Entonces todo parecía prometedor. Volteando atrás; promesas vacías. Construía una estructura bastante débil.

Una torre de wishful thinking, ambición, actitud positiva, inseguridades, vacíos, traumas y grinding sin dirección que me distrajeron de hacer lo que debía hacer: Construir cimientos sólidos.

El famoso: “Fake it till you make it” mal entendido, que impactó mis estudios, negocios y autoestima.

Una ruta que realmente comencé a recorrer desde los 16, entrando a prepa.

Sabía, en el fondo, que era el camino equivocado. Por supuesto que lo más sencillo fue continuar encubriendo mis inseguridades y malos hábitos, en lugar de trabajarlos.

Lo que necesitaba era cococerme mejor, confiar en mi, aceptar mis errores, comenzar desde donde estaba (no desde donde quería estar) y perseguir cada actividad con excelencia.

Aquí para las próximas décadas:

Esta maniobra me costó solo 12 años. Hoy tengo 28.

¿Escribo desde un lugar muy distinto? En lo personal, quizá. Ha sido, sobre todo, un trabajo de remoción. Tedioso, solitario, poco excitante, e inesperado.

Me recuerda a esta escultura siendo liberada de su forma de bloque. Aquí una representación bellízima de Sir ChatGPT 4o.

¿Cómo vuelvo al camino correcto? ¿Habré tirado la toalla? ¿Cómo pasó tanto tiempo? ¿Cómo es posible que siga aquí?

¿Soy una mejor persona? Definitivamente.

He identificado y corregido fallas importantes de carácter. Errores e inseguridades que desde pequeño obstaculizaron mi desarrollo.

¿Necesitaba atravesar esto para finalmente romper el ciclo? Who knows.

Hoy comienza un nuevo capítulo. Con tan poco papel, tiene que.

El progreso no es lineal.

Bendito sea.

You just realized that you have limited time and a ton of stuff to do. You need to delegate, but how?

Delegate Problems, not Tasks.

Good delegation generally requires you to think in terms of outcomes, not tasks.

• “Hey, can you help me solve x challenge so we can achieve y?” (YES)
• “Hey, here’s a list of what you need to do, exactly as I say” (NO)

The best employees tend to love to solve problems — and they hate being. micromanaged.

Coach, don’t instruct

Delegating problems is only the first step. The next part is even more important: to help the person you’re delegating to find the right solution on their own.

The simplest and most relevant way to do this is the GROW Framework.

1. Goal — Establish the Goal

• What problem are you solving? / What are you trying to achieve?
• Why is it important? / How important?
• What does the expected outcome look like?

2. Reality — Examine the current Reality

• What is happening now (what, who, when, and how often)?
• How are we currently measuring success?
• Have you already taken any steps towards your goal?

3. Options — Explore the options

• How can you solve it?
• What are the obstacles?
• What are the Pros and Cons of each option?

4. Will — Establish the will / Way Forward

• What will you do now, and when?
• What are the most pressing obstacles?
• When do you need to review progress? Daily, weekly, monthly?

If you want to dive deeper and tie this management framework to your strategic goals, click here.

—

References:

• Delegate Problems, not Tasks.
• The GROW Model

Assume you are _________ (whatever errors of character you are constantly battling with). I’m:

• Lazy (It’s relatively easy for me to work long periods, but when I get rest and disconnect, I find it really hard to get back on track).
• Suffer non-diagnosed ADD (Attention deficit disorder).
• Unpunctual.
• Introvert (it’s actually quite the opposite, but I find it hard to cultivate and deepen relationships. It’s weird).
• Zero practical (I love to read/think/hypothesize but find it challenging to take that to action).
• Over-think (I want to see every possible angle. Frequently I feel like I’m trying to put the ocean in a 250 ml glass)
• Lack focus and direction (wants to do everything, ends up doing nothing)

You have to accept that, by default, you are your worst. Even more when you are tired, sad, hungry etc.

Now that you have recognized and accepted your dark side, it’s time to set up systems or behavior-rails in your daily life so that it gets increasingly difficult to behave at your worst than it is to behave at your best.

General behavior-rails

Behavior rail number #2 — Never get hungry: By the time you get hungry, your glucose, willpower, and mood is considerably low and unstable. Prevent it by always having a healthy snack close to you.

To be continued..

Every marketplace faces the same problem. How on earth can you get the flywheel turning? How can you create demand for your platform when there is no supply, or vice versa? And then, how do you scale to liquidity? — that point in time where you get to scale and everything works like magic.

When starting a marketplace, it’s good advise if you seed one side first. You can either go for a supply first strategy, or a demand first strategy.

Supply first strategies

• The Trojan Horse: Create a solution for one side (generally the supply side), a stand-alone product or service that benefits them before you have any demand.

Eventbrite started as a SaaS ticketing platform for event organizers. Even without driving any buyers to the platform, they first provided a useful tool for organizers to manage their own ticket sales online. It wasn’t until they had a ton of supply engaged in the platform that they started seeding the demand side.

Open Table first provided reservation software for businesses. It wasn’t until later that they gave the opportunity to sell that inventory to people looking where to book tonight.

Grubhub originally had a demand first approach. They picked up menus for every restaurant they could find in a neighborhood, put them online and when people were searching for delivery menus, they made sure to pop up in those searches. → With all the demand that was showing up, they later went to restaurants and said: Hey, we have all these people that are looking for food delivery. You should advertise with us so you can get in front of them.

