Learn a framework for quickly pitching a new product idea, and enhance your career!

When I interview a product manager to work in my team, I want to know that they understand the whole of the product cycle - how to make it happen, from concept to rollout and beyond, and most importantly what will make it successful. Too many product managers only ever see a part of the process (which I think is a fault of their management), so the product will never quite achieve its potential. Think of a great product that is way too expensive (e.g. the Apple Mac Pro computer), or a wonderful hiking device that doesn't have maps for your area (e.g. Garmin GPS), and you wonder how someone missed the big picture. A product manager that I hire needs to always keep in the mind the product vision and key success factors, and emphasize them through all of the discussions with company teams that seek to limit their own team's effort, expenditure, or risk, and will blindly limit the product's potential. Luckily, this approach works well both in large companies and in startups, but it takes a speciatl person to 'get it'. To identify that special person, I usually spend at least half the interview inviting the product manager to pitch me a new product idea.

Don't panic! At this point inexperienced product managers are ready to walk out, but I give them a framework in order to structure the discussion. To my surprise, many have told me at the end that they learnt more from our short discussion than they had in the previous several years, and several have decided to actually go and build the product they pitched! Yes, there are frameworks such as CIRCLES out there, but this one is more complete - I've based it on the standard 10-slide pitch that is frequently used when asking for venture capital money, but shortened to fit within an interview, or your rare lunch with a VP.

The framework I suggest to candidates is this:

1. Pain points

2. Users

3. Market sizing

4. Product vision statement

5. Features

6. Metrics

7. Pricing

8. Profit over 3 years

9. Rollout plan

10. Risk assessment

While it may seem daunting when seen in a long list like this, a product manager with more than a year of experience should immediately recognize familiar steps in this framework, but I agree that it needs courage for them to tackle the ones that are unfamiliar. As most Exponent clients know, what the interviewer is looking for is not a 'right' answer, but a logical pattern of thinking and mental agility that will serve a product manager well in pretty much any situation.

One curious point is that most product managers are happy to talk about product features, but that is only number 5 in the list, and there is so much else to discuss!

How long does it take to get through this framework? Time is very limited in an interview, but I have tested this framework with several hundred candidates, and we can get through most of the topics within 40 minutes, albeit with a bit of helpful coaching. I recently tested it with a senior coach from Exponent, and he aced the whole thing in 30 minutes! However, inexperienced candidates can take up to 1.5 hours, so it is worth practicing beforehand.

Stepping through the Framework

Let me guide you through each step in the Framework to tell you what I am looking for, and describe the mistakes that I see many candidates make.

Scenario: A Good Walks App

I usually ask candidates to suggest a new product idea from their hobbies or home life, so that we avoid non-disclosures from other employers, and because candidates usually have more passion about such topics! Something that has really annoyed them, and needs to be fixed (Hint: have a topic pre-selected before your interview!). A popular topic among candidates is the need for an app that can guide their young family on good walks or bike rides near home, usually with kids, so let's choose that one for this article.

Pain points
Users

Any product discussion should always start with pain points, although it is heavily intertwined with Users, and I don't mind candidates mixing the discussion as long as they summarize the pain points clearly. You get extra points if Agile story format is used!

Ideal Answers:

As a young parent, I need to be able to quickly find walks that are appropriate to age, walking ability, and interests, so that my family can have a healthy and happy day out.
As a responsible parent, I need to know exactly where critical facilities are, such as parking, toilet stops, baby-changing stations, and food along the route, so that my family is happy.
As a responsible parent, I need to know whether handicapped persons or ageing grandparents can accompany us on the chosen walk without difficulty, so that no-one gets left out.

Mistakes candidates make:

No clear definition of users - parents, children, grandparents, friends. Most people forget to mention handicapped users!
No clear definition of the pain points. Without that it is hard to know whether the product features are appropriate!

3. Market Sizing

In this step we figure out how many potential users there are so that we know whether the product is worth building, and of course it is an estimation question in disguise. The usual approach is to derive the potential user count from the population of the area. For instance, the San Francisco Bay area has a population of roughly 8 million. (Hint: check the rough population size of your local area before the interview!) Take 60% to get the size of the working population, divide by 2 to get couples, and then take the percentage of young families, which is about 30% (see here). That gives about 720,000 households (the actual number is 784,000, but that is accurate enough).

How many households would use an app for family outings? That is unknown, but I suggest you use a number like 10% where you have no other information. That gives a potential user count of 72,000 households, which is pretty good for just one market. I would proceed with an app that had that kind of usage potential.

Ideal answers:

Any user number that the candidate arrives at is fine, because it is the logic that matters, but I would expect an answer between 50,000 to 100,000 users, and for the candidate to confirm that it seems like a reasonable answer.
Is this product idea worth proceeding with? Yes.

Mistakes candidates make:

Oh where do I start? Not knowing the population of their local area, having no concept of how to do this estimation, and particularly serious - not being able to judge whether the answer is reasonable, or whether we should proceed with the product are all typical problems. (Hint: Practice estimation questions!)

