Better Product Management: Goals and not Flagpoles

Getting a sign off and blessing on a project

Requiring blessings and approvals delays hitting goals and devalues customer validated learning

As a manager, do you feel the need to control every resource and every action of your employees?  Do you want to know everything that is going on–and not just whether goals are being hit?   Do you put in place requirements for sign offs? If so, you’re likely get suboptimal performance from your team.

Often when mangers seek to control a process or know what’s going on, they introduce a sign off requirement.  Time spent getting approvals delivers little value unless it results in very meaningful change.  Instead, this act of ‘running things up the flagpole’ and ‘getting the Pope’s blessing’ mostly delivers value to the micro-manager.  Even if going up the flagpole changes the result, it’s often highly likely that both ideas we’re right–and no customer validated learning occurs to improve future decision making.

Recently a new product management process was provided to our team.  If someone wanted to start work on fixing a high priority bug–even one that affected 50% of online revenue, they would need to get 2 sign offs and alert a third person before work could begin.  This “flagpole” upon which a new activity needed to be run up and approved–provided transparency and control over resource allocation.  However, it means that bugs stay on the website longer, more time is spent getting sign offs, and less time is spent delivering value.

Another example is spending hours getting  approvals for website copy.  After 6 people spent about 6 hours each on copy, another 9 people spent two hours and a half hours in a room approving the copy.  Over 50 hours were spent on copy. The time would be better spent ensuring there was an A/B testing platform and regular usability testing.

Even a customer service organization can create the flagpole problem.  For example, often customer service representatives are required to get approvals for customer refunds.

A high performing company –without flagpoles–could solicit ideas in under an hour (instead of 50 hours), a/b test a few variations, get qualitative insights from usability studies and customer service feedback, and adapt on the go.   Ideas for copy from the 9 people could come via informal 5 minute meetings or emails.  The product manager would be learning faster, the results would be better and more repeatable, and 45 hours would be saved.  Another process done at one public high growth technology company is to have a daily 30 minute meeting with the most senior marketing person where they can provide input on anything launching–and it’s clear that they’re the gate preventing launch so it usually happens in a few days.

Perhaps most importantly, a flagpole process is not scalable.  A high performing 300 person or 1,000 person company should have too many website updates launching each week for 9 people to sit in a room debating for hours on end.  While it’s helpful to have some tone and style guidelines that fit the brand, long meetings for copy approval are not sustainable.

How do you avoid flagpoles?  Give the product manager measurable goals that are NOT just launching features.  The primary question is where are things tracking toward the goal, and what are the next few things being tried to hit the goal. With goals, it also becomes clear what matters more.  For example, if the goal is a conversion rate, the manager can focus on the emailed or verbal copy suggestions that will be seen by 95% of the users–where someone else in an approval meeting might spend precious time on the copy only seen by 5% of users.  And the answer is which copy converted better, not which sounded better (assuming it’s on brand).  With a goal of a conversion rate, the manager can also decide if the bug fix is worth the engineering time and disruption to hitting their goal. Of course, goals are not everything–for example, a product that grows revenue in the short term might hurt the brand and revenue over the long term–but they are very helpful.

Even operations teams can try to remove flagpoles.  For example, to remove flagpoles in customer service, consider allowing representatives to issues up to a certain dollar amount (e.g., $100) to streamline operations (credit to Tim Ferriss for this idea).

As you run your company, watch out for new processes that require approvals, as they can meaningfully slow down progress towards goals.

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Pinterest Was A Pivot From Mobile, With Funding in 2009

HelloTote was an iPhone app by Cold Brew Labs, the parent company of

I’m surprised that articles on Pinterest in Fortune and Business Week start the story with the launch of the beta launch in early 2010.  The story really starts in 2009 with a mobile app and seed funding.

The holding company for, Cold Brew Labs, was incorporated in 2008. One of the company’s first plans was to launch a mobile shopping app called HelloTote.  According to the SEC, Cold Brew Labs raised over $500,000 in July 2009 from investors.  I know this round included included the venture capital firm Firstmark.

HelloTote's Facebook group page, which has pictures of founders Paul Sciarra and Ben Silbermann, mentions using the app to save favorites.

According to its Facebook page, HelloTote was intended to be a “shopping catalog for the iPhone” where “you can browse items from dozens of retailers, save favorites, get sale notifications, and find nearby stores.”  The first version “…has women’s clothing, shoes, and accessories from stores like Nordstrom’s, Saks, Banana Republic, Shopbop, and J. Crew.”

