In Part 2 of our conversation with Tim Schulz, we delve into some key product management learnings from his time at Google, and from his current role as Chief Product Officer at Bigcommerce. Watch the video to hear Tim’s take on:
- How to tackle pricing and packaging, and how to determine which features to offer out-of-the-box and in different tiers
- Their 40/30/30 model for allocating product development resources: 40% on big bets, 30% on tech debt, and 30% on customer requests
- Why product managers should have a “maniacal focus on the customer” and always incorporate customer conversations and feedback into development
Tim Schulz: There are a lot of partners on the lower end that take care of that, but as you move a little bit more up market, we've found that we've had to build more robust capabilities into our platform there. To err on the side of going with a partner or the partner doesn't exist, consider how far we invest.
Matt Pasienski: Is that something where you've had to structure your product at a tiered approach? You had a SMB product platform and then there's another enterprise tier with more advanced features?
Tim Schulz: That's basically how it works. Now it's all shared in the same platform, or multi-tenant SaaS, and that's good for everybody. We, unlike some competitors, did not have to go an architect some new system and now we have two different codebases. It's all in the same codebase. It was built with moving up market in mind, so we already had a lot of great capabilities. That's exactly how it's worked traditionally, where we have different feature available for certain tiers. Typically those pricing tiers will align to a persona of size of merchant. We're actually revisiting that in this next year, where because our mission is to help merchants sell more than they could everywhere else. We're moving a lot of those features into our lowers tiers and just democratizing, and moving our pricing model to a more shared service model. Where as the merchant grows, we are able to get more money from them to invest in the product and get more features for the lower tiers.
Matt Pasienski: I think this is absolutely critical to a business, especially as a business grows, figuring out the pricing and the packaging. What are the signals that you're looking for and what's your, I'm just assuming you have a very experimental approach to determining where these things are going to succeed. What do you look for when you're deciding what to offer right out of the box, for instance?
Tim Schulz: On the pricing front... I'll take the pricing front and then the product front. On the pricing front, we know that industry analysts say that an online merchant is, a merchant who sells online, is investing about 7% in that channel of [GMV 00:01:51]. 7% of every dollar they collect to spend on maintaining that. Of that 7&, that includes a lot of other ancillary solutions to the e-commerce platform. The e-commerce platform is typically around 2 or 3%. We aim for that take-rate threshold when we do our pricing. When we think about what features to democratize, we say, "Well it help a merchant sell more and be more successfully online versus their competitors?" What is the competitor ecosystem doing with those features? Are we more competitive because we moved them down? Lastly, how much does it cost us to offer that service? If it's high cost, then we really try to scrutinize to think, "Is it good to move that all the way down?" Are we just blowing out support costs, things like that. There's lot of examples, but that's typically how we're approaching it now.
Matt Pasienski: How do you get feedback from the field? Now you have people who are accessing with your biggest clients, then you have the SMB tier. How do you synthesize all those different types of requests, and feature requests, and bugs and all that? What's your process and how do you make sure that your product team is handling that?
Tim Schulz: Before solutions like Wizeline came along, it was spreadsheet hell for us. We had these large Google docs and we would collect feedback from prospective customers, current customers, new current customers, longtime current customers, analysts and aspirational customers that we want to have. We divide that out across sales, support, marketing and everybody gets this information. We sift through it and have a top list. We've also launched idea sites in the past where it's almost like a Stack Overflow model. People submit a feature and people can vote that up. All of these have been helpful.
The way we usually think about our product development lifecycle against these requests is we have a model of 40/30/30. Of our engineering resources today, we like to invest 40% of that capacity in what we call "Big bets". These are the big rocks of things that move the business in some new area that we haven't been in previously, or there's a big opportunity that we're modesty invested in but we need to invest a lot more. Another 30% goes into tech dev, and that the... You can probably define tech dev, but it's essentially those areas where we've had maintenance, we've had to cut a corner in the past to get something to market, we need to go back and brush up that API or whatnot. The final 30% is customer feature requests, so actually aggressively tackling these.
Against this 40/30/30 model, we have a durable teams PM model. We assign tracks of work, whether that be order management or merchandising or analytics, driven by PM and they have a dedicated set of engineering. They're each given this 40/30/30 mandate. Especially for the customer feature requests, the PMs are reaching to customers, talking a lot to them and getting customer feedback through whatever system or tools that we're using, be that solutions like Wizeline or Google Docs or things like that.
Matt Pasienski: Was that something you carried over from Google or earlier? That allocation model of 40/30/30? That sounds like a very, honestly that's I think an industry best practice of really just separating two things. Separating your analysis into like, "Hey we're going to fix bugs but we also need to move the ball forwards on big initiatives."
