What it takes to scale a product-led company with John Brennan

Sumeru Managing Director John Brennan shares what it takes to scale a product-led company—from UX and innovation to the role of domain knowledge.

Intro to Sumeru Scaling X Podcast

Mark: (00:00:30)

Hello and welcome to Sumeru’s Scaling X, the podcast that’s all about growth. Here on Scaling X, we dig deep into life’s essential questions including this one:

How do you scale a growth stage company without losing its soul?

Few people have a better handle on the topic than Sumeru managing director, John Brennan. Before co-founding Sumeru, John had leadership roles at Adobe, Accenture and other companies. So listen up, he’s going to tell us how it’s done. Thanks for joining us, John.

John Brennan:

Thanks, Mark.

What Makes a Product Led Company Grow?

Mark: (00:01:00)

So John, you know a lot about what makes a product led company grow. If you could distill all that knowledge down to one thing, what would it be?

John Brennan: (00:01:30)

My view is today more so than ever that product leadership is critical. And I think that that’s a function of a couple of things.

Number one, we literally have a generation of users who’ve grown up with the best consumer applications in the world. They’ve been trained to recognize what great software looks like.

As investors in business software, which is primarily what we invest in, right? We invest in software that is focused on enterprises or businesses. We have to recognize that the users of that software have been trained in their personal lives, by their experiences with Facebook and Google and Amazon.

We have to understand that the bar for the software that we create is fantastic and it’s high. It’s created by these companies that are truly iconic companies in that regard.

The second thing that I think is really important to understand about product leadership in today’s world is that we’re in a socially linked world.

There’s no hiding from mediocre or bad product. Maybe in the old days you could keep your customers from talking to one another. You could offer a reference here or there. Those days are long gone.

People do their research on the internet. People understand how to find other users. So my perspective is that that customer or user’s social network around a product may in fact be one of the most important and endurable competitive advantages today.

But it’s also something that you need to tend to. The way you tend to it is by delivering great product. Product simply needs to be great.

Not okay, not good, it needs to be very good or great.

Mark:

Okay. What you’re saying is the bar has gotten higher and there’s no hiding.

John Brennan:

That’s right.

The Relationship Between Product and Company

Mark:

So if your product sucks, people will know it. People will tell you about it, you’ll know it, your investors will know it will be revealed.

So given all of that, even though if you have a great product, it’s still not enough sometimes. Because you have a product, but then you have a product led company.

How do the two in your mind best connect or what’s the relationship between the product and the company?

John Brennan: (00:04:00)

I think that the best way to maybe to address that sort of broader idea is that a product in and of itself–particularly a SaaS product–doesn’t simply exist in a vacuum, that there is an entire customer experience that gets delivered.

The customer experience begins with the sales process or frankly, the marketing process where most of our companies have really made a commitment and pivoted to the idea that we’re in a fight for people’s attention.

In order to get their attention, we have to deliver something valuable to them.

So valuable insights or valuable content that really attracts them to what it is this particular company is doing. That’s a part of a customer experience. A sales process, which really doesn’t try and slam a square peg into a round hole, but really delivers the solution that makes sense.

That’s part of a customer experience. The solution itself, which I’ve just talked about, being a great product that people want to consume is obviously deeply important. Then, obviously the quality of that solution, and the ease of use and the helpfulness of it goes to the central heart of the matter, which is people actually adopting it.

And so there’s the quality of the product, which helps it gets adopted.

There’s the quality of the customer success function or the customer support function, which helps people go beyond just what we can do in product to go a step further in terms of adoption.

So, if I think about a product led company, it doesn’t mean you just throw the product over the wall. You’re building kind of an entire philosophy of saying, look, we value your time.

We’re not trying to sell you something that’s not going to work, that we’re trying to get you involved in a platform that’s going to create value for you and that you’re going to enjoy using and that you’re going to adopt more deeply.

But it’s a commitment at the heart of it to give people a really world class product experience, whether that’s experience just in the product or the insight and the process that comes before, or the support that comes after.

Innovative and Inventive Companies

Mark: (00:06:00)

That makes perfect sense in the idea that a product needs a support system around it. Is that something that founders sometimes overlook or often overlook?

John Brennan:

I think a little bit at the core of this is sort of the distinction between invention and innovation. But I actually think there’s a really important distinction to be made between the two.

I want every one of our companies to be both inventive and innovative–companies need to be committed to both ideas.

And so invention is, I’m almost axiomatically new thinking. It’s meeting the unmet need. And in the best case, frankly, finding that unknown and unmet need. Some people call that category creation.

