[On-demand] Product Management Webinar: Business Fluency

[00:00:00] Janna Bastow: All right. Hello, everybody. Come on in. I can see there’s people who are just getting in now so welcome. Come on in. Grab yourself a seat. Say hello. Open up the chat there and say hi. Let us know where you’re calling in from. Myself, I’m in Brighton, UK. Shardul, where are you? 

[00:00:18] Shardul Mehta: I am outside of Washington, DC.

Oh. About an hour outside of… in a place called Ashburn, Virginia. 

[00:00:23] Janna Bastow: All right. Who’s closest to Shardul? Well- There we go. We’ve got Matt. Hi, Matt. In from Edinburgh. Welcome 

[00:00:31] Shardul Mehta: he’s a couple of miles away. Yeah. 

[00:00:32] Janna Bastow: Yeah, exactly. Just the other side. Yeah. Yep, absolutely. I can see people are just filtering in now, so come on in, get settled in, and we will kick off very soon.

I can see everyone’s note takers are here as well. Feel free to take notes. This will be recorded as well you will get a copy of this or you will be able to find this online as well as the the transcript. And we got Jason calling in from Nashville. Hi, Jason.[00:01:00] 

Hey, Jason And for everybody here, feel free to open up the Q&A section as well. If you got any burning questions, drop them in there either as right now if you got anything up front, or as Shardul and I talk, drop questions in there. And I’m gonna give people just another minute or so to settle in, and then we’ll properly kick off.

Somebody coming in from Spain. Great. Hey, Sam. People are slow on the keyboard today. It’s really hot where everyone is. It’s really hot here. I’m not sure anybody else is suffering from that, but it’s really slowing us down, I think. 

[00:01:41] Shardul Mehta: We’ve had a heat wave over here the last few days. Been like over- Yeah

100 degrees Fahrenheit, which- Ooh … I’ll let our- 100 degree Fahrenheit, but I know that’s too much … 

I’ll let our international audience do the whatever the hell- … the math works on that, yep. Yep, 

[00:01:55] Janna Bastow: absolutely. 

[00:01:56] Shardul Mehta: Cold and raining in Scotland. 

[00:01:58] Janna Bastow: Oh, that sounds like a nice [00:02:00] change

Gonna be hot today in Colorado. That’s right, it’s morning for a lot of people, isn’t it? It’s much earlier in the day. It’s end of the day here for us we’re just wrapping up. Cool. I can see that people have settled in. We’re gonna kick off in just a second

[00:02:15] Shardul Mehta: Yeah, I think Colorado’s a couple hours behind me, if I’m… If I got my time zones correct. 

[00:02:21] Janna Bastow: All right. Cool. People from all over the place. This is great. All right big welcome. Thank you, everybody, for joining. Welcome to this ProdPad Expert Fireside Series this webinar that we’re running today.

It’s great to have you here. So this is a series of webinars that we’ve been running for years. All the past talks are recorded, so you can go onto our site and find those, and it’s been a mixture of presentations and firesides, but basically always with a focus on bringing in amazing experts a focus on learning from their experiences, learning from what they’re picking up in the wider market.

You will have a chance to ask questions. You will have a chance to chat with your fellow product people here. And [00:03:00] today is gonna be recorded and shared with you, so you don’t have to take copious notes. We’re doing that for you. Big welcome. Thank you so much for being here.

We’re gonna kick off in just a second, but I wanted to give you a little bit of a heads-up of what we’re up to here at ProdPad. So I know that there’s some folks here who are already supporters of ours, already people who’ve been using ProdPad for a while. Thank you so much. For anybody who isn’t familiar with ProdPad, it’s a tool that we built when we were product managers ourselves.

We needed something to help us keep track of all the experiments and feedback and all the different metrics and things like that we were trying to keep on top of. So we built something that gave us, as product people a sense of control and organization, a sense of transparency for the rest of the teams, they know what’s going on in the product management world, and it gives you a single source of truth for all your product decisions.

Defensible, clear decision-making put in a place that the entire team can get behind and your execs can get behind. And it’s now used by thousands of teams around the world. It’s something that you can try completely for free. We’ve got a sandbox version of ProdPad where it’s basically preloaded with example data, including things like [00:04:00] Now-Next-Later roadmaps and OKRs and other bits and pieces so you can see how it all fits together.

This is something that’s built by product people for product people, so give it a try and let us know what you think. In the meantime, I wanna get on and introduce you to our guest for today. This is Shardul Mehta, and Shardul, he and I have crossed paths a bunch of times because he’s basically a product OG.

See people will call him a product Jedi, and it fits. He’s a seasoned product executive, a four-time founder, writer, speaker. Basically a big career spent bridging messy innovation and in a institutional scale, from anywhere from startups to Fortune 100 enterprises. He’s the founder of Street Smart Product Manager, where he mentors the next generation of product leaders, and he teaches improv on the side.

So Shardul, thank you so much for being here. Why don’t you jump in and fill us in with more of what you’re working on? 

[00:04:52] Shardul Mehta: Yeah. Thanks Janna. I’m really excited to be here. Let’s see. Should I, can I go ahead and just share the slides? 

[00:04:57] Janna Bastow: Yeah, you can jump in straight into your slides.

I’ll [00:05:00] stop my share, and you should be able to share your screen. Okay. And so today we’re gonna be talking about why roadmaps don’t get funded. Yeah. What executives are actually buying. Are you good to share your screen now? It’s saying someone else is sh- … Oh, wait. Allow. There we go. Okay. I’ve allowed you to do we’re in. Can everybody see his screen? 

[00:05:20] Shardul Mehta: Okay. So yeah, y- you got the screen, screen up? 

[00:05:24] Janna Bastow: We got it, yeah. 

[00:05:25] Shardul Mehta: It’s my gray-haired face there. 

[00:05:28] Janna Bastow: Okay. We can see you. Very good. Right here. 

[00:05:30] Shardul Mehta: All right. Okay, cool. Thanks, Matt, for confirming. So buckle in, folks. Please place your seat backs and tray tables in the upright position.

This is gonna be a bit of a fast ride. I’m a fast talker, but I told Janna she can feel free to interrupt me at any time ’cause I can just go. Those of you who probably know me know I can talk a mile a minute. But to get us started, I wanna kick things off with a question.