4. Product Vision Statement

Popular with Bay Area companies like Google, it helps to create a very brief phrase or a 'product vision statement' that you can use to sell your product idea to management, and refer to the product with engineering and other teams. It is a good way to keep the product true to its vision, because you can refer to it in meetings all the time! There are many good guides for writing one (see here for one), but I recommend the following:

No more than 3 or 4 words
Must mention (or clearly imply) the primary user who is going to benefit from this product
Must mention one or more key benefits to that user
Must indicate the activity with which the product will help

Examples: 'Quick first-time homebuying', 'No-hassle airport arrival', 'Fast retail customer checkout', 'Accurate medical appointment timing', 'Happy beginner cooking', etc.

Ideal answers:

'Happy Family Walks', 'Easy Family Outings', 'Fun Family Hikes', are all reasonable product vision statements for this new product idea. The key users are there - families, and you can understand the activity and the key benefit.

Mistakes candidates make:

Again, another difficult one for candidates - I have to coach people a lot on this one. The major problems are usually a phrase that is too long, doesn't identify the users or a key benefit, or has no context. I get non-sensical things like 'going out with the family and finding a bathroom'!
Candidates for whom English is not their first language struggle more with this topic. (Hint - practice constructing these statements before the interview!)

5. Features

Candidates usually breathe a sigh of relief when they get to this topic - they have been waiting to dazzle me! But I know that they have missed the point when they start describing the logo, the web page design, the user registration process, etc. What I am looking for are features that DIRECTLY address the pain points that they themselves identified back in step 1!

Ideal answers:

Ability to detect or specify your local area
Some kind of grading, difficulty level, or way to quickly indicate whether a walk is suitable for my particular family's needs (age of my children, handicaps, wheelchairs, etc.)
Precise location and distance to reach toilets, food, etc. along the way is essential.
For extra credit, a graph of the gradients on the walk, a map showing the location of the facilities, video of the walk, recommendations from other users with a similar family profile, etc.
If you can draw for me how the app includes all of the above features, then wow!

Mistakes candidates make:

Not addressing the pain points. This is such a serious failure that I would be tempted to end the interview at this point.
Describing the non-essential items of the app, such as colors, user registration, dimensions of wheelchairs, or how other users will rate the walks, even though they have a different family profile.

6. Metrics

By this stage, I usually want to put my head in my hands, because I know this interview is already a waste of time, or I am so energized that I want to hire this person immediately! However metrics is another hurdle that causes many good candidates to fall down. What I am looking for are 'metrics that show me that the product is a success', and I usually specify that I do NOT want to measure revenue. The key to answering this question is to focus on what really matters to a potential investor, and not spend time measuring number of downloads, number of accesses, number of recommendations, etc.

Ideal answers:

The most important metric in my view for most apps is RE-USE. That is the number of times the same user comes back to use the app again. It tells me that they see value there, that it is solving a problem for them (though we don't know which one), and that this app has long-term staying power and growth potential.
Other key metrics include: number of walks available within the app for a specific local area, number of times the app is recommended to new users, and accuracy of the data (location of the walks, location of the rest stops, etc.).

Mistakes candidates make:

Candidates love to rattle off as many measurements as they can, once they get over the shock of hearing that I am not interested in measuring revenue! Rarely do the metrics they propose have anything to do with the success of the app, but rather are about the usage of parts of the app such as number of logins per hour, number of downloads per hour, number of searches per hour, etc. While these are useful in measuring activity, they don't tell me whether the product has actually solved the pain points for those users. If I download a walk one time, does it tell you that I will use your app again in the future? No. It only indicates that I want to try out what you have.
Telling me how the metrics will be collected may be interesting, but is another irrelevant answer.

7. Pricing

Many product managers have a fear of pricing, because they have never been allowed near the topic. This is a mistake of senior management, because the balance of features versus cost is a key factor in users deciding whether to use your app or one offered by a competitor. This is the classic 'PC versus Mac' debate in a nutshell.

The fear factor means that I find it very hard to get candidates to specify an actual price e.g. $5 dollars per walk download. You need to think about the value that the app offers to users, and therefore how much they might pay. What are the alternatives, and how long do they take? How do people find a walk today without your wonderful app?

Ideal answers:

Give a number: $1 per download, $5 per download, or a subscription price of $10 per month. It doesn't really matter what number you give me, as long as you have the courage to give a number, and outline how you are charging - by download, by subscription, by user, etc.

Mistakes candidates make:

No number. I have had candidates actually refuse to specify a number!
No sense of the value of the app to the users - how much is this information worth?
No appreciation of alternative sources of information for the users.

