Entering StartUpLand: An Essential Guide to Finding the Right Job

by Jeffrey Bussgang

There are many, many books for founders, providing them with advice on how to raise money, build their companies, and live their lives. In fact, I wrote one of them—a book called Mastering the VC Game, which is targeted at helping founders raise capital and grow their startup.

Those two attributes—pushing the limits and thinking like an owner—are critical for all startup employees. If you can program your mind to internalize those two attributes, you can fit into every startup out there. The culture of a startup is that you’re on a mission, not just doing a job. The founding team is passionate about pursuing that mission and wants their passion to translate to the entire company. A lot of startups care about “best place to work” awards and about people loving the environment. All that language is about getting people to care and think like an owner.

The title is often a signal of what is expected of the individual when the company grows rather than what the job looks like at that moment.

An effective PM is an entrepreneur, strategist, technical visionary, cross-functional team leader, project manager, and customer advocate all rolled into one.

As a PM, you are tied to a product and to a customer. You think every day about how to serve the needs of that customer, and how to make the product better—even in ways the customer can’t themselves articulate directly.

If the company is making incremental improvements to an existing product, the PM focuses more on making the product better, easier, faster, and more robust. You might ask yourself, How do I shape my product to best solve my customers’ problems in the context of the competition, of a finite pool of engineering resources, and of the demand that the sales organization is putting on me?

This is what PMs do. They really try to understand what it means to walk in the shoes of their customers—what their problems are, what their environments are like, what they read, who they talk to, who they listen to, what do they worry about? And then they try to extrapolate from those insights by creating representations of their target audience, called personas, which they can use as an anchor for product design decisions.

Ultimately, startups are always on a life-or-death deadline: You ship this product, we make the quarter, and we get financed again for another eighteen months.

At a high level, product managers have three main responsibilities: •Defining the product to be built and its prioritized elements, whether a new product or an evolution of an existing product •Negotiating and securing the resources to direct toward product development or, if the resources are already dedicated, making the business case when faced with constrained resources

Managing product development, launch, and ongoing improvement by leading a cross-functional team, typically of your peers

To identify and evaluate product opportunities, product teams will often engage in what entrepreneur-turned-educator Steve Blank, in his seminal book The Four Steps to the Epiphany, calls “customer discovery and validation.” The objective of customer discovery is to figure out if the product is worth building—whether potential customers have a need for it and if it solves their problem.

Before investing in software development, a good startup will invest in upfront customer discovery and validation.

In a young company, you might produce little more than a few PowerPoint slides describing a product vision that articulates the core customer’s needs to be addressed, the broad elements of the proposed solution, how the product will evolve over time (also known as the product roadmap), and a few major themes for each product release. In a more mature company, you might need more upfront documentation so you can evaluate ideas across multiple functions. You might produce a detailed description of the customer’s requirements, or market requirements document (MRD). In an MRD, the PM will also either confirm that the new product is consistent with the company’s strategy and business model or justify abandoning the product idea. In some cases, the PM might even develop the preliminary business case for a product—including pricing, competitive analysis, the go-to-market strategy (direct sales, telesales, channels, international), and sales and profit forecasts.

The persona (sometimes called a marketing persona or user persona) is often a fictitious description of prototypical customers, encompassing their behavior (e.g., what they read, where they vacation or go out to eat), needs, and goals. Another tool, user stories or scenarios, are hypothetical descriptions of the persona completing a key task, often written to help bring the persona’s needs to life for the engineering team.

Product requirements document (PRD) or product specification (spec). A PRD or spec describes how customers will interact with a product, specifying the functionality needed to fulfill a comprehensive set of use cases—that is, all the different tasks customers will be able to complete.

Before launch, this requires anticipating any reliability or performance issues that might arise and developing a plan for resolving them. “Readiness” meetings allow each function to report on its progress against a checklist of launch requirements: Have sales reps been trained? Do channel partners have collateral material describing the new product? Are the new application programming interfaces (APIs) properly documented? Have the procedures to handle escalated product use been established to route complex customer service problems to the right parties?

To monitor performance, you’ll rely on internal sales and usage data, including records from customer service interactions. For online products in particular, there’s usually a wealth of such data. PMs should not need to depend on Engineering or the data team to access and analyze that data. You need to be your own analyst, proficient at analyzing log files using tools such as Google Analytics, Mixpanel, and Kissmetrics to pull data from disparate systems into a unified view.

