Product Management Webinar: Language of Money

[00:00:00] Janna Bastow: Welcome everybody. This is the product expert fireside series that we run here at ProdPad. We’ve been running them monthly for several years now. And today we are joined by Rich Mironov and we’re going to be talking about mastering the language of money, bridging the gap between product and executives, and talking about the tough subject of money, today is recorded and you are going to get a copy of this that you’re going to be able to share around with people. So feel free to grab a copy of this afterward and share it with your colleagues. All of these have been recorded in the past. There’s a mixture of presentations as well as firesides. But it’s always with a focus on these amazing experts that we bring in and a focus on the content and the learning and the sharing, people bringing in their experiences and talking us through how they deal with real-world product management experiences.

So as I said, today is going to be recorded and shared with you, and you will get a chance to ask questions. So make use of that Q&A section to drop your questions in as we go. Before I do a full intro to Rich, I just want to tell you a little bit about ProdPad. Some of you might already be ProdPad users.

Say hello and say what you love about ProdPad in the chat, if you are. If you don’t know about ProdPad, let me just tell you a bit about it. ProdPad was a tool that myself and my co-founder Simon built when we were product managers ourselves. It was something that we built because we needed something to help keep track of our own product management jobs, right?

We needed something to keep track of the ideas and feedback and all the experiments and all the stuff that we’re trying to bring towards the right outcomes and nothing existed. So we built it. And so using ProdPad, we realized was giving us control and organization and transparency into this product management system.

And basically, it created the single source of truth for our product decisions and helped clue people in as to why we were building this stuff. And now it’s being used by thousands of teams around the world. So it’s a tool that you can try completely for free. We’ve got a free trial. You can jump in and we even have a sandbox mode where you can jump in and see how lean roadmaps, OKRs feedback ideas, experiments, how it all fits together in a product management space, so you can get a sense as to how it’s going to work for you.

And our team is made up of product people. So it was founded by product people. We’ve got product people throughout the company to help support it and make sure you get everything on board and good to go. So jump in and give it a try and let us know what you think. We’d love to get your feedback. And on that note, we’re constantly shipping and creating new stuff for ProdPad.

We do releases every week. A lot of you who have been following along with the product patch story recently might be seeing some of these new things that we’ve been pushing out on the AI side. We’ve been really removing a lot of the grunt work around your product management job. So it started off with.

Let’s see if we could just help you take the gist of your idea. Those post-it notes you’ve got stuck to your monitor. Can we take that and help you generate the rest of the idea and help you ask questions like what problem does it solve and what risks and challenges might you run into? Can we help you turn your, turn it into user stories?

Can we help you generate user key results? But also we wanted to use it to help you get feedback on your vision. This vision that you’ve put together, is this actually any good? And also, use it to understand whether you’ve got alignment. So these ideas that you’re coming up with, are these aligned with your vision?

Are you going in the right direction? And most recently, we’ve launched a bot that you can actually talk to and ask questions like, Hey, is this actually on our roadmap? Can you summarize that feedback from those last customers? Can you tell us if we’ve heard this before or if these things are connected?

And it will take a look at what’s in your ProdPad backlog and give you this type of insight. It’s really powerful. It’s all in beta right now, so you can jump in and start trying it out. We’d love to get your feedback on that.

So on that note, I’d love to go ahead and introduce you to Rich because he’s the main event today. Now I know Rich, we’ve been bumping shoulders for well over a decade now. 

[00:04:18] Rich Mironov: Maybe two decades. 

[00:04:20] Janna Bastow: Something like that, yeah. Rich and I go back quite some time because you might know that myself and Simon, the founders of ProdPad, were also founders of ProdPad.

Product Camp London, which was a spinoff of something that Rich started originally in Silicon Valley. He was one of the people that we lent upon for advice on that and have just generally been in the product circles with looking up to as a seasoned product person who’s been there and has been gathering product people and learning from them for years.

And he’s somebody that I’ve learned from. So really great to have a chance to bring Rich in on this show. He, today he coaches product executives and product management teams and lots of software orgs. He’s parachuted dozens of times into software companies as interim VP of products and CPO.

He’s also a serial entrepreneur and, an author as well. So I would love to hand it over to Rich and say a big thank you for joining. And a big welcome to Rich. 

[00:05:25] Rich Mironov: Great. I’m thrilled to be here. Thanks so much, Janna, for letting me join. 

[00:05:31] Janna Bastow: Of course. Yeah. Thanks for being here.

And tell me tell us I know your background, tell the others here about your background. What have I missed from that, that sure to know you? 

[00:05:41] Rich Mironov: Probably useful to know that, almost everybody who discovers product management thinks it’s new. I Had my first product job in 1988.

Okay. So if you count on your fingers, that’s 35 years of product management, product leadership, and doing product stuff. It’s not new, new tools, new languages, new frameworks, new templates, whatever canvases, but some of us have been doing this for a really long time out of Silicon Valley.

Starting there and then six startups of which four we file under. Yeah. Character building and good life lessons, because that’s really the only good things that came out of it other than meeting investors who were disappointed later on. And hung out my shingle 2001. So I’ve been doing an independent set of work, coaching, and interim CPO working with investors for more than 20 years now.

I guess that puts me in the OG category. 

[00:06:33] Janna Bastow: It does. And it comes with such a wealth of experience. So glad that you’re sharing that. And you’ve also had the ability to work at different levels as well. I know a lot of people who haven’t had that wealth of experience and don’t get the chance to work with execs or don’t get the chance to work at the board level.

Can you tell us about your experience working being brought in at that top level and how that what what a lot of other product people experience? 

