Some early-stage investors may choke at hiring a product manager before there’s even a product to manage.  But telecom veteran Dave Nelsen knows better and used his own money to hire a product manager from Day One for his latest venture.  And within weeks it paid off – big time.  Here’s how Nelsen sees the role of product management in the life of a startup.

By Peter Longini, Managing Editor

Dave Nelsen preaches the gospel of product management, and he puts his money where his mouth is.  Back in April 2005, the telecom entrepreneur put $100,000 of his own money into a venture called ‘TalkShoe' - a Web-based service allowing anyone to create an Internet talk show or interactive podcast.  Its name is pronounced the way an Ed Sullivan impersonator might say ‘Talk Show.'  And its product sounds like a call-in radio show on steroids. 

But unlike most startups, whose initial hires are typically engineers assigned to help the founders build the product their company was created to sell, TalkShoe's first hire was a product manager - someone whose primary job was to figure out exactly what to create in the first place.  Although Nelsen began his firm with a reasonably good idea of what he was hoping to go to market with, some important questions remained about which features really mattered, to whom they made a difference, and how the business model might actually work. 

So his product manager's first assignment was to scan the competitive landscape and see what else was out there and how well it worked.  It's a good thing he did.  "We started with market research.  If we had just gone off and hired engineers, we would have started out building something.  But what we found, about three weeks after we'd gotten into the market research, was that a little more than five years earlier, another company had been founded with exactly the same idea I had for TalkShoe," Nelsen said. 

Finding failure

"That company, Ingenio, was funded to the tune of almost $100 million.  That was back in the bubble days.  They built a great system, but it totally failed.  So by looking around, we found that there was a fundamental problem with our first idea.  Their system was pretty much what we would have built over the course of the next few years had we not discovered that the model failed.  So we learned what it could and couldn't do. 

"Then we tracked down some former employees from the company and asked them ‘what did you do right?  And what was the reason for the failure?'  It was clear they had built something superb.  Once we learned the one or two keys to why they had failed, it gave us the idea that became TalkShoe," he said. 

"That may be the ultimate example of what a product manager can do in terms of market research, competitive analysis and formulating a product concept.  No matter how much we pay that product manager over the next five years, it couldn't possibly be enough.  He saved us from going down a path that would have led to re-creating something that was already proven to be a failed business model.

Home-grown product management

Nelsen, who was formally educated as an engineer at Stanford and whose last venture was CoManage - a specialty software company whose products enabled large telecoms to keep better track of their assets - developed his own product management skills over the course of 24 years in the telecommunications industry including Bell Labs, AT&T, and FORE Systems.  "When I joined AT&T, it was a fairly insular company, a monopoly," he recalled.  "It employed one million people and had a regulated rate of return, so customers didn't much matter.  A few years later, it was an unregulated entity that had to focus on customers.  So nine years into my career, I switched into product marketing and product management."

"Somebody had to work with customers to figure out what to build into the initial offering - which was the first truly high-speed data communications protocol, known as asynchronous transfer mode - as well as how to price it, what the key features were to be, and when and where it would be available.  So I fell into that job without knowing a whole lot about product management.  I knew I liked to work with customers, and I knew a lot about these high-speed networking technologies.  But frankly, looking back on it, I was probably a pretty bad product manager in the beginning. 

"One thing I did right was to put together a customer council of 15 of AT&Ts largest customers.  And while that didn't necessarily represent good market segmentation, it did represent a lot of revenue.  And I worked with them to try to figure out what we should build into the initial offering.  Then we started to experience hard knocks.  We were getting killed in the marketplace by a little upstart company; we weren't quite building the right things.  It was on-the-job training.  That's how I got into product management.  Then I came to FORE Systems and that's where I formed my real ideas about the value of product management. 

Isn't product management and product marketing really the same?

"The product manager is the person who decides how to allocate scarce corporate resources.  In any technology company - in fact in almost any product-based company - that means engineering.  You have a limited number of things you can do and the product manager's job is to figure out what does the market really need?  What do my current customers need?  What do the competitors offer?  And how can I best invest my engineering and other dollars to get the most advantage in the marketplace? 

"The product manager's job is to figure out what are we building from a feature-functionality standpoint and what the benefits would be to different market segments and customers.  The product manager is the one who determines when to do this particular product release.  And he or she writes the specs for the product - its requirements."  That's where the distinction between the product manager and product marketer comes into focus. 

"The product marketer is more about communicating what has been done - what some people call marketing communications.  The product marketer does things like public relations, trade shows -things related to getting the message out and communicating so that people are aware of the product, its features and its benefits to them.  The product marketer is typically very closely involved with the sales organization - providing them with things like the collateral that they need to communicate about the product and its capabilities. 

"At TalkShoe, I have a VP of product management and a VP of marketing.  The VP of marketing is responsible for all that outbound communication and sales and market-facing messaging whereas the product manager is determining what to build." 

But where do really good product managers come from?  "People really don't get classically trained in product management," Nelsen admitted.  "Working for somebody who's a strong product manager is a great way to learn.  And there are certainly some fantastic training courses out there - two- and three-day classes about best practices in product management.  I think that by taking advantage of those kinds of tools and learning from people who've done it for a while, you can become a better product manager. 

"It's not a black art that you have to be born with.  There's a lot to learn."

About the Author:

Peter Longini is the Managing Editor for Inside Product Strategy™. He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .

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