Once companies cross $10M in revenue or ARR, the right product leader becomes a secret weapon for the next stage.
If the first $10M relies on speed and execution. The next $100M adds strategy, operations, and coordination. The right product leader adds all three.
After $10M in revenue, the next leap is from product to complete platform and growing into the de facto solution for your customer. Instead of solely building and selling a product, we need to consider increasing wallet share among our existing customers (white space) and/or expanding to new ones altogether (green space).
The first $10M centers on repeated execution. After $10M, we intuitively increase the importance of new capabilities in finance and operations. But, the product organization often gets overlooked because it’s usually already “good enough.” Someone is coordinating the roadmap, so the potential hole isn’t glaring yet.
The teams that grow most effortlessly have an advantage within their product function. They’re building what the customer wants and doing so quickly. Those that don’t will eventually lose to competitors or have an R&D function that becomes a drain on the P&L, sometimes unknowingly.
So, what’s the difference between good and great. And what do you look for?
Great product leaders tend to always have three traits in common:
They are customer-obsessed, not technology-obsessed. Building the right product for the customer is more important than leveraging the latest and greatest technology. If the latter solves the former, great. If not, solving the customer’s needs comes first.
They understand the entire business and create cross-functional buy-in. The sales team loves them because they take the input and turn it into solutions for the customer. The marketing team loves them because they can explain solutions in lay terms and understand what creates the right to win. Finance loves them because they’re P&L obsessed. The entire organization loves them because they’re accountable.
They balance the long-term with the short-term. The sales team needs to close deals today, but if the product isn’t great in 3 years, they’ll have nothing to sell. Building great products requires a balance of this understanding. They’re laying the groundwork for the future without sacrificing revenue and the P&L today.
It’s not enough to know the desired traits of a product leader. We also have to think about how good/bad shows up in the metrics. Since the product team is usually in place at $10M ARR, recognizing a weak product organization can take longer to show up in the numbers.
The boiling frog analogy applies here. The pain point will grow slowly over time. By the time you realize it, you’re cooked, and a significant change is needed. The solutions are often painful and expensive, both financially and culturally.
A few early signs of poor product leadership include:
Sprint points (what the engineering team is working on) begin skewing too far in the direction of solving bugs, QA, customization, and non-revenue generating / not scalable issues. I like to think of new feature development as leading indicators of future revenues. It will show up in sales if they’re not being worked on.
The margins of implementation and customer success begin to drag. In the former, it’s usually an indication of a high level of customization if you’re pricing the service correctly. If margins within CS are poor or inconsistent, it’s often due to a solution that can be solved with software.
Win/loss ratios begin to shift due to incomplete feature sets. If customers consistently pick other solutions because of missing features, the product organization isn’t effectively strategizing for the future.
The cost of bad product leadership compounds. Eventually, the sales pipeline begins to stall as competition increases and the team burdens the cost section of the P&L outside their own team. Generating less revenue with a higher cost structure is a recipe for disaster.
Product managers catch a lot of grief, and some of them rightfully so. The “CEO” of the product monicker, popularized by Ben Horowitz, inflated a lot of egos.
But, the right product leader creates a competitive advantage. The right product leader views themselves as a servant to the other parts of the company, helping each do their job better. Find yourself the right product leader, and the entire organization will feel the effects.
Kevin Stevens 