20VC Why Founder Insight is Overrated, Why Big and Bold Product Visions Can Be Dangerous & Why Getting To Product Market Fit by Accident Can Lead to Danger with Hubert Palan, Founder & CEO @ ProductBoard

In this episode of "20 Minutes VC," host Harry Stebbings interviews Hubert Palan, the founder and CEO of Productboard, a platform that aids product managers in understanding customer needs, prioritizing features, and aligning teams around a roadmap. Palan, who raised over $64 million from top-tier investors like Sequoia and Kleiner Perkins, shares his journey from a VP of Product Management at GoodData to creating Productboard. He emphasizes the importance of strategic planning and flexibility in product development, warning against the pitfalls of stumbling into product-market fit without a systematic approach. Palan also discusses the challenges of scaling a company, the necessity of transparency, and his vision for Productboard to become the central product brain for companies, akin to Salesforce's role in CRM. Throughout the conversation, Palan advocates for a collaborative leadership style and the significance of understanding customer segments and needs in product strategy.

• Harry Stebbings introduces Hubert Palan, founder and CEO of Productboard.
• Productboard assists product managers in understanding customer needs, prioritizing development, and unifying teams around a roadmap.
• Hubert Palan has raised over $64 million from investors like Sequoia, Index, Kleiner Perkins, Pessima, and Credo Ventures.
• Prior to Productboard, Hubert was the VP of Product Management at Good Data.
• Harry mentions sponsors Carter, Secureframe, and Cooley and their services.

We are back for the 20 minutes VC in founders Friday with me, Harry Stebings and following from our episode with Alfred Lyn at Sequoia. On Wednesday, we're joined by an incredible Sequoia founder today in the form of Hubert Palan, founder and CEO of product board helping product managers understand what customers need, prioritize what to build next, and rally everyone around the roadmap.

This quote introduces Hubert Palan and his company Productboard, highlighting its purpose and significance in the product management space.

• Hubert Palan has a Master's in Computer Science from Prague and an MBA from Berkeley.
• He worked in technology and strategy consulting at Accenture, then joined startups, and became VP of Product Management at Good Data.
• His experience showed a contrast between his education and the reality of product management in high-growth startups.
• Hubert noted the lack of customer-centricity in existing product management tools like Jira, which led to founding Productboard.
• Productboard is now used by over 3,000 companies for product management.

I discovered there the reality of product management at high growth startups in the valley and just in the tech world. And I kind of learned that my idealized MBA educated and Accenture framework trained brain and approaches are slightly different from just like let's see what sticks way of approaching building startups in many of the tech companies.

Hubert Palan describes his realization that the practical world of product management differs from the structured approaches taught in business education, which led to the inception of Productboard.

• Hubert's Eastern European background made him idealize Western business practices.
• Upon realizing that even respected figures don't have all the answers, Hubert felt empowered to be bolder and more resilient.
• The frugality from his upbringing was beneficial in the early stages of his startup.
• Hubert discusses the challenge of transitioning from frugality to aggressive spending after raising significant funding.

I think that you kind of idealize it, know externally and you think that everything is thought out. And then when you realize that it isn't, when you kind of get thrown into it and you ask people that you respect and that you thought was like, oh my God, this is a God. And they just have the formula and they have the recipe to build the companies, it just makes you, you basically go and you're more bold.

Hubert Palan reflects on how his background influenced his perception of business and his approach to entrepreneurship, emphasizing the importance of boldness and resilience.

• Hubert believes that while founder insight is necessary to identify new market opportunities, it is overrated.
• He emphasizes the importance of founder flexibility and readiness to pivot, citing examples like Slack's pivot from a game to a business communication platform.
• Successful product teams share insights and collaborate rather than relying solely on the founder's vision.
• Hubert argues that founder insight is just a small part of the larger narrative in building a company.

So to me, it's much more about the flexibility of the founder and not holding these insights too strongly. And there's many people who are very stubborn and who hold their opinions super strongly. They have this reality distortion field around them and they persuade others that like, oh yeah, this is the best thing.

This quote emphasizes the importance of founder flexibility and the ability to adapt and pivot, rather than strictly adhering to their initial insights.

• Founders must balance the need for a reality distortion field and persistence with the ability to be realistic and flexible.
• Hubert discusses the importance of being open to change and the collaborative process in refining the company's direction and products.

Great question. I think that you need to hav

This incomplete quote suggests that Hubert was about to share his thoughts on balancing persistence with the need to be realistic, a common challenge for founders.## Conviction in Business Ideas

• Conviction must be based on systematic validation, not just gut feeling.
• Entrepreneurs should validate the market need, the size, and their solution's superiority.
• Conviction should evolve from ongoing validation of the market need and potential solutions.
• A structured approach is necessary to challenge and support the conviction.

"You need to have a way how to kind of validate that and validate just like, is it a need that's big enough, that's, like, painful enough? Is there enough people out there that have the similar need? And do I have really a superior way how to solve it?"

