Intercom on Product: Facing the tech slowdown
In the face of what’s expected to be an economic downturn, projected growth has slowed, investment has shrunken, and the tech industry has taken a hit. It’s time to pause, regroup, and devise a new game plan.
I’m not going to sugarcoat it – it’s not looking good out there. In the midst of a harsh market sell-off, many tech organizations, even some which, up until a few months ago, had been raising new rounds or had runway to spare, have started to announce spending cuts, layoffs, hiring freezes, and slowdowns.
For product folks the pressure’s on to revise your roadmap and short-term strategy to account for a narrowing budget, and shifting customer priorities. Those customer interviews you did 6 months ago that informed the decisions you made for 2022? They’re quite probably outdated. The projects and the timeframe you set until the next round of funding? It’s probably no longer accurate.
But we’re not here to be the bearers of bad news, there’s any number of VC thinkfluencers out there who can do that for you on Twitter. We’re here to get practical, to talk product, and to take this next stage head-on. And while we might not have an idea of how long this will last, we have seen this before. However, every downturn is followed by a rising tide. If businesses look at it honestly, embrace the opportunities that come up, and make the necessary changes in their strategy, they’ll be able to not only survive but come out stronger on the other side.
In today’s episode of Intercom on Product, Paul Adams, our Chief Product Officer, and I reflect on the tech slowdown and what it means for product teams.
If you’re short on time, here are a few quick takeaways:
- While short-term strategies are more into focus right now, don’t lose sight of the horizon. Make sure you have a plan to emerge healthy on the other side and reap the rewards ahead.
- Chances are you need to rethink your roadmap. Consider which projects will have more impact in the customer satisfaction and bottom line and adjust your priorities accordingly.
- In difficult times, titles, processes, and boundaries between orgs should become more fluid. Focus on getting the right thing done, even if it’s done by the wrong person.
- Everything that has gone down goes up again. To keep morale up, keep communicating the mission and vision for the company and remind people the work they’re doing is important.
- In shrinking markets, you get stronger feedback and learn faster whether your product is there and what needs to change. Be open-minded, take the opportunity, and act on it.
If you enjoy our discussion, check out more episodes of our podcast. You can follow on iTunes, Spotify, YouTube or grab the RSS feed in your player of choice. What follows is a lightly edited transcript of the episode.
The slump ahead
Des Traynor: Gosh, it feels only a year ago the venture capitalists everywhere were telling us, “It’s time to step on the gas. Spend, spend, spend,” that there was a massive opportunity to be had, so you should raise and burn, and raise and burn. Today, there’s a relentless message coming from every VC who’s old enough to own their very own Substack, and it is, “Cut and raise, and cut, and raise, and when you’re raising, raise money for me.”
So rather than be yet another bad buzz message, we wanted to be practical. It’s May 2022. This is a slowdown, and that means something for product teams. So let’s talk about what they do, what you should do, and let’s get into it. This is Intercom on Product, episode 17. I’m joined by our Chief Product Officer, Mr. Paul Adams, Paul, how are you today?
Paul Adams: I’m good, Des. How are you?
Des: As good as can be in the tech-pocalypse of 2022. Now, we agreed we’d try and keep this non-reactionary and upbeat but, at the same time, interesting and relevant to the folks who listen. What sort of things change when the world falls apart from a venture capitalist-backed B2B SaaS startup stock point of view?
“We’re only beginning this slowdown, and who knows how long it will last, but it will end for sure”
Paul: You and I are lucky or unlucky enough to have seen this before. I think, for a lot of people who listen to the podcast and work in product teams and companies around the world, the last decade has been this insane bull market, and they haven’t seen anything like this. Even with the pandemic – the pandemic was challenging in a bunch of ways, but it wasn’t the same as this big, fast economic slowdown.
There are practical things that people can think about. For example, some of the things that we can cover today: changing your roadmap – the roadmap you had two months ago can’t possibly be the same you should have now – and changing your mindset is really important. People need to change how they work. We’re only beginning this slowdown, and who knows how long it will last, but it will end for sure. And managing morale is also a big thing that is challenging during these things.
Adjusting the roadmap
Des: Let’s get into it. Roadmap. What are you going to need to change? Let’s assume the scenario is, as discussed, that hiring is slowing down. You probably aren’t going to get all the headcount approved that you did. Maybe you won’t get some backfills, and maybe, in some extremely bad scenarios, you might be laying people off, but let’s just assume the world has changed and you don’t have the team you thought you were going to have. What do you change?