Think about your roadmap today, and which statement would you say best describes your roadmap today? Is it mostly [00:06:00] stable, frequently challenged, constantly changing, or it feels completely out of control? Just type a number in the chat and let me know. 

[00:06:10] Janna Bastow: I have some bets on what we’re gonna see.

There we are. There’s a number. 

[00:06:13] Shardul Mehta: We’ve already got fours and threes. Yeah, there you go. Sounds very familiar. Okay, I think I’ve caused enough trauma already, Janna, so I think I should move on. So yeah so my partner Mike Smart, whom I’ve been working with for quite some time on this project, he and I have been talking to product leaders over the last year.

And so look at this picture. This is what they tell us product leadership feels like for them, and I suspect it probably feels like that for many of you as well. I know I’ve lived and breathed this as well myself. Every week you’re balancing these top-down expectations against the bottom-up reality, right?

And you’ve… In the midst of all that, there’s this relentless push for growth, and sales wants commitments or they make commitments for us. There are feature requests, support tickets, and bug fixes. Engineering always seems to wanna refactor everything. And of course, there’s [00:07:00] always that executive fire drill that I know we all absolutely love.

And somehow, in the middle of all this, you, us product people, are expected to turn all of this into some kind of a coherent roadmap, which kind of explains why we’re all basically tired. Now, when we asked people, why is this, right? These are some of the common, not the only, but some of the common explanations that we hear.

And certainly if you go on social media, certainly LinkedIn, newsletters, podcasts. Not yours, Janna. Yours is wonderful and perfect. Thank you. Other podcasts and webinars. But you go to Reddit and Slack communities, you hear this echoed all the time. We hear it echoed in the people that we coach.

And look, to a certain ex- extent, there is some truth in these, right? But here’s the thing. We’ve been saying this stuff for years. I mean, if we’re really honest with ourselves, we’ve been saying these things for years, decades even, and how has that really worked out for us, right? We’re still faced with these problems years and years later.

And to be [00:08:00] honest, it’s a very “they are the problem” oriented type of view. And, if we just explain to them how product is supposed to work, and if we have the right perfect product process, everything would be perfect, right? That’s what we’ve been telling ourselves for years and years.

But based on our conversations Mike and I have developed a different view, which is that what if none of these things are the actual problem? Now, I’m not saying that we don’t need a product process and we don’t need a roadmap and all that kind of stuff. Obviously, we do. But here’s what I am saying.

Product management and executives are operating off of two completely different scoreboards. In PM, we’ve basically celebrated and glorified the things on the left here, right? Engagement, discovery, features, orchestration, speed. And I’m not saying they’re important. They are definitely important, but the thing is that where the market is going, they’re not enough.

Executives are operating off a completely different scoreboard. They look at, when you really boil it down, they [00:09:00] look at growth, retention, profitability. They’re not interested in a product mindset or in developing product thinking, no matter how much we would love that. They’re not gonna be, quote, “product-led”

What they want ultimately is confidence that the company will hit its goals. And so if we can’t map our product work to the scoreboard, how can we expect alignment, let alone commitment, right? This is the fundamental thing. So here’s my next question. Think about your roadmap. How many initiatives on your roadmap can you directly connect to the core unit economic driver of your business model, right?

So go ahead and type a number in the chat, like X out of Y or a percentage. Ballpark it. And in fact I’ll add another one. Can you name the core unit of growth for your product?

One of N. [00:10:00] I love the honesty

A-R-R. Okay?

Overall, I seem to have quieted the chat. I’ve stumped everyone. Well I’m gonna… You can keep adding to the chat if you’d like, but I’m gonna, I’m gonna go on. Now look if you don’t actually know the answer, don’t feel bad. This is Vegas rules. It’s just us. And because honestly, none of us were really trained, and certainly I was never trained to think like this when I got my product management training in this, right?

And if you look at the last 15 plus years, the good that’s happened is that our product craft has become very professionalized, right? So like certainly if you go back to- when I go back to when I started, we didn’t even know what the heck we were doing. And certainly if you were outside of Silicon Valley, which is where I was, product management was just a name.

We didn’t know what the heck we were really doing. We were sort of [00:11:00] making it up as we go along. But over the years, fortunately it’s become a robust operating discipline, right? We know how to organize work. We’ve developed a common language. We now know how to ship better. I mean, even before AI, right?

I mean, it was all about improving flow, coordination, delivery confidence. But there has been a byproduct, and the net effect is that the result is we speak a different language than what our executives and frankly the rest of the business speaks, right? We’ve sort of got our own inside sport terminology.

We’ve started operating against a different scoreboard. I mean, I’ve been on forums, and I won’t name names, but I’ve been on forums where I’ve heard product leaders say, “Well, we can’t be held accountable for revenue.” And I’m telling you, you say that to commercial people, executive people, and they just, they shake their heads.

And I don’t believe we’re actually prepared for where the market is going. The process of product development, as we know, if you’ve been keeping in touch with AI, is getting massively disrupted So the product craft [00:12:00] is table stakes. I’m not saying it’s not important. It’s just, it’s now just become table stakes.

You’re not gonna be differentiated in any way because you can build a roadmap or you can do discovery or anything like that. And I don’t believe what the focus that we’ve been on so far with AI is really preparing us for what’s coming, and I’m gonna try and prove that to you over the course of this webinar.

So let me share a story with you. There’s a company, NatCare, name I’ve changed, okay? But it was a real company. The president and GM issued a high-stakes challenge. He said, “Grow the business from 30 to 55 million in annual revenue in the next 18 months.” And to get there, he demanded what he called the insight killer strategy, which was a plan which was specifically built to beat their biggest competitor.

Again name changed. So how do you think the product team responded? Well, first, they did this, where they panicked. And they thought, of course, they needed months of new research and a brand-new roadmap, and they did what product people are trained to do. They set up a bunch of [00:13:00] discovery calls, and brainstorming meetings were scheduled, and Miro boards were drawn up and all this work that we normally do.

But then their product leader looked a bit closer at their backlog and discovered something really interesting. It turned out that the ingredients of success were actually already there. It was just this messy pantry full of raw ingredients, random tickets, user stories, half-baked features. But all they lacked really was just they didn’t have the recipe.