That’s what founders do and they do it really well. Right? The market, your customers cannot often tell you what to invent. It’s the founder’s profile. Someone who sees a problem and knows usually because they’re technical or because they’ve been deep in a domain that there’s a way to address that problem that others cannot even imagine.

That’s the invention process.

Innovation in my language is, at least is more incremental. It’s not less important, but it proceeds more naturally from the current condition. And sometimes it requires entirely new thinking, but often it’s about compounding improvements, right?

So, going back to your question, do founders sometimes not see the importance of the customer support that comes at the end or the process up front, which really helps to make people understand the centrality of that particular solution?

Yeah. I think sometimes that’s the case because they’re incredibly excited about the fact that they’ve identified an unknown unmet need and they’ve built the solution. To them, it’s self evident because they’re a founder, because they understand the problem. Usually they’re a practitioner in a part domain. They understand the problem so well they can’t imagine that everyone else wouldn’t see it.

So to answer your question, yes, I think sometimes they don’t see it, but the reason they don’t see it is because of their specific profile. And that’s why we have valuable companies because people, they get to these insights that allow them to invent something really new and fresh.

Great Founders and Products

Mark: (00:08:30)

Have you learned anything about getting the founder to look, step back and look objectively at their product? Is there ever a time when you need to sort of manage that relationship between the founder and the product?

John Brennan: (00:09:00)

I’m not sure actually. I mean, I think when we talk about founders, I think one of the things that is magical is that typically as I say, the founder’s profile is someone who is uniquely able to both identify a problem and then solve the problem.

I think that gives founders an enormous amount of confidence. They have an essence, often created a category of software or technology that didn’t exist before.

There is sort of a software product imperative in SaaS that we all need to remember in order to build really category defining and durable companies. It’s this phrase that I have, which is every product needs to evolve into a platform or it’ll deteriorate into someone else’s feature.

When we get involved with companies, from time to time, the founder may be really focused on the product they’ve built, but they may not totally appreciate that we need to aggressively evolve it, continue to evolve it into a platform.

Or there’s somebody else out there who once they’ve shipped their product, once it’s available for inspection, someone else with a, maybe a bigger platform will see it as an opportunity to add it as a feature.

We don’t want to lose any of that energy of kind of execution, execution, execution. But look, great founders like great product leaders have to be able to level up into big picture strategy and level down into details.

That’s what makes them truly great leaders for product and often great leaders for the company is they can span that sense of, I can think about a five year, seven year vision and abstract strategy and I can also go toe to toe with the UX designer or the engineers on exactly how that feature should be implemented and the color of blue on that particular part of the interface.

We find that our leading entrepreneurs and our leading founders are absolutely able to scale up and down, up into the strategy and down into the detail.

Is it a Product, Feature or Platform?

Mark:

What are the first few things that you look for? Are there questions that you ask yourself every time about a product?

John Brennan: (00:11:00)

Yes. And in fact, one of the first questions is what I just alluded to, which is, is this a product or is it a feature? Right? Because if I get the sense that it’s a feature, but it’s been a valuable feature, right?

They’ve built a business around it. The, really the central question is wow, if it’s a feature, then someone’s going to come along and build a product.

Now if it really is a product, then we have an opportunity probably to go a lot further and extend into a platform. And occasionally I’ll ask myself, is this really a product or is it a platform?

And we have made investments in companies who kind of who came to life and were founded with the vision of being a full platform. And so we were fortunate enough to invest with founders where they had a platform vision.

But it’s that first kind of test I would say, is this a product or is it a feature? That’s one test that I have. The other test that I have is (00:12:00) sort of, what’s the core invention here versus what’s the innovation? And there are a lot of innovative companies out there which do really valuable work and create really nice businesses and we might invest in them.

There are other businesses which have some core set of inventions at the heart of their product, and then they surround that invention with innovation. And so I really try to understand what (00:12:30) type of product I’m looking at in that instance, is it a product or a solution of the market that is mostly innovation with a little bit of invention or is it a bit more half and half?

Because I think what that it really helps you to understand how close are we to creating a new category, how much of this is something that other people just simply didn’t imagine and cannot imagine. And I think that tells (00:13:00) you a little bit of what sort of roadmap you have in front of you in terms of before people can react to it overall.

Then the other thing quite frankly, is I look at the software itself and how do I feel about it? And admittedly, this is maybe the softer part of the exercises before we get deep into an exploration of the company or into diligence. But traveling from okay, software to very good or great software, it’s a bigger journey than people think.

And it’s not just the big ideas that make software great, it’s the accumulation of lots of smaller items that create that sense of flow and fit and finish that are just as important to a user’s experience.