Another signal of the breadth of product responsibility will take place in the product roadmap meeting: Do we put feature A in or feature B? Do we put feature B in this quarter or next quarter? Who gets to say what feature C should look like exactly? If you feel like the founders are looking over your shoulder and making those decisions, or are in the room when those decisions are being made, it means the founders are still taking a very active role. If they’re not in the room at all and just ask to be debriefed later—Let me weigh in on that one thing that I really care about; I don’t care about the rest and No, you got that one wrong, and here’s the way you should approach that—then that means the PM has become, or is becoming, more of a leader.

other technology companies, such as Microsoft, launch more complex products—often targeting enterprise customers, whose employee training requirements reduce their tolerance for rapid product change and experimentation.

waterfall development because a graphical depiction of how stages are completed over time cascades from top left to bottom right. Stages typically include: 1. Concept exploration, culminating in documenting user stories and perhaps a lightweight business plan that makes the business case for the work 2. Prototype or product specification, the document or wireframe prototype that provides guidance on proposed product functionality, which allows engineers to begin 3. Design work, which in turn is followed by 4. Product development 5. Internal testing 6. An alpha launch with pilot customers

I’d also recommend the online CS50 class taught by Harvard University professor David Malan. It’s an introductory-level computer science class. You don’t have to do homework; just watch the first three videos. Invest three hours and you’ll learn a lot about computer science.

“I think we’re screwed,” I grumbled to my VP of Business Development while poking at my wilting salad at the airport restaurant. We had just come back from a meeting with the president of a major grocery retailer, who was regarded as a thought leader in the industry. Our startup, Upromise, had this great scheme to have grocers contribute a portion of a consumer’s

believed it would drive loyalty while helping families pay for college. After politely listening to our pitch and letting us walk him through our fancy slides, the president told us he was unconvinced of the benefits of our program. He flat-out turned us down, and predicted that no other grocery retailer would join us in our mission. My VP was an industry veteran and a strategic thinker, tenacious when it came to problem solving. “Why don’t we just change the model?” he asked. “Let’s see if we can get the consumer packaged goods companies, like Coca-Cola and Kraft, to fund the rewards and have the grocers just pass through the savings to the consumers.” And just like that, in that dumpy airport restaurant, we pivoted the Upromise business model, went out and struck deals with dozens of major packaged goods companies, convinced over a hundred grocery retailers to share their data with us, and ended up, in aggregate, with 15 million households as customers. That’s what business development can do for a company.

Business development (biz dev, or BD) managers can have a big impact on a technology company’s growth and profitability.

I refer to the strategic function of business development, which is more senior in nature and does not involve being assigned a sales quota.

Facilitate word of mouth. Get your customers to speak on your behalf, either live or via their own blogs or social media outlets such as Twitter. Share presentations and case studies via SlideShare. Contribute positive reviews and comments to developer content sites like Hacker News and Stack Overflow. Slick marketing doesn’t work because developers are smart and cynical, so build credibility by providing authentic value.

Marketing people at startups are the gurus of unit economics because they’re always measuring CAC versus LTV and using this data to inform the company about how it should invest in Sales and Marketing. A lot has been written by me and others about the proper way to calculate CAC and LTV. I won’t repeat it here but it’s available on my blog, Seeing Both Sides (seeingbothsides.com).

Another important tool in figuring out unit economics is conducting cohort analysis—organizing customer behavior data into related groups and analyzing each group, or cohort, to determine trends over time. Examples of common cohort analysis include tracking customers who began using a service at a given point in time and seeing how they behave month over month, or how the customers who were acquired via a particular source perform month over month. Suppose, for example, it costs you ten cents in advertising and marketing costs on Facebook to drive an installation of the popular augmented reality gaming application, Pokemon Go. When you do your cohort analysis on the Facebook-acquired users, you observe that they never actually use the product—they just install it and abandon it—and thus are worthless to you. Then, suppose you launch another customer acquisition initiative on Snapchat where each user costs you twenty cents to acquire, but when you do your analysis of this cohort of users and how they behave over time, you observe that these users play Pokemon Go incessantly—twenty times a day, every day, month after month after month. Thus, your cohort analysis shows that the Snapchat-driven acquisitions are far more valuable than the Facebook-driven acquisitions.

A valuable framework to understand the entire marketing funnel in an analytical fashion is the demand waterfall, also referred to as the demand generation waterfall. Each stage of the customer journey is mapped out and a percentage conversion is assigned to each in order to provide a mathematical equation that helps predict outcomes.

Some percent of MQLs become SALs, some percent of SALs become SQLs, and some percent of SQLs become customers. Put these pieces together and you have the demand waterfall—a mathematical formula that tells you what your conversion percentage looks like at each stage of the process.

As the VP of Marketing, you are responsible for business outcomes, not marketing activities or even directional KPIs. This absolute accountability shapes your focus—if generating pipeline is the challenge, then you need to marshal all your resources to sourcing quality leads; if deal size is compressing, then your responsibilities flip to late-stage sales support. “Prioritization whiplash” is an occupational hazard for the head of marketing.

In the demand-gen role, you’re always thinking about how many calls you make per day to prospective customers. How many emails. How many conversions you had. How many demos you scheduled. How many people came to the webinar you were trying to recruit for. And what your conversion rate is—in other words, what happens to those leads after you toss them over to the sales team. You’re always measuring the funnel and you’re A/B testing and you’re using tools like Google Analytics, Adobe Omniture, and Mixpanel and all sorts of other tools, where you’re getting better and better at sophisticated measurement and analytics to drive marketing and inform possible marketing.