So what they then did, what the product team did, he challenged his product team, and the product team did exactly what you’d expect. Their first instinct was to organize the chaos, ’cause that’s what we’re trained to do. They grouped related items together. They created themes, built epics. They applied all of our brilliant prioritization frameworks and rearranged the backlog into something that was more manageable.

And they presented that to the product leader, and they took basically a messy pantry and turned it into a neatly organized bag of groceries. Now, this wasn’t gonna work, and the product leader recognized that immediately because the PM, the GM was not asking for [00:14:00] a bag of groceries, right? So they took another pass, and they assembled their work into this polished product proposal.

It was really beautiful. The presentation looked great. It was packed with features and capabilities, screenshots, all these roadmap items. They even created a quick prototype, and it looked like this great presentation And they presented it. And unfortunately, the meeting was an absolute disaster because – the GM didn’t want to eat any of their food, basically.

Because he wasn’t asking for a product description. That’s basically what they gave them. He was asking for a growth strategy. He was asking where to invest the company’s resources. So the team had taken the groceries and arranged them neatly on a cafeteria tray, and all the ingredients were there, but nobody could see the meal.

Nobody could see the theme. They had explained what they wanted to build, but they had failed to explain how it would actually grow the business. So it’s not that they weren’t smart or capable, it’s just that they basically just failed to stick the landing. So the team had presented this collection of [00:15:00] features in this beautiful PowerPoint presentation, and it failed because the president was really looking for a business investment proposal.

He was not looking for a feature capability. He was not looking for some kind of our typical Jira roadmap. He was looking for a business investment proposal. So they needed to stop talking so much about screens and workflows and technical capabilities, and they needed to start talking about fundable units and investable bets.

In other words, they had to present a dining experience with a clear theme and a signature dish. So that’s what they did the second time around, and the reaction was completely different, and the president immediately approved the initiative. And the reason was very simple. Because what had looked like a disconnected collection of product ideas the first time now looked like a focused growth strategy that seemed capable of generating $10 to $15 million in business impact.

And it’s not because they had done some brilliant discovery or that the features were different, it’s just that they had finally explained [00:16:00] why the investment mattered. So the underlying ingredients were all the same. It was just the way they were prepared and presented. So that bag of groceries or that pantry full of random ingredients, they had now become a signature dish, and so it was the framing that had changed completely.

And so by organizing just their existing backlog into a business case with a commercial investment thesis, they had created a signature dish that their executives absolutely loved. And so this kind of gets to one of the core principles that Mike and I have been- for any of you out there who’ve been following me and Mike for some time, we talk a lot about this.

We certainly teach it in our course. Executives do not manage products, they manage value. This was in fact actually not even my quote. This was a quote by one of the executives, by the way, a non-product business executive. This is a verbatim quote. “We don’t manage products. We’re held accountable to manage value.”

And so to influence them, we have to map our product work to their valuation drivers. If we speak in [00:17:00] product craft while the ELT is speaking in customer acquisition cost or bookings or EBITDA, we’re paying a credibility tax If our team status is green, it doesn’t mean a whole lot if the company scoreboard is red.

That’s not alignment. And so what the executives are actually funding is they’re not funding roadmaps. They’re definitely not funding features. They, now they may ask you about these, and they certainly do, but it’s because really two reasons. It’s because first of all, they see them as proxies to the real results, which is impact to the company scoreboard, and also because some of them shared with us privately, they don’t believe that the product team understands the scoreboard or understands the business model because all they hear out of the…

what comes out from the product team is just features and roadmaps and technical stuff at the end of the day, and our operating models and those sort of things They talk about features only because they’re supposed to deliver revenue. That’s the way they look at them. They talk about the roadmap, [00:18:00] they wanna look at the roadmap because they look at it as supposed to drive delivering growth.

So what they’re funding are investable bets, right? So when they look at your roadmap, they’re asking themselves four questions. Whether they verbalize this to you or not, this is what they’re asking. When I got into the executive chair, it’s what I was asking as well. They’re looking at what changes in the business for the better as a result of investing in this roadmap or this strategy?

What’s the upside? What’s the downside? And what’s our confidence? Why do we believe in this plan, right? And so the executive conversation that’s really happening is not about what should we build, it’s really about where should we invest? And this is the epiphany that I had years ago, which was when I had this realization that the roadmap review is actually not a prioritization meeting.

It is an investment committee meeting that I am leading as the product lead. That’s actually what’s happening, even if it’s not said [00:19:00] explicitly. So Janna, I know I’ve been talking a lot, so I’ll pause here to see if there’s any questions, ’cause what I’d like to do next is actually share with everyone what’s, what we’re seeing going on in the marketplace and how that’s shaping product management, but this might be a good place just to pause for a second if there’s any questions.

[00:19:15] Janna Bastow: Yeah, absolutely. And I’ll give people a chance to drop their questions into the the Q&A, but this reframing as an investment committee meeting I think is really important because it changes how we think about approaching it, right? I’m sure you’ve probably got some interesting stories about how that’s shifted the way that people prepare for and go into and what they’re expecting to get out of those meetings.

Because the ultimate goal isn’t, I guess, to have a list of prioritized things, it’s to get buy-in for the things that are coming up on your roadmap. If you don’t have that buy-in, then your roadmap is gonna constantly shift and change based on whims that are what you might sense is outside of your control as a product person. 

[00:19:50] Shardul Mehta: Yeah, it’s interesting I’ve used, I don’t know, I’ve lost count of how many formats I’ve used to present a roadmap in different ways and sh- And we spend, as a product community, so much time talking [00:20:00] about how to present a roadmap and all this sort of stuff, and I will never forget when I was…

I’d just become a director of product, first time, and I was in front of the executive committee, and the CFO at the end of the whole thing asked, “Shardul, so this roadmap you’re presenting and it’s got X million in budget, and you’re asking for an incremental Y in resources. Is this guaranteed to get us 20 million in revenue?”

He just asked me point-blank, “Is that what this is getting us?” And I gotta tell you, at that moment I felt really much on the spot. I got nervous, I got anxious. It’s a tough question. My chest. Yeah, but that’s what they’re asking you to sign up for.