Fortune must have been mistaken when they write that the Pinterest team was “hard up for cash” in January 2010, just 6 months after closing $500,000.  The small Cold Brew Labs team raised an additional $700,000 – $1,000,000 in November 2010, suggesting they were ran lean but never that close to bankruptcy.

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Delight Frequency vs Delight Depth

A friend in the VC community asked me to evaluate a mobile wishlist and deal finder.  Interestingly, that’s what SF darling Pinterest first raised money for with HelloTote.

I advised my friend to focus on how deeply and frequently consumers get delighted by the product.

  • Low delight, high frequency products offer a user low levels of delight daily. Facebook, Instagram, YouTube and Zynga are great examples.
  • High delight,  low frequency products offer delight a handful of times each year.  RentTheRunway and acted upon 50% off deals fall in this category.

If your product doesn’t offer over 50% off, you need to make sure it can deliver delight often. Delight can come in many forms:

* Getting a comment from friend and feeling a sense of connection

* Earning a badge and getting a sense of accomplishment

* Learning something

* Getting a laugh

* Showing something cool

What you don’t want to offer is a few dollars of savings or a few comments from friends a few times a year.  That is what a comparison search engine or mobile shopping tool might do.  Web comparison search engines like and need to invest heavily in advertising and search engine optimization because their product delivers only moderate savings and delight.  They struggle with retention.  A mobile app has an even more difficult time with retention because intent-based marketing opportunities like Search Engine Marketing on the web are immature on mobile.

And, of course, the deeper the delight you provide the more you can charge a consumer.

What impresses me about BirchBox is that they’re doing everything with their community, points, deals, instructional videos, and personality.

On the other hand, I fear Foursquare doesn’t offer quite enough delight beyond just badges with their low levels of interaction among the community and low monetary rewards.

Lastly, “time until first delight” is a metric that will drive retention and virality.  A wishlist and deal finder can  struggle to make a user delighted on their first visit.  On the other hand, a social site the lets a user interact with a friend or earn a badge, or a daily deal sites can offer 50% off, can do much better on offering some delight over the first 30 days.

How often do your favorite products delight you? Where to they fall on the chart?

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From Student Side Project to Apple “Staff Pick” with Elance

This post by me originally appeared on the blog of eLance, an outsourcing platform that I used to find contractors to build a prototype…and later to build KartMe’s first mobile app, which got a “Staff Pick” from Apple.  The post was shared over 600 times.

How did I graduate from Harvard with a live website and iPhone app, without spending my days programming? Mark Zuckerberg and Bill Gates dropped out of school to get their companies off the ground. But with Elance, I was able to get and KartMe Mobile running while still making it to all my classes and getting my homework done. Soon after launch, Apple awarded KartMe Mobile a “Staff Pick”. This led veteran investors to get involved. Before I knew it, I was living my dream of building a useful product used by thousands.

It all started when I told people I’d be moving to Boston. Suddenly I received lots of recommendations–restaurants to try, books to read, movies to see, hotels, ski resorts, and more. At first, I saved these ideas on scraps of paper. Then in a draft email. Finally, in an Outlook contact that sync’d with my phone. Months later, I realized I never used these recommendations. When I was out and about in Boston—I couldn’t quickly see which restaurants were around me. When I was walking by a bookstore or planning to go to a movie, I couldn’t quickly pull up my “bucket list” (that is, lists of recommendations of things to do). That’s when I had the idea for KartMe: an Internet site for the creation of online lists, where recommendations, reviews, prices, and notes are at my fingertips. It would help me organize and save. When a friend asks, I could share a list. I could use it at home, work, in class, or on-the-go. Saved information would instantly be available on my iPhone, BlackBerry, or Android.

I wanted to get a prototype together quickly, but at the same time I didn’t want to spend my days in front of a computer. Class was interesting and meeting classmates was really fun. I’d only be in school briefly—and I wanted to make the most of it. I chose to outsource so that I could be efficient with my limited time in school. Elance was my first choice because of the number and quality of vendors who could bid on my proposal.

Using Elance, I started working with a firm in India to put together a prototype website. Before class at 7 a.m., I’d chat with them using Skype. Once we had a prototype, I’d sit in our student center and show it to passing classmates. Based on their input, I decided to pursue the idea further. Again using Elance, I hired a team to build a full website. As soon as we started getting free traffic from Google, I had another firm on Elance build the iPhone app and mobile website.