[00:06:58] Rich Mironov: Yeah. And worth saying I’m mostly a B2B enterprise guy. So while I parachute into a small number of B2C organizations, my experience is mostly with folks who are selling small numbers of really big deals.

Which completely changes the whole psychology of things from selling millions of people, small amounts of something or small value items. Yeah, 

[00:07:21] Janna Bastow: I think, as I love B2B, that’s my space. And I know you’ve got a lot of B2B fellow aficionados in the channel here as 

[00:07:28] Rich Mironov: well.

Indeed. Yeah. Again, all my startups were B2B. I did, I think 15 interim CPO or VP product jobs. Mostly the thing that’s interesting about that is. That’s a call nobody wants to make. So no one calls me because products running well, or everybody’s happy or there’s low staff turnover on the product and engineering team or designers feel empowered or they’re hitting their numbers.

So pretty much every time I’m doing that. It’s a bit of a dumpster fire. It’s a discovery process of what’s broken and what’s not working at the company. And it’s really at the executive level. My observation is no matter how good you are as an individual product manager, you can’t fix what’s broken in the larger company if it’s really bad.

So for instance, if the sales comp plan is encouraging folks to sell the wrong thing. Which it often is, we can scream and shout and stamp our feet and hold signs out in front and picket and whatever else we’re going to do. The salespeople are going to do what we pay them to do, not what we want them to do.

And, likewise, if you’ve got most of the board or most of the execs are out of. Hardware companies where the thing you focus on every day is the marginal, the per unit margin, and the marginal cost of producing one more unit, right? We’re making cars and the key thing is how much it cost to buy the steel and the rubber and the glass.

And if we could reduce the cost of materials per car, we’d make more money. Try to apply that sentence to software. It makes zero sense. Cause in the software business it’s a fixed cost variable revenue model. If we can sell one more copy of our bits, we get to keep almost a hundred percent of it, less, whatever we pay in commission.

Often what I end up working with is boards and exec teams that really don’t understand the software business and honestly, aren’t that interested in the minutia, the, how’s the food being made in the kitchen kind of thing. They’re very focused on current-quarter revenue. Everything we’re going to talk about, I think, in the next bit is how do we understand those folks.

How do we see where they’re coming from and what’s important to them? Because as product folks, our messages and our communications have to match our audience. And we know that of course, when we’re shipping products out to people outside our company we have to talk in their language. We have to talk about value.

We have to explain why it’s good. They don’t really care how many engineers we have or how hard they work. But often we forget that whole line of thought when we’re dealing with sales and marketing and particularly customer success or consulting groups internally. And 

[00:10:08] Janna Bastow: you made a really good point there.

We have to understand these folks. And, I always see the different stakeholders around us as, stakeholders, not unlike customers, and we’re really good at understanding customers. How do we go about understanding our executives pulling out information there? 

[00:10:24] Rich Mironov: Yeah I think that’s exactly right.

It’s really important. And I usually start by going back and remembering what each of those functional groups is rewarded for. How are they measured for success? I think the idea that some company has a strategy and we’re all going to understand it and we’re going to align every department with that is.

Basically, fundamentally flawed, right? So if we’re in marketing and the way we get our bonuses and promotions is by the number of qualified leads that get passed to sales. We’re really not interested in much else. So it’s events and outreach and, social media. If we’re on the sales side, it’s very clear.

When I look at the comp plan, I know just what the sales team is going to do and product managers lecturing them for hours on end about what the ideal customer should be. When in fact, they’ve got a customer who can fog a mirror has a budget and for some reason is interested in our product.

That was a wasted few hours, right? Salespeople are paid to close, right? So that’s why they get the coffee and 3rd prize is, you’re fired. So really understanding what the motivators in the day-to-day are. For finance for operations, we go around the executive table, meet the folks, talk to them, and see what matters to them.

And in the enterprise space, it’s usually pretty uniform, but going to vary by company. And before I can pitch somebody on why we’re doing the thing we’re doing, and they’re not going to get the thing they asked for instead, because the roadmap is full. I really have to understand what they do and how they’re paid and rewarded.

Yeah. It should seem obvious, but somehow we don’t do it. 

[00:12:00] Janna Bastow: Yeah. It often feels like the sales team is pitted against the product team. Like they’ve been given an incentive almost intentionally that’s different than the product team’s incentive. Why is that? Or how does that disconnect happen? 

[00:12:14] Rich Mironov: I see that as the general case, by the way, not the exception.

So if you’re an enterprise sales let’s talk about what you do in enterprise sales. First of all, you have a very small number of accounts, right? You’ve got 4 million dollar accounts, 2 of which might close this year. By the way, if you don’t close them, you’re fired. The idea that the salespeople are going to think about the larger market is fundamentally wrong.

And so they are going to be pushing us every single day to say yes to whatever the most recent request is that came from their two accounts that might close this year. There’s no sense of market, right? And the other one, the other part of it is their timelines are much shorter than ours, right?

If this is a deal that needs to close this quarter, all of our discussions about why next year is going to be better and how we’re going to have scalability in 2025, and this is going to appeal to a large audience don’t matter. Because that customer asked for three things, two of which make no sense.

One of which is technically incorrect, and we could fix it if we have the time, but their job is just, is to say yes to those requests. So we can close the deal. And generally what I find is that all of the product management discussion for them sounds like excuses, right? Two, two sort of medical issues here.

One, I call roadmap amnesia. Dunno if you’ve heard of this. Yeah. 

[00:13:38] Janna Bastow: Roadmap amnesia. You talked about this just briefly, and you say that you are around this. Could you tell us? Yeah. So what do you mean by roadmap? 

[00:13:43] Rich Mironov: Amnesia? Yeah, so the approximate cause of roadmap, amnesia on the sales side is any call from any big customer who wants a thing that’s not on the roadmap.

