The 'Zero Interest Rate' Product Manager

As I was relaxing in some good weather last weekend, I had the urge to write about a phenomenon that we are starting to see more and more of in tech. No, this isn’t an article about larger economic conditions that are being created by central banks all over the world, but rather takes inspiration from what’s going on in the economy to define a negative pattern of product management we are seeing in tech. Many are referring to this pattern of PMs as ‘The Zero Interest Rate Product Manager’ phenomenon. I heard Lenny Rachitsky and Casey Winters discuss this in a recent podcast and had thoughts of my own that I wanted to write down. Let me explain.

What does ‘Zero Interest Rate’ Mean

Let’s start with what zero interest rates mean for the economy and work ourselves back to product management. In a nutshell, when a central bank has close to zero interest rates, it means that money in the economy is plentiful. Most of you already knows what happens next, startups are able to raise capital faster, established companies are able to spend more dollars, more jobs are created, disposable income rises and sometimes there’s a rise in inflation due to consumer demand outpacing supply like in the current scenario. Let’s focus on accountability during zero interest rates - when money is cheap, even the most absurd startup ideas that make little business sense get funded. While innovation may increase slightly, the focus on actually creating a healthy profitable business decreases. And then interest rates rise one day and a bunch of startups run out of business.

What does that have to do with Product Management? For this we must look at places like Amazon, Google and Meta. At these big tech companies with huge cash reserves on their balance sheets, most PMs function in a more or less zero interest rate environment. This is because they have squads of research, design and engineering team to back any and every idea that they can think of. Accountability tends to be lower than in a startup environment and PMs can afford to ‘do things right’ rather than being agile, taking risks and failing fast.

User research is a scarce resource

Of course most startups or most companies for that matter, do not have huge cash reserves. Especially for SaaS, there is a LOT of disrupters and the pressure is always on to gain market share. So, in essence PMs working in SaaS cannot afford to be ‘Zero Interest Rate’ PMs. The job often requires PMs to make fast decisions to release more often and close important enterprise customer deals.

In these environments, user-research is often a scarce resource. Usually, there’s less than one user researcher assigned to a single product team. There isn’t a repository of user research available that PMs can just ‘query’ and get more information from. Even when a dedicated user-researcher is available to a team, working on a single function (or feature) can often take hours of pre-interview research, hours of customer interviews and hours of documentation. This can lead to a researcher being tired and overworked.

Most SaaS companies cannot afford to hire an army of user researchers. This makes this incredibly valuable resource scarce. But talk to any good user-researcher, and they will tell you that a lot of new features do not require hours of user-research. A lot of features can be developed by just copying how they work from other platforms or talking to frontline sales/support teams about the needs of a certain type of customer. You need research when the customer or use case is distinct enough to warrant dedicated research.

Frameworks are not colouring books

Let me tell you a secret. PMs LOVE frameworks. There are enough frameworks out there for product vision, strategy, prioritization, specs, data analysis and PMs will often try each and every one out until they find the one their audience likes. I also think Reforge has some of the best frameworks for product management out there.

BUT, PMs often use these frameworks as shields when asked to ship faster. I’ve seen plenty of PMs do this and have fallen into this pattern myself in the past. What we need to understand is that frameworks are tools, not colouring books. When we need to define a new use case or analyze retention/engagement, we can pull out a framework from Reforge and help our product teams make decisions faster. But, we must not use these frameworks as colouring books, to colour in the lines and never take risks to go outside the lines.

Shipping is learning

In SaaS companies and startups, often the best way to learn is to take risks and ship often. The best learnings happen during failure. I don’t fully agree with Reid Hoffman, but his quote “If you are not embarrassed by the first version of your product, you've launched too late” captures a lot of this sentiment. Heck, this is in line with the principles described in ‘The Lean Startup’, imo the single greatest book about product management.

What leaders can do to enable this is creating an environment where product experimentation thrives and failure in such endeavours is not punished, but rather learned from. Spotify does an incredible job at this and thus they have remained one of the pillars of music streaming, even with a lot of competition.

For PMs reading this, I encourage you to understand the scarcity of user-research, get more face-time with frontline customer teams like sales and support and do more streamlined product experiments. I can vouch that these have worked in the past and will continue to work in the future. And finally, stop operating at zero interest rates, that’s not the reality we live in. Papa (Jerome) Powell will be proud ????.