And I’ll be talking about this in some of the subsequent slides We’re finding in the conversations that we meaning Mike and I, have had over the last year or so, particularly with CPOs and VPs of product, they are getting explicitly asked these questions. They are getting asked to sign up [00:21:00] for a number, and that is a material shift from, let’s say, even five years ago, right?

Where we could, “Y- yeah, it’s directional. Yeah, it’s dotted line.” Now they’re like, “No, I want you to sign up for a bookings number. I want you to sign up for an ARR number for the next… for this year.” It’s not even like we love to talk about long-term horizon. They’re saying, “Look, we wanna grow by 20%. X amount of it is supposed to come from product.

Are you signing up for that number?” Even though they may not have formal P&L authority or be a GM, but they’re being asked and they’re being evaluated based on how are they contributing directly to that number, not just the CRO. 

[00:21:39] Janna Bastow: And that’s actually the really key thing, right? ‘Cause it’s an easy trick question, right?

Can you guarantee this is going to uplift our revenue by X percent or X dollars or whatnot? The thing is that you can’t guarantee, right? You’re not writing the future. You don’t know. But you can do things, and this is what you’re signing up to, is you can do things that increase the likeliness that you’re going to hit that number, right?

And actually, you can show ways that [00:22:00] you could vastly increase the likeliness based on one path versus another. You can’t guarantee it, but, that’s the job, right? And the roadmap, I mean, I’ll say this as somebody who’s very bought into the Now-Next-Later format of the roadmap, right? It’s not about the format of the roadmap.

It’s not about what you actually present to them. It’s about using the roadmap to get that alignment and that buy-in so that you all agree that this is how you’re gonna de-risk, how you’re gonna increase the chance that you’re able to hit that number. And you’re absolutely right. There’s so much more pressure now to provide clarity on exactly how you’re gonna hit that number because they want guarantees.

No one can give guarantees, just the same way that a sales team can’t guarantee they’ll hit a sales number, but they can invest in a whole bunch of sales activities that increase the likeliness that they hit those numbers, right? Yeah. And that’s really all they’re asking. But I think you’re right, Shardul, that we have been speaking different languages, in that, we’ve been talking about customer delight and how we can improve the customer experience and the journey and things like this.

We haven’t [00:23:00] necessarily as a craft been talking about the outcomes connected to the business, how this is going to cause an uplift in revenue, right? And we can sort of say we draw lines between usage and revenue and things like that, but actually at the end of the day, we need to be speaking the same language and show what we’re doing that is likely going to impact the important business metrics.

And actually, there’s a question from Sam here. Let’s jump into this. Sam asks, “Is where do we invest a high level direction or specific feature or development? How do you position it to leadership in a way that lands and wins?” 

[00:23:34] Shardul Mehta: Yeah, great question, and certainly something I mean, just to put in a plug for our course, it’s something we definitely teach in our course, and we go into quite a bit of depth.

But it’s all around, so we, Mike and I talk in terms of business fluency and couching things in terms of an investible bet. At the end of the day, the way they think about it is, okay, if we’re investing in this roadmap, this product, this feature, this whatever, right?

What is the business outcome [00:24:00] that we’re going to get? And that’s measurable in, maybe in terms of revenue, improvement to margin, whatever, right? It’s basically at the end of the day how do we believe… Or they’re asking, do we believe this will materially move the needle- … on our score?

And yeah, like you were saying, Janna Sometimes it’s dotted line or directional or whatever, but a lot of it is also in how the framing of it. And when we don’t, when we come with a list of features, even if it’s customer backed, we say, “Look, we’ve done all this discovery.

It’s supported by cust- you know, customer demand and blah, blah, blah,” and all this sort of stuff. And all that is great, and it certainly helps get attention, but there’s still a missing piece to win the argument, right? Because then we dovetail, “Look how pretty this prototype is. Look how cool this feature is,” right?

And this sort of stuff. And at the end of the day, what they’re look, looking for is, okay, but is this going to help us meet our revenue goals? Is this going to help us make traction in the marketplace or beat [00:25:00] competitors or, help, frankly, improve our financials? What is the risk factor here?

I mean, yeah, everyone gets that there’s generally risk, but, are you able to quantify it? And by risk, they’re also asking, what are we not doing as a result? Hey, product leader, you’re proposing to do X. That means you’re proposing not to do Y. And we oftentimes present them as a choice, frankly, between projects.

Yeah. What we need to do is present it as a choice between business outcomes. Hey there’s initiative A and there’s initiative B. Yeah. We can do one of them, right? And it, yeah, okay, there’s capacity and there’s team allocation and budget, and we get into all this sort of thing, right? But really it’s about, well, the reason why we got excited about initiative A was because of this potential business outcome, and the reason we got excited about initiative B is for that business outcome, but we can only get one.

We gotta choose, we gotta choose between those two, and there’s factors related to those. That’s the conversation and that’s the way to be able to position it. [00:26:00] So let me get to what we’re seeing in the marketplace and what’s, let’s talk about what’s actually happening. Another question to the chat here.

Do you believe that product management is changing faster than at any point in your career? And if so, why? So go ahead and put that in the chat. Let me see what your answers are.

Yes, AI.

[00:26:23] Janna Bastow: Ian, I was just about to type the exact same thing

I’m wondering if other people are feeling the same thing. Does anybody feel like it’s not changing faster? That some of the fastest changes might have happened, perhaps when we made the shift from waterfall to agile, or from, web to mobile or as different, disciplines grew.

[00:26:48] Shardul Mehta: Jason could do my presentation for me. Product has gotten so cheap that judgment about work, what to make has become so much more valuable. Okay. So Jason’s sharing spoilers. So yes, it does feel [00:27:00] like for many folks that it’s changing fast. And if many of you are thinking of AI, I think you’re right, but I also think people are misdiagnosing how it’s changing.

So here’s what product management has traditionally looked like. Some version of this, right? And the key question always was, what should we build or what should we build next, right? And it was all really about orchestrating product delivery. Our tired conversation of not waterfall, agile or scrum or SAFE, God forbid.