Okay. And what happens is as a salesperson who desperately needs to close this deal, or I don’t get paid, I don’t get to upgrade my Tesla and add another room to my house and, re-equip my yacht. I need to find a way to say yes to that. And when I talk to the product management folks, they always tell me that the roadmap is full, which by the way, it is always.

And that my thing’s not on it and they explained to me why I can’t have what I need to close this deal. Not very useful from the sales point of view. The other thing that happens is even though somebody, maybe the head of product has reviewed the road map with me every Tuesday at our Tuesday staff meeting every week for the last year.

As soon as a new thing arrives in my head on my phone in my Zoom from an important customer who tells me they need it. I forget. Yeah. Everything that was on the road map because this is what I need and so I’m approaching the product engineering and executive team with the idea that this is really important to me and therefore to the company and there must be room for it because it’s important to me and therefore to the company and it can’t be that hard.

Because the customer told me it wasn’t that hard. It’s probably only 10 lines of code and I bet we can have it by Friday. And so what I find is that the ability to retain roadmaps on the sales side is near zero because it doesn’t help them in their jobs. And the belief that there must be capacity after all the engineers are just sitting around eating bonbons and playing fortnight.

I walked through engineering and they weren’t typing. So they weren’t working. This is really important to me. Therefore, there must be capacity. It must be the highest priority. I’ll escalate it to the CEO. That’s the behavior that in fact, we’re rewarding. And motivating the side of enterprise salespeople so there’s no surprise there for me on every 1 of those meetings we have to restart the meeting by showing the road map again explaining the top 3 things on the road map and the rest of the subject for this session why those 3 things are going to make the company an awful lot more money than whatever deal just popped in.

On a phone call from JP Morgan Chase they told us if we could have teleportation by Friday, they would write us a check for 2M bucks. Exactly. That dynamic is 1 that I see not everywhere but in most enterprise software companies. 

[00:16:20] Janna Bastow: And so how do product managers regain their footing in these conversations?

They often just get absolutely trampled over when somebody says, Hey this deal is going to be worth this much. And they don’t really have any way to negate that because they don’t know that the deal is, or isn’t that much, they also have. 10 other features that are due by Friday or by some really close due dates that are impossible and can’t be done.

That’s right. Or 100 put their foot down somewhere and say, that’s right. We can only do 3 of these 10 things. That’s right. They communicate that without looking like the product manager who always says no. 

[00:17:00] Rich Mironov: In fact, we often look like the product managers who always say no. And that is part of the job. But so if I can take the side trip and back to the main topic here, which is talking about money.

Okay. Yeah, great. So my observation is, if I, as the head of product or anyone on the product team talk to the rest of the executive suite, particularly the go-to market side, sales, marketing, finance, and whatever customer support or customer consulting is, right? Nothing we say is of interest to them at all, unless it includes a currency symbol.

I sometimes I call it the reverse dog whistle effect. Okay. Dog whistle, the dog hears it. You don’t hear it. The reverse dog whistle effect is I spend 10 minutes explaining why you can’t have what you want, but no one is listening until we talk about money. So if we back into, let’s just imagine there are 3 big go-to-market things on a roadmap, right?

The big refresh of our product from version 11 to version 12 and GDPR and some other things. And I say this is really important. We’ve agreed. It’s the strategy. It’s at the top of the list. We have to get version 12 out. No, one’s listening. Until I connect the dots here, and so there’s usually a 3 step connection here.

First. I say we’re working on version 12, even working on it for a year. It’s the strategy. We’ve agreed in all the meetings and everybody nods, but nobody’s listening. We have to then connect that in 2 steps. 1 is why is this going to help the business? Is it gonna drive upsell? Is it gonna drive new customers in our segment?

Is it gonna drive new open segments? Is it gonna remove a huge cost factor, right? There’s some fundamental business reason. Notice it’s not a technical reason, a business reason why the folks around the table should care. And then I have to attach a vague number to it. I call this exercise counting the digits.

I’ll tell you why in a sec. But for instance, I have to say, look, moving from version 11 to version 12 will drive a bunch of upsell in our current installed base by our guess is that 10 or 20 percent of all of our current customers are going to trade up from the basic product. To the intermediate product, which costs them, which gets us another thousand pounds a year.

And if we do the math here and I’ll show it to you in a sec. If we have 10, 000 customers and we think 10 percent are going to upgrade, that’s a thousand of them. And we think that’s worth a thousand pounds a year and we multiply that’s a million pounds a year. And suddenly there’s a number on the table everybody sits up and remembers why we’ve been investing in version twelve for the last year because it’s a million now is it a million not really maybe a half a million three million whatever but notice that if there’s a deal on the table it’s worth two hundred and fifty thousand.

Or 25, 000 or nothing. Everyone in the room can figure out that a million is bigger than 250, 000. So now we’re talking about the trade offs, the language of business of money where I can say we could certainly delay our whole version 12 upgrade thing for a year. No problem. Raise your hand.

If you. Are willing to give that 1, 000, 000 pounds up or the 1, 000, 000 euros conversation right now. Now we have people who care about the outcome. They care about taking something off the road map. They care about all the promises we made and announced in public and talked to our customer advisory board and put in a press release about the things that are coming in version 12 and they’re going to be embarrassed.

And some of them are going to lose their jobs. Okay. Now I’m listening. And so it raises the bar from, I have a deal. I’m going to invent in my own head that it’s worth a lot of money and I’m going to beat on an individual product manager because it’s important to me. And there’s no sense of scale here.