I launched the site upon graduation. In the course of 6 weeks, Apple twice gave KartMe’s mobile web app a “Staff Pick” and called our site “really useful”. We raised some angel funding and are improving and marketing the product.

KartMe has helped friends and families to save, organize, and share 20,000 recipes, restaurants, books, movies, home design ideas, wedding dreams, travel tips and more. We’ve served millions of webpages, partnered with iVillage, been featured in Cosmopolitan, and more. I’ve had a blast running the business – particularly as KartMe has deepened relationships between families and friends.

Going forward, we’re making KartMe better at delivering more value to our members. We’re making it possible to pass grandma’s recipes down from generation to generation, while also ensuring you can look them up on your iPhone. We’re helping bridal parties share style ideas from their phone. And we’re ensuring friends can exchange mobile travel guides. If you want to follow our progress, start cataloging and sharing your favorites at

About the Author: is Phil Michaelson’s first company. He started the website, built the mobile version, and attracted users and investors initially by using Elance. Use for free to organize your recipes, plan your wedding, collaborate on a home design project, or organize travel tips, books and more. With KartMe Mobile, you’ll never forget an ingredient and can easily share with friends your photos of cooked dishes or fashionable looks. age, been featured in Cosmopolitan, and more. I’ve had a blast running the business–particularly as KartMe has deepened relationships between families and friends.

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Notes from Steven Blank Talk on November 12, 2010

I’ve been a fan of Steve Blank’s writing for a LONG time.  I wished HBS would teach more about the search for a business model.  Where you need to get out of the office, and test and refine.

Today, I not only had the the chance to hear him speak, but I also won a copy of his product management book,  4 Steps to the Epiphany, by limbo-ing better than the rest. If a picture of my limbo-ing appears, I’ll definitely share it.

Notes from Steven Blank’s talk:

  • A startup is a temporary organization used to search for a scalable, repeatable business model
  • Great founders know how to search for ideas that work.  Someone needs to build the business. And then, great managers know how to execute the busienss.  VC’s might want someone different for the different stages.
  • Startup metrics:  Customer Acquisition Cost, Viral coefficient, Customer Lifetime Value, ASP/Order Size, monthly burn
  • Startup customer acquisition: early adopters, one-off deals, done by founders, pricing/features are unstable
  • Startup product management:  you talk about testing hypotheses, minimum feature sets, pivots, continuous deployment, continuous learning
  • Your organization should not be a startup forever…or even 10 years
  • Customer development solves for unknown risk.
  • Founder needs to get out of the building
  • More startups fail from a lack of customers than a failure of product development
  • It takes 3-5 times for a CEO/product visionary to hear why a customer thinks their product sucks! Humans don’t want to hear what’s wrong about their idea.
  • Startups have a series of crises.  That’s just what happens. Pivot is the process to deal with them.
  • Customer development reduces customer risk and market risk.  It doesn’t reduce technology risk.

Also, thanks to Gary Whithill for organizing the event–and getting such a great speaker.

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The One Privacy Setting Facebook Forgot

Have you adjusted your privacy settings in 5 different places?  If not, your friends may be sharing your Facebook pictures, status updates, religious views and more.  Preventing your information from being used  across the web requires:

  • Visiting  Facebook’s settings for “What your friends can share about you”
  • Visiting  Facebook’s settings for “Instant Personalization”
  • Visiting Yelp
  • Visiting Microsoft Docs
  • Visiting Pandora

Instead of requiring 5 steps (a quintuple opt out!), Facebook should offer one setting, which allows you to easily opt out of sharing your data unless you give permission.

It seems like every year Facebook automatically ensures its members share more data with the world.  In 2007, Facebook Beacon automatically shared what members bought, without their permission.  In 2009 new privacy settings automatically defaulted most members information to the public.  Now, Facebook is looking to your friends to make your data public.  Senator Schumer is being polite when he says, “This opt out procedure is confusing, unclear, and you might even say hidden”.

It might be acceptable if this was the only place where you had to go to opt out of sharing:

Facebook privacy setting

In the image above, you’ll see the top privacy setting area is for your personal information.  However, there are now more privacy settings that control where your personal information gets shared. The settings below are not located in “Personal information and Posts”–they’re in “Applications and Websites”.