It, but it’s ultimately all about orchestrating product delivery. Here’s what most people think it will look like thanks to AI, right? Some version of this, right? And to some extent, it’s very true. Certainly, this is happening. The key question being answered here is can we build it faster?

And the way I look at it is that I think this is really more about optimizing software creation. I’m not convinced that it means we’re delivering more value. We are optimizing software creation. So here’s what I think it will actually look like. And if you take a moment and read the [00:28:00] right-hand side, you can see it’s very different from the other two columns.

The key question will be, and is increasingly, where should we invest? So it’s really about optimizing capital deployment. This is the key question more and more CPOs are grappling with. And so our profession is actually evolving from build better to, which is where it was, to build faster, to build the business.

And this is, I think, what the real shift is gonna be over the next five to 10 years. And so here’s why. Let’s talk about what’s actually happening in the marketplace. So the market feels like this because of the headlines and podcasts and social media. They make it feel it’s all about AI and big tech and whatever’s happening or being said in Silicon Valley.

But here’s what the market actually is, because this is where capital is actually deployed. 90% of the capital is an established enterprise software, vertical industries, corporate tech. All sounds really boring. [00:29:00] But the reality is that most of it is backed or owned by private equity, not venture capital.

And when you remove the paper valuation markups of the AI startups, private equity actually holds a massive absolute advantage in total assets under control. The VCs who typically fund early stage companies, they’re heavily funding and subsidizing, quite frankly, AI startups, and that dominates the narrative.

But the reality is that there’s two trillion, trillion with a capital T, in assets that are owned or backed by private equity. 15 to 20,000 software companies globally are owned or backed by private equity. And if you isolate to the more larger, more established platforms and enterprise software providers, that’s still almost about 2,000 large premier software platforms that are under private equity control.

And then you account for the thousands of smaller add-on software companies that PE firms quietly buy up and roll into those primary platforms every year, which you don’t hear about in the news too [00:30:00] much. That just becomes a massive ecosystem. So private equity now controls the operational playbook for over a third of the mature B2B software market.

And then you overlap that with the fact that 90% of product people actually work outside of Silicon Valley, and you start to see the reality that the market you think is influencing you isn’t the market that’s really actually shaping your career. And any of our listeners- 

[00:30:25] Janna Bastow: Can I just interject with something there, which is I have talked to senior product people before who don’t actually know, they didn’t know as to whether they were backed by VC or private equity or whether the company behind them operated more like a private equity or VC.

And the two can have vastly different impacts on how the company thinks about itself and, how it’s measured at the exec level. And if that’s not known through to the people who are actually building the company, it can create giant mismatches between how they think they’re operating. People working for private equity backed companies who are borrowing from VC companies, their tactics and things like that, right?

They’ve gotta think about it [00:31:00] differently. 100%. And this is where, having a clear understanding as to how it works can make a massive difference. So if anybody doesn’t know, do that research. Figure out who’s backing your company. Is it bootstrapped? Is it private equity owned? Is it VC?

What is it? 

[00:31:14] Shardul Mehta: I was lucky enough early in my career where I had another mentor. He’s gone on to become an investor and a board member. At the time, I think he was a COO. I can’t remember now, it’s many years. But he was an executive in a company I was in and he gave me great advice.

He said, ” if you really wanna know what’s going on, follow the money.” And that that just clarifies everything. And so to your point, Janna, yeah, the capital behind software has changed. In fact, it’s not like what it was five years ago, and VCs and private equity operate off entirely different playbooks.

VCs who historically have been more concerned with growth and maybe a little bit less so with profitability at least compared to private equity- … many of them over the last year or so have now become more focused on profitability, and the big reason was [00:32:00] because the IPO market, certainly at least in the US, dried up, although I’ve been hearing now that there’s efforts to revitalize that.

But there isn’t much dry powder left, and so they started looking for M&A events as an exit strategy or even to sell to private equity as an exit strategy. In fact I just read earlier this week that a report that was talking about how a big reason why there’s huge interest in OpenAI or Anthropic going public is because there’s just this belief that it will reopen the IPO floodgates.

Now, in contrast, private equity has always been about this, about profitability. It’s always operated expecting measurable business outcomes. Growth, retention, margins, EBITDA. So your point, Janna, about people, and I’ve talked to these people, and I’ve experienced this myself, you go from a VC world to a private equity world and suddenly your head is spinning and you’re absolutely stressed out.

And what you hear then people ranting on LinkedIn is that, “My company doesn’t want to invest in innovation.” So on top of this, by the way, private equity is sitting on $2 trillion [00:33:00] of unallocated capital. $2 trillion of unap- allocated capital. They’re under enormous pressure from their LPs to invest in it, and PE managers, just folks who may not be as familiar, PE managers are typically operating under enormous pressure to deliver returns on promised targets on a deadline that

that’s been promised back to their investors. So this is the broader context behind why executive expectations are changing. And both VCs and PEs of course care about value creation. They just ask different questions. They both do care about AI, but they expect very different economics.

So for VCs, the focus traditionally has been on the future. Most of their bets fail. We don’t really hear about the failures. We just hear about the 1 to 2% that actually explode, like Uber, Airbnb, OpenAI, and we think that represents the market. And traditionally, VCs are happy to keep fueling growth even at the sacrifice of short-term operating profit.[00:34:00] 

They want category leadership and market dominance. Private equity, on the other hand, is comparatively a little less interested in those things as a goal. They want cash flow. They don’t want failures. Their whole business model operates based on they can’t have too many failures. They want ROI now.

They want predictable, profitable growth. And so your point, Janna, about- If the capital strategy absolutely shapes the company strategy, and it puts a different pressure on a CEO in each of these environments. A VC-backed CEO is pushed to win the market, grow fast. I’ve been in, in VC-backed companies where, profitability was given a little bit of short shrift in the short term, right?

Raising capital is often about just extending the runway, but a PE-backed CEO is held to a higher standard. They’re pushed for consistent returns. They take a more disciplined approach to investing the company’s cash. And you can’t keep going back to the well and get more investment.

It is all about the company has to [00:35:00] be self-funding. So the questions all become about where do we deploy capital? Where do we invest? Which products create the highest return? And here’s the big news, which is that increasingly product leaders are being asked to answer these questions. We heard this universally from all the product executives that we talked to in the last year, and the non-product business executives in terms of their expectations on product.

