Tuesday, October 13, 2015

What Makes You A Good Product Marketing Manager?

"A Pretty Package Can’t Sell A Poor Product” - Bill Walsh

I am a big fan of Bill Walsh and his management philosophy. Following is an excerpt from his book The Score Takes Care Of Itself.

To promote sales of season tickets, I came up with an ambitious (and time-consuming) plan called “Pick-a-Seat Day” in which we put bright red ribbons on all available season ticket seats and invited the public to buy their favorites. And that’s not all. 
On the big promotion day we offered balloons, free donkey rides, ethnic foods, and clowns for the kiddies. Also, free popcorn, soft drinks and hot dogs, jugglers, a Dixieland band, and magicians. It was really a great family event for the thousands of folks who came out to Candlestick Park.
The next morning I arrived at the office early to see what the results of my “Pick-a-Seat Day” promotion were. Or, more accurately, weren’t. Total season tickets sold: seven. (I bought three more myself on the fifty-yard line, just so I could report that we’d hit double digits. In fact, our family still has those seats.) 
“Pick-a-Seat Day” was a total flop, but it was a flop that taught me something very important: A pretty package can’t sell a poor product. Results— in my profession, winning football games— are the ultimate promotional tool. I was trying to sell a bad product, a team that was the worst franchise in sports, that had lost twenty-seven straight road games, and whose record at home wasn’t much better. 
From that point on, I focused my energies exclusively on creating a quality product, a team that was worth spending money to see. When that was achieved, we also achieved a ten-year waiting list to buy a 49ers’ season ticket. 
In your efforts to create interest in your own product, don’t get carried away with premature promotion— creating a pretty package with hype, spin, and all the rest. First, make sure you’ve got something of quality to promote. Then worry about how you’re going to wrap it in an attractive package. The world’s best promotional tool is a good product.

I see this as a chronic problem in the software industry and many product marketing managers make it even worse. They tend to impose their own belief system in isolation while marketing to prospects without championing product and customer views as well as ignoring competition and where the product fits in the market. Over a period of time I have learned a few lessons observing and woking with them as well as being one of them for some part of my work.

Amplify the value proposition, don’t recreate it: One of the most common mistakes I observe product marketing managers make is to recreate value proposition of a product instead of amplifying it. A lot goes into making a great product - finding the end user needs, designing compelling experiences, and enabling them with technology. Product managers and engineers spend a lot of time making great products. Don’t reinvent the wheel; it’s precisely those stories and the unique characteristics of the product you want to amplify. As a product marketing manager your job is to tell great stories and not to rewrite them. Find the right medium and use it to your own advantage. Get customers excited and help them see the possibilities.

Sell the problem, not the solution: I have seen people focus on a very narrow definition of competitive differentiation, pricing and positioning. It’s not just about pricing and positioning; customers shop in categories for a specific set of problems or challenges they may have. As a vendor you need to have empathy for your customers on their buying process. Spending time articulating how your products solve their problems is far more important than outlining features and outsourcing the task of matching features with JTBD of your customers. Product marketing managers tend to fixate on what they are selling as opposed to what customers are buying.

Apple commercials are a great example of bringing products to life in scenarios and stories without marketing a product feature-by-feature. These commercials are designed to emotionally connect with consumers in their lives on why they need to buy Apple products and what they might use them for. Communicating with buyers on how you understand their problems is far more important than telling them they can do whatever they want with your products. This is especially hard when you’re selling technology and what customers are buying is a solution.

You need to understand the market, competition, and customers, not in isolation, but how they move with each other. Most product marketing managers I have seen take either a market view and force products to customers or take a customer view in justifying how it meets demands of the customers, but fail miserably articulating how their products fit in the market with the competition because they ignore the market. You have to do both. You could decide to ignore what you don’t prefer but your prospects won’t.