So we have to come back and we have to be prepared to look at the top three or four things in the roadmap and say, that one’s worth it. 5 to 20 million euros. So if you guys vote me off the island and decide cancel it, that’s fine. But nobody gets to retire to Fiji for an extra year. Yeah. The language of money, their language, right?

[00:21:16] Janna Bastow: That’s right. That’s right. And you can all communicate at the same level. 

[00:21:19] Rich Mironov: That’s right. And of course caveats here. I usually expect to find about half of all the work that product and engineering and designer doing. Yeah. Don’t generate direct money because they’re keeping us in business and they’re dealing with scalability and security and ease of use and all the other things that we do.

So roughly half of the engineering and R and D budget. We’re not going to talk about because we can’t defend next year’s scalability against this year’s. Whatever, but for the half that that we’re going to talk about, we’re going to announce, we’re going to show to the world, we’re going to proudly beat our chests about, we’re going to have a lot of press releases on.

We should be able to talk about those top three or four or five things in money terms. And yes, of course, they’re wrong and the error bars are five X, but, I call it count the digits. Is it a six digit idea? That’s hundreds of thousands of something. Is it a seven digit idea? That’s millions of something.

Is it a nine digit idea? It’s hundreds of millions of dollars. Cause if it is, let’s not cancel it for some deal, down in some obscure place. That’s worth 10, 000. 

[00:22:25] Janna Bastow: Yeah. Now you said that we were going to get into the the more detailed math. 

[00:22:29] Rich Mironov: Oh yeah. I actually wanted to share just a one slide bill because I find the talking about money and talk about numbers without looking at it.

It’s really hard. Yeah. So let’s find this thing. This is a slide I use it in all of my chief product officer, VP training again, count the digits. I don’t care if it’s 150, 000. Cool. Or 190,000 or 220,006 digits, right? So when there’s a new idea or we’re defending the thing we’re doing, or somebody’s got a brilliant idea, here’s a count the digits, we have some, you have some idea of something that you think is gonna drive upsell, right?

If we added, AI assisted calendaring to our ERP product, whatever that meant, everybody’s gonna want to trade up from the basic product that has it to the advanced product. That they charge more for. Okay, so let’s just imagine the numbers. We don’t have to be right. How many customers do we have?

And what’s our wild guess for how many of them might trade up based on this thing? And what’s the revenue difference? I usually restrict this to no more than 3 numbers because nobody else at the table. Can keep more than three numbers in their head, right? And somebody could do the math here, but 50, 000 times 1 percent is about 500 times a thousand pounds years, about 500, 000 pounds.

So this is a high six to low seven figure opportunity. Blah, blah, blah. And we can compare it to some other revenue suggestions. Cause we get those all day long, right? Everyone in the company has a suggestion for something we should do that will generate money. And if you can guess that it’s a 4 digit answer instead of a 9 digit answer, you can politely say, I love you.

I love your idea. That’s a wonderful idea. We’re not doing it. Because here are the 3 things on the roadmap that you forgot that are bigger than this, right? Likewise, if we were going to save a bunch of money in the support channel, right? If we’re going to reduce support costs, how many tickets a week do we get on this problem?

And what portion of those do we think we can eliminate if we fix this bug or make this UI change? And what does it cost us to staff our support team to do 1 more ticket, right? Again, the numbers aren’t important. What’s important is no more than 3 of them. We’re going to multiply them together.

We’re going to get a number in the low 5 digits here, as we always do with support stuff, right? And when faced with this versus some 15 other ideas for how to improve support and make them happier and reduce costs, we can sort the 6 digit ideas above the 3 digit ideas and only have the fist fight about the top 3 my thought here is you can eliminate the bottom 90 percent of all the requests that come in with four minutes of math or three minutes of math, because they’re orders and orders of magnitude smaller than what we’re doing. So just to finish out the thought, it’s of course, not accurate. It doesn’t have to be accurate, but it helps us compare similar things of the 9200 tickets we got about how to improve support.

Can we. Pick 20 of them, do some math and then pick the three that are likely to be useful, right? Notice we’re connecting the work with the goal upsell or support costs or whatever with some vague numbers. So let me turn that off and shut up and let you get a breath in. No, I 

[00:25:48] Janna Bastow: love that.

All right. That’s really useful. Thanks for sharing that. So what reactions do the execs seem to get when they’re faced with a product team? It comes to them quantifying their work and that sort of way. 

[00:26:00] Rich Mironov: Yeah. And we’re never perfect at it by the way. And there, and some executive teams decide that they’re going to put on their accounting hats and green eye shades, and they’re going to, they’re going to want to spend 45 hours.

Disassembling this and that’s a loss, right? We’re never going to be accurate enough to satisfy the finance folks who believe you can predict next year’s revenue to 11 digits, right? Because you can get onto Excel and just put more digits in. But it really it reframes the discussion from.

Engineering should be more productive and get more stuff done because I need it. I’ve never met an engineering team that was sitting around and had excess capacity. If we’re going to do a new thing, by the way, every executive team hates it. When I say, if we’re going to do a new thing, we have to take something else out.

There is no slack. There is no white space. There is no people sitting around. There’s no engineering team hiding in my pocket. So now we get to talk about strategy. Is this going to serve our broad set of customers? Not just the one you suggested. Yeah. Easier, hard, maybe but it really focuses it down to instead of the one sales rep, who’s imagining a huge deal.

It’s a 50, 000 deal, but we’re hearing that it’s a 5 million deal. Yeah, it eliminates that. The other thing it does is it pushes a lot of pressure up into the rest of the executive team. There, there’s a thing I did years ago. We called the magic bullet. Okay. So I was at a startup 70 person startup and I made a deal with the VP of sales who I’m still friends with.

