Month: January 2019

Same and different

All human beings are 99.9% identical in terms of our genetic make up. Despite being virtually the same, we’ve found ways to let that differing 0.1% get in the way of belonging and cooperation.

We’ve been successful in finding arbitrary differences – some biological, most made up – as justification to be cruel to one another. In some cases in our history, this cruelty was due to a competition for scarce resources. In most cases, especially those in our recent past, even the scarcity was manufactured.

While we are undoubtedly progressing as a species in our ability to put that 0.1% in perspective, there is a lot more work to be done.

Martin Luther King Jr said “The arc of the moral universe is long, but it bends toward justice.” In saying so, he acknowledged the challenges involved with changing minds. But, he also reminded us that – “Our lives begin to end the day we become silent about things that matter.”

No challenge is an excuse for us to take action for causes that matter.

The Robo Advisor follow up – 4 approaches to investment management

I spent some time through the holidays in December doing research on Robo investment advisors. Below is what I learnt from the research. For folks outside the US, the specific examples won’t be applicable – but, I hope the framework is helpful.

I think there are broadly 4 approaches to managing investments:

1. Financial advisory (High cost, Low effort): A financial adviser typically charges ~1% of funds under management in addition to the fees from individual funds. There are broadly three benefits. First, the financial adviser helps guide your entire financial life including helping you rein your expenses. Second, advisers ensure you have a few basic hygiene factors in place – emergency