When you look at successful technology companies operating at scale they have typically cracked three things: viability, scalability, durability.

Building the Product Machine, with Carlos Gonzalez-Cadenas

When you look at successful technology companies operating at scale they have typically cracked three things: viability, scalability, durability.

The ability to deliver world class product is a core competence of the very best technology businesses, says Carlos Gonzalez-Cadenas, the CPTO of Gocardless.

Carlos is both an entrepreneur and a product leader. He was the founder of Fogg, a travel start-up acquired by Skyscanner in 2013, and he then worked at Skyscanner to build an extensive product organisation to more than 400 employees in the run up to their acquisition by the Chinese travel company CTrip in 2016.

Carlos joined GoCardless as CPTO in early 2017. GoCardless is building a global platform for recurring payments. Typically today, most recurring payments are handled using credit cards, but credit cards are not good for recurring payments due to many reasons, most importantly the cost and the failure rate. GoCardless vision is to provide the very best platform for companies to take recurring payments.

As a technology executive and product leader, Carlos embodies the ability that very few have to make complex problems simple

This article is based on a recent interview we recorded with Carlos on Product Management as part of our Pain of Scale series, that you can listen to here.

Notion has invested in more than 55 technology companies ranging, they are all different, but have much in common. The desire for product excellence is on common characteristic, but so so is their journey from “start-up” to “grow-up” to “scale-up”.

  • Start-up, maybe $1-5m revenue and 10-50 people, where they are asking themselves a simple question “Am I solving a problem that is really worth solving?”
  • Grow-up,maybe $5-$25m revenue and 50-250 people, with a different question “Can I build a business to solve that problem predictably?” and then
  • Scale-up, $25m+,“can I get really big, really fast?”.

Through those three phases product is critical, but the does the way they think about product change?

When you look at successful technology companies operating at scale they have typically cracked three things:

  1. Viability – they have a business that works, a product that solves a problem their customers value and a way of monetising that problem.
  2. Scalability – they can increasingly add more customers efficiently
  3. Durability – the business is very hard to replicate, making them difficult to attack or replace.

How do they get there?

The start-up phase is mostly about viability as we discussed, but also discovery. Founders are looking for signals on product market fit.  They start with quantitative signals – in a consumer business you need to see customers again and again. In B2B frequency is different but if you have a high level retention then you know you are close to reaching PMF.

In the grow-up phase they have proven PMF and the key thing is to prove the ability add scale. This may be about the ability to acquire customers in different segments and then in different geographies and also about building the product machine.

The product machine works on three dimensions:

  • Achieving product velocity (ie frequency of shipping
  • Delivering impact (nps, churn, conversion, revenue growth) aligned to strategy and objectives (focus on balancing short term and long term)
  • User experience main job is to remove friction and drive adoption.

Data plays an important role as an asset for the company, improving measuring and performance on each of these dimensions.

In scale-up mode the business concentrates on two dimensions – continuing to grow very fast – either in new segments or adjacencies and then the other is building durability, building businesses and products in a way that makes it other companies to replicate and attack.

Through these three phases, what changes from a product perspective and what stays the same?

The fundamentals stay the same.

  • You always need to hire great people.
  • You always need to understand your customers and their needs and engage very well.
  • You always need to build world class products that solve these problems.
  • You always need to react fast to change.

You need to be good at all of these no matter what stage of the business.

What changes is the how. You need to deliver on these fundamentals but in different ways. For example some things become much harder

  1. As you grow you typically have more customer types and segments, and therefore understanding those customers, and prioritising product development becomes much harder.
  2. You typically have way more people, and ensuring you hire the right people, develop and retain the best possible people becomes harder.
  3. The communication to ensure everyone is on the same page becomes harder; when you have 5 people in one room, communication is trivial. When you have 400 people around the world it becomes a hard task.
  4. Consistency of approach; when you have only 5 engineers ensuring they apply the same principles with shared architectures, processes and tools is easy. When you have 400 that is again substantially harder.
  5. Continuing to move fast is really hard. When you are small, moving fast is easy. When you are larger, you need to put a lot of thought into how you organise the product team to continue being very agile as you move fast.

As you go through those phases, your GTM is also changing. How do ensure alignment of product with go to market?

It requires two things.