Shockingly, 20 years later, and I gave him a little token. Now it was the U. S. So it turned out to be a used shell casing because we have those here. And I said, Stuart, this is your magic bullet and it’s worth 1 engineer week for anything you want this quarter. But here’s the rules. When any of your folks want something that’s not on the roadmap, they’re going to go to you and ask for it.

Not to me, which was a huge win for me. And you can only use this token once a quarter. And when you come to me and tell me to use it, I’m going to take it out of your hand and lock it in my desk. Great. Yeah. And the 1st time we did this, of course, then early in the 2nd week, the quarter, he came over, he gave me the little token.

We agreed on a 1 week piece of engineering. And for the other 11 weeks of the quarter, people came to him with bigger deals that might have wanted that one week of engineering. And I said, no. And what that let us do was suddenly he had an incentive instead of just to beat on me. To actually look at the deals in the pipeline and decide which one was going to get the magic bullet because he got paid.

All VPs of sales get paid on total revenue. Not on individual deals, we’re back to metrics and reward systems. And if he’s paid on the total revenue for the company, he’s got a lot of incentive for him to ask the hard questions. How likely is the deal? How big is the deal? I’m on the pipeline call every week.

And when you told me last week, it was a 20, 000 deal. Suddenly you’re telling me it’s a 2 million deal. I’m confused, right? Product folks never want to have to unpack deals. We’ll just get lied to. And so we moved a little bit of the incentive about interrupts and changes back to the sales team by limiting their supply and forcing one person on the, at the top of that pyramid to have to make the call.

And so for the rest of the quarter, every time some salesperson came to me and said, I need, I want, I need, I want, it’s really important, right? I’m the most important person in the universe. I got to say if you can convince your boss that all those things are true. Then I’m all yours, right? So we’re working to align the real incentives.

Instead of the imaginary ones that all the McKinsey’s the world talk about. 

[00:29:40] Janna Bastow: I absolutely love that story. And it actually reminds me of really early days when I was still hashing out prod pad as some sketches in the very first early versions, that salesperson to, it wasn’t such a big company.

It was just an individual salesperson against an individual product person. The salesperson would come back. With this grin on his face every week with some new feature that he’d sold. And I had, of course, and I was at my wits end. What I had, I started realizing what he couldn’t see where my backlog was.

It was all scurried away in the Jira of the day. And. Every time he came to me and said he needed something, I would try to figure out how it might work, but it hit a limit. And so I started externalizing it, and the first version, I guess you could say, of the ProdPad backlog was my post it that I put on a wall that he could see.

And so if he came over saying, I absolutely need this thing, it has to be done, I’d sit with him and say, great, let’s put it on a post it note together. Cool. Let’s write it down. Number one thing to be done. Is it number one? Then help me these things down. Are you going to help me move all the other post it notes down?

And you can see this visceral reaction where he had to move last week’s right down. And then you go, no, not that one. That one’s still more important. Oh, that’s good to know. And not that one. That one’s still more important. Okay. So it’s third, most important. 

[00:31:01] Rich Mironov: Cool. Until next week. Yeah. That, 

[00:31:04] Janna Bastow: that other one, it has moved forward, but these other ones are still waiting behind because as you can see, the developers are busy now, they were, twirling in their chairs because they were compiling.

They never do look like they’re working, we never did have free leeway, but it helped externalize and make the product system more transparent. And, that’s right. Putting a little bit more power to them so they could see how their decisions or how their requests were impacting 

[00:31:28] Rich Mironov: product.

Sure. And I love that. Again it’s the same model, which is we have to force scarcity. We have to drive hard decisions for people who don’t want to make those hard decisions, right? If you’re in, if you’re in the sales side, you believe, I don’t know Dunning Kruger effect, right? The less I know about somebody else’s job, the easier their job is, right?

So it’s true. So engineers believe that selling is easy, right? Yeah. What salespeople do in the engineer’s mind is they print out the price list they have a meeting with the customer they give the customer a writing implement and that person circles the thing they want to buy and they sign at the bottom that sales from an engineering point of view from a sales point of view engineering is trivial.

I write down on the post note what I need and I give it to the engineers and they coded up and I have it by end of day right and what that creates is this fictional idea if I’m on the sales side that there must be infinite capacity. Because it’s important, right? And I don’t have to remember what’s in plan because once I’ve closed the deal, it’s out of my brain, right?

The fact that there’s seven years of engineering for a team of 1000 that I committed us to is out of my brain because I got paid. Yeah. So we have to keep coming back. The other thing I observe and, in, in the modern world of product management apps, almost everybody has a way to externalize the roadmap and send a link with a PDF to the sales team.

In my experience, at least in the enterprise space, I’ve never seen a salesperson click that link. Oh, okay. We as product folks keep sending it out. Okay. Just imagine if you launched a new feature for your product. It was all instrumented and you discovered that none of your users were ever using that new feature, right?

But somehow we have this belief that because the roadmap is important to us and we know what’s on it. And by the way, it’s all code words and language. They don’t understand. That the salespeople are going to click on the link, see the roadmap, understand the roadmap, remember our conversation, and then quiet themselves to not ask for anything because they see they’re not going to get it.

That’s a logical chain I’ve almost never seen happen in the real world. They’re instead going to phone up me or somebody on my team. As they always do, because their time is more valuable than ours. Just ask them, right? And they’re going to tell us that they’re going to tell us what they need, and they’re going to forward us the note.

And we’re going to have to come back again from Roadmap Amnesia and talk about once again, what those 3 things were that we talked about on Tuesday and Friday and a week ago, Saturday, right? And have the discussion again, because their incentives and their whole engagement with the world. Okay. Is that they’re on the deal they’re on until they’re on the next deal.