Every CPO and VP of product we spoke with over the last year told us they’re being asked these questions on the right. In fact, whether they were PE or VC-backed, which was an interesting thing. And so the product playbook as we see it is changing, and if it hasn’t hit you directly yet, it’s because maybe it’s not trickled down to you, but unless you’re in a well-funded AI startup whose business model is frankly being subsidized, it’s definitely hitting or will very soon hit your top product executive and will hit the rest of the product team.

And so for years, our community, product management, was told that our competitive advantage came from [00:36:00] building faster and more efficiently and that, basically we could run engineering teams more efficiently. But today, AI is rapidly commoditizing software creation, right? So building and shipping is no longer a real differentiator for product teams, and frankly, I don’t see it as a career differentiator for product people.

The scarce skill isn’t in building products anymore or knowing that you can run an AI tool better than somebody else. Everyone’s gonna be able to do that, right? It’s in making better business decisions. It’s in demonstrating sound business judgment. So Jason, you get 1,000 points for your earlier answer, right?

Product management is actually fast becoming one of the company’s most important strategic business functions, and this is the expectations. Product leaders are increasingly expected to be able to own business outcomes outright, be able to know how to allocate capital, enable commercialization, and act as a strategic advisor to the executive team and even, in fact, to the board.

In fact, I read a report recently that according to this report, they said half of the [00:37:00] CPOs that they surveyed, and they surveyed, I don’t know, 1,000 CPOs or whatever the number was. Half of them now have P&L responsibility of some kind. That one in three chief product officers that they surveyed own and drive the M&A agenda for their companies, which is, that is a definite change.

Yeah. So the challenge for product management is no longer in deciding what to build. It’s in deciding where to invest, and thinking like a business owner and investor is now quickly becoming an essential part of a CPO’s job. And if it’s part of the CPO’s job, you can imagine it’s gonna start trickling down to the rest of the product team.

This requires a new set of leadership skills that frankly, traditionally has not been taught to product people, right? So understanding customers, prioritizing roadmaps, the product execution, those are important. I’m not saying those are not important, and AI is certainly making those more efficient, but that’s just becoming table stakes, honestly.

Increasingly, executive teams are expecting things like a basic [00:38:00] understanding in the economics of the business. So the fact that you understand ARR something is actually just the tip of the iceberg. You need to understand the economic model behind your business, understanding how to really allocate R&D capital, being able to craft go-to-market plans, and then the ability to deliver measurable outcomes.

And I wanna talk about the PM role itself also, because this isn’t just affecting product leaders, but the PM role itself is changing, but not in the way most people think. So I’m sure many people have probably heard this narrative about the, quote, “AI product builder.”

There’s a lot I’m hearing out there about, product managers will go away, and they’ll be replaced fully by product builders. Well, so here’s my problem with that. First of all, I’m not one of them. So- 

[00:38:45] Janna Bastow: Thank you. Thank you … 

[00:38:46] Shardul Mehta: I’m not drinking that Kool-Aid. I do think the product manager role will evolve, but not in the way we are being told.

12 product builders delivering 12 products does not automatically generate 12X in profitable revenue. Building faster [00:39:00] creates zero value if the product doesn’t have a proper monetization plan. So for the real signal, look back to what’s happening in the capital markets, like I was just talking about, right?

So with AI commoditizing code creation, our differentiation, your differentiation, isn’t in proving that you can use AI tools better than the person sitting next to you. The value is now shifting both upstream and downstream to things like commercial planning, go-to-market execution, and monetization. So in the future as we go forward, the PMs will really stand out will be the ones who can demonstrate sharp commercial thinking.

Which by the way, I’m on record where I’ve always believed that to be the case. I think, I mean- … when I started product management, it was actually a business function. Somehow it got usurped by Agile and a bunch of other stuff, and it became more of a technical function. But if you can show impact on the business, you get traction, and I think that is now going to be forced more and more because of AI and because of [00:40:00] the way that the capital strategy is changing.

So this is an identity shift for a lot of us. I mean, Janna, I’ve been on forums like this where I’ve talked about this and Mike and I, we just people push back, and people are like, “Wait, this is just very different way of thinking for a lot of folks.” Because it’s just, it’s not the way we were trained.

And if we’re really honest with ourselves- Yeah … what we’ve been trained to do is to kind of act like glorified roadmap managers, but that’s just table stakes. We need to start thinking and acting like portfolio owners. When you bring 40 features to a reset conversation, you’re guaranteed to have a debate about priorities.

When you bring 10 investable bets, you create a portfolio review, right? An investable bet has an economic outcome. It has a cost that includes not just the team working on it, but everything else the company is not doing as a result, and has a risk profile and a confidence level based on evidence.

So if you can’t express it as a bet, it’s going to be vulnerable. It’s gonna be subject to getting hijacked. 

[00:40:59] Janna Bastow: Yeah. And I’m wondering [00:41:00] if people who are listening in are feeling this, right? Are they pushing back on this? Mentally feeling like this is not aligned with what they thought they were gonna be doing.

Is this scary to people? Or is this in line with what they were expecting, what they’re seeing already? Really interesting to see what what people say about that. 

[00:41:14] Shardul Mehta: I think it’s really exciting. I think this is the best opportunity product management has had to really showcase what our value truly is.

I know someone somewhere along the way popularized this diagram, which I absolutely hate, which is the product manager in the center and everything else around, and we’re like, “We’re the coordinator.” And I’ve always hated that representation. I also am not a fan of that Venn diagram that shows…

What does it show? UX business and technology, and we’re in the center. And I’ve never been a fan of that because you look at the narrative out there, we always end up talking about UX and technology, but we never talk about the business, right? Yeah. And I think that’s being forced now, right? And so what we believe, Mike and I call this business fluency, and we’re increasingly seeing this as the new way to lead product.

Simply put, it’s the ability to connect every product [00:42:00] decision to business outcomes. It involves understanding not just your product features and the underlying tech, but the economics of the business that you’re in, and being able to speak that language. It involves treating the product work as investments and making business, and making decisions based on business impact.