Focus on what customers are buying and not what you’re selling: Most successful go-to-market strategies are the ones that are profoundly simple. I have observed product marketing managers fail at one of the most basic tasks to ensure the prospects understand what they are buying. With complicated pricing, packaging, and a combination of deployment options, more often than not, customers are confused about what they are buying even if a product could potentially solve their problems. This confusion creates friction and customers end up buying what they understand in simple terms and that may not be your product even if it is superior to your competition. If you can’t simplify the value proposition in simple English without any jargon and offer an extremely clear explanation of what they are buying and how they can operationalize it with the lowest time to the highest value you’re not doing your job well.

Leverage irrationality: Software is rational, human beings are not. I have seen product marketing managers take a classical demand-supply economics as their go-to-market basis. They strongly feel that the product (supply) should somehow fit into an existing need (demand). While, to large extent, I do hope product managers (and not product marketing manages) are looking at those opportunities, but not all products are designed that way. It’s your job to tap into this very irrationality, the behavioral economics, to create demand for the product. Make customers want your products and not just need them. Better understand behavioral economics to decide how you will market the product, how you will package it, and how you will sell it. Customers don’t make decisions based on the product merit alone; good sales people know this and they leverage these aspects in their sales cycle. What I find strange, especially in enterprise software, is that product marketing managers stay oblivious to the fact that customers don’t always make rational choices. Perhaps it’s the formal business education or the “knowledge curse” that gets in their way and they overthink a human behavior situation and make it an economics issue.

Footnote: This is not an attempt to stereotype all product marketing managers and make them look stupid. In fact I have met and worked with some really bright product marketing manager. This is simply an attempt to outline how they might be able to channel some of their energy in a different way to be more effective in certain situations.

Wednesday, July 8, 2015

The Discriminatory Dark Side Of Big Data

It has happened again. Researchers have discovered that Google’s ad-targeting system is discriminatory. Male web users were more likely to be shown high paying executive ads compared to female visitors. The researchers have published a paper which was presented at the Privacy Enhancing Technologies Symposium in Philadelphia.

I had blogged about the dark side of Big Data almost two years back. Latanya Sweeney, a Harvard professor Googled her own name to find out an ad next to her name for a background check hinting that she was arrested. She dug deeper and concluded that so-called black-identifying names were significantly more likely to be the targets for such ads. She documented this in her paper, Discrimination in Online Ad Delivery. Google then denied AdWords being discriminatory in anyway and Google is denying to be discriminatory now.

I want to believe Google. I don’t think Google believes they are discriminating. And, that’s the discriminatory dark side of Big Data. I have no intention to paint a gloomy picture and blame technology, but I find it scary to observe that technology is changing much faster than the ability of the brightest minds to comprehend the impact of it.

A combination of massively parallel computing and sophisticated algorithms to leverage this parallelism as well as ability of algorithms to learn and adapt without any manual intervention to be more relevant, almost in real-time, are going to cause a lot more of such issues to surface. As a customer you simply don't know whether the products or services that you are offered or not at a certain price is based on any discriminatory practices. To complicate this further, in many cases, even companies don't know whether insights they derive from a vast amount of internal as well as external data are discriminatory or not. This is the dark side of Big Data.

The challenge with Big Data is not Big Data itself but what companies could do with your data combined with any other data without your explicit understanding of how algorithms work. To prevent discriminatory practices, we see employment practices being audited to ensure equal opportunity and admissions to colleges audited to ensure fair admission process, but I don't see how anyone is going to audit these algorithms and data practices.

Disruptive technology always surfaces socioeconomic issues that either didn't exist before or were not obvious and imminent. Some people get worked up because they don't quite understand how technology works. I still remember politicians trying to blame GMail for "reading" emails to show ads. I believe that Big Data is yet another such disruption that is going to cause similar issues and it is disappointing that nothing much has changed in the last two years.

It has taken a while for the Internet companies to figure out how to safeguard our personal data and they are not even there, but their ability to control the way this data could get used is very questionable. Let’s not forget data does not discriminate, people do. We should not shy away from these issues but should collaboratively work hard to highlight and amplify what these issues might be and address them as opposed to blame technology to be evil.