8. Profit over 3 years

This is a trick question, because most candidates hear the word 'revenue', not profit. Profit means revenue minus expenses, so you will need to estimate both. All I am looking for are ballpark, back-of-the-envelope (or napkin) estimates that you could do during lunch. Here are the steps:

Estimate how long it will take until you can ship a working product. My personal rule of thumb is that from initial concept to delivering version 1.0, including all user testing, takes 1 year. That means NO REVENUE during the first year.
Estimate your expenses per year. Allow a minimum of $1M per year - that is enough to fund 5 people in Silicon Valley, and more in other parts of the world. Allocate $1M in years 1, 2, and 3 for development and maintenance costs, and $1M per year in years 2 and 3 for marketing. A good product manager will add on another million per year to fund data collection and updates - all that valuable walk data costs money!
Estimate your revenue per year. That should be easy for year 3 - take your price and multiply by the number of users that you estimated! But in year 2 you may only make half of that.

Ideal answers:

Expenses of something like $6M over 3 years, and revenues of between $3M to $4M over 3 years sound reasonable (assuming $1 per download, with families downloading twice a month on average). But that is just for the Bay area, so you need to specify how many metropolitan areas can be added during those 3 years - let's be conservative and say 5. That gives revenue of $3M x 5 = $15M, which gives an overall profit of say, $15M - $6M = $9M over 3 years.
I want the candidates to say whether they would invest in this business. Often the answer is yes, especially if their estimates include wild revenue calculations!

Mistakes candidates make:

Most candidates think revenue starts from day one, and assume it grows exponentially. I wish that were true! They give wild revenue estimates, but if they can back them up with reasonable assumptions, I'll accept it.
Most candidates have a hard time thinking about the costs. Salaries, marketing, and data collection/validation are the large cost items.
Don't be afraid to give numbers! All I am looking for is a logical approach to this task - the results themselves are not so important.

9. Rollout Plan

To my surprise, few candidates understand this step, and expect it to be handled by the marketing team or product marketing team. Only when I ask whether they have the walk data to rollout their app across the whole world, or even the whole of the US, do they suddenly realize that there is a problem. This often occurs with apps that depend on data (think of the work it has taken for Exponent to create their library of study materials for you!).

So a good answer requires an estimate of how many locations you can reasonably collect and validate data per year, which in turn depends on the investment made.

Ideal answers:

Any answer that gives a measure of 5 to 10 cities per year per data collection person is probably in the ballpark. Of course that can be scaled up by adding crowd-sourcing, crowd-validation, or more data collection specialists (think of how Wikipedia is run), provided you monitor quality.
Any candidate that is able to lay out a progressive plan of US state by state, or world country by country gets high marks.

Mistakes candidates make:

Not realizing that data collection and validation is key to the success of this solution, and that it doesn't happen overnight.
Crazy estimates like rolling out a US state per week or an additional country per month (all in local language?) are worthless.

10. Risk assessment

By this stage most candidates have run out of time, and the interview has already finished. For those who have been quick I add this extra challenge - tell me what investors should know about the risks of this project.

Ideal answers:

Poor data quality
Too few walks available per region, or too few that address the specific family needs
Difficult to search for what you want
Competition - which comes not just from other apps, but all of the existing walk guides, tour guide books, and websites already available for free!

Mistakes candidates make:

Blank stare, or a claim that there are 'no risks' (unbelievable, I know!).
Risks that have little to do with the success of the app, such as the number of public toilets in an area.

What's Missing?

I mentioned at the start of this article that this framework is based on a typical 10-slide new product pitch. Have we covered all of the topics that would normally appear there? No - a typical new product pitch or startup presentation would also include the following topics:

Competition

You would normally expect a comparison of the strenths and weaknesses of your proposed product versus several key competitors. I have removed this from the interview version of the framework partly in the interests of time, but also because finding out about your competition requires research, which is not practical during an interview. However, a take-home assignment which a prospective employer might ask you to do should definitely include a competitive analysis.

The Team

A new product pitch would normally include a bio for each of the key players that will launch and guide the new product. Investors often place more confidence in the people that are involved than they do in the product idea, knowing that the product and its market may change rapidly. During an interview it is not fair to ask a candidate to name the team that will bring this product to life - they might perhaps go and do exactly that!

Summary

I have learned over the years during which I have used this new product pitch framework that it is a tough test for product managers, but a worthwhile one. If you can get through this framework in a coherent, logical way during an interview, I trust that you could do the same thing in real life, and I would have no hesitation in hiring you. Of course different interviewers are looking for different things, but something in this framework is bound to spark their interest.

Learning the framework also serves another purpose - it gives you a ready-made way to present new ideas and proposals to your management and colleagues once you get hired.

One of the best ways to prepare for a product management interview is to train yourself to be curious about the world around you, and start describing it in terms of this framework. For instance if you are in a restaurant, you will probably see several product opportunities while you watch how people order, pass the time, and make their choices. The same thing can happen if you are on public transport or in a public office - so many things around us are just waiting to be improved! It could be you that does it.

Good luck!

Want to learn how to use tools like the above to answer interview questions? Want to get expert coaching from interview coaches like Tim to ace your next PM interview? Check out Exponent's PM Interview Course and Interview Coaches.

venture capital Posts

Read our latest blog posts about venture capital on Exponent.

Venture Capital Behavioral Mock Interview: Why Floodgate?

How to Pitch Your Product Vision in Product Management Interviews