Over time they realized that a supply first strategy works best for them. Now every time Grub-hub opens a new city, they send a couple of sales people to make a certain number of contracts with restaurants, and then start bringing in demand.

Insights on the change from demand first to supply first:

• They learn over time that certain restaurants are the ones that help really build an interesting product for the demand side, for people that want to order food. And you can learn which restaurants are actually important from products like Yelp.

Seamless Web launched with a Hiper-local approach: they first went to investment bankers and big law firms and said: we are creating this restaurant food delivery service, are you interested? They signed big contracts with them and then went with local restaurants in the area in the categories that matter (Chinese, Tai, Italian) and said: Hey, we are only going to onboard 2 Chinese restaurants in the area and we are going to your competitors next. (A strategy that turned to be very successful).

Horizontal vs. Vertical

• Uber Eats: Food delivery and only food delivery
• Rappi: Everything, delivered.

There’s no correct answer. Going very vertical in a very local market makes the most sense to see if you can find product market fit, but the same can be true for very horizontal companies. The thing with horizontal companies is that you can’t be everything to everyone and eventually over time you are going to get disrupted by vertical businesses.

What I (Rodrigo) think you could do though is to highly tailor every experience on your horizontal approach as if you had a vertical approach. For each vertical, personalize the value proposition, make different branding, own different contexts etc.. The same strategy that every big consumer brand like Unilever or CKE Restaurants, for example, pursue.

Once you are past that (building the initial demand and supply), what should you do?

They send a small team to each launch market tasked with:

1. Understanding Market dynamics

• How they are different from other markets
• Similarities with other successful local markets
• Challenges: Are they geographically dense or spread out? What types of services are most on demand?

2. Building up the initial supply and training the initial supply in the service side.

3. Doing local PR, paid marketing etc., in coordination with the Head Quarters. The team was there for several months to get the supply and demand going, to get user feedback, create a sense of community among the supply side, help train them and onboard them etc., and then they returned to the HQ.

Eventbrite has tried distributed models with local city managers.. there’s no perfect approach. This was an important piece that lead to the growth of Yelp.. so there’s no single strategy that works better.

How to decide if centralized (everything is controlled from HQ), or decentralized (Many local groups with a lot of independence)? Ask yourself:

• How much training needs to happen?
• Does that need to happen everyday or just for a period of time?

Everytime GRUBHUB launches a new market, they send a small team tasked with:

1. Building the initial base with restaurants and learning how the market works (the same as Task Rabbit)
2. Hiring a local manager that will build a team and stay there. The first week they stay with the recently recruited local person to teach him best practices and get him up and running.

Over time, they found that they didn’t actually need that local person, that they could manage everything from HQ and be as effective.

This is designed in way that the salesperson (the local manager) wouldn’t be victim of his own success and say: I’ve already signed up 5,000 restaurants.. there are not so many more leads left that I could go after so what do I do know? They can just move to another city and start all over again.

Compare that to Uber that has to train drivers on how to accept rides, manage quality, and do that everyday because they are always adding new drivers. That’s a very different dynamic that requires at least some local people on the ground all the time. That’s how Uber has scaled, mostly with local teams.

The tension that will bring up when you keep local people

Originally those local people were in charge of the supply and demand which meant that they sent e-mails, the figured out the paid marketing budget, they did whatever they needed to get the liquidity, but as you scale.. there are specialists that are gonna be better at that.

In the case of Uber, the local person that is doing e-mails, and events, and paid marketing, and vetting new drivers is probably not going to be the best Ad-words person you can find, or the best e-mail marketing. Uber actually struggled when they got to scale trying to get back and centralize some of those functions. They probably could have thought more about what was going to happen to those functions when they got to scale or set expectations with the teams and say: Here’s what you are going to do now and here are the ones you are going to focus on in the future.

Most successful tactics on driving supply and demand

Market-places are first trying to organize the existing demand. Figure out a way in which your supply is easily able to promote their own listings or their own events to their own -existing- supply.

Offline can be very powerful:

• Task Rabbit made every service provider wear green t-shirts. That was a huge brand awareness driver.

• Instacart included the Instacart bags with every order. Then they stopped doing so and then they were back at it again. Everytime they didn’t include the bags, they saw their numbers decline.

• Airbnb has a genius strategy. Everytime a customer books a room they ask them: “Hey why don’t you list your own room since you are not going to be there in those dates”. (Customers get to be both supply and demand)

• Grub-hub gave flyers to each restaurant, so each one of them could tell their own customers that they had delivery with Grub-hub. (Everyone is willing to do the work if they will get more business)

Grub-hub’s Business model: Commission on direct sales with restaurants.

• On the supply side: “In a few months” they had their ROI from getting the restaurant on the platform.
• On the demand side: they had a 4 month pay-back period for signing up customers.
• On LTV: The average restaurant and dinner would stay with them for 4+ years.

What should marketplaces should excel at

• Quality of the supply: You don’t want all the supply. You want to have curated offerings. It can be curated by the team, which I advise you to do at least in the first months of your marketplace if not forever and/or it can be curated later on by the customers themselves e.g., Uber and their rating system.

Advise:

If you feel there’s a batch of users, and this is generally in the supply side strategy, that you just have to get and it makes the demand side work, you should almost think of it as a sunk cost.

For example, you pay and do whatever you need to get the airlines if you know that they can drive all the demand. Usually that’s a Venture backed startup that has to burn a lot of the capital to survive the sunk cost to build the supply side, but they know there’s going to be plenty of profits later on.

Remember: In marketplace there’s mostly winner-take most effects if not winner takes all effect. The key is to be first to liquidity (first to scale). It doesn’t matter if you are not first to market.