Photo courtesy: Kutrt Bauschardt

Wednesday, April 22, 2015

The Art Of Delegation - My Ten Principles For Healthy Team Culture

"Delegate almost to the point of abdication" - Warren Buffet

I have worked with numerous leaders at all levels and have seen the best and worst practices in how they delegate or they don’t. Here are my 10 principles of delegation that I practice and advocate based on the lessons I have learned by being on both ends of the spectrum.

1. Delegating is not simply about asking someone to do something for you; it’s about setting expectations on desired outcome and offering to help.

2. Delegating does not mean being a slacker but shifting focus instead on right things; as a leader, more often than not, doing right things is more important than doing things right.

3. Delegating something that you typically won’t is the best way to empower your employees; all other empowering talk is cheap.

4. Never take credit for what you delegate; in fact never take credit for anything that you accomplish.

5. Delegation leads to transparency; most employees struggle to get a bigger picture and don’t have insights into what their managers do.

6. Don't say, “I trust you,” instead delegate a task where an employee understands she would not have gotten an opportunity to work on it unless the manager had her trust.

7. Put yourself in the shoes of whom you are delegating to; manage their concerns, emotions, and challenges instead of yours.

8. If afraid of delegating a task imagine the worst case scenario before you delegate it and mitigate the situation by setting expectations and periodically monitoring the progress to make you comfortable delegate.

9. If still afraid of delegating unpack the task into sub-tasks and start with delegating the first sub-task; it’s always the first step that is incredibly hard to take.

10. Share with your employees what you don’t want to delegate; help them build empathy for what you do and motivate them to step up for that task the next time.

Photo courtesy: tanakawho

Monday, March 16, 2015

Chasing Unknown Unknown, The Spirit Of Silicon Valley

A framework that I use to think about problems disruptive technology could help solve is based on what Donald Rumsfeld wrote in his memoir, Known and Unknown:
Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.
A couple of decades ago technology was seen as means to automate manual processes and bring efficiency. While largely automation is a prerequisite in the modern economy the role of technology has significantly changed to create unique differentiation and competitive advantage against peers in an industry. Many people are working on making things betters, cheaper, and faster or a combination of these three. This approach—solving known known—does provide incremental or evolutionary innovation and market does reward it.

But, the Silicon Valley thinks differently.

The Silicon Valley loves to chase known unknown problems, the moonshots, such as self-driving vehicles, providing internet access to every single human being on the earth, and private shuttles to space. These BHAG are totally worth chasing. To a certain degree, we do know and experience what the actual problem is and we can even visualize what a possible solution could look like. As counterintuitive as it may sound, but it is relatively easy to have entrepreneurs and investors rally towards a solution if they can visualize an outcome even if solving a problem could mean putting in a monumental effort.
"We can be blind to the obvious, and we are also blind to our blindness.” - Daniel Kahneman
Most disruptive products or business models have a few things in common: they focus on latent needs of customers, they imagine new experiences and deliver them to customers, and most importantly they find and solve problems people didn’t know they had and couldn’t imagine it could be solved - the unknown unknown.

Chasing unknown unknown requires bold thinking and a strong belief in you quest and methods to get there. Traditional analytical thinking will take you to the next quarter or the next year with a double digit growth but won’t bring exponential growth. These unknown problems excite me the most and I truly enjoy working on them. Unknown unknown is the framework that I use to understand the potential of disruptive technology such as Big Data and Internet of Things. If technology can solve any problem which problem you want to have it solved is how I think.

Chasing unknown unknowns is not an alternative to go for moonshots; we need both and in many cases solving an unknown unknown journey starts by converting it to a known unknown. The key difference between the two is where you spend your time -  looking for a problem and reframing it or finding a breakthrough innovation for a known corny problem. A very small number of people can think across this entire spectrum; most people are either good at finding a problem or solving it but not at both.

Discovering unknown problems requires a qualitative and an abductive approach as well as right set of tools, techniques, and mindset. Simply asking people what problems they want to have it solved they don’t know they have won’t take you anywhere. I am a passionate design thinker and I practice and highly encourage others to practice qualitative methods of design and design thinking to chase unknown unknowns.

