Building a startup takes a lot of time and effort, and despite all the sweat, tears, pain, and joy, fewer than 10% of startups will survive, according to TechCrunch.
And these numbers are lower in Latam (From Mexico to Argentina). For several reasons, some say the low investment in overall innovation (0.7% of GDP in Latam vs 2.8% in the US according to Unesco), and we can see that on the Global Innovation Index report, the Latam country with the highest rank is Chile at just #50. However, there are also sociocultural differences in play, so it’s not just a money issue.
This excerpt from a Council on Foreign Relations article on why Latam is losing out on globalization explains: “Why hasn’t Latin America been able to thrive in a more connected world? There are lots of reasons, to be sure. Weak governance, inequality, informality, and insecurity all play a part. Still, a vital but overlooked factor is the lack of regionalization—the exchange of trade, money, and knowledge within Latin America itself.” Do take the time to read the full case study Why Latin America lost at globalization—and how it can win now.
However, startups in Latam still fail due to delayed product launches or issues in the product management process itself, and not just a difficult economic environment.
In my experience, only a few startups spend enough time learning from their setbacks. Product managers who work at startups have a golden opportunity to make failure a central part of their methods.
As a seasoned product manager in Latam, I have reaped the benefits of using effective product management techniques first-hand, especially when things start going south. This article tells the story of some of my biggest mistakes (or learning opportunities) and my most significant wins.
Let’s start at the beginning
I got hooked on the startup world almost a decade ago during my last years at college. My girlfriend (now my wife) and I had a whiteboard in the living room, in order to crack an idea worth pursuing (have you seen the series Playlist on Netflix about the birth of Spotify? We were just like Daniel Ek).
It took us a couple of months to get an idea that we called Coowit.me (Come with me: a ticketing events and “get-together” app. Think Ticketmaster meets Tripadvisor reviews and a group forming feature) then we got a team set up:
- We decided on a market and an idea worth pursuing.
- We recruited a CDO and CTO as co-founders.
- We got into a couple of incubators.
- We got angel investment and hired a few developers.
What could go wrong? Pretty much everything!
In the beginning, we were happily learning by doing, I was learning how to code and create marketing campaigns, and we were using design thinking in 2014, my CDO was learning UX/UI when there weren’t any readily available courses.
Lesson #1: Hire slow and fire fast
Listen when you hear people say this. It is great advice. Choose the right co-founders and team members. Some say choosing a co-founder is like a marriage; for me, it was.
But unfortunately, we hired someone too quickly who left us just before our release and didn’t leave any documentation.
The mini-lesson here: Use a knowledge-sharing platform and always document everything. I know the agile principle says working software over documentation… but what if the developer leaves? Aim for the perfect balance to write your software documentation, architecture, database structure and coding.
Lesson #2: Understand the expectations of the fund’s owner
In a market like Peru, you cannot expect to go into an accelerator and say, “I’m going to do X with no experience and zero traction,” and get funding. You may be able to do this in other markets – in the US venture capitalists may be worried about losing opportunities but in Peru, people are afraid of losing money. A startup founder in Latam needs to learn a lot about the VCs or funds that could invest in the business. If you are a product manager in a corporate environment, learn who controls the money in the company and what triggers that person.
Lesson #3: Get an MVP as cheaply as possible
Your team looks to the product manager for direction, assistance, and leadership. It’s therefore your responsibility to motivate your team and provide them with the resources and encouragement they need to perform.
A product manager’s primary responsibility is to manage and reduce risk to give a value hypothesis to work with the product. That’s because risk is an essential part of a startup or corporate venture. And this must be accepted and owned by founders and backers, especially in very early firms that sometimes don’t have product managers.
You need to assure the VCs, angels, or CFOs that, with the investment/opex/capex you’re asking for, your team will get the cheapest possible minimum viable product (MVP) ready to show clients. So you must answer truthfully: “Will anyone even like this product at this early stage?.”