— — — —THE END — — — —

Clap if you find this useful! Happy to engage in the comments. Also, if you want to share strategies that you have seen work at other companies, please do! I can add them on. Thanks!

Source: Eventbrite VP & GM Brian Rothenberg and Greylock Growth Advisor Casey Winters on a conversation at GreylockPartners.

Characteristics & Network Effects

Essentially a marketplace is composed by a group of people (sellers) adding value to another group of people (buyers) through an integrator: the platform.

• Single winner: Contrasting with conventional retailers that tend to have a lot of competition, marketplaces usually monopolize a given industry due to the moats they get to create — e.g., Network Effects.
• Higher Margins: Marketplaces enjoy considerably higher profit margins due to the fact that almost all the work required to transact gets done by the interested parties (sellers and buyers), and not by the platform.

Network Effects

Also known as “The Wheel”, it is the effect that an additional user of a product or service has on the value of that product to others. — i.e., Increased number of participants on a marketplace improve the value of the marketplace itself.

When the wheel starts turning, it gets very difficult to compete with because all the sellers want to go where the buyers are and viceversa. In other words, marketplaces are monopolies by design, and they do exist:

Amazon

Another not so evident example is Amazon. It turns out that they don’t handle (ship) all the products listed on their website. In fact, most of the products that you see are from 3rd party sellers.

In 2016, Amazon sold more product from 3rd parties than as a 1st party merchant.

And the difference in their margins as 3rd party sellers vs. as 1st party sellers was astonishingly higher. 25% vs. 80%–90%.

Benefits

So, what makes the marketplace business model so attractive?

• Usually gets to benefit from network effects
• The community does much of the work
• No physical constraints on growth
• Often very capital efficient

There are also a lot of important benefits for users

• The identity of the seller/buyer can be corroborated
• Reputation gets quantified and shown to anyone
• Payments are securely handled by the platform

In short, the platform filters and regulates the participants to ensure their own safety and good behavior, reducing friction and facilitating trust between peers.

Want to dive deeper on Marketplaces? Check out the second part of this Marketplace Series.

Source: Jeff Jordan’s (General Partner at Andreessen Horowitz) presentation on Marketplaces.

A term sheet is a non-binding agreement stating the basic terms and conditions under which an investment will be made. It is typically an 8 page length document divided into three main sections:

Economic Terms:

• Price: The price of the equity being bought. This number is commonly known as valuation. There are two ways to think about valuation.

→ Valuation pre-money: The value your investor assigns to your company before making the investment.

→ Valuation post-money: The valuation pre-money + money of the new investment.

• Liquidation Preference: In case of a liquidity event, it pertains to the money returned to a particular series of the company’s stock, ahead of other series of stock. There are two components that make up the liquidation preference:

→ Preference: The actual preference. The money returned to a particular series of the company’s stock ahead of other series of stock.

→ Participation (which divides into):

• Full participation: After the payment of the Liquidation Preference, the remaining assets should be distributed to the holders of the common stock and the preferred stock on a common equivalent basis. (I pay you x times what you invested (generally 1x) and then “convert” your preferred stock into common stock because the remaining assets are going to be shared among all the common stock holders.
• Capped participation: the stock will receive its liquidation preference and then share in the liquidation proceeds on an as-converted basis until a certain multiple return is reached. **If the return is greater than the cap, then the participation will not apply.
• No participation (also known as “simple preferred” or “nonparticipating preferred”): receives x multiple of its invested money back, or converts its stock to common stock and share in the proceeds from the sale of the assets with every other common stockholder.

Liquidation Event: A merger, acquisition, sale of voting control, im which the shareholders of the company do not own a majority of the outstanding shares of the surviving company or sale of all or substantially all of the assets of the company shall be deemed to be a liquidation.

• Pay-to-Play: Investors must keep participating pro-ratably in future financings (paying) in order to not have their preferred stock converted to common stock (playing) in the company.
• Vesting: Industry standard vesting for early-stage companies is a one-year vesting cliff and monthly vesting thereafter for a total of four years. This means that if you leave before the first year is up, you haven’t vested any of your stock. After a year, you have vested 25% (that’s the cliff). Then you begin vesting monthly (or quarterly, or annually) over the remaining period. If you have a monthly vest with a one- year cliff and you leave the company after 18 months, you’ll have vested 37.5% (or 18/48) of your stock.
• Employee Pool: the amount of the company equity that is reserved for future issuance to employees and key hires.
• Exercise Period
• Anti-dilution

These are my keynotes from the book: Venture Deals. I strongly recommend you to read it, especially if you are preparing to raise a funding round!

From someone that knew close to nothing about raising venture capital, I really appreciate the transparency with which the authors address each topic (both from the entrepreneur’s and investor’s perspective).

Did you like it? Don’t hit the clap button once. Hit it many times!

**There’s a book called Secrets of Sand Hill Road that was published very recently. No doubt it’ll be a great book too.

Success stories from LATAM.

It is not risky to say that the success Rappi has had in the region and the speed with which they have grown is inspiring! I believe we can learn a lot about their strategy, the path they have taken to join the 🦄 club, and most importantly, they way they are contributing to the entrepreneurial ecosystem.

Rappi is an on-demand delivery startup launched in July 2015 by Simon Borrero, Felipe Villamarin, and Sebastian Mejia in Bogotá, Colombia. Now they are active in 7 countries and on their way to achieve 80 million users by 2021.