I wish, as Silicon Valley, we don’t lose the spirit of going after unknown unknown since it is hard to raise venture capital and rally people around a problem that people don’t know exist for sure. Empowering people to do things they could not have done before or even imagined they could do is a dream that I want entrepreneurs to have.

Photo courtesy: Ahmed Rabea

Tuesday, December 30, 2014

Did SAP Overpay For Concur?

Since SAP announced to acquire Concur and eventually closed the acquisition for $8.3B many people have reached out to me asking whether SAP overpaid for Concur. I avoid writing about SAP on this blog even though I work for SAP because this is my personal blog. In this case, I decided to write this post because this is the largest enterprise SaaS acquisition ever and this question unpacks the entire business model of SaaS enterprise software companies.

If you’re looking for a simple “yes” or “no” to this question you should stop reading this post now. If not, read on.

People reaching out to me asking whether SAP overpaid for Concur in itself is a misleading question because different people tend to compare Concur with different companies and have a specific point of view on whether the 20% premium that SAP paid to acquire Concur is justified or not.

Just to illustrate financial diversity amongst SaaS companies, here are some numbers:

This is based on a combination of actual and projected numbers and I have further rounded them off. The objective is not to compare the numbers with precision but to highlight the financial diversity of these companies based on their performance and perceived potential.

Market cap is what the market thinks the company is worth. The market doesn’t necessarily have access to a ton of private information that the potential acquirer would have access to when they decide what premium to pay. While the market cap does reflect the growth potential it is reflected in a standalone pre-acquisition situation and not post-acquisition.

The purchase price, including the premium, is a function of three things: revenue, margins, and growth (current, planned, and potential). However, not all three things carry the same weight.


For SaaS companies, annual recurring revenue (ARR) is perhaps the most important metric. It is not necessarily same as recognized revenue what you see on a P&L statement and ARR alone doesn’t tell you the whole story either. You need to dig deeper into deferred revenue (on the balance sheet and not on P&L), customer acquisition cost (CAC), churn, and lifetime value of a customer (LTV) that companies are not obligated to publicly report but there are workarounds to estimate these numbers based on other numbers.


If you’re a fast growing SaaS company the street will tolerate negative margins since you’re aggressively investing in for more future growth. Margin is less interesting to evaluate a fast growing SaaS company, for acquisition purposes or otherwise, because almost all the revenue is typically invested into future growth and for such SaaS companies the market rewards revenue and growth more than the margins.

Margin by itself may not be an important number, but the cost of sales certainly is an important metric to ensure there is no overall margin dilution post acquisition. Mix of margins could be a concern if you are mixing product lines that have different margins e.g. value versus volume.


Current and planned growth: This is what the stock market has already rewarded pre-acquisition and the acquirer assumes responsibility to meet and exceed the planned or projected growth numbers. In some cases there is a risk of planned growth being negatively impacted due to talent leaving the company, product cannibalization, customers moving to competitors (churn) etc.

Growth potential: This is where it gets most interesting. How much a company could grow post-acquisition is a much more difficult and speculative question as opposed to how much it is currently growing and planned to grow pre-acquisition (about 29% in case of Concur) as this number completely changes when the company gets acquired and assumes different sales force, customer base, and geographic markets. This is by far the biggest subjective and speculative number that an acquirer puts in to evaluate a company. 
To unpack the “speculation” this is what would/should happen:


This number should go up since there are opportunities to cross-sell into the overall joint customer base. LTV does reduce if customers churn, but typically preventing churn is the first priority of an acquiring company and having broader portfolio helps strengthen existing customer relationship. Also, churn is based on the core function that the software serves and also on the stickiness of the software. The most likely scenario for such acquisitions is a negative churn when you count up-selling and expansion revenue (not necessarily all ARR).


This should ideally go down as larger salesforce gets access to existing customer base to sell more products and solutions into. The marketing expenses are also shared across the joint portfolio driving CAC down. This is one of the biggest advantages of a mature company acquiring a fast growing company with a great product-market fit. 