For any of you if you’re not familiar with my newsletter, I talk about this endlessly in my newsletter, streetsmartproductmanager.com. And what this does, and we’ve seen this in action, I’ve seen this in my own career, and we’ve seen this in action. I know, Janna, you and I have talked about this countless times.

Yeah. It ends up strengthening executive confidence in your product, in the outcomes, in the team, in you. It builds a stronger product narrative, like the story I shared earlier. It increases decision velocity. It makes decisions more durable because they now become economically defensible, and you increase your products and your own commercial impact.

And so this is the operating system that Mike and I teach. And I obviously can’t go through it all here, but it’s all about reframing things in terms of investable bets, [00:43:00] demonstrating commercial leadership. It’s not just about stakeholder alignment, it’s about enablement. It’s about stewarding those outcomes and having a decision discipline when, and we help you think, communicate, and make investment decisions the way executive teams actually expect.

And so I’ll just, I’ll actually just wrap up here and then we’ll pause for questions, Janna because I’m sure people have questions. But honestly, we’ve only just scratched the surface, right? There’s so much more that we can and need to talk about, like how do you actually connect roadmap items to business outcomes?

I know you and I have had private conversations about that. And by the way, folks, Janna wrote a beautiful article as a guest on my newsletter, which you should absolutely check out. Email me and I’ll send you out the link. How do you frame initiatives as investments? How do you make trade-offs without the politics?

So we teach all of that in our course which is called Business Fluency for Product Leaders. So a quick plug for everyone. We’ve been running this in private invitation-only cohorts now for several months, and we’re now opening it up to the public for the first [00:44:00] time. We’ll teach you how to operate like the leaders that, that the profession is now demanding.

There’s the URL. I will put it in the chat as well here. You can scan the QR code All the details are on that page. You can check it out. We’re offering it for an introductory price. You can try and expense it as well. And by the way a sweetener the next seven people, we’ve already had people signing up so we wanna fill out the cohort.

The next seven people who sign up before July 15th, we’ll give you a free one-on-one coaching session directly with me and Mike to help you apply the playbook directly to your actual situation. So we can help you work through your portfolio, roadmap, or next executive conversation. We schedule it after the class.

And finally, one last thing. If you wanna see this in actual action, Mike and I are offering a free lightning lesson this Thursday, two days from today. So it’s on July 9th, 12:00 PM Eastern. You can translate that to your time zone. And I just realized that the URL is not… So you can scan that QR code, but here is [00:45:00] the URL for that.

It’s absolutely free to register. We’ll show you how executive buy-in actually works. And I think we’re already at 150 people registered and it’s climbing rapidly. So join us if you want that free lesson. So that’s my TED Talk. I’ll pause here for questions that people- 

[00:45:16] Janna Bastow: Yeah, absolutely.

And that’s the crux of it, right? So I think, if you talk to product managers and you say, “Oh, it’s about the outcomes, about making sure what we’re doing is important for the business,” and they go, “Yeah, totally,” right? They get that. But I think it’s one of these things that so many product people haven’t had the practice in.

They haven’t had the chance to be at that table. They don’t know the language, and they don’t know how to learn these things. They don’t know which executives to go get this information from. And so this is where I think there’s gonna be a growing up, a glow up of product management where people get better and better at tuning into what the executives need.

And I think it’s really important that as people get to grips with it, as we see success stories, we’re sharing that out there, right? It was by product managers sharing their success stories about how we align teams and how we [00:46:00] empower companies to, to build things that matter to customers we were able to create, almost a groundswell of product managers getting better and better at their craft.

But the stakes have been upped as you’re showing, right? And actually, they probably should have always been up like this. I think there was a, a-

up that we’re adding that value. Yeah. So yeah, really interested in diving into how product managers begin to learn this stuff, right? Learning how to really understand what’s what’s driving the business. There’s some questions that have come in as well, so I wanna welcome any other questions that pop up into the Q&A section.

But let’s start with the one from Ian. Ian says, “Is the strategy shift from roadmap product builders to portfolios owners a short delay until AI skills incorporates commercial acumen, or a long-term play because companies are unlikely to expose the sensitivity to AI models and risk leaking a IP?”[00:47:00] 

That’s a really interesting one, Ian. 

[00:47:02] Shardul Mehta: It is… I believe it is both happening now, and it is a long-term play. We’re already seeing this in the people we’ve spoken with we’re already seeing this shift. Certainly at the leadership level. Increasingly, it is happening. I think

it might take some time before it trickles down all the way to the individual PM, or certainly if you’re, if you’ve just become a newly minted PM, perhaps because… And that job, frankly, is more about execution than really driving strategy. But yeah, but long term, look, I think, I’m not trivializing AI. I know it’s a big shift, right? But AI is at the end of the day think back to there came a point where as a product manager you were just expected to know Jira or its like, right? Or any kind of tool. So today, yeah, you know how to build an AI agent or workflow or those sort of things.

And I know they’re interviewing for those skills, unfortunately, on some interviews. But that will become commonplace. But being able to demonstrate real business judgment, [00:48:00] being able to understand how business works and drive commercial impact, that is a long-term play for sure. 

[00:48:06] Janna Bastow: And, one thing that’s important to remember with AI is that with the world that we’re in, right?

Where there’s going to be increased capabilities, there’s gonna be increased demand, right? So just because companies are now better, let’s say AI can incorporate commercial acumen, that means everyone has better commercial acumen. That means that the stakes are higher for everybody. The world is gonna continue to find ways to compete, and so the companies are gonna be the ones who, yes, they have AI that have commercial acumen.

But saw an article recently that made a really good argument about how any flow where value can be added, AI can add value, but AI plus a human will always add more value, right? And so perhaps our jobs are less about the commercial acumen, because that’s what the AI has, but what can the product managers be doing to add more value to that?

Where can they be pulling out real life insights as opposed to what the AI has just, fed to them and their competitors, right? So [00:49:00] when it’s in this world where we’re gonna be competing to grow in our own spaces it’ll be humans who find ways to sort of burst out of whatever AI provides to everybody, and provide that extra little bit of value.

So at one point in time, yeah, it was important that we were able to help our teams build faster. But building fast is now solved, so it’s about building better. And, as teams build better, we’re gonna be forced to find ways to do even more with that, and humans will always add value on top of AI processes.