Ultimately, you need to be strategic about trying to lower the cost per lead, and to think about the value of a lead. It means being intellectually curious about what happened to those customers, and what the attributes are of the customers that tend to stick around year after year so you can try to attract more people like them. It means asking what you can do at the top end of the process to adjust

customer retention in the future. That’s what a good demand-gen person does. It’s an analytical job. It’s thinking end to end.

Shah, Dharmesh, and Brian Halligan. Inbound Marketing (Hoboken, NJ: Wiley & Sons, 2014). The two founders of HubSpot have written the seminal book on inbound marketing and demand generation.

Scott, David Meerman. The New Rules of Marketing and PR (Hoboken, NJ: Wiley & Sons, 2015). This book provides a terrific review of modern marketing techniques across social and content marketing.

Moore, Geoffrey. Crossing the Chasm (New York: Harper Collins, 1991). A classic book on marketing to early markets. Still regarded as the bible of ...

In September 2012, Paul Graham of Y Combinator, a seed accelerator in Silicon Valley, wrote a provocative blog post titled “Startup = Growth” that shocked people. In it, he claimed that startups must grow an audacious 10 percent per week in order to be successful. Paul declared: “If there’s one number every founder should always know, it’s the company’s growth rate … if you want to understand startups, understand growth.”1

While many growth teams have special requirements that compel them to build their own custom data infrastructure, many work with commercial SaaS (software as a service) products. A number of popular data products are used by startup growth teams, including: •Web, mobile, and funnel analytics: Adobe Analytics, Mixpanel, Google Analytics, Kissmetrics •Mobile analytics: Flurry Analytics, Localytics, App Annie •A/B testing (also known as split testing) and personalization: Optimizely, Maxymiser, Unbounce, Monetate, Visual Website Optimizer

Once data is available to you in the growth manager role, you’ll help the company answer two core questions. First, where should growth initiatives focus their resources across all the stages in the funnel from acquisition through retention and renewal? The answer to this question can be derived by analyzing customer behavior from top to bottom of the funnel, coupled with a thorough understanding of the product experience, usability, user perceptions, business model, and go-to-market strategy. Second, what progress is the company making against its marketing goals? You’ll help the company quantify and understand that progress by selecting a few important metrics—often called key performance indicators (KPIs)—and by developing reports for consumption across all of the teams accountable for growth initiatives.

Generally, there will be more ideas than a team can implement, so the growth manager must apply both art and science to decide which changes are worthy of a test, and to balance the level of resources applied to a particular change as a result. Sean Ellis, the founder of GrowthHackers.com and former Vice President of Marketing at LogMeIn, has a simple framework for prioritizing project ideas via ranking on three core measures (you can use a 1–10 scoring system or a high/medium/low label): •A relative score of the impact of the change if it is successful •A relative score of the confidence that this test will yield a successful result •A relative score of the cost to execute the test

To work at a startup, the absolute most important quality for a person to have is drive. He or she has to be driven every moment of every day to think of more ways that they can make the company grow, and then be driven to personally make those ideas happen. Because otherwise, chances are that task just will not get done.

You also need to become a master of statistical reasoning, so that you can design effective experiments and develop an intuition for the user’s experience. If data is the fuel of growth, then analytics are the engine. Over time, sophisticated analysis will help you develop your instincts, so you’ll need to learn to understand and think through them. This means diving into the raw data and using tools like MySQL, Excel, the R programming language, and Tableau software to retrieve, manipulate, and visualize data.

One Growth Metric

First, a company needs an organizing objective that is easy to understand, universal, and clearly communicated. This one objective creates a shared context and language for every person in the organization to contribute to growth. Choosing a single objective can be challenging: the funnel is complex, teams have their own priorities, great ideas can come from various sources, and people work autonomously.

As discussed in chapter 4 (on marketing), many teams make the mistake of choosing a so-called vanity metric that gives them a false sense of success. Growth at the top of the funnel, for example, can be exhilarating, but true retention and conversion might suffer due to lack of product/market fit.

Growth teams often maintain a working model of the dynamics in the business that is updated manually or algorithmically on a regular basis. The model is often a simple waterfall chart of user activity at all of the meaningful milestones between the top of the funnel and churn (e.g., a hundred people visit the website, twenty people register, ten people activate, and two people pay) with additional dimensions superimposed (geography, acquisition source, etc.).

Matt Boys, former Growth Marketing Manager at payments startup Stripe, uses a model like this to stack rank from highest to lowest areas of investment, then chooses a stage and a growth metric suited to that stage, and dedicates a period of time to running experiments focused on improving just this metric.

Matching the Growth Goal and Activities The mix of tactics that the growth team chooses must be compatible with the magnitude of the growth objective and the company’s horizon for growth. The finite reach of each stage in the funnel means that there is a limit to how much growth can be achieved through optimizations. Growth in excess of what can be achieved by optimization requires the development of new acquisition channels.

The usability test is one of the best methods for developing empathy and insight into a company’s target users. There are many ways to conduct usability tests, from setting up a complete testing lab to doing ad hoc guerrilla testing at a coffee shop. Services like UserTesting (usertesting.com) make it easy to run quick, lightweight tests on a target demographic of users.