So those are three kind of tests that I have early in a process to really understand, to get a sense, an essence of the products’ leadership and opportunity for leadership overall.

Product Lead Leadership Best Practices

Mark:

Are there certain things you look for or that you see as warning signs in leadership?

John Brennan: (00:14:30)

Well, absolutely. I think you could probably say of course, as investors, we are ultimately investing in people.

We’re investing in the leadership team. These are small companies or smaller companies. They’re in dynamic marketplaces. We’ll invest in and be a partner to the founders for five years, seven years.

During that time, there will be a lot of decisions and changes that need to be executed. We’re relying on the dynamism of that leadership team and the sort of the intellectual capacity of that and the execution capacity of that leadership team.

So absolutely, that’s probably the most important thing. I mean, you, obviously, if you’re a venture capitalist and you’re looking at three people it’s almost entirely your diligence. You just have to kind of diligence the team and some amount about the idea.

We entered a different stage and so we can really diligence the business itself. But nevertheless, the team is really central to kind of carrying that forward.

Now, going back to the product nature of this whole discussion, some of the quality of that team is reflected in the product, right? I mean, if you see a haphazard product, it should tell you something about the nature of that team.

If you see a haphazard explanation of a strategy, it tells you something about the team. And I think for the most part products and presentations are a reflection of the team that writes them and creates them.

So it’s rare that I meet someone who has a totally incoherent presentation and a haphazard product and we’re super excited about moving forward because they seem good or because the numbers are good.

Mark:

And there probably are very, very few instances where a haphazard or a poorly executed presentation or strategy, 18 months later, you said, “Oh, I wish I’d invested in them.”

John Brennan:

Not too many of those. No. I mean, that’s just, the reality is, I mean, people particularlyI mean, I could understand when companies are really small and they’ve got the kernel of an idea and they’re kind of swirling around trying to find exactly the right way. You could understand that.

But even in that world, I think that ultimately investors, even in the smallest companies are looking for a management team that’s formidable, that is going to sort itself out and find a way through its problems. And central to that is communicating with clarity and central to that is building products with a sense of clarity. And so I think you’re right.

How to help product-led companies grow?

Mark:

When you first started investing and made the transition from working at a larger company to advising and investing in smaller companies, what made you think that you had something to say that would help them? Why did you think you could help?

John Brennan: (00:17:30)

Gosh, that’s a good question. I don’t know, arrogance. Is that the right answer? Too much confidence, a lack of humility. I have no idea.

I mean, look, I think that when you work with teams and you lead teams effectively in other companies and you get a sense that you’re okay at it, or maybe even good at it, or very good at it, imagine that you can transfer that set of skills and capabilities to other organizations in a different role.

So I enjoyed the work I did with the product teams at HP and Adobe immensely. And I felt like we built great products and we had a lot of fun doing it. I didn’t imagine that some of what I had been able to do there wouldn’t translate to other organizational contexts.

Mark:

I’d have accepted arrogance.

John Brennan:

Okay, fair enough.

What are the challenges for product-led companies?

Mark: (00:18:30)

How, even in the past few years, how have the challenges to a product led growth stage each company changed?

What’s the state of challenges for that kind of company?

John Brennan:

I think the biggest challenge is the speed of competition and the breadth of competition. That’s in my view.

The barriers to building software oriented solutions are lower than they’ve ever been, right? Whether that’s because of cloud-based computing, whether that’s because of better and better tooling and development environments, whether it’s because of the transparency of information that we talked about earlier, that once you reveal your product to the world, everybody can consume it and see it, and they can understand what assumptions are embedded in it.

You would expect in a dynamic market, there are plenty of other people who look at what you’ve built and say, well, that was kind of my vision anyway, but I think I can do it better, or I have a twist and I want to chase my dream and I want to do it.

And so the premium today, and part of the reason I’m so passionate and committed to the product led growth is you cannot relent on continuing to evolve your product.

Because people can build the product and they might have a twist or an insight that’s better than yours. And so I think there’s a certain amount of paranoia in this context is healthy.

Then, paranoia, not just about the big companies, but paranoia about the group of three to five rockstar engineers and product managers who get together because they’re super passionate about building something new in your particular domain.

Be paranoid about them too. So I guess, the answer to your question is competition.

Product Led Competition

Mark:

Competition. Of course. It’s always competition, isn’t it? Anyway, it was a fascinating conversation.

John, thank you so much for your time, for sharing your wisdom, your considerable wisdom I should say. That was really valuable information for anybody who’s interested in growing their companies. So this has been Scaling X with Sumeru. Tune in next time.

John Brennan:

All right. Very good. Thanks, Mark. What a pleasure. Talk to you soon

 

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