The first sounds so obvious, but I cannot overstate how important this one is. That is having a commonly agreed terminology and understanding on customers. So if we have five customer segments we care about as a business, then using the same terms to describe them, and having a shared understanding of their needs and how we will serve them is crucial. I’ve seen a lot of misunderstanding by different teams using different terms and names. You need the same terminology and understanding. This helps the product team. It helps the marketing team in terms of the collateral they need. It helps the sales team as they become far more effective building value propositions their customers care about. This is level 1.

Level 2 is ensuring we have a commonly agreed strategy of where we will focus at any given point in time and its critical we are all aligned on this.  All focusing our efforts in the areas that matter the most.

You talk a lot about the importance of winning. How does that play out in business?

I’ve seen a lot of companies and one pattern I’ve seen. Start ups tend to get two things right. One is the long term vision, as in if we get this thing right then this is how the world is going to change.  They are great at articulating this.

They are also good at managing the short term, using tools such as OKRs, what do we need to do in the next few weeks, or quarter. Maybe using scrums in the product world.

But where I see companies struggling in a big way is the bit in the middle, the gap between the short term tactics and the long term vision.

How in precise terms are you going to get to deliver on your long term vision?

What is fundamental is you need to be able to articulate the three or four major milestones that will enable you to move from where you are today to deliver on the vision.

Doing these three things really well is how you win.

Who’s the gold standard for product excellence?

I don't think there is a single business you can look at that is doing everything perfectly.  I see businesses doing a part of the product discipline extremely well and I tend to basically learn different things from different business in different industries.

For example, two very different businesses in very different categories who do product very well are Netflix and Inditex (the Spanish fashion brand, one of the biggest in the world).  These two have mastered customer science very well, they know what their customers want and how to react fast deliver on their needs.

Netflix do that by understanding the movie and the series DNA and producing their own content that is extremely successful and delivers to the customers in a big way.

Inditex have mastered what is called fast fashion, which is being able to gather data on what is working in the different shops worldwide and being able to produce new products incredibly fast and get to the market from design to manufacturing to delivery and get products that customers want in the shops very fast.

Companies like booking.com, have mastered experimentation at scale particularly in consumer businesses, coming up with hypotheses that can improve your product and being able to prove experimentally.  They have mastered this and are running hundreds of experiments every month, the effectiveness of their product is unmatched in the hotel industry. In the hotel sector, they are typically converting at way higher rates than their competitors precisely because of this.

Then you have companies like Spotify, which have really mastered the organisational side of things, how to design and how to run great product organisations. They established the squads and tribes blueprint, which have been widely adopted.

So I look for different companies in different categories who are the gold standard in different areas: 1) customer science, 2) experimentation at scale and 3) organisational design.

Are there any specific individuals, product leaders, previous luminaries within some of those businesses that you look to and learn from?

Yeah I think there are a few, I think the ex-CPO of Netflix, Gibson Biddle did something fantastic. I tend to be always following people who have run product organisations for the scale, even if they are not doing that anymore.

I think also Marty Kagan, of Silicon Valley Product Group fantastic opinion as him of one of the best you product managers out there, definitely one of the best in Silicon Valley.

There are many others that I follow in the specific niche part of the discipline. Some on experimentation, some on coaching. But these two, Gibson and Marty are great guys to really follow.

Notion hosted an AMA (ask me anything with Marty Cagan earlier in 2018, which you can read about and watch in full here).

We learn the most obviously from our mistakes. Any particular mistakes you've made on your journey that you don't want others to make?

I've made so many mistakes that probably would mean we’d need another hour, but these are two I’ve worked hard to address:

The first one would be that I would like to recommend is that when you're scaling a business, tis to think 12 months ahead in terms of your key hires.  It is super important to be proactive on this as your ability to amplify the organisation is based on game changing hires. So one of the things I have now done is I plan way more carefully 12 months ahead in terms of key hires.

The other mistake I work on is how to articulate the vision and strategy. You can test this really easily with what I call it the corridor test. If you stop someone in the corridor and ask them to state your strategy, if they can’t do that then its likely not going to be executed. So you need to put emphasis on ensuring your strategy and vision are really simple to understand so your your team will be much more aligned and engaged.

What is winning for Gocardless?

In terms of Gocardless, it means we will be the dominant payments network, with all the merchants in the world using Gocardless for their recurring payments. That would be winning.

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