The Founders

Simón Borrero

• In 2007, his last year of college, Simón started a web agency in Colombia called Imaginamos, for 212 dollars. He then grew the company to 300+ employees without any external capital and made projects with companies in 17 countries along the way. 9 companies were created inside Imaginamos and 7 are still in operation. One of them is Grability.
• In 2013 he founded Grability, a white-label mobile shopping platform for retailers.. (the technology he used to create Rappi). They started working with the biggest retailers and supermarkets in the world: El corte Inglés (España) Reliance (India) Walmart (México). Today Grability has 200 employees with offices in New York, Madrid, Mexico, and Bogotá. They are now working with the leaders in South Africa, New Zeland etc.
• In 2015 Rappi was founded.

According to Simón Borrero, a few years ago supermarkets didn’t understand that the experience of buying a TV is different from the one of buying food or groceries. They were making the mistake of replicating the shopping experience and logistics from an electronic store into their own platforms.

Grability was on their way to solve that problem, but the sales cycle with these big retailers was very long. They got desperate and decided to start Rappi as an experiment to show their customers how it should be done.

Rappi starts in Bogotá with 5 people from Grability giving-away donuts in exchange for app downloads. A key difference that sets Rappi apart from its competitors is that they mapped not just restaurants, but also supermarkets, corner-stores, pharmacies, and every other consumer facing business you can think of. Allowing them to deliver everything from food and groceries, to medicines, cash, packages, “favors” etc.

A very popular story exemplifying the width of the Rappi offering: One time a bunch of guys were playing FIFA, but their team was incomplete, so they paid a “Rappi favor” and a delivery rep from Rappi ended staying at their house to play with them.

Products

Rappi initially launched with two products: 1. Delivery of products from corner-shops 2. An open field to ask for whatever you needed to receive at your location. Then they started launching other product categories, in accordance to the most requested services they were receiving in the open field.

The Rappi Virus

As of December 2018, Rappi was active in 7 countries and 35 cities.

Propagation city by city

Presence in Mexico

Financing Rounds

How were they able to grow SO fast? Financing rounds!

Rappi Milestones

Rappi has had a tremendous impact both in the economy of the countries it has operations in, as well as in the local startup ecosystem! I think they are paving the road for other startups and investors in the region, proving or disproving some key aspects of a. market, b. cultural myths. — They are showing that:

1. Latin America is ready in terms of local talent (company builders), and customers (a critical mass of reachable people with disposition to try new products and money to spend on them).
2. It is possible to grow at “Silicon Valley”/exponential rates: Rappi, to this days, is still growing at a steady rate of at least 20% per month.
3. It is possible to receive a shiz ton of money from the most important investors in USA and the world.
4. It is possible to compete with the best companies a.k.a. the best (and best funded) talent in the world. I’m referring to companies like Uber, Just Eat, and Delivery Hero; some of Rappi’s main competitors.
5. There’s a way to LATAM domination!

The only way to succeed is to think in LATAM terms. Not in national terms. As Nathan Lustig says:

It’s really important to start tracking and writing A LOT more about what’s happening in our backyard. Shoutout to Nathan Lustig from Magma Partners, Victor H. Cortés from Contxto, Andreas Kraemer from MITA Ventures, and many more for their work.

Thanks for reading. Let me know what you think and clap if you like it!

Of course I feel insecure. How not to be? I have many paths among which I can choose, but I need to pick one. Getting what I want, or not, depends on choosing wisely. What if I don’t? 😱

I have a set of variables to take into account: What I know that I know, what I don’t know that I know, what I know that I don’t know, and what I don’t know that I don’t know.

Variables that I probably don’t even know about! Bloody Hell! — I feel insecure just because there’s no way I could know what’s on the other side of the bridge before I cross it.

You see the gap? I call this gap The Reality Bending Bridge.

It is very simple. In business and life you have limited data from which you can base your decisions on, but you still have to make them.

The only way out of the prison that your overthinking mind is building, is to 1. Enter the bridge with some hypothesis and expected/desired/ measurable results 2. Wait for reality to kick you in the butt 3. Discover victorious that the results were what you wanted them to be.

If they were not, now at least you have some data to re-enter the bridge (better prepared) and try again until you get whatever it is that you are after. The goal here is to cross the bridge as fast and cheap as you can, so you don’t run out of momentum or resources before achieving your goal.

How to loose fear in two steps:

1. Understand that you are going to make mistakes ALL THE TIME. You just have to keep re-entering the Reality Bending Bridge.
2. If you fear for your reputation, remember who’s in the arena. ***Bonus content at the end**.

• Optional: In the case you, genius, start hiding your fear for the unknown (stopping you from doing what you actually need to) under the mask of “theory” and “strategic thinking”, remember Morpheus:

• Are you lost? Go through the bridge.
• Are you feeling insecure? Go through the bridge.
• Do you have to make a decision? Go through the bridge.
• Are you feeling like you know how the market is going to react?

Ok, first GO THROUGH THE BRIDGE.

Clap if you like it!

Bonus content:

Here are my key takeaways of the work written by Sam Altman, current chairman of Y Combinator, on how to start startups. Recommend you to read/hear the original! Have fun:

The Idea:

• What are we doing and why?
• How the company is going to be a monopoly one day? (Better when bigger and difficult to copy).
• For something to be new, it has to be 10x better. Build new stuff.

The Team:

• Mediocre teams will not build great companies.
• 1 founder great at building product. 1 founder good at sales.