And they don’t have to remember what’s closed. 

[00:34:19] Janna Bastow: At least it’s good to know that we’re always going to be needed. 

[00:34:22] Rich Mironov: Not appreciated, but needed 

[00:34:24] Janna Bastow: Exactly. Yeah. Somebody had a great question here. I remember to ask. We were talking earlier about how there’s always this misalignment and you said in most companies you see this misalignment between sales and product.

Have you worked in environments or have you seen environments where the incentives are better aligned with product teams? Are there alternative approaches? 

[00:34:43] Rich Mironov: I Think of this not so much as. Incentive models as company structures. So if you’re in the B2C world, so where I’m doing a music streaming service, and I’m going to have 25 million users and they’re going to pay me nine euros a month. There’s no one consumer of my streaming service who is so important that they have, that the CEO has their phone number. And when they call the CEO takes the call. So in the B2C space, I see in general at the company level, it’s much easier to align goals in the B2B world as you get larger deals with smaller numbers of them.

So just imagine you’re going to have, you’re going to close 8 or 9 big deals this quarter. They’re worth 1 to 5 million a piece. The board of directors knows the names of every single one of those deals. In fact, they’ve helped broker meetings with champions at those companies, right? And if you miss two of those deals, if you don’t close them, we have to fire people, right?

And that’s this quarter, right? In the face of that kind of pressure, I see, okay, ours fall away. I see strategy fall away. I see ideal customers fall away. The drive to close the customers who have budget and may or may not actually want what we. Think we’re selling them is very intense. And so at every moment we agree on the strategy, we agree on the OKR, we agree on the metrics.

And then the next call comes in and it turns out they need a custom connector to FileMaker, which was a database I worked on that was an Apple spinoff in the eighties. And nobody knows it exists, but this big bag has a FileMaker thing in the basement. And if we don’t do a FileMaker plug in.

They’ll walk from the deal and that becomes the conversation. So I see it much more about the target audience and the size of deals and the way we’re organized that I do about the, I don’t think there’s any magic incantation here. In fact, let me back up a step. It’s my observation that the go to market side of almost every company is completely uninterested in how we build product right now.

We want them to love us and understand us and right care about the difference between. Scrum and XP and Kanban and whatever else are safe or crazy thing we’re doing. We want them to appreciate that the backlog means that we’re only working on a few things. We want them to care about our doing discovery, right?

We want them to understand and love us. And I think that’s a mostly misguided goal, right? In the same way that I’m not a sports fan and I certainly don’t play golf. If you’ve ever sat in a room with 4 or 5 golf fanatics and listen to them talk about golf for 5 hours, right? That’s the equivalent of me as a product person, pretending to be Dr.

Sheldon Cooper. Sorry, from Big Bang Theory standing in front of the sales team and lecturing them for four hours about my prioritization algorithm, right? When all they want to know is who do I call? That’s your boss. That’s going to approve this thing. I need because you said no. 

[00:37:52] Janna Bastow: And in the same way that your customers don’t really care how that no, it just can’t 

[00:37:57] Rich Mironov: cause a problem.

They do, but often I find customers are more interested in the process. They’re more interested in the testing. They’re more interested in the security. They have questions about how it works. The sales team has questions about what to say about those things that will get people excited. But our sales team doesn’t use the product.

They’re really not that interested in what it does. They’re interested in the short list of very short stated benefits. By the way, I call those selling stories. Yeah. Okay. A selling story is eight or 12 words in quotes, which if I say them in the order, you gave them to me, customers will be excited. Do I care what the product does?

Not so much. Do I care how it was built? Not at all. Do I know how many engineers are working on it? Doesn’t matter to me. So our desire to have people love us and understand us and get into the product cycle with us. I really wonder where that’s good energy spent. 

[00:38:54] Janna Bastow: Yeah. So tying this back to what you’re talking about before you, you had that counting the digits, you’re able to quantify the, that goes onto a roadmap, right?

And there might be things that are not customer driven that actually have huge value that you can say, Hey, this has huge value. And here’s why that’s something that’s going to save us lots of money. And therefore it has huge value. And here’s why. And then there might be things from customers that also do have huge value.

And then other ones from customers that don’t have huge value, they’re going to be intermixed. That’s right. This will then help you figure out the order in which to tackle things and make decisions. 

[00:39:31] Rich Mironov: And it really helps again, if you look at the incoming rate of tickets and requests at any company, it’s 20 X or 50 X, the capacity of the company.

Of the engineering team, it’s not, we’re not 10 percent short, right? We’re 35 X short. And so one of the things that we have to do as product folks is put a stake through the heart of the bottom 80 percent of all the requests as soon as possible. We’re never going to do them. We’re lying to our stakeholders when we say let me put that in the backlog and I’m going to come back next year.

It’s never going to happen. We are in a battle to choose the six or four things that go at the top, all of which are high priority versus the other 19 things, which are high priority. If it’s low priority, we’re never getting there. And some scheme where we can politely tell people that was a lovely suggestion.

And I love you and you’re, I love the tie you’re wearing or the, whatever it is. And thanks for that, that drink you bought me. Cause you thought it was going to get something to the top of the list. Salespeople deal in abundance, which is all the customers, engineering and product design deal in scarcity and hunger, because we have to get four things done instead of 20 things started.

Which means 

[00:40:40] Janna Bastow: ultimately, if you’re telling your salespeople that let’s say 80 percent of their requests just aren’t going to happen, you’ve got to work with them on telling them, you’ve got to sell what we have today. That’s right. You 

[00:40:50] Rich Mironov: have to sell what we have 

[00:40:51] Janna Bastow: today. Maybe 20 percent of them, if you can show that these are really big deals and are bigger deals than the type of thing that we’re working and deserve to bump stuff out of the way, but otherwise.