Lesson #4: If people say yes, launch the product by yesterday.
Do alpha and beta tests, whatever. This was one of my biggest failures and learnings at Coowit. We wanted too many features in an MVP because we wanted to be a better product than the alternatives available, but it was too much for our small budget and we needed more time to prove it.
This is where strong product management comes in. While it’s easy to define the importance of good marketing or sales opportunities, startups often need help explaining what a product should do, what problems it needs to solve, and who the target demographic is. If you think about it, these are pretty basic questions— yet people have the most difficulty with them.
Product managers guide each phase of a product’s lifespan, from research to pricing and marketing positioning, by placing the customer and the product first. |They represent customers’ interests within the company and ensure that the market’s voices are heard to create the most outstanding product possible.
Leading product teams in Latam has taught me that the probability of failure decreases dramatically if you lead a product through a clear roadmap and thoughtful process (it doesn’t need to be heavily documented, but it needs to be clear and concise to the point).
Having a real strategy for the product and its market is the first step to product success. But remember that for Y Combinator’s Paul Graham, “Startup = Growth”, so in the early stages, think about how the product will grow. Growth has to be fundamental in your roadmap and backlogs.
Understanding what your target client wants or needs can help you create a product strategy that will add value to them. Product launch and development must only start when the plan has at least been prepared to increase the likelihood of success. Always put the product/growth strategy first.
Lesson #5: Always do research
A headhunting firm contacted me during the pandemic. They had a client, an established educational company, who wanted to implement a new digital business unit. The founders wanted to compete with big edtech businesses but needed more funds. I asked if they had US$100M but the answer was no. So at my interview I gave them a hypothesis for a product. Afterwards the board did extensive traditional research for a month with an external firm before bringing me on board to start my discovery. We could have saved time and money by doing a one-week design sprint or a Lean Inception workshop. But it was a traditional company.
Research and discovery are fundamental disciplines for any product manager. We always hear about traditional founders looking to overhaul their product’s experience. For example, I was once told: “I want a tablet or a touchscreen to look like an innovator.” Did it solve the user problem? In the discovery phase of that product, we discovered what users wanted, and it wasn’t a touchscreen.
Lesson #6: Stakeholder engagement is crucial
You must comply with your board, but remember that following the HiPPO (highest-paid person’s opinion) is optional and sometimes not the best outcome. Product managers are the voice of the customer and as such, have to work out how to deliver value to customers and ROI to the board.
Moreover, a product lifecycle that all parties, from developers to senior stakeholders, understand and agree to follow, will increase the likelihood of success and lessen duplication of effort. It also avoids pushing things out before they are ready, which is a significant factor in the failure of many companies because sometimes, when you’re in a big corporation, you are just like a “Pirate in the Navy.” You may get initial approval, but the senior leadership doesn’t understand what they approve and how it will bring value to the overall business. You need to make sure this doesn’t happen. As a pirate, your job is to influence the navy and transform the company creating a lasting and valuable change.
Your secret to success as a startup is a solid product and growth plan (it will probably change a lot, but having a clear vision and north star metrics is vital).
Through my personal experiences, I’ve learned that leveraging product management is critical to preventing startup failure. This is especially true in the fast-paced and dynamic environment of Latam startups. I’ve learned some key lessons:
- Hiring slowly and firing fast is crucial, as choosing the right team members can make or break a startup.
- It is essential to gauge the expectations of the fund’s owners, as different markets have different approaches to funding startups or corporate innovation.
- A product manager’s primary responsibility is to manage and reduce risk by putting the customer and the product first and guiding each phase of the product’s lifespan.
In short, product management is a powerful tool that can help startups reduce the likelihood of failure.
Discover more great content on Mind the Product!
- Four growth lessons I’ve learned from the best product managers
- How to become a data-driven product manager
- Don’t convince. Inspire! – Lessons on storytelling by Petra Wille