Tim Schulz: Google was blessed with 90,000 dollars in profit every minute, so I think that they could actually invest in a lot of these things concurrently at the same time.
Matt Pasienski: They had 100/100/100.
Tim Schulz: Maybe 300/300/300, to hit Larry Page's moonshot goals, which is exciting but I think the one thing that I did carry over from Google is... Something that I've had to continually relearn and teach myself is a maniacal focus on the customer. Not letting, there's such temptation at a technology company, especially internet technology company to kind of let the technology do the work for you. You just make these product decisions and you roll things out. I forget that there's a human being on the other end of that monitor. Talking to them a lot, watching them go through use cases, doing a lot of user testing and being as humble as possible when we develop products. So that we don't let our cerebral knowledge about our industry or our own great ideas, which you can see on any of the white boards in the room here, ahead of what the customer really needs at the moment. Number one, and always continually iterating and extending betas and pilots in some periods so that you get to the point where you launch a feature, it has very high customer sentiment and they want to share, they rave about this.
Matt Pasienski: This is no joke. I took a little tour of the office before we started and I saw, the only thing I saw on the screen, I'm not stealing any knowledge, was beta exit criteria. I was just like, this is such a good thing to see when you talk about what is the finish line for our development, not just what are building.
Tim Schulz: Yeah. We just came out of this last year, we shipped 120 features this year with the team that we grew from two people in SF to almost 100. We've learned looking back that there's a certain high you get from launching a product. I did it on launch day. The question we're asking ourselves is, what's the right high we want to have? Do we want to have like crack-cocaine high, or bikram yoga high? This beta exit criteria-
Matt Pasienski: That's a very San Francisco kind of-
Tim Schulz: We've very comfortable talking about crack-cocaine and bikram yoga in the same sentence.
Matt Pasienski: Right on market street here.
Tim Schulz: Beta exit criteria, and some of the engineers and product managers ask, look if we have this strict criteria and shooting for NPS 7 or 8 on feature launches, it's going to result in fewer releases. Not overall, but in some ways. Consolidating teams around larger rocks and we're okay with that. We've learned that getting one thing really big, really right the first time has just a huge impact on customer sentiment. It impacts churn, it builds our brand. It's important to get the product right. Mid-market [SaaS 00:08:05] is tough. You look at companies like Hubspot where they invested a couple of years in just getting it right, and then all of a sudden you see the sales turn around, you see the market turn around. I had a conversation with one of our board members. I'm very open with what I really like and what I'm frustrated by. One of my frustrations was we're hitting all the right buttons, we're partners with all the best companies, we're launching all the right features, and it feels like the circuit board isn't connected to the mainframe.
Nothing's happening. It's just one of those things where you have to keep towing M&Ms into a well and then eventually you start to see the kind of colors come up. We're finally hitting this point where customer sentiment is really turning around. We're doing townhalls, hundreds of customers are attending now. We're present at conferences and people are coming over to us and saying, I just love e-commerce. I love all the innovation you guys have been doing. It's very reassuring. For a little while there, it was hard. We were in the troughs, just speaking into this echo chamber, but finally we hear the echo chamber speaking back. It's the voice of a lot of happy customers and pleased partners and we're thrilled.
Matt Pasienski: That's really interesting that you're using NPS to kind of define the end goal, because there's a hundred things that could go wrong that could just completely destroy... Like you said, you're in your own head about our technology, you focus on the 30 things you're good at, not the 70 things you're missing. NPS has unlocked that for you and helped you get closer to the customer.
Tim Schulz: Our CEO Brent has another take on NPS. It's an additional layer that's been very very helpful, and that's that you categorize what you're doing in terms of table stakes. Table stakes in the middle, differentiators on top, and then non-core things that you have to have in place, but maybe it's farmed out to partners or it's just something that you check a box on it. The non-core and the table stakes features that you need just to be in the business that you're in, should have an NPS of about seven or eight. If you've invested to a point of getting NPS at nine or ten in those, maybe you over-invested. The differentiators should've, you'd focus nine or ten. Nine or ten focus should be the NPS there. That way the customer's are amplifying that which is actually differentiating your business and they're raving about the things that's hard to compete with. That's how we look at this, and that cascades into our 40/30/30 model and it also impacts which durable teams we put on certain initiatives and how big the [inaudible 00:10:24].
Matt Pasienski: That's fantastic.
Tim Schulz: There's not like the size of maybe a JC Penney or a Nordstrom. We don't encounter that as much in our business. In fact, a lot of our merchants push us to innovate because they're trying to compete with these big retailers.