be direct, cross-side, or data-driven.
Casey Winters discusses how some businesses leverage restaurant authority to push their products to drivers for adoption. This network effect eventually leads to more users making a product better, and in turn, that leads to more customers joining the platform. Network effects come in three types: direct network effects, cross-side network effects, and data network effects. Direct network effects are when every addition of a user makes the product better for existing users. Cross-side network effects involve two distinct types of users, and the additional user on one side of the network makes it more valuable for all the types of users on the other side. Data network effects occur when quality or cost improves as more data is collected through the product.
Lessons from Grubhub's Defeat: The Power and Limitations of Network Effects in Marketplaces: Network effects can provide a strong competitive advantage, but being complacent and failing to innovate can lead to loss of market share and profitability in marketplaces. Comprehensive inventory alone may not be sufficient, as competitors with expanded selection and delivery networks can disrupt even established players.
Network effects are a powerful form of defensibility, but they're not immune to disruption. Grubhub, an asset-light marketplace model, was disrupted by DoorDash, Postmates, and Uber Eats because they expanded selection, built delivery networks, and took delivery management responsibilities away from restaurants. Grubhub's high-margin business model was no match for these heavily managed negative-margin delivery services that raised millions from private markets. It is essential to be comprehensive or have exclusive inventory in a supply strategy for marketplaces. Grubhub focused on being comprehensive, but competitors dramatically expanded selection and attracted more users. The lesson here is that being complacent and failing to innovate can lead to loss of market share and profitability.
Grubhub's Struggles in the Face of Competition and Pandemic: To survive during existential threats, businesses should take calculated risks, not underestimate disruptors and be open to acquisitions to stay ahead of competitors.
The rise of delivery services like DoorDash and the pandemic caused Grubhub's negative margins to turn positive for the first time. Grubhub attempted to copy the strategies of its competitors but struggled to compete due to the operational heavy nature of delivery networks, and the risk associated with disrupting investors. Casey Winters suggests the only possible play for Grubhub was to buy out DoorDash as early as possible. Don't underestimate the disruptor in the market and be willing to take risks to stay ahead of the competition, especially during existential threats.
Winning Strategies for Startups to Compete with DoorDash and Uber: Startups can thrive in the food delivery market by creating new supplies, offering engaging experiences, and competing in the pickup use-case. Developing white-label models has its challenges but can lead to multi-million dollar revenue businesses.
To compete with companies like DoorDash and Uber, new startups will need to adopt different strategies as the earlier approach of spending huge amounts of money is no longer viable. Instead, startups can focus on creating new supplies in the market or providing cheaper or more engaging consumer experiences. Additionally, there is a potential opportunity to compete in the pickup use-case, which is an area where DoorDash has struggled to expand. While some startups are developing white-label delivery models, they often struggle to build network effects on the demand side and can face challenges in growing multi-million dollar revenue businesses.
Building a Successful Marketplace with or Without a SaaS Tool: Start with building the marketplace for easier access to cross-side network effects. Later, adding a SaaS tool can enhance functionality but building a marketplace on top of a SaaS tool can be risky and difficult to replicate.
When it comes to building a marketplace, it's generally better to start with the marketplace before adding a SaaS tool. Marketplaces are inherently difficult to build, and starting with the marketplace allows for easier access to cross-side network effects that drive growth. Adding a SaaS tool later can enhance the marketplace's functionality, but trying to build a marketplace on top of a SaaS tool can take a long time to de-risk and may not be replicable for other businesses. Businesses like Eventbrite are currently undergoing this transition, but it requires a direct relationship with the customer's customer and building entirely new skillsets. In contrast, businesses like Faire have successfully added a SaaS tool to enhance their existing marketplace.
Building a Successful Marketplace Business: Focus on Supply and Demand: To create a successful marketplace, have a strong value proposition for suppliers that brings in business, and provide a reason for customers to transact with multiple suppliers. Learn from successful examples like Substack.
To create a successful marketplace business, there are two key elements: a subset of SaaS businesses that offer selection and standardization, and the ability to drive demand through supply. The primary value proposition for suppliers is the promise of bringing extra business, not just a tool or payment system. Marketplaces need to provide a reason for customers to transact with more than one supplier to increase discovery and network effects. The Substack platform is an example of a successful marketplace that abstracted the problem of finding more emails to subscribe to and focused on delivering more relevant articles to readers. While the marketplace model may not work for all businesses, Substack has achieved a wild network effect and increased their user base through recommendations.
Challenges and Success Factors for Consumer Subscription Startups: Consumer subscription startups face difficulty due to unpredictable consumer behavior and retention rates, requiring high retention rates for sustainability. Successful businesses achieve scale through economies of scale, network effects, or bespoke growth loops instead of relying on paid acquisition.
Consumer subscription startups are difficult to build into thriving businesses due to the unpredictable nature of consumer behavior and retention rates. Unlike B2B SaaS companies, which have more predictable revenue streams and net dollar retention, consumer subscription companies require higher user-based retention rates, ideally north of 60-70%. This is because customers tend to retain worse than businesses, and their spending habits do not typically increase over time. Successful consumer subscription businesses like Netflix, Amazon Prime, and Spotify have achieved scale through economies of scale, network effects, or bespoke growth loops. Paid acquisition is not a sustainable path for growth, as retention rates tend to decrease as companies expand their customer base.
The Importance of Network Effects and Alternative Monetization Strategies for B2C Subscription Founders: B2C subscription founders should focus on organic growth loops and supply-side referrals to improve retention rates. They should also consider alternative monetization strategies and stay small in the early stages to determine what works best. Recommended books for entrepreneurs include The Goal, Thinking, Fast and Slow, and Profit from the Core.
For B2C subscription founders, relying solely on paid acquisition and freemium models to achieve long-term retention is risky and unsustainable. Network effects, or building organic growth loops and supply-side referrals, can allow your product to improve faster than your target customers decline, leading to better retention rates. It's also important to consider alternative monetization strategies and to stay small and scrappy in the early stages to figure out what works. Recommended books for entrepreneurs include The Goal by Eliyahu Goldratt, Thinking, Fast and Slow by Danny Kahneman, and Profit from the Core by Chris Zook.
Key Elements for Successful Cross-Functional Teams: Assigning a driver for cross-functional teams and aligning everyone towards the same objectives are crucial for success. Team members should accept the driver's decisions, learn from them, and improve for future projects. Also, diversify your leisure time by watching Party Down, reading Station Eleven, playing The Last of Us, and listening to Kelela's and De La Soul's music.
Casey Winters, a product leader, recommends cross-functional teams and alignment as crucial for success. He stresses the designation of a person leading the project in a cross-functional team to get everyone aligned for the same OKRs. This person is the driver or the directly responsible individual, and their decision should be abided by team members. If their decision doesn't work later, the team can learn and improve for the future. He also recommends watching Party Down, reading Station Eleven, playing The Last of Us, and listening to Kelela's recent album, Raven, and De La Soul's Stakes Is High.
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