[00:49:30] Shardul Mehta: Last I checked, all of our products and services are still sold to humans. Yeah. And humans are messy and unpredictable, and even the best laid strategies end up failing because human beings just, they’ll do what they wanna do, right? And so if you’re just relying on AI to come up with your commercialization strategy or your product strategy, take it verbatim, I don’t know that you’re gonna have long-term success.

Because an AI is- At least so far, they can’t really predict [00:50:00] human behavior because we’re terrible at predicting human behavior. 

[00:50:03] Janna Bastow: Yeah, it’s like copying your competitor’s features feature by feature and saying, you’ve done it… Well, all you’ve done is caught up with somebody else, right?

AI’s only gonna allow you to catch up with the norm that everyone else has access to. So we’re gonna be looking at ways as a whole, as organizations, to push that needle that little bit further. Jason’s got a question here, and somebody else has thumbed it up, so let’s jump into this one.

Jason says, “I love your emphasis on adopting the language of business, like shifting from testing hypotheses, product language, to building diversified investment portfolio, the executive language. But as product managers do this, how do you advise bringing a cross-functional product team, like designers, devs, researchers, along on the shift so they become comfortable with it as well?”

[00:50:49] Shardul Mehta: I mean, look, at the end of the day and I could be wrong about this, but I’ve never expected my designers, devs, researchers, and everyone on the build side to become portfolio owners. I think [00:51:00] I, I saw my role as being able to represent the customer, obviously. I need to be able to speak intelligently to customer needs, and then also the business justification, right?

The reason we wanna prioritize this feature or do this thing is because we have this revenue goal, or I’ll give you a very specific quick example where I was working in an AI company, I did the pricing model, and we put the pricing together. We found that I think something like I forget now the number, but 15 or 20% of our margin, the cost was coming out of, was just tokens from documentation processing, right? Which was pretty high, and that was a big driver behind why even though our CEO on board was asking for 85% margins, I actually showed that we will never get… We’re at 45, and we will never get to 65 unless we make some fundamental changes. And so then I started pushing…

Now, I put together a whole business case and a financial model with the [00:52:00] executive team, but when I went to the ML and engineering team I said, “Okay, here’s the deck. If you’re willing, if you want me to go through it, I will.” But the short answer was just, “Guys-” 14 or 20% of our cost, of our margin is being sucked up in this cost, which we can eliminate if we pursued this other strategy.

And that’s the driver behind why I’m advocating priorities. And they were like, “Okay, yeah. I mean, I get it. Makes sense.” And then we just dovetailed into the typical feature development stuff that we love to do with the engineers. So that’s my answer to that.

[00:52:32] Janna Bastow: Yeah, and we probably have time for one more question. Marie has asked a question and somebody else has thumbed it up as well. She says, “Do you have any insight on how this would look at a public company, like a mature B2B product?” She says she’s feeling the shift in terms of what’s being asked but there’s a long lag between releasing and client adoption and revenue.

So trying to figure out how to put together a good argument for investment is pretty difficult. 

[00:52:53] Shardul Mehta: Oh, boy. Yeah. Marie, I’m sorry. Think you can give some- I don’t know that I have enough time to answer that question. I think a lot of what I’ve talked about has [00:53:00] certainly been, and a lot of the people we’ve been talking to are in that mid-tier growth scale phase from 50 million to maybe half a billion dollars. Public company, you’re absolutely right, it’s a little bit of a different ballgame. There will always be this… Until the SEC changes its rules, we’ll have quarterly earnings reports and there’ll be a quarterly focus.

I don’t know that I have a… I’m gonna give you an incredibly unfair quick answer, but please come see me afterwards if you wanna discuss it in more detail. The super quick, short answer is you have to balance both. You have to have allowance for short-term, quarterly focused or here now needs.

Versus the long-term play, and that kind of gets into how you present your product strategy and your investment thesis, which then dovetails into kind of budget allocation and some of those things. So I know, super unfair quick answer, but- 

[00:53:50] Janna Bastow: actually I can add to that with maybe a bit of a pep talk, right?

So for product managers who are operating companies where things are tougher, right? Regulated spaces, public companies, things like [00:54:00] that remember that the difficulty that your companies face in order to bring things to market are the same difficulties that anybody else operating in that space are going to run into, right?

If you’re in a regulated space, your competitors are most likely in a regulated space as well, right? If it’s if you’re operating as a large company, you’ve got these things that are holding you back, chances are your main competitors are running into the same things, right? There’s things that you get as a public company, right?

That are bonus, right? You get a giant budget to put towards stuff that startups who are coming after you don’t get. So a lot of the things that are difficult are your moat, and yes, they make it difficult, but also remember that creates the space around you that you can do things that other companies can’t.

So whenever you’re coming up with a strategy, think of what your company uniquely can do to defend its position and push itself forward, right? You’re a public company, great. Can you put some of that budget towards something that, that outstrips what the competitors are doing? Your competitors are startups.

Can you act like a startup but still have the funding? That’s what a lot of these big [00:55:00] companies are doing with their labs and things like that, right? Where they’re working with a a startup within a corporate type thing, which we could probably tackle another day and really dive into about why that sometimes works and sometimes doesn’t, ’cause big companies are tough.

But remember that the things that are making it difficult are also making it difficult for your competitors, so embrace that and figure out what makes you good at solving these problems. Now, I, we’re just about at time, so I wanna say a huge thank you, Shardul, for sharing these stories, sharing these insights, and actually really diving into the guts of how we start thinking about this business fluency.

I think it’s such an important topic because it is driving how we’re gonna be able to show our value as product people down the line. So huge thank you for that. Everyone he dropped some links in there, so we’ll follow up with those links for anybody who didn’t catch the chat. Thank you everybody for jumping in with your questions in your chat.

Good to see you here. Everyone say thank you- 

[00:55:51] Shardul Mehta: Thanks Janna, for having me on. I really enjoyed it. Thanks everyone for joining. Yeah. Have a great week. 

[00:55:55] Janna Bastow: Of course. I wanna say thank you to Shardul, and thank you everybody again. We’ll see you [00:56:00] back here next time. Bye for now.