A Great Product:

• Build a product improvement engine

Constantly ask yourself:

• Are your users using your product more than once?
• Are your users fanatical about your product?
• Will your users be truly bummed if your company went away?
• Are your users recommending your product without you telling them to do it?
• If you are a B2B company, do you have at least 10 paying customers?
• Disagreement? Talk to your users

Product: All interactions a user has with your company.

Great Execution:

CEO’s universal job: To make sure the company wins. Hire people that complement your skills and let them do their job.

Growth & momentum are the keys to great execution. If you are growing, it feels like you are winning, and people are happy. If you are growing, there are new roles and responsibilities all the time, and people feel like their careers are advancing. If you are not growing, people are not happy. They fight over responsibilities and blame.

The company does what the ceo measures. It’s valuable to have a single metric that the company optimizes. If you care about growth and if you set the execution bar, the rest of the company will focus on it.

Always optimize for growth.

2 Key metrics:

• Retention
• New customer acquisition

Review progress every month.

Trap: Thinking about problems too far in the future. i.e. How are we going to do this at massive scale? The answer is to figure it out when you get there.

Rule of thumb: Plan for 10x your current size.

Don’t get demoralized from bad growth on total numbers. Instead, think in terms of percentage growth. Remember how exponential growth works and that giant companies started with small numbers.

How to operate? Focus and intensity. Don’t do the next thing until you dominate the first one.

Startup debt: Doing too many of the wrong things.

Jobs of the ceo:

1. Set the vision and strategy for the company
2. Evangelize the company to everyone
3. Hire and manage the team specially in areas where you have gaps
4. Raise money and make sure the company doesn’t run out of money
5. Set the execution quality bar
6. Find whatever parts of the business you love the most and stay engaged there.
7. Do whatever it takes. Lead by example.

Advise:

1. Define early the mission and the values.
2. Be generous with equity, trust and responsibilities.
3. Be willing to go after people you don’t think you will be able to get. Don’t compromise on the quality of the people you hire.
4. Good and bad people are both infectious. Trust your gut on people. If you have doubt, the the answer is no. The company needs to be united internally.
5. Value aptitude over experience for almost all roles. Look for raw intelligence and a track record of getting things done. For people you don’t already know, try to work on a project together before they join full time.
6. Get good at recruiting
7. Get good at sales.
8. Invest in being a good manager. Avoid Hero mode and delegate. Be willing to be late on projects, to have a well functioning team.
9. Everyone should be in the same office.
10. Fire quickly. Culture is defined by who you hire, fire and promote.
11. Try to get your CAC (Cost of acquisition) ROI (Return on investment) in 3 months.
12. Try to make enough money to pay salaries for founders. That way you stop being at the mercy of investor’s money.

Remember that at least a thousand people have every great idea. One of them actually becomes successful. The difference comes down to execution. It’s a grind, and everyone wishes there were some other way to transform “idea” into “success”, but no one has figured it out yet.

—

Source: https://playbook.samaltman.com/

Chapter 1 · Relaunching Roadmaps

A good roadmap is not so much a project plan as a strategic communication tool, a statement of intent and direction. Product maps are all about creating a shared understanding of where you are going and why.

Product: Whatever form of value that you deliver to your customers.

It all starts with the bicycle. Some of the first roadmaps where created (around the 1890’s) to show how to bike from one part of New York City to another.

Roadmaps should be tied to a compelling vision of the future:

“This is our vision of why we’re here and what we’re trying to accomplish for clients, and here’s the roadmap that’s going to help us progressively get there”.

A roadmap is a strategic document that should offer guidance to your teams on what to focus on.

Chapter 2 · Components of a Roadmap

Primary Components:

• Product Vision: Your guiding principle
• Business Objectives: What kind of product do we need in order to attain those business goals?
• Themes: The key problems that customers face. Themes focus on outcomes rather than outputs.
• Timeframes: Broad Timeframes avoid overcommitment. Focusing on dates as the primary measure of success diverts attention from the iterative and uncertain process of innovation so critical in new product development. Broad timeframes like calendar quarters or even Now, Next, and Later provide guidance while preserving some flexibility.
• Disclaimer

Secondary Components:

• Features and solutions: How you intend to deliver on your themes
• Confidence: Level of confidence you have in your ability to address each item or theme on the roadmap in the next release.
• Stage development
• Target customers
• Product areas

Examples:

Chapter 3 · Gathering Inputs

Understand where your product is in its lifecycle

• New: “Validation”
• Growth
• Expansion: “Product line expansion”
• Harvesting
• End of life

Understand your ecosystem (Lean Canvas):

• Problem and solution
• Value proposition
• Unfair advantage
• Key metrics
• Customer segments
• Distribution Channels
• Costs
• Revenue model
• Key partners
• Key resources

Define the Problem and the Expected Outcome of the Solution

Trying to create a product roadmap without a basic understanding of the product’s domain and its users will leave you groping around in the dark designing for fictional scenarios with biased assumptions.

One very rough way to determine a product person’s level of experience is that the novice focuses on features, while the seasoned pro focuses on problems. The best product pros take this to the next level and ask, “If we solve that problem, what’s the outcome we want to see?”

Gathering Input from Your Customers

One of the most critical parts of the effective product development is to properly identify who your customers are, and then o truly understand and empathize with them — their jobs, wants, needs, obstacles, frustrations, emotions, and more. Validate what the problem is and how best to solve it.

Chapter 4 · Establishing the Why with Product Vision and Strategy

Vision: is why your organization exists. It can be decomposed into the benefits you hope to create through your efforts.

Mission: the intent you hold right now and the purpose driving you to realize your vision.