That’s right. We’re going to say no to, so sell what we have. 

[00:41:05] Rich Mironov: Sell what’s on the truck. And I think it’s on us to endlessly remind the sales and go to market side, why we built them and why we all agreed they were going to make money, right? We built this new feature because we all agreed that you guys would find 10 more customers for it.

Get busy right if you didn’t think that was true, we shouldn’t have built it right. And so again, what we’re doing here is we’re hiding a little bit of the transactional detail behind it because this audience isn’t that interested, but we have to find ways. To politely say no and move on because we don’t have enough energy in the universe to do discovery on every suggestion that comes in from every channel, from every slack channel, from every customer advisory board, from every meeting.

[00:41:52] Janna Bastow: Now for that 20 percent that does make it onto the roadmap, I’m a big now next later fan. I’m a big fan of sequencing things rather than putting it into a list of things that you’ll do and when they’re going to happen because that can lead you into a trap. Do you, can you talk to us about your experience about dealing with execs who love their timelines and don’t want to let go?

[00:42:14] Rich Mironov: Yeah. So I’m a big fan of Now Next Later, but I think that works much better on the building side than on the selling side. Because if I need something in this in the next category, because there’s a deal coming up and it’s got to close by next March, then my question is, will I have it right? And so I think of it.

Sometimes I like to attach some timeframes on that where we say now is through the end of next quarter. And we’re 90 percent sure of what we’re going to ship now and through next quarter. And so we can make commitments mostly for the things that are now to next quarter, right? The things that are two quarters away, um, we’re going to, we’re going to use softer language.

We’re going to say, these are the candidates, right? These are the opportunities. These are the, whatever synonym you want here, because what we want to say is you may get it, you may not get it, but if something better comes along, we’re going to bump it out. Right and we won’t and we won’t make a signed commitment to a customer for something that’s in the next or later category.

Unless we have a very serious discussion about that. 1 thing right? And if next is the following 2 quarters and later is more than a year from now. I think that really helps people understand that if they have a deal right now and something showing in the much later category. One answer is no, you’re not going to get it.

The other answer is we’re going to have a very serious escalation to the CEO. sO I think that’s helpful. I love the structure, but remember the folks on the other side of the table are being paid to close. Yeah. And they need a date to close. And so they’re going to keep coming back and asking for a date because they can’t close otherwise.

And so we have to anticipate that they’re not just going to fold their cards and go home because we put up now next later. And what you 

[00:44:13] Janna Bastow: described there is what I call weaning them off the timeline roadmap, right? So being able to soften the dates into wider horizons of time.

And if you’re removing 80 percent of the date commitments and leaving it as broader as it’s further out, it gives you that much more flexibility. But we don’t live in la la land. Sometimes there are hard dates that strategically make sense for the company to invest the time up front to make something happen, to hit a million dollar deal or a 10 million deal.

 

[00:44:44] Rich Mironov: That’s right. And the CEO is the ultimate call on that. So I know that I work for the CEO and, and there, there’s this medical concept called advised consent, where before you get an operation, that’s really serious. They tell you all the things that could go wrong. And they ask you if you still want the operation.

When the CEO comes to me and says, we are going to shake the roadmap, we’re going to put this thing in, it’s going to consume a lot of time. I have all these explanations for why I’m not happy, but ultimately the CEO gets the call. And we say, okay, we’re going to, we’re going to follow that lead.

Here’s the things we’re leaving on the floor. Here’s the revenue we’re leaving on the floor. Here’s the customer commitments we’re leaving on the floor. But I work for you, the CEO, until you decide I don’t, which I’ve been fired a bunch of times. 

[00:45:32] Janna Bastow: And that actually leads to another great question. Not the fired part.

That’s a story for another day. Maybe when we’re not recording. Michelle asks any suggestions for when the sales element is driven by the founder? Thank you. 

[00:45:43] Rich Mironov: Oh much, much harder, right? Founder syndromes are pretty deep, right? The founders form the company. They know all the answers.

They’ve talked to everybody, right? I find negotiating with founders way harder than the professional management team that comes in later. But again, I, as the head of product have to support my team, product engineering, design, and whoever makers by presenting. Or choices alternatives, yes, we can do that.

We can absolutely do that. Here’s what we’re going to have to give up. I Think anytime we have a yes or no question, can we do X? It’s malpractice for us, right? We have to say these are the things currently in plan or next and later. Here’s what we’re going to push back. And you’re not going to get it and we’re going to write it down and send an email around or a slack message around, and we’re going to date it and time it and stamp it.

So the two weeks from now, when you ask me where that other thing was, cause you forgot because of roadmap amnesia, I’m going to remind you that we’ve put it in the cold storage and we’re not getting it this year, which is a really hard conversation. But if you’re a senior product person, if you’re a product leader, a CPO, that’s the conversation you have almost every day.

[00:46:59] Janna Bastow: Yeah,  absolutely. And that leads into another great question. Roshanna says, I feel roadmap amnesia is one, but sales amnesia exists too. And there isn’t enough ROI done for feature asks. Did we win the deals we said we would win?

[00:47:12] Rich Mironov: Yes. And that’s politically charged and it embarrasses people. Sometimes when I parachute into a company as a consultant or an interim CPO. The very first thing I do is I have the team go back and find all the things we’ve built in the last two years. And to bring me five examples of things we built that were on time on spec, they were perfectly as requested and the deal didn’t close or it didn’t generate any money.