“Oftentimes, a zero to one project or something new has more value for a business than a feature version 28, which is what a current team might be working on”
Paul: There are a few variables here. One is the one you mentioned. Many companies are slowing hiring. Up until a few months ago, they were raising cash or had plenty to spend and, in many cases, had raised it to hire more people. Now that is slowing down because their projected growth is slowing. Many companies won’t kill hiring, some will. Many won’t have layoffs, some will. But many will slow hiring. I assume, for most companies, the things on your roadmap are tied to teams and people. And that’s the first thing – you literally do not have the people. I don’t think anyone in their right mind would ask the people you already have to do all the things the new people were going to do. So you just don’t have the capacity. And that’s not simply, “Hey, let’s not do the things the new people were going to do,” because some of the things the new people were going to do might be more important than the things existing people are planning to do.
Des: A zero to one project might be worth a lot more to the company. And bear in mind that a lot of these hiring slowdowns are tied to extending runway to the next round. Oftentimes, a zero to one project, or something new, has more value for a business than a feature version 28, which is what a current team might be working on.
“Take a long, hard look at your roadmap and ask, ‘Are the things that led us to prioritize these projects still true today?’”
Paul: Exactly. Other things are changing, too. One thing that’s probably changing right in front of us is the customer’s mindset. If you did research interviews six months ago that led to the insight that led to the roadmap you have today, that might be different now. If you interview those same people and ask them the same questions, you might get different answers. That’s a subtlety that is easily lost, “Hey, the insights and data that drove us to prioritize these things may no longer apply.”
Des: Exactly, they expired. There’s some multiverse where they’re still the aspirations, and the ambitions and your customers’ roadmaps and their hopes and dreams and their financial forecasts are still true, but today, here and now, they’re revising all of them, and you may or may not be in it.
Paul: And it’s the same for consumer software. Consumers are changing. If we end up in a recession, people will have less money to spend and they’ll reprioritize how they spend that money. Take a long, hard look at your roadmap and ask, “Are the things that led us to prioritize these projects still true today?”
Get your priorities straight
Des: The mindset shift you should assume customers are going through, in the way I characterize it, is the move from a “why not” mindset, as in “let’s give this a try,” into a “why” mindset of “why should we do this?” Or from aspirational buying, which is, “imagine how cool this could be if it works,” to very functional buying, or, “we’re only interested in things that have a nearly direct, one-to-one causation with an increase in revenue or decrease in costs.” Or, in the old Fred Wilson term, it’s moving from buying vitamins to only buying painkillers. And because of that, looking at all the new stuff you’re doing, and in a timeframe that makes sense, you should think about which of these things will matter and change the posture of your business in a good way. You probably need to reprioritize and replan.
Paul: Something you said the other day stuck with me – that over the last few years (and for many people, this might be the majority of your career so far), you’ve been operating in this growing market. Your business is probably trying to expand, there’s a wide-open road, you’re driving, and you can see far into the future. You’re focused on the long term, eyes on the horizon, versus what you described to me as driving in the middle of the night on a windy road that you don’t know, and suddenly you’re just not driving as fast, and you’re not thinking the same way.
“Companies should think about pulling more people onto Horizon one. But what’s important is to not lose sight of horizon two. You’re still planning for the long term”
Des: You’re looking at corners going, “I just need to get around this corner, and I’ll deal with the next thing.” And I think there’s a horizon thing there. For what it’s worth, folks who are in really early startups and are listening, this is their normal life. If you recall, Paul, back in our Series A days, in 2013 or so, it was very much like, “can we make the year?” Because if we didn’t, we were dead. There was that sort of lingering existentialism that kind of governed things, which, as you recall, provides a sharpening focus to what we do. And I think that focus has to come back.
Now the difference is, and this is the point you made to me, if you just focus on sure things in the short term, it’s a sure thing you’ll have a short term. You have to actually have a plan for what comes next. You liken this to the Horizon Planning that you do.
Paul: When we’ve mentioned this in the podcast before, we use Horizon 1-2-3, Horizon Planning. I don’t know if it was McKinsey or who first came up with this thing, but we’ve found it helpful and use it in our own specific way. Horizon one is the next 12 months, optimizing our current business, and horizon two is further out than that. For us, it’s anywhere from 12, 18 to 36 months, two to three years out, which is more about thinking about new types of opportunities, expanding our business, and expanding our strategy.
Both of these time horizons matter, but depending on where you are as a company and how things are externally in the markets, you can focus more of your resources on one versus the other. And one thing companies should think about is pulling more people onto Horizon one. But what’s important is to not lose sight of horizon two. You’re still planning for the long term. You’re still making investments today that you won’t see a return on for a year or multiple years but that you think are strategically important. I think horizon one is now suddenly in sharp focus, and as you said, getting back to that for bigger companies, there’s a refocusing there that’s a little bit more like the survival mindset we had in the early days.