Facebook privacy setting

In fact, after exploring all the options above, in “Applications and Websites” area, I came across these settings for “Instant Personalization”:

Facebook privacy setting

I thought I’d click to “Learn More”.  That led to a long list of Q&A, where I found this:

Facebook privacy setting

So, it turns out that to ensure my past comments and pictures stay private, I need to visit each “instant personalization partner” of Facebook and opt out.  After doing some research, the Electronic Frontier Foundation confirms that only way to fully opt out of Instant Personalization is to take all these steps.  If you don’t take all these steps, your friends may unknowingly share all your past activity on Facebook.

Facebook says it requires Yelp, Microsoft and Pandora offer “an easy and prominent method for users to opt out”.   It would be nice if Facebook took its own medicine.  Here is a proposed privacy setting:

Proposed Facebook Privacy Setting

Facebook could define partners as applications, advertisers, and third party websites. They could offer more detailed options.  But the general idea is to make it a double opt-in system (1. you say you’ll share, 2. you say which partners to share to) rather than a quintuple opt-out system.

What do you think?  Should Facebook offer one easy and prominent method to opt out of sharing?

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Raising Angel Funds in NYC: 5 Lessons Learned

About halfway through KartMe‘s angel raise, I took a second to jot down some lessons learned.  This post originally appeared on’s blog. Without further ado, here are the lessons:

1. Angels want to see you making measurable progress.  To get to the next level, you’re going to need to show measurable results.  Whether it’s revenue per customer, user growth, or a viral coefficent, something measurable is required to either raise money or pay your bills. Start measuring something now.  It could be retention, content creation, unique visitors, bounce rates, something.  Should you get investors, they’ll be following progress in monthly updates…which will mostly include numbers.  So start measuring, and start showing improvements to investors.  Investors know your ideas are going to change, and all they’re going to have to judge success on is numbers, so you might as well start executing and improving based on more than just your gut.  A big mistake I made was showing investors new “designs”, thinking that qualified as measurable progress.  No one cared. In fact, they just wondered why the designs weren’t live and doubted my ability to execute quickly. To summarize, get to know angels a few months before you want to raise funds, and start showing measurable improvements.

2. Angels like simple ideas.  Investors are busy.  Angels are even busier as investing is often a side project for them.  They’re not all going to sign up for your product.  They’re not all going to read your business plan.  Give them a simple explanation that they can remember and explain to their colleagues, spouse and child.  When I explain KartMe now, it’s:  we help people share lists and we monetize with commissions.

3. Angels like teams.  Ideally, your team with have 2 technical co founders and one business person.  It seemed that every investor had a story about a technical person who became unintereseted in the company, leaving the business person floundering.  They like to see long standing relationships between teammates located in the same location, so flight is unlikely.  They like to see that the business person can “attract talent”.  They like the idea of 3 people working until midnight for what amounts to a very low hourly cash wage.

4. Angels are sophisticated investors. Nearly all angels I spoke to throughout the process knew everything I’d learned in business school about fundraising.  They all wanted price protections, participation opportunities, “caps” on convertible notes, etc.  Once you get beyond friends, family, and supportive entrepreneurs, assumes angels willl know more than you about investment terms.  The investors committed to KartMe have probably done over 100 deals as angels, VCs, and private equity investors.  They’ve gone through every term in our agreement, thinking about good and bad outcomes. They thought to set aside funds in case things go bad (and they can buy more of KartMe at a discounted price) or good (and they can preserve their share).  With the new  angel funds, like Founders Collective and IA Capital Partners, I’d assume the sophistication of angels is ever increasing.

5. Closing takes momentum, which you can generate. There were at least 5 different “mini-events” I’ve used during the last couple weeks to get commitments.  A PR hit let to an investor putting an offer a on the table.  One party putting an offer on the tabe gave me something to get another party in.  One resume of an investor got another investor excited.  One parties cash in the bank account helped me get another party to commit.  Getting over half the money I wanted committed enabled me to get another party to commit.  As you approach your fundraise, try to have as many exciting, momentum generating events as you can ready.

Fundraising has been a great experience.  I’ve been able to refine the marketing pitch and have a better sense of what metrics matter.  These are just 5 of the many lessons learned.  More about the experience of raising capital is coming.  Stay in the loop by following KartMe on Twitter.