And the reason we need that is because no one in the executive suite remembers those. And so I have to come in and say do you guys remember project Sisyphus? Oh, yeah, we spent 2 years and 7, 000, 000 to close the deal. That was the only one though, right? Oh, do you remember the next project? And so I come in because I don’t care if I get fired and I come in and I lay 6 of those on the table or 10 of those on the table, right?

And say, there’s something going on here that you guys are missing, which is that. We make commitments and then we don’t close the deals and we consume all of engineering and we didn’t get any of the things we want. You wondered why we didn’t ship any of the things that were on the roadmap last quarter.

Let me tell you what we worked on and none of those led to money. Remember money, right? None of those led to money. And everybody in engineering is going to quit and the product folks are going to follow them because we’re taking requests and we’re not doing our homework. So which salespeople are you going to fire over this?

And how are we going to have real ROI or real commitments on the sales part? If we do that, where’s the 9 million bucks? That’s a hard conversation. It’s a grown up one. Yeah. 

[00:48:47] Janna Bastow: And another hard conversation because Al has asked do you have any advice for the, for a situation where there’s pressure from execs for the product to change to match the sales pitch, especially for new products?

[00:49:00] Rich Mironov: Yeah I think there’s a time phasing here. If you’re still finding product market fit, if you only have two paying customers that may be the right thing to do. Right now we have to apply judgment on all sides, but if you’ve got 9000 customers, that’s impossible. And I go back to economics again on this.

An old piece of mind that I won’t rehash here about the laws of software economics, but if you can ship exactly the same bits as the one we’ve already built. It’s a hundred percent margin to the company because we don’t have to do anything less the 1 percent we pay for 2 percent for sales commission.

So if we can ship what we have already, it’s 98 percent margin. Okay. If we have to build something new for this customer delays, roadmap changes, huge expenses, we have to support it forever and we’ll never be able to sell it again, which means we will never get leverage on this, which means your investors and your board and your VCs are going to rip you up and down.

For not building things that have revenue scalability. That again, that’s the language of revenue sales of scalable sales, as much as it’s the language of engineering and product. 

[00:50:06] Janna Bastow: Yeah, that’s a good point. I’ve often said, if you’re seeing a team who a sales team is constantly selling stuff that doesn’t yet exist, it’s either because the product isn’t actually good enough, maybe early stage and the product isn’t up to spec or your sales team isn’t good enough, right?

They’re just being a bit lazy and just finding anybody, but not the right. 

[00:50:25] Rich Mironov: Sure. So here’s a one other tiny tool that nobody ever uses, but we all talk about let’s make a tiny change to the compensation plan on the sales side. Okay. It’s tiny. Here’s what we do. You get 110 percent commission quota relief for selling exactly what we have.

The first time you sell anything we don’t have, we’re going to take five X the cost of whatever it takes to build it and deduct it from the deal. And the second time you’re fired. Okay. I presented that to, I presented that to dozens of executive teams. Nobody ever does it, but it makes the point that if we’re paying them to sell things, we don’t have, we should expect them to sell things.

We don’t have, we can’t punish engineering. We have to change the incentive model. Yeah. There’s this extra commission for 12 months retention. Good. We have to think about how we’re paying people because if they’re selling something we don’t have, we’re doing it wrong, hiring the wrong people, whatever.

I want to put something in place where when they look at their comp plan for the quarter, they do the thing the company needs them to do. 

[00:51:28] Janna Bastow: Excellent. We have time for a couple quick fire questions here. Neil asked one and a couple of people voted it up. Who do you feel has ultimate responsibility for the purpose and vision of a product and business direction in the company?

[00:51:38] Rich Mironov: Yeah, I’m not sure that question has a logical answer. If the company doesn’t have a business strategy, then we’re all going to fail. If the company doesn’t have a product strategy aligned with the business strategy, we’re all going to fail. I would say that the head of product, me or you, is responsible for coaching the rest of the executive team into agreement here in alignment.

We don’t have the power, but we all fail. We all drown if nobody owns it and we don’t have a strategy. 

[00:52:10] Janna Bastow: Excellent. Thank you. And Masoud asked, is there a book that you recommend to product managers to read, to learn the language of money and get familiar with finance fundamentals of their companies?

[00:52:21] Rich Mironov: Gosh, that’s a hard one. What was his name? How to Win Friends and Influence People from the 1920s. Oh, Carnegie. Yeah. All right. Dale Carnegie, right? That’s a book about selling. It’s really skinny and it’s really dumb, but every single engineer and product and designer should read it because it’s about understanding your audience in a way that’s a little, I love Teresa Torres, but this is a much skinnier book.

[00:52:43] Janna Bastow: Yeah. Excellent. There was another one, which isn’t really about finance, but it does touch on product and and the financials of the art of profitability, the author, whose name I’ve forgotten now, but it talks about, it’s done in almost a parable. Format’s really lovely, readable thing, but talks about, it goes through dozens of different ways that you might think about.

[00:53:05] Rich Mironov: That’s great. And again, I think we don’t want to focus on the details of the number to six decimal places. We want to focus on the story we’re going to tell. Why is it important? How is it going to lead to a good outcome? And how do we quantify that in money terms so that the folks at the other end of the table care?

Absolutely. 

[00:53:24] Janna Bastow: And Anil asked us whether we’ll write down the names of the books. They’ll be in the show notes or the transcription. We post these up in the same place that you registered for the webinar. So everyone, you’re all going to get a copy of this. It’s all been recorded. It’s all going to be sent out to you in due time.

So thank you all for joining. I want you all to say a big thank you to Rich for joining today. Rich, thank you so much for your insights and all the the experience that you shared with us today. Once again, Rich, thank you so much for joining and everybody else, thank you for joining here today. I’m just trying to find my screen here. There we go.

And great to have you here. See you all again next time.