“It’s just good advice to critically look at the roadmap when the world changes, when your business changes, when customers’ priorities change and buying patterns change”
Des: One piece that I often think about is that when we say prioritize, as in, “you might want to prioritize certain things,” everyone thinks they know what that means, but I think everyone walks away with a different interpretation. If I could tell you to prioritize the list of five things, you might say, “All right, well, 3, 1, 2, 4, 5, those are my priorities.” That’s one way to think about it, but that’s really just ordering it. It doesn’t give any sense of the magnitude of how important the top item is versus the bottom.
So, lately, I’ve taken to framing it more like prioritizing it to a point of certainty – give it enough resources until you think it’s really improbable that it won’t get done. It’s not saying, “Hey, there are five things, we’ll split our resources 20% each, but just to be clear, that’s number one.” When we say prioritize, what we mean is resource it to a point of certainty. And so, when we say prioritize horizon one, what we mean is make sure you get through the next period so that there are rewards to reap far beyond.
Paul: A phrase you and I have been using a lot internally is “what’s the bang for the buck?” I was talking to my team about this, and we kind of whiteboarded a little formula, which is a combination of how important this thing is to our customers and our confidence level in the idea that it is important, ie. “should we go and do more work to increase our confidence that it’s important?” Then, what’s our confidence in our ability to execute against it? And actually, the third thing is the outcome. What’s the outcome we’ll get? How important is it to customers? What’s the business outcome for us, and how confident are we that we can execute it well?
Des: And then the timing is just how long it takes. That’s literally the horizon one versus two. Will this actually happen in a timeframe that we can reap rewards? That’s plenty on roadmaps, but I think it’s just good advice to critically look at the roadmap when the world changes, when your business changes, when customers’ priorities change and buying patterns change – it’d be a weird scenario if your roadmap was still perfectly accurate.
Shrinking timelines
Des: Next, you mentioned mindset. What sort of shifts would you like to see in companies going through periods like this?
Paul: We kind of touched on it just there. I think the first mindset shift is to ruthlessly prioritize. And again, as you said, these things need clarification. On the prioritization side, a rank list is a start, but it’s much more about the confidence in our ability to execute the thing in a reasonable timeframe. And you can play with all these variables. You can scope smaller and pull in the timeframe, you can add time by deciding you need higher confidence that it’s important – there are a bunch of things you can play with.
“You just don’t have time for consensus building – you’ve got to get ruthless”
In good times, when the market’s buoyant and you have more time and more runway, or even if you need to raise again, you know that you’ll raise, the pressure’s off. You can take your time, and there isn’t a ruthlessness about it. You can do things like indulging in consensus building, like, “Hey, let’s take our time, be thoughtful and involve everyone, make a good decision and then execute.” And I think there’s a mindset shift required now. There’s no time for that. And so, you need to move into this other mindset which is more about winning the market than it is about expanding the market. You just don’t have time for consensus building – you’ve got to get ruthless.
Des: And the reason winning becomes more important than expanding is that generally speaking, in times like this, there’s not a lot of new customers emerging. There’ll be a lot of great startups started over the next year, two years, but they’re not going to be dropping five grand a month in your software anytime soon. So, generally speaking, the market tends to be a little static right now. And then, in a couple years, it’ll boom again as those companies come to fruition.
Often, in good times, and this is true whether you’re “seed” or Series Z, if a product or release slips by a month or two months or three months, generally speaking, that doesn’t matter because time horizons don’t matter that much. It would matter if it was a year late, but a couple months don’t matter. The worst-case scenario would be a company that’s caught halfway between one round and the next, where they really don’t want to have to go out and raise in a downturn.
“Timing matters more when you have less of it, especially for folks who are still measuring runway in months and have probably seen it shrink”
Products need to land in time. If we’re out of money in December and the product shows up on December 1st, that’s not enough. It needs to land in time to impact the financial posture of the company and demonstrate significant growth metrics that can be either used to extend your runway or used in a pitch deck to demonstrate additional value so you can raise an evaluation you’re satisfied with.
But timing matters more when you have less of it, especially for folks who are still measuring runway in months and have probably seen it shrink, maybe based on some modeling. All of a sudden, the dates get more important because we expected our product to be live so that it would get used so that it would have such a change in our business.
Paul: Absolutely. There are feedback loops that kick in, whether it’s customer feedback or business dollars. The slower the loop, or the longer it takes to get the loop going, companies compound.