Values: Intended to guide behaviors. A compass that tells you which direction is north or south, but not which direction to travel; you must make that decision yourself.

Product vision: clarifies why you are bringing a product to market, and what its success will mean to the world and to the organization. It is the destination you plan to reach.

Product Strategy: How you Achieve Your Vision

The bridge that connects your high-level vision to the specifics of your roadmap. For many companies, the product strategy is the main contributor to their overall business strategy.

If your product vision includes meeting the needs of a group of people, then your product strategy simply makes that more explicit and concrete by explaining a bit about how. Usually, this takes the form of objectives. i.e. SpaceX hopes to meet its lofty vision of “make going to Mars a reality in your lifetime”.

Objectives and Key Results

Identifying business objectives that tie to your vision is critical to making that vision a reality.

The premise of the OKR (objectives and key results) framework is that objectives are specific qualitative goals, and key results are quantitative measures of progress toward achieving those objectives.

Here are a few guidelines on OKRs as they apply to product roadmapping:

• Everything on the roadmap must be tied to at least one of your objectives.
• Stick to a manageable number of objectives; from our experience and research, fewer than five seems to be most effective.
• Focus on outcomes, not output.

Think “What kind of product (solution) do we need to attain those business objectives?” For example, work on improved usability will increase customer lifetime value (LTV) by decreasing churn. The goal for the customer is a better user experience; the goal for the product is decreased churn and increased LTV. The duality we mentioned previously is balanced.

The 10 universal business objectives. While every product team has unique metrics, there are some patterns:

Sustainable Value:

• Support the product’s core value
• Create barriers to competition

Growth:

• Grow market share
• Fulfill more demand
• Develop new markets
• Improve recurring revenue

Profit:

• Support higher prices
• Improve lifetime value
• Lower costs
• Leverage existing assets

OKRs: Go in a direction (Business objectives) to reach this specific destination (Key results) by an improvement to this metrics (KPIs)

In the next example, a company expresses its product strategy for the next year in three objectives, each with measurable success criteria:

1. Launch new features or services that realtors will pay more money for.
2. Improve the feature sets of our existing plans so more users will purchase.
3. Improve our team functionality to better meet the needs of team leads.

Each of these themes is tied to an objective that can then be measured by specific key results, and their roadmap reflects this. This internal objectives-driven approach to roadmapping makes direction crystal-clear for internal teams. In this case, rather than being based on customer needs, each objective focuses on a measurable business benefit that work is designed to achieve (higher average sale price or higher renewal rate, for example). This “outcome-based” roadmap makes clear why certain work is important”

How you do know if you have achieved those objectives? You have metrics to track your progress. And who doesn’t love a good metric?

Key results (and metrics)

One of the most important things is to define how the success of that product will be measured, or its key performance indicators (KPIs). These KPIs are often the metrics you are using to measure the key results from your OKRs.

Tying this back to Contactually’s (a fictional company) objective of “improve the feature sets of our existing plans so more users will purchase,” key results here could be “an increase in user base by 5% over the course of a specific timeframe” (a quarter, year, etc.) and feature-specific metrics such as “time to compose and send an email is reduced by 10%,” indicating that the usability of that part of the product has been improved. Note that there can be multiple key results to each objective, as it may take different measures to determine whether an objective is met.”

Outcome versus Output

“Well-known Harvard Business Review blogger Deb Mills-Scofield gives a great example distinguishing what you’re delivering (output) from the reasons why (outcome): “Let’s define outputs as the stuff we produce, be it physical or virtual, for a specific type of customer — say, car seats for babies. And let’s define outcomes as the difference our stuff makes — keeping your child safe in the car.” Her summary is the best way to keep these terms straight: “Outcomes are the difference made by the outputs.”

Books to read on the topic:

• Measure what matters · How Google, Bono, and the Gates Foundation Rock the World with OKRs.
• Radical Focus · Achieving your most important goals with Objectives and Key Results.
• Platform Revolution · How Networked markets are transforming the economy and how to make them work for you.

Case Study: Space X

“In September 2016, Elon Musk, CEO of SpaceX (and Tesla Motors), announced his roadmap to colonize Mars. His presentation and roadmap overview are a great example of how product vision, strategy, business objectives, and themes all come together.

PRODUCT VISION
Let’s start with SpaceX’s published corporate vision statement:
SpaceX was founded under the belief that a future where humanity is out exploring the stars is fundamentally more exciting than one where we are not. Today SpaceX is actively developing the technologies to make this possible, with the ultimate goal of enabling human life on Mars.
This statement contains elements of vision, mission, and values. The distinctions are not important here; what is important is that Musk outlined an aspiration for the company, a reason why it exists, and a clear statement of how we all will benefit if they succeed.

To make the benefit absolutely clear, he pointed out:
The alternative to an extinction event is to become a multi-planet species.
Using the word product somewhat loosely, the first major component of SpaceX’s product vision is to “create a self-sustaining city on Mars.” Why Mars? Tying directly back to the organization’s mission, Elon describes it as: “the best option among nearby planets for a self-sustaining civilization.”

BUSINESS OBJECTIVES

“Musk begins his discussion of strategy by outlining the key problem with getting people to Mars: money. He estimates it would currently cost around $10 billion per person. There is therefore “no overlap between people who want to go and people who can afford to.” To make emigration to Mars market-viable, SpaceX would have to “drive the cost to the equivalent to a house in the US — about US $200,000.” That sounds like a business objective with a built-in key result.”