This quote emphasizes the importance of validating a business idea through a systematic approach by assessing the market need, its intensity, the number of people affected, and the uniqueness of the proposed solution.

• Investors, especially in early stages, seek to understand team dynamics and the depth of the startup team.
• Effective due diligence includes speaking with team members and understanding their communication and values.
• The nature of leadership within the team—whether it's dictatorial or egalitarian—affects team collaboration and success.

"The best investors want to meet the team... It's how the founding people work and collaborate with the others. What is that relationship? Is it very dictatorial or is it kind of meritocracy, egalitarian? Is it respecting each other opinions?"

Hubert Palan highlights the significance of team dynamics and leadership style in a startup, suggesting that investors should engage with team members to gauge these factors during their due diligence process.

• Leadership involves creating an environment where information is shared and everyone is aligned.
• Product Board's system is designed to centralize product decision-making data, similar to a CRM for customer data.
• Leaders should facilitate knowledge transfer to new employees, ensuring they understand the company's history and market insights.

"I want you to not reinvent the wheel because if you just joined the company, there's six years of knowledge and learning about the market and somehow you need to get it."

Hubert Palan discusses his leadership style, which focuses on sharing the company's accumulated knowledge and insights with new team members to prevent redundancy and accelerate their contribution to the company's mission.

• Big and bold product visions are necessary but must be approached with strategic, deliberate steps.
• Entrepreneurs should avoid the pitfall of trying to build a product for everyone and focus on achievable milestones.
• Clear communication with investors and the team about the realistic path to achieving the vision is crucial.

"The bold vision, you need to have the insight that what is it that you're going to be in five years is not what you should be building today."

Hubert Palan warns of the dangers of overreaching in product development and stresses the importance of strategic planning and setting realistic milestones to progress towards a bold vision.

• Understanding the core product and customer persona is fundamental to product strategy.
• Decisions to expand product offerings should be based on customer needs and market knowledge.
• It's often more successful to introduce new products to an existing audience than to a new market.

"It turns out that typically it's easier to stay in the same Persona and add needs... with jump to a new Persona and to kind of like a big segment comes suddenly new, go to market messaging and positioning a new set of competitors."

Hubert Palan explains that expanding a product line within the same customer persona is usually more successful than targeting a new demographic, due to the complexities of understanding new market needs and competition.

• The SaaS industry is experiencing a period of consolidation as mature companies acquire newer ones.
• Consolidation is a natural progression as industries mature.
• Companies should have a defensible business in their core area before considering expansion.

"I think we're entering this period of mass consolidation where you mentioned a couple of the big incumbents there. Salesforce requiring SPAC is a great recent example, but it's one of many."

Harry Stebbings discusses the trend of consolidation in the SaaS industry, indicating that established companies are beginning to acquire second-generation firms to expand their offerings.## Competition and Market Consolidation

• Companies are increasingly competing across different use cases.
• The challenge is to compete with multiple players while protecting against new entrants.
• There is a trend towards consolidation, where companies add acquisitions to their suite of products.
• Acquisitions aim to create combined value for customers who use the entire platform.
• Acquired companies should have validated businesses with new market opportunities.
• Specialized solutions are still necessary for highly specialized use cases, despite the rise of no-code/low-code solutions.

"And I mean, you see it, for example, in support, right? Zendesk intercom draft the competition is increasing along the different use cases and competing with everybody at the same time."

This quote emphasizes the growing competition within the support sector, illustrating how companies like Zendesk and Intercom face challenges from multiple competitors across various use cases.

"But this consolidation in my mind, so it's like, okay, are there players who can add it into their suite of products, like the acquisition to their suite of products so that it strategically all makes sense and so that there's a more combined value created for a customer if they then use the whole platform."

The speaker is discussing the strategic importance of market consolidation, where companies enhance their product suites through acquisitions to create more value for customers.

"I still believe that there needs to be specialized solutions for highly specialized use cases."

Despite the trend towards versatile platforms, the speaker advocates for the necessity of specialized solutions tailored to specific use cases.

• Horizontal platforms must identify vertical-specific use cases without alienating other customers.
• Product marketing must balance broad appeal with specialized solutions for specific industries or roles.

"I think that's the biggest product marketing challenge ever, which is when you have such horizontal platforms, finding the vertical specific use cases and then how do you do that from a product marketing perspective without alienating everyone else who's not dentists or whatever it's going to be."

This quote outlines the challenge of targeting specific vertical markets while maintaining a horizontal platform's appeal to a broad audience.

• Achieving product-market fit is crucial but can be problematic if it happens accidentally.
• Strategic thinking is essential for sustainable growth and avoiding being pulled in too many directions by the market.
• Companies must avoid bloating their product with features that do not serve their ideal customer segment.
• Vision and deliberate strategy are key to transitioning from initial product-market fit to larger-scale success.

"If you just go and you stumble into it by accident because you saw something or you tried it and you don't really have that system in place that allows you to consistently go forward and validate and test and iterate in a smart, strategic way, you're in trouble."