Changing gears and blurred roles
Des: Yeah. What about how a business works? What do you think about the changes you might want to make there?
“If the thing that needs to happen is that a PM has got to go in and help sales, the PM should go in and help sales”
Paul: I think this is a bit more practical for people than changing your mindset. It’s easy for me to say, “Hey, you need to ruthlessly prioritize.” It’s another thing to think about what that means. One analogy that comes to mind is sailing in calm seas versus rough seas. We’ve all been sailing on calm seas, whether we realized it or not, even though it didn’t feel like that at times. When you’re sailing on calm seas, you can walk around the deck and help out. And stormy seas means, literally, all hands on deck. It means blurring orgs and the boundaries between orgs. So, for example, if the thing that needs to happen is that a PM has got to go in and help sales, the PM should go in and help sales. People can’t be saying, “Oh, it’s not my job to get on the sales call and do the demo.” If that’s the thing that’s going to make progress, then that’s the thing the team should do.
I’m reminded of Paul Graham’s article from 2013, which was “Do Things That Don’t Scale.” It’s a good article for everyone to read in the midst of what’s going on right now, doing things that don’t scale and optimizing for progress over a sustainable process is, I think, the order of the day. You need to think about how to get this thing done and change people’s remits when necessary. An extreme example would be, “two months ago, I hired you to do X, but we’re in stormy seas now, and X is not appropriate – I need you to do Y.” And that’s a two-sided thing. Leaders and managers need to make the call to say, “Let’s not work on X, let’s work on Y.” And the team needs to be open-minded and flexible, “Hey, working on Y is going to be a new learning experience for me. Throughout my career, I’ll be in calm seas and stormy seas. And I’m about to learn how to sail on stormy seas.”
Des: It’s more important that you get the right thing done even if it’s done the wrong way by the wrong person than it is to have all the right people doing all the wrong things. And sometimes, when people cling to titles and processes and all that, they generally tend to focus on “all our ducks in a row, everyone doing exactly what they’re employed to do,” and meanwhile, there are burning fires, but it’s okay because it wasn’t their job to put it out.
“You know you’re working in a suboptimal way, but you don’t have the luxury of working towards optimality right now. You have to work towards survival”
If there’s a problem, it’s very tempting on calm seas to be like, “Well, that sounds like that’s a problem, so what we should do is go and hire a director, and over the next six months, they’ll hire their team, and they’ll address the problem.” That’s okay in a world of infinite time, and you’re assuming the problem doesn’t age too badly, but you just don’t have that luxury right now. If the work needs doing, get it done. And that is a shift where you know you’re working in a suboptimal way, but you don’t have the luxury of working towards optimality right now. You have to work towards survival.
Paul: It’s something I’d really encourage people to think about because, again, I don’t think a lot of people have experienced this type of challenge before, is to be extremely open-minded and flexible and resilient. In my experience, over my career, most of the very best people I’ve worked with and most of the very best people who went on to become brilliant leaders had an insane appetite for new things and were just unendingly curious. They never stopped wanting to learn. And if they didn’t know about a thing at a part of the business, they would just go in, and learn and talk to people and ask them about their jobs and what they do and how it works and how it connects. And they’re just forever connecting different parts of a company and how it all makes the whole.
I think that for many people, these will be career-defining changes. They’ll go and work on a thing for three months and come out the other end and, months and years into the future, realize that was a defining moment in their ability to be brilliant leaders.
Des: A crucible moment. I can’t remember who it was, but somebody has a famous phrase – I’m guessing it’s some venture capitalist – and they call them crucible moments; the moments where you can emerge stronger or weaker. I think people who can demonstrate the resilience, the flexibility, and the creativity to like to adapt will come out as such powerhouse people on the far side.
An eye on the bigger picture
Des: What about outside of the practical and tactical and how you work with your team, what do you think about putting on your actual CPO cap and think about how to communicate to your broader organization or maybe even the entire company? What’s important there?
Paul: One whole area is managing morale, which I think we should get into in a second. But before we go there, what’s really critical for people to realize is that if anything’s true in the kind of economy we’ve witnessed over the last hundred years or so, it always goes up and then it goes down, and it goes back up again, and it goes down and up. Everything that has gone down has gone up again, and everything that’s gone up has gone back down again. The peaks and troughs can change, and the length of time can change. We’re going down now; we don’t know how far we’re going down, we don’t know how long it will last, but it’ll go back up again.
You have to, as a leader, think about the fact that it will go back up again. And for all the pragmatic, “Hey, make sure you come out the other side alive,” I think you need to think about coming out the other side thriving and healthy. You need to keep thinking about the vision for the company you want to be on the far side of this and the product you want to have on the far side of this, which, again, may not be the same product you thought you needed two months ago. So you’ve got to think about that.