Revenue growth

As LTV goes up and churn goes down overall ARR should significantly increase. Additional revenue generated in the short term through accelerated growth (more than the planned growth of the company pre-acquisition) typically breaks even in a few quarters justifying the premium. This is an investment that an acquiring company makes and is funded by debt. Financing an acquisition is a whole different topic and perhaps a blog post on that some other day.

Margin improvement

This is a key metric that many people overlook. Concur has -5.3% operating margin and SAP has promised 35% margin (on-prem + cloud) to the street by 2017. To achieve this number, the overall margins have to improve and an acquiring company will typically look at reducing the cost of sales by leveraging the broader salesforce and customer base.

This is a pure financial view. Of course there are strategic reasons to buy a company at premium such as to get an entry into a specific market segment, keep competitors out, and get access to talent pool, technology, and ecosystem.

Based on this, I’ll let you decide whether SAP overpaid for Concur or not.

Disclaimer: I work for SAP, but I was neither involved in any pre-acquisition activities of Concur nor have access to any insider Concur financial data and growth plans. In fact, I don’t even know anyone at Concur. This post is solely based on conventional wisdom and publicly available information that I have referenced it here. This post is essentially about “did x overpay for y?,” but adding SAP and Concur context makes it easy to understand the dynamics of SaaS enterprise software. 

Photo courtesy: Iman Mosaad

Tuesday, October 21, 2014

Disruptive Enterprise Platform Sales: Why Buy Anything, Buy Mine, Buy Now - Part III

This is the third and the last post in the three-post series on challenges associated with sales of disruptive platforms such as Big Data and how you can effectively work with your prospects and others to mitigate them. If you missed the previous posts the first post was about “why buy anything” and the second post was about “why buy mine." This post is about “why buy now."

Platform sales is often times perceived as a solution looking for a problem a.k.a hammer looking for a nail. In most cases your prospects don’t have a real urgency to buy your platform making it difficult for you to make them commit on an opportunity. There are a few things that you could do to deal with this situation:

Specific business case

It’s typical for vendors to create a business case positioning their solutions to their prospects. These business cases include details such as solution summary, pricing, ROI etc. If you’re a platform vendor not only you have to create this basic business case but you will also have to go beyond that. It’s relatively hard to quantify ROI of a platform since it doesn’t solve a specific problem but it could solve many problems. It is extremely difficult to quantify the impact of lost opportunities. If your prospect doesn’t buy anything do they lose money on lost opportunities? Traditional NPV kind of analysis goes for a toss for such situations.

As a vendor not only you will have to articulate the problems (scenarios/use cases) that you identified leading up to this step but you might also have to include more scenarios that were not specifically discussed during the evaluation phase. Getting a validation from the business on expected return on their investment while fulfilling their vision is crucial since your numbers will most likely get challenged when your prospect creates its own business case to secure necessary investment to buy your platform.

Leveraging the excitement

What seemed like a problem when you worked with a variety of people inside your prospect’s organization may not seem like a problem in a few weeks or months. It’s very important in platform sales cycle not to lose momentum. Find a champion of your pilot keep socializing the potential of your platform inside your prospect’s organization as much as you can while you work on commercials of your opportunity. People should be talking about your disruptive platform and wanting to work with you. Cease that moment to close it.

Knowing who will sign the check

Platform sales are convoluted. People who helped you so far may not necessarily help you with the last step—not that they don’t want to but they may not be the buyers who will sign the check. It’s not uncommon in enterprise software sales to have influencers who are not the final buyers but the buyers do have somewhat defined procurement process for standard solutions. When it comes to buying a platform many buyers don’t quite understand why they should be spending money on disruptive platform that may or may not necessarily solve a specific problem.

To complicate this further, for disruptive technology, it typically tends to get cheaper as it becomes more mature. This gives your prospect one more reason to wait and not buy your platform now. As I mentioned in the previous post your focus should never be on pricing (unless of course you are the best and cheapest vendor by a wide margin) but on immediate returns, no lost opportunities, and helping your prospect gain competitive differentiation in their industry.

Despite of working with your prospect for a while helping them define problems and piloting your platform to prove out the value proposition, you might get asked again to do things all over again. There are two ways to mitigate this situation: a) involve buyers early on in the sales process and not at the very end so that they are part of the journey b) work aggressively with your influencers to establish appropriate communication channels with the buyers so that it’s the influencer’s voice they hear and not yours.