The speaker warns that accidentally stumbling upon product-market fit without a strategic system for validation and testing can lead to difficulties in sustaining growth.

"The risk is that you will start responding to all these asks and it's like, oh, this is great. The market will pull us where we need to be, but without the strong lens, it's a strategic lens, you're in trouble."

This quote highlights the danger of being reactive to market demands without a strategic focus, which can result in a product that loses its core value proposition.

• Pricing models must reflect the value created for different roles within the product process.
• Companies may start with per-seat pricing but can evolve to monetize additional roles and modules.
• There are various approaches to pricing, such as monetizing active users or creating blended roles with adjusted pricing.

"So right now we have all these seats free and we are not monetizing them. But it doesn't mean that once we have the super strong foothold in the product organization and all the product makers that we're not going to come up with a way to monetize that, whether it's through another role that's monetized, whether it's through another modules or even like a whole set of modular products."

The speaker explains that their current pricing strategy offers free seats, but they plan to monetize these in the future by targeting different roles and offering additional modules or products.

• Transparency builds trust with employees and leverages their creativity to solve business problems.
• Sharing challenges and performance issues with the team is crucial for collaborative problem-solving.
• Transparency is necessary but must be balanced with privacy regulations and strategic considerations.

"And so if you're not sharing things that are not working, if you're not transparent about the performance, if you don't talk about the inconvenient information that you just lost a big customer, or that the churn is high, or just in general the friction in the business, the big problems. But what are you doing?"

This quote underscores the importance of sharing both successes and failures with the team to foster trust and encourage collaborative problem-solving.

"Well, I think that transparency is not binary. It's not nothing or everything, right? It's a continuum."

The speaker is making the point that transparency isn't an all-or-nothing approach but rather a spectrum where strategic decisions determine the level of openness.## Transparency in Leadership

• Transparency is crucial, but challenging, in leadership, especially during difficult times.
• Leaders must communicate honestly about company challenges to foster long-term resilience and understanding among employees.
• Transparency can lead to some employees leaving, often those less committed to the company's mission.
• Honest discussions about company struggles are rare but vital for founders, especially when engaging with investors.

"Imagine that you're a general, you're fighting a war, and then competitors start winning and undercutting you from the right, and you show up, you would stand in front of the whole army and you would say things are not looking good. It looks like you're being overpowered, it's demoralizing."

This quote emphasizes the difficulty of being transparent as a leader when facing competitive challenges, likening it to a demoralizing update in a military scenario.

"But I still like to err on the side of, let's just tell people that things are not going great and hope that we can fix it."

Hubert Palan prefers transparency even when it's hard, believing it's better to be upfront about challenges in the hopes of overcoming them together.

• Hubert Palan uses analytical tools like a mood meter to monitor his well-being.
• He practices meditation and seeks support from his wife and mentors to manage stress.
• Hubert emphasizes the importance of not stressing over uncontrollable factors and maintaining clarity of thought.

"I had a little founder's mood meter. I put into a spreadsheet how I feel, and I plotted it because I'm analytical guy."

Hubert Palan describes how he quantitatively tracks his mood to manage stress, illustrating his analytical approach to personal well-being.

"Don't stress about things that are outside of your control, because that's completely counterproductive."

He advises focusing on what can be controlled and not wasting energy on external factors, which is critical for maintaining mental health and effective leadership.

• There is a responsibility in the tech industry to include those not at the forefront of innovation.
• Hubert Palan is considering starting a nonprofit to help people adapt to and benefit from technological advancements.
• Acknowledges the growing divide and tension caused by the rapid pace of innovation and change.

"I feel like we all, in technology, we are pulling society towards innovation, and we have a responsibility not to forget about the people who are not on the front lines of innovation."

Hubert Palan highlights the tech industry's responsibility to consider the broader societal impacts of innovation and to support those who might be left behind.

• Product management is a complex role that requires a mix of skills in customer empathy, design, business, and technology.
• The role is evolving as newer generations bring a better understanding of technology and its applications.
• The difficulty in hiring product managers has decreased over time as more people gain the necessary skills and understanding.

"It's a complex role. It's a combination of customer empathy, design, business, technology."

Hubert Palan explains the multifaceted nature of product management, which contributes to the challenge of hiring for this role.

• Hubert Palan values the support from his family, particularly his wife, during his entrepreneurial journey.
• Mentors play a crucial role in providing guidance and learning opportunities.

"But I want to highlight my wife and in general, the support that founders get from the families."

This quote acknowledges the often-overlooked contribution of family support to a founder's success.

• Hubert Palan aims to make Product Board the central hub for product management, similar to how Salesforce is for CRM.
• The goal is to create a system that can aggregate market information and guide product decision-making effectively.
• He envisions Product Board as a command bridge in Star Trek, where information is analyzed and strategic decisions are made.

"I think of it as becoming the salesforce of product management, becoming the central product brain."

Hubert Palan shares his vision for Product Board, aiming to be as pivotal for product management as Salesforce is for customer relationship management.