THEMES

“Musk then asks, for this strategy to be viable, what would need to be true? His team has done the research and defined the themes this way:

• Full spacecraft reusability
• Refueling in orbit
• Propellent production on Mars
• Right Propellant

“These four themes don’t describe the specific technology or solution, but are all subgoals of the affordability objective. Each of these subgoals can also be a theme (we’ll discuss sub-themes further in Chapter 6) that can become part of the roadmap.”

KEY RESULTS

“The key results for the objectives tied to the first theme of “Full spacecraft reusability” could be:

• The overall market cost is $200,000 or lower.
• The reusability of rocket transportation is 90% or greater.
• Tons of propellant can be produced on Mars.

Chapter 5 · Uncovering customer needs through themes

We related the product professional to an executive chef, and compared building products to crafting meals. In this metaphor, the roadmap is equivalent to the chef’s menu; it defines what will be delivered.

Your roadmap helps you match those customer needs with what’s important to your business to thrive and grow. Start by understanding and organizing the most important customer needs first.

Distinction between Product Roadmap and the Release Plan

Your roadmap should be a high-level view of what needs and problems your product should solve, while also helping you confirm why. In contrast, your release plan should detail how you will solve them. The product roadmap should not be about developing solutions or defining what your product will look like. Leave that to the release plan!

We use themes and subthemes to express customer needs. A theme is a high-level customer need. A subtheme is a more specific need. Themes can stand on their own, but they can also represent a grouping of subthemes.

So, again, themes and sub-themes represent the needs and problems your product will solve for. A need is generally something the customer doesn’t have yet, whereas a problem is something that’s not working right (with the existing product, or whatever substitute they might currently be using). Even though these two terms suggest subtle differences, the important point is that both refer to a gap or pain in the customer’s experience. When identifying the themes and sub-themes for your roadmap, remember to consider both needs and problems from all angles.

Themes help teams stay focused without prematurely committing to a solution that may not be the best idea later on.

In our experience many product teams fail to hit the mark with their products because “so many features in today’s products are solutions without a clear problem to solve.” Themes are so important is because they force you to focus on the need before you even start to consider solutions — and then to evaluate how well each potential solution meets that need.

One of the initial problems that Lyft set out to address was that in a hectic urban environment, it was generally hard to find a taxi (Theme) (in addition, of course, to other taxi-related problems, like not accepting credit cards, dirty cabs, unpredictable fares, etc.) (Sub-themes)

Imagine for a second your user is standing on one side of a rushing stream, trying to figure out how to cross without falling in. In order to do so, they need to choose which rocks they will step on, in what order, to land on the other side safely. Not only that, they’ll want to pick the easiest and most efficient path. In this metaphor, you can think of the stream as representing the user’s “problem” and the rocks as the steps in their journey toward solving that problem.
The steps in the journey map give you zones you can zoom into to understand the user at a deeper level. With this understanding, you can start to define each need or job in more detail. Those needs go on your roadmap as themes and sub-themes.”

The key is to focus on understanding “why” a need or problem is worth solving (or not). The user journey map is a great way to do this because it provides context.

When you get a request for a feature, you can employ the user journey map to make sense of where that need fits into the context of the user experience. Is it a critical path item, or simply nice to have? Is the existence of the unsolved need or problem impeding the user’s journey in a significant way?

Once you understand how and where the customer experiences the need, you can work directly with them to validate the problem and test possible solutions.

To use another metaphor, we can compare building a product to constructing a home. The infrastructure or backend of a product is akin to the foundation, framing, rough plumbing, and electrical of a house. These forms and systems tie everything together and make the house functional. The flooring, windows, furniture, and other finishes are equivalent to the frontend layer that the customer sees and interacts with.

Teresa Torres, Product Discovery Coach, Product Talk3, has developed a visualization for this problem that she says has revolutionized the way teams make decisions. She calls them Opportunity-Solution Trees and we’ve found them a brilliant way to distinguish solutions from the problem, need, or other opportunity they are intended to address — while at the same time tying them together logically.

Teresa says it all starts with a clear desired outcome. Remember those business objectives from Chapter 4: examples such as increasing your conversion rate or customer engagement? Those.(Hopefully you can see where this is going.) What Teresa calls opportunities, we call themes. We share the nomenclature of solutions and experiments designed to validate those solutions.

This hierarchy, similar to what we advocate in this book, simplifies decision-making by separating decisions among objectives, themes, and solutions. Each decision is a comparison among a small number of like things. Working down this hierarchy, level-by-level, allows teams narrow their testing and development efforts to solving one problem at a time.

Using Job Stories and User Stories to Support Themes

Themes are about Outcomes, not Outputs

Relating Themes back to your Objectives

With your strategic objectives clearly defined and approved by all stakeholders, the next step is to make sure that every theme on your roadmap relates directly to your objectives. Look at each theme or sub-theme critically with your team. It’s possible for a theme to link to more than one objective, and that’s fine. In fact, it’s great if a theme can inform multiple goals.
One good way to link themes to objectives is to color-code your objectives, and then tag themes with the associated color.

SpaceX example · Theme Card

One key point we’d like to reiterate: stick to needs when defining themes and sub-themes. You will be very tempted, believe us, to start brainstorming solutions or sketching ideas. Avoid this temptation! Stay focused on the needs at this stage. Defining solutions will come next, and developing them will be a whole lot more fun and effective when you’re confident about why they need to be implemented.

Chapter 6 · Deepening your Roadmap

Using Stage of Development

Different industries and individual organizations use their own terms, but commonly there is a discovery, market research, or R&D.