Happy selling!

Photo Courtesy: Wierts Sebastien  

Tuesday, September 30, 2014

Focus On Your Customers And Not Competitors

A lorry is a symbol of Indian logistics and the person who is posing against it is about to rethink infrastructure and logistics in India. Jeff Bezos is enjoying his trip to India charting Amazon’s growth plan where competitors like Flipkart have been aggressively growing and have satisfied customer base. This is not the first time Bezos has been to India and he seems to understand Indian market far better than many CEOs of American companies. His interview with a leading Indian publication didn’t get much attention in the US where he discusses Amazon’s growth strategy in India.

When asked whether he is in panic mode:
For 19 years we have succeeded by staying heads down, focused on our customers. For better or for worse, we spend very little time looking at our competitors. It is better to stay focused on customers as they are the ones paying for your services. Competitors are never going to give you any money.
I always believe in focusing on customers, especially on their latent unmet needs. Many confuse not focusing on competitors as not competing. That’s not true at all. Compete hard in the market but define your own rules and focus on your customers. Making noise about your competitors and fixating on their strategies won’t take you anywhere.
But there's also some opportunity to build infrastructure from scratch. When you think of facilitation commerce between small shops and the end-consumer there would be things you would build - I don't know what they are, we will have to invent some of these things - that you might not build in other geographies where infrastructure grew for different purposes.
All emerging economies are different and India is a very different market. Bezos does seem to comprehend that. Things that you take for granted and things that you would invest into in the western countries are vastly different in India. Amazon has a great opportunity to rethink logistics and infrastructure.
The three things that I know for sure the Indian customer will still want 10 years from now: vast selection, fair, competitive prices and faster, reliable delivery. All the effort we put into adding energy into our delivery systems, reducing defects and making the customer experience better, I know those things will be appreciated 10 years from now. We could build a business strategy around that.
Innovating doesn’t mean reinventing strategy, the "what." What holds true in the US is likely hold true in India as well. It’s the execution—the “how”—will be different.

Speaking of Amazon as a growth company:
I like a quote from Warren Buffet who famously said: You can hold a ballet and that's okay and you can hold a rock concert and that's okay. Just don't hold a ballet and advertise it as a rock concert. Are we holding a ballet or are we holding a rock concert? Then, investors get to select. They know we have a long-term viewpoint. They know that we take cash flow that gets generated from our successful businesses and invest in new opportunities. India is a great example of that happening.
Even though Amazon has been in business for a long time with soaring revenue in mature categories the street sees it as a high growth company and tolerates near zero margin and surprises that Jeff Bezos brings in every quarter. Bezos has managed to convince the street that Amazon is still in heavy growth mode and hasn't yet arrived. In short term you won’t see Amazon slowing down. They will continue to invest their profit in their future to build even bigger businesses instead of paying it out to investors.

When asked whether Google is Amazon’s biggest rival:
I resist getting in to that kind of conversation because it is not how I think about our business. There are companies who in their annual planning process literally start with: Who are our three biggest competitors? And they'll write them down. This is competitor number one, two and three. Then they'll develop strategies for each of them. That's not how our annual planning is done. We do have an annual planning process and actually we are right in the middle of it now. We start with,`What'll we deliver to our customers? What are the big ideas, themes?'
Amazon has innovated by focusing on what customers really care about and not what the competitors do. This approach has paid off and I can see why Bezos is keen to do the same in the Indian market.

I really liked what he said when asked about being gifted and being kind:
I believe that humans would achieve anything that we are determined to achieve, if we work hard. So, celebrate your gifts but you can only be proud of your choices. And, cleverness is gift. You cannot become Einstein no matter how much you work. You have to really decide on how you're going to make choices in your life. You get to decide to be a good husband and a good father.
I strongly believe in why making right choices is more important than being gifted. I share this with as many people as I can and I also tell them, “you control your effort and not the outcome.”

Photo courtesy: Times of India