“Your mission and your vision matter more now than at the good times when everything’s right”
Des: We’ve talked about missions and visions on the podcast before, so we don’t repeat all that, but I think it’s a time to remind people that one wider, broader picture matters. If you’re in a project management org, you’re helping people collaborate, and you’re ultimately enabling creative people all over the world to realize their true potential. At Intercom, we say our mission’s to make internet business personal. Stripe will increase the GDP of the internet. The idea is to remind people that while there might be a patchy period, what we’re doing is really important. The work is really important.
We probably have a bigger job to do because of this. I suspect more business will happen online. I suspect we’ll have a bigger job to do to serve it all. It’s about reminding people that the work is actually important. Yes, we might be in a bit more practical, tactical mode. And that tends to narrow your time horizon a little bit to think about the short term, but know that you are playing for a bigger prize and that there is a there to get to.
“In downturns and shrinking markets, you’re going to learn faster whether you’re good, whether your product is there or not there, and what needs to change”
And communicate that. Remind people that, on the far side of this, this is how you’ll fit in the competitive landscape. Here’s what our product will look like and the capabilities our product will have. Here are the problems in our business today that we will have solved. Here’s the maturity we will have gone through as a company and here’s the strength that we’ll be in. Getting people to anchor on that is important because the alternative is they kind of lose sight of that and it starts feeling a little too much like they’re on a treadmill. Your mission and your vision matter more now than at the good times when everything’s right.
Paul: Absolutely. And one thing I’d add is that there’s a sharpening opportunity right now. In downturns and shrinking markets, you’re going to learn faster whether you’re good, whether your product is there or not there, and what needs to change. Customers of yours would probably get more opinionated and have stronger opinions, so there’s an opportunity for everyone to get into the sharpening of the vision for the time when this ends.
Keeping the spirits up
Des: Let’s close out on morale. How do you manage individual morale? Aside from setting a great mission and a vision, what are the things you think product managers should be doing?
“Winning together is easy. It’s good times. The best teams form when they’re losing”
Paul: This is actually an interesting thing because obviously, the things people are experiencing are new and not necessarily happy times, but I actually think there’s a very upbeat ending to this podcast, to be honest, and I’m not just saying that to end on an upbeat note. I genuinely think there’s a great opportunity here. There’s that phrase that goes “what doesn’t kill you will make you stronger.” And if you talk to or read an autobiography of people in sports or other areas of life where they are the best teams in the world, the best people in the world of what they do, they will say a version of, “Hey, our world-beating team was formed in defeat. It wasn’t formed having won.” Winning together is easy. It’s good times. The best teams form when they’re losing, and you have to look each other in the eye and say, “what are we going to do? We’re in the trenches together; we’re in this together.” There’s a survival instinct. I don’t like that we’re down in the trenches, but I do like the opportunity to form the best possible teams you can.
I think that’s an opportunity that people should embrace because the reality isn’t changing. So let’s embrace the opportunity it presents. For people who aren’t in leadership positions, it’s really important to assume the best intentions from the leaders. The leaders are literally trying to keep the company healthy, making sure you come out stronger. I think most companies really do have the best intentions, and I think people need to assume the best intent and stay positive and not get cynical. That’s really, really important.
“Managers need to be more willing to listen to what’s going on in the frontline and to make sure that there’s a perfect information flow”
Des: Along with assuming the best intent, share what you see, as well. Sometimes, the folks closer to the wire, closer to the customers, closer to the product just see more opportunity. They see more edge cases. They see more like bugs in the strategy. It’s possible that you assume your manager has the best intentions, but you can also still believe that they’re wrong and tell them what they’re not getting. Healthy information flow is important. Much like you said that everyone should be open-minded in the roles they take, I think this is definitely a time when managers need to be more willing to listen to what’s going on in the frontline and to make sure that there’s a perfect information flow.
Paul: A hundred percent. And even get down there themselves.
Des: Yeah, absolutely.
Paul: And see it, directly observe what’s happening and what other people are saying and try and help out. Again, blurring the boundaries isn’t just from org to org.
Des: Yeah, absolutely. The main thing I’d say, just from my experience of all this, is you can and will get through this, as long as you’re willing to stare at it openly and honestly. Changes can be painful and annoying. For a lot of folks, it’ll be a new challenge and a new muscle to grow, but genuinely, people, teams, and companies emerge stronger and sharper and more experienced even though this sucks. And obviously, we wish them the best. That has been Intercom on Product, episode 17. Thank you all for listening. Take care.
