Vickie Peng: Why the Best Product People Actually Build Less Product? | E1141

Intro (0s)

• For pre-product market fit, it's advisable to choose a metric that represents customer happiness.
• Instead of using MPS, it's better to use a metric that's specifically an action in the product, such as an API call or a dashboard creation.
• People tend to overestimate the amount they need to build to learn what they want to learn.
• Vickie expresses excitement for the interview and mentions that Alfred, who usually sends curt emails, sent an essay of praise for Vickie.

Lessons from TrialPay (1m10s)

• Vickie Peng, a seasoned product leader with over 15 years of experience, shares her insights on product development and leadership.
• Peng emphasizes the significance of structuring problems and taking action to build conviction in a product's potential.
• She recounts her success at Trial Pay, where she transformed a side project into a major revenue driver by recognizing an opportunity to apply the company's business model to social gaming.
• Peng highlights the dual responsibility of a product leader in building both the product and belief in its possibilities, both internally and externally.
• She reflects on her career, often finding herself owning side hustles and relishing the challenge of building belief in unproven ideas.
• The most effective product leaders don't overestimate the product's development but underestimate the power of storytelling.
• Common storytelling mistakes include framing the story from their perspective rather than the customer's and focusing on the solution instead of the problem.
• To improve storytelling, product leaders should focus on how the product will change the customer's life, make the story resonate with the customer's problems, and create a unique and differentiated story that stands out from competitors.

Product Lessons from Polyvore (7m32s)

• Vickie Peng, a product leader, stresses the importance of building only what you like and what is necessary.
• She successfully transformed Polyvore's vibrant social community into a monetized platform by introducing a performance marketing engine without diluting its essence.
• Peng highlights the effectiveness of starting with minimal resources, such as running a sophisticated ad engine using a Google spreadsheet for a year.
• She agrees that you often overestimate the amount of product you need to build to learn and achieve your goals.
• To scale, you may need to do things that don't scale initially, such as faking certain aspects of your product operationally.
• The best product people focus on building the right products that solve real problems for users, rather than building more products.
• They prioritize understanding the customer's needs and pain points, and use that knowledge to create truly valuable and impactful products.

Biggest Takeaways from Instagram (11m56s)

• Vickie Peng identified Instagram's retention problem, despite increasing monthly active advertisers, as many users stopped using the product after trying it.
• Reframing the problem and understanding the actual issue to be solved is a crucial lesson learned.
• Peng joined Sequoia Capital due to her personal relationship with Jess Lee and the firm's belief in using technology to find exceptional founders.
• Vickie Peng joined Instagram's product team five years ago and believes that effective product management involves building the right product rather than simply building more products.

Good vs. Great Product Mission (16m23s)

• A great product mission should be customer-centric and describe how it changes the customer's world. It should be a long-term goal, not just a short-term objective.
• The metric for measuring success should be a single number that represents customer happiness, such as the number of times a user takes a specific action in the product. This metric should be aligned with the mission and quantify the aspiration set by the mission.
• The best product people focus on building less product by prioritizing customer happiness and value delivery. Output metrics, such as Mr, can be misleading, especially in the early stages of product-market fit. It's important to focus on the metrics that directly measure customer happiness and value creation.
• For example, a robotics company found that focusing on robot hours live, which measures the actual value delivered to customers, is more effective than tracking upstream or downstream metrics.

Starting Point for Effective Product Strategy (21m49s)

• Product strategy involves analyzing metrics, understanding gaps, and identifying user-facing hypotheses for low retention or engagement. Data and qualitative feedback from users are crucial in determining why users are not returning to a product.
• Focusing on a niche audience is important, but it's essential to consider the potential market size and whether there are enough users who deeply care about the product.
• Building a product for the customer rather than finding a customer for a pre-built product is a common mistake. Diluting a product for a broader audience may not be effective, even if it seems efficient.
• Product-market fit is an ongoing journey that requires constant adaptation to changing market conditions, customer segments, and competitive environments. Product people should not rely solely on off-the-shelf solutions but should be willing to rethink and customize their products to better meet the needs of their target market.

Three Different Types of PMF (27m9s)

• PMF content often discusses a product in isolation, focusing on reaching the right customer, usage, retention, and benchmarks.
• However, it is crucial to consider the market and customer mindset when building a product.
• The product should align with the customer's mindset and their relationship with the problem being solved.
• There are three archetypes of customer mindsets: hair on fire, aware but not actively solving, and unaware.
• Hair on fire customers are urgently trying to solve a problem and actively comparing available solutions.
• The key hurdle in this scenario is differentiation and overcoming noise in a crowded marketplace.
• Differentiation should be compelling and clearly communicated to customers.
• Founders often overemphasize their customers' pain, while customers may rate it as less severe.
• The terrifying question in this context is whether the problem truly matters to customers.

Advising Founders in Competitive Markets (31m10s)

• Founders should describe their products using the language of their customers to create compelling marketing messages.
• Overcoming the "hard fact" customer mindset requires demonstrating that a solution to their problem exists.
• Marketplaces can become complacent, accepting limitations as unchangeable, but disruptions like Uber can challenge this mindset by introducing new options.
• Building great products involves the challenging task of reprogramming human habits.
• To overcome entrenched habits, focus on solving problems that matter to people and offer compelling solutions.
• External events, such as the COVID-19 pandemic, can make previously unshakable habits vulnerable to change, but it's crucial to assess whether these changes are lasting or temporary.

Future Vision (37m58s)

• There are three paths to building a successful product: Hair on Fire, Habit-Forming, and Future Vision.
• Future Vision Founders have deep expertise in an area that allows them to envision a world that others don't.
• The challenge in the Future Vision path is overcoming skepticism and proving the validity of the vision through milestones and stepping stones.
• Hair on Fire products solve urgent problems with clear demand and budget, but they face intense competition, lower retention, and pressure for continuous improvements.
• Future Vision products have the potential for higher margins due to less competition and lower customer expectations for frequent updates.
• Vickie Peng believes in targeting large markets with no competition and building products for the unheard.
• The Delta 4 framework suggests that a new product should be at least four points better than existing solutions on a 10-point scale to be successful.
• Product distribution is crucial, and even if a product is better, it may not succeed if it lacks effective distribution channels.
• The best product people focus on building the right products that solve real problems and provide value to users.
• There is no one-size-fits-all approach to product development, and the best product people are able to adapt their strategies to the specific needs and circumstances of their users and their businesses.

Quick-Fire Round (46m59s)

• Founders often fail to achieve product-market fit because they don't solve a significant problem or provide a compelling solution.
• Founders should focus on understanding and articulating the customer's perspective rather than describing their product in their own words.
• Hiring product leaders too early can hinder the founding team's ownership of product vision and strategy.
• Product teams may experience tension with other functions due to a lack of collaboration and respect for each other's roles.
• New product leaders should build conviction in the problem and customer by understanding their needs and the company's internal processes.
• Linear's product strategy successfully targets engineers with a tool typically used by product managers and managers.
• Vickie Peng observed that senior engineers dislike traditional product management processes and tools.
• Linear prioritizes the needs and preferences of engineers, leading to its success and expansion to cater to a broader range of users in the development process.