During that workshop, one of Spotify’s lead product managers shared a version of her roadmap. On the roadmap she’d tagged each item as either “think it,” “ship it,” or “tweak it.” In this simple way, her team was able to indicate the stage of each item on the roadmap to all stakeholders. When a stakeholder sees an item labeled “think it,” they know the theme is still being considered or explored.
Another interesting insight about the Spotify example is that status labels also help differentiate between themes and features. Any item labeled “think it” has clearly not been solved for yet, and therefore by definition is a theme. Any item labeled “ship it” or “tweak it” means that a solution has been chosen, and can therefore be considered a feature.

Communicating Confidence

For example, we might attach a 75% confidence to the Now column, 50% confidence to the Next column, and 25% confidence to the Later column. These confidence percentages represent our level of certainty that we will deliver on those items in those timeframes.

Tagging Product Areas

A software product might have areas such as user interface, platform, administration, and APIs. A product like our garden hose might have weather surface, exoskeleton, water channel, and connectors. Each may have separate sets of details such as stage of development, but more important, each must receive sufficient attention on the roadmap to come together into a fully functioning product that meets customer needs. Each may also have separate business objectives.

Chapter 7 · Prioritizing with Science

Why Prioritization is Crucial

You can never get everything done you would like or even might think is minimally required. Resources are limited, priorities shift, executives have ADHD, and on and on. So if you are not going to get it all done, you have to be very sure you get the most important things done before something changes and your resources are redirected.

Law: Always assume you may have to stop work at any time.

This law is a core tenet of the Lean Startup movement popularized by Eric Reis. In his book The Lean Startup (Crown Business), Reis points out that the reason most startups fail is that they run out of money before they find a viable business model.

You ruthlessly prioritize your work so that you get the most important things done first and begin to demonstrate value quickly.

The inverse of (and antidote to) shiny object syndrome is focus. If you focus as an organization on one set of problems for a strategic set of target customers, you minimize the increasing drag of bad decisions and seemingly small diversions.

Popularity

We truly believe that outsourcing your product strategy to your customers is a mistake in nearly all situations. An inexperienced product manager will, with the best of intentions, rank feature requests by frequency or size of customer. It makes sense, initially. Why not give customers what they ask for? The issue with that is customers can’t often articulate what they need from your product. Yes, a seasoned product person will seek to understand customers and their needs — but this is fundamentally different from asking customers what they want.
Steve Jobs is famous for ignoring market research, saying, “A lot of times, people don’t know what they want until you show it to them.” This perhaps oversimplifies the problem a bit but resonates with our experience. A roadmap made up entirely of customer requests generally results in a product with no focus, unclear market positioning, and poor usability. If you understand what underlying problems motivated your endless list of customer requests, you and your team can usually develop a more elegant set of solutions that render that list moot.

Sales Requests

Your job is not to prioritize and document feature requests. Your job is to deliver a product that is valuable, usable, and feasible.” Similarly, asking for input from your sales team is smart — they have insight into how buyers think and what will get their attention — but prioritizing based on what will help close the deals in the pipeline this quarter is short-term thinking. It may help make the numbers once or twice, but successful product people are focused primarily on how to serve a market rather than individual customers.

Critical Path

As we discussed in Chapter 3, a user journey map provides an opportunity for product professionals to tease out various dimensions at each step in the customer’s journey, including their emotions and state of mind during each moment.

Once you’ve identified those critical pain points, your job is to insert your elegant solution into your potential customer’s path at the exact moment when their pain or frustration is highest.

What is the one thing (or set of things) our solution needs to get right?” These are the most painful steps in the process that you have to address or improve in order for the user to be convinced to hire your solution. You might identify numerous negative emotion states in your user’s journey, but the key here is to narrow those down to the “must haves. Linking these key moments together into a critical “path journey gives you a blueprint for creating a great product (or what some would call a minimum viable product).

Kano Model

The Kano model, developed by Dr. Noriaki Kano, is a way of classifying customer expectations into three broad categories: expected needs, normal needs, and exciting needs. This hierarchy can be used to help with your prioritization efforts by clearly identifying the value of solutions to the needs in each of these buckets.
The customer’s expected needs are roughly equivalent to the critical path. If those needs are not met, they become dissatisfiers, and your chosen customer will not buy your product. If you’ve met expected needs, however, customers will typically begin to articulate normal needs, or satisfiers — things they do not strictly need in your product but that will satisfy them. If normal needs are largely met, then exciting needs (delighters or wows) go beyond the customer’s expectations. These typically define the offerings of category leaders.

You must solve for critical path or expected needs (dissatisfiers) at a minimum, but that alone won’t guarantee you success. Nor will you usually have the luxury to develop every satisfier or delighter you can think of. Resource and time constraints dictate that you pick among them and choose the ones that will make the biggest difference first.
One method we’ve used to prioritize potential solutions is to score each idea in terms of desirability, feasibility, and viability.

Chapter 9 · Presenting and Sharing your Roadmap

Inspiration

Your roadmap will paint a picture of a world where your customers are happy and your company is successful, making everyone in the organization want to be a part of it. If your why (aka product vision) is compelling, and your how plausible, you’ve got people hooked, and they’ll be happy to discuss how they can add their particular what to the plan.

The IKEA effect

Why do people love their IKEA furniture? Because they had a hand in putting it together. It’s the same with roadmaps.

The Osborne Effect

Announcing future plans too early can also slow down current sales as people may decide to wait for the next version or upgrade.

Product Roadmap for Engineering (More detailed)

Product Roadmap for Sales and Marketing

Product Roadmap for Executives