Kart:   Best Startup Reading – Articles

Blog:  Pitching without PowerPoint: 8 Tips for a First Meeting

Page: The Best of 2,000 Karts

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Build a business, not a feature

Are you afraid a competitor could quickly replicate your web application?  If you’re not, you should be.  For better or for worse, intellectual property rights appear to not mean much on the web.  And as a web application provider, you’re offering is up there for everyone to see.

Recently, Google launched two products that may have immediately put competitors out of business.  Its “to do” list list is a direct threat to Remember the Milk and its Latitude product is a direct threat to Loopt.  Whether fair or not, Google, Facebook, Amazon, Apple and Microsoft have virtually free distribution through their “installed base” of search, social, ecommerce, music, and browser/os users.  And those firms have the technology talent to copy many web application’s features.  So, how can you build a business that is not a feature big firms can replicate and distribute?

1) Target a profitable niche: Most big companies only look at big markets.  They need to increase the value of a multi billion dollar business.  Only Amazon seems to go after tiny markets, given its decentralized operating structure.

2) Create switching costs with users: If a user has to invest time to learn your application, and placed data in your application in a proprietary format (think: photoshop and their file system), then a user is likely to remain with your service even if someone releases the same features.  But be careful.  Data in a proprietary format that exists elsewhere (e.g., my friendgraph is known by Facebook and Google/gmail) or data with a high decay rate (e.g.,  last week’s “to do” list)  does not create a switching cost.  Sharing sensitive data, like financial information pushed to, could reduce the likelihood of switching, as users tend to stick with partners with whom they trust with their important data.

3) Build supplier and distributor partnerships: Unlike features, businesses have suppliers and distributors.  If you’ve negotiated exclusive partnerships with a low cost or unique supplier or distribution partner, then you have an unfair advantage that can’t be replicated.

What else do you think differentiates a business from a feature?

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The front page isn’t where the advertising revenue is (or was)

Reddit had a catchy tagline. They were going to be your “front page of the web”. After getting an audience, and selling to CondeNast, they quickly changed business models to focus on providing a technology that can go after verticals, like cosmetics with, now  Why wasn’t Reddit bought to be a front page?

Some things in media don’t change too much. One is that the front page isn’t where the money is. Back in 2001, I was given a case interview from a global consulting firm on why newspapers revenues were declining. The answer was that websites like Monster, eBay and Craigslist were taking away the profit centers of newspapers. The lesson was that newspapers used their front page to draw readers into verticals that they could monetize. And the web was doing a better job in serving consumers in those verticals with functionality like search instead of getting ink on your hands.

Mozilla’s FireFox has an interesting in their approach to this problem. By providing you a browser or entry point to the web, they’re essentially a frontpage, if only the outside border of your page. And they’ve monetized this space by selling ‘default’ positioning in the search bar. iGoogle and MyYahoo have a similar approach to monetization. Front pages can serve as lead generation for search businesses.

This is why Digg is going to have trouble delivering returns for investors with an advertising based business model. They can’t grow the value of their ad inventory unless they can steer users to a profit center. Of course, Digg can try other things.

Can Digg provide a myDigg to users that serves as a front page, allowing them to tap into this search revenue? Is that where they are heading with their recommendation engine and your data made available through Facebook Connect? Time will tell.

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Watch out, Founders! Early decisions lead to awful user generated content

Online communities have a tough time getting started. There is a chicken and egg problem. Who wants to join a community that doesn’t exist? To solve this dilemma, Yelp’s CEO openly admits that early on the company decided to pay reviewers and now pays “community managers” in major cities. A second founding decision was to focus on getting the most reviews possible with its user rewards system.

Yelp’s founding community in any city is those who are willing to contribute reviews for low pay (i’m assuming rates did not attract top writers and bloggers…because it didn’t). For example, for many moderate and expensive restaurants, reviews often cite discounted Restaurant Week specials. Yelp is now challenged with broadening its set of active contributors in order to get broadly applicable content for the larger audience it is attracting.

The second original decision founders made was to encourage the community to review often. Online Karma awards are given for Firsts, and users compete to see who can have the most reviews or Firsts. As the community prefers to be heard rather than rated, Yelp accepts reviews about old meals or reviews that focus on the circumstances of the meal. Sadly, this has led to a proliferation of low quality reviews for restaurants, a category where one size does NOT fit all.

I think Yelp has a lot of potential (17 million unique visitors a month is already impressive), but right now the main feature that helps me is the mashup of google maps, yellow pages, and pictures.

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