When investing in your product team makes sense

Your product team is a cost

The talk and, by extension the whole conference, was focussed on sales; how to get your start-up to grow. I felt disheartened by this focus. As if the work of the product team did not matter.
Sales bring in paying customers, so is a plus on the balance. The product team, product managers and -designers, are often just a cost, without a direct positive impact on the revenue.

Additionally, multiple SAAS companies went big (or even unicorn) with very old-school, barely usable interfaces. Yes, I’m looking at you Immoweb, Odoo and Teamleader. Fair enough, with a bigger budget came bigger product teams and stuff got gradually better. But still, it is sometimes harder to sell the value of the product team in the early stage of the product.

In the last 12 months, we saw some big layoffs of product people in (big) tech. Spotify reduced its product team drastically and AirBnB redirected Product managers towards a marketing role . Not only did product teams shrink, but they shrunk proportionally more. This adds to the image that the product team is nice to have.

Product as a driver for growth

Agreed, in the short term, your investors (or yourself, if you bootstrap) should invest in selling your software. But investing in your product team makes sense if you look further than your next two quarters.

Sales guru Jacco to the rescue! Two main insights I’m stealing from their story:

1. Sales is all about knowing what your customers need. Not about closing and objection handling.

2. Software As A Service (or SaaS) revenue is (almost) always subscription-based, which means that

   • Getting users onboard smoothly,
   • Using as many features as possible and
   • Asking for more of your paid(!) modules

   is the way to get that revenue graph steep.

Knowing what your customer needs, is the core of product management. We keep going back to that in every meeting with every team we work with. How do we know what users’ problems are? Because we talk to them. Almost everyone in our team is trained in research to figure this one out.

Solution ideation and drawing nice-looking boxes in Figma is the easy part. Understanding what problem people have and how to solve it is the real challenge here. And of course, our designers use Whimsical, Figma or code to visualize that solution.

More than half of the start-ups knocking on our door want to achieve more engagement and product usage.

This means getting users (and their data) onboarded as fast as possible, adding valuable functionality and changing how employees work; replace the unscalable manual work (or many Excel sheets) with software solutions.

One example bearing the fruit of our labor is Flexmail, an email messaging tool. It took several months (!) to onboard new users completely, and we were able to reduce that to days. Resulting in salespeople being able to sell instead of onboarding users.

So when do I need to invest in your product team?

The short answer is: in every stage.
As long as your product is not mature enough for leads to flow in - think Airbnb, Spotify or Itsme - you should keep investing in understanding and solving the problem from the user.

Our advice:

1. Having a product manager and designer close from the start of your venture, will not only reduce the risk of building something nobody wants, but will help build your sales story.
2. After that first launch, the product team will help reduce the pressure on the customer success and sales teams and incorporate user feedback in your next releases.
3. Even when you find yourself reaching product market fit, the product team is not obsolete. Competition is fast to copy successful products, so you need to stay on your toes. The needs and problems of your users change, so you always must keep digging into the problems your users have and keep updating your product.

So yes, you need both. A product team AND a sales team. They both contribute to the growth of your SAAS start-up. The effect of the sales will be quicker, but the impact of the product team will be more profound.

And if you have to choose, temporarily, go for sales, but know that you will have to clean up the product organization afterward.

Happy investing!