Why is product management in Startups so different?

The core responsibility of product manager is to increase the chances of product’s success in the market and help to get a sustained growth (revenue or users). Why is that some product managers do exceptionally well on matured products and not so good at creating new products and vice versa.


The core responsibility of product manager is to increase the chances of product's success in the market and help to get a sustained growth (revenue or users). That raises a fundamental question - if product managers are challenged with same set of challenges at startups and corporations. Why is that some product managers do exceptionally well on matured products and not so good at creating new products and vice versa.

Working with startups and corporations, especially interacting with many products leaders in the silicon valley, we summarized the distinction. The questions always becomes, "Whats the difference between creating and maintaining for product managers?".

Creating a New Product:

  1. Hypothesis Evaluation / Product Market Fit : As easy as it may seem, the most difficult part of any startup is to make sure that they are solving a specific problem with right set of tools. It takes time for product managers to understand the real problem and the solution they envision is "good enough". It takes an incredible amount of time to understand the customers, market and several iterations along with R&D teams to bring that MVP to the beta customers. The crux of this step is to bring in a good amount of confidence level to the whole company they are solving a problem and customers care. e.g. If you are tasked with building a "private social network" for teens, your challenge is to understand if a real need exists and the solution you propose would help those teens. No matter how nice your product and design is, if there is no real problem to solve - then the product is bound to fail. In other words, we can't solve a non-existing problem.
  2. Business model (that works) : Startups are known for changing business models - not because its fun to change but that's the way you stay in business. Innovate; Try out; Move on. It takes huge effort to put together the leaders from product management, R&D, sales and marketing on what's working and what would take us to the next level. Business model change often brings a huge mindset shift to the entire team. e.g. If you start with license revenue, it may not be easy for you steer the company to adopt SaaS model. It's not just the product change but the mindset of the internal (sales, marketing,..) and external (customers, users, analysts, VCs) stakeholders. So, change management is critical to make the business model changes a success.
  3. The first customer : We are not talking about the first beta-customer. We may turn a beta customer into a revenue generating customer but getting that first customer to trust you and pay for your product/services is the key. It does not matter if you discounted the license but making your customer to write a contract and pay even a $1 is an achievement. Most times this first customer may turn out to be a reference customer. So, it is important to nurture the good relation and collaborate together on product road map.

Scaling and Maintaining a Matured Product:

  1. Scalability / Expansion : For mature products, by definition, the market-product fit has already been established. Markets understand the products strength and customers know what to expect. The challenge with the mature products is to understand the growth opportunities. The key question becomes "Should we expand into new industries?" and "Should we target international markets?" and "What other adjacent features can we create?". And whatever you decide to do, there might be an impact on the product, marketing, sales and pricing.
  2. Sales Enablement : As the products gets matured and team grows, invariably number of layers of people increases. From 2 member sales team you might grow to a 50-100 member sales team. The challenge really is how does the product team convey the right product knowledge to new/incoming sales teams. As the product matures the competition matures and so is industry. So, starting with the datasheets, play books, competitive analysis, win-against analysis, socializing win-loss analysis, there are bunch of activities that you got to focus on.
  3. Pricing, Renewals and References : The cost of sale is usually much higher than the cost of a current customer renewal. Usually a good amount of effort is spent in satisfying the current customer demands. Some customers are relatively more vocal about what they want and may squeeze you for that extra mile. Another challenge is to maintain the pricing level for the ever increasing customer demands. As the features and functions increase, you get to a state where you have change the pricing structure. Without the pricing adjustments, current customers are unhappy or new customers are unhappy. Lastly, as we expand the product, potential customers keep asking about the reference customers in the industry that they can talk to. However, getting reference customers is key to success i.e. to give their brand and time to you and your customers.

In summary, the product management challenges are quite different in startups vs. corporations. It's not just the question of new products vs. matured product but the whole eco-system that makes products successful is different.

Do you think of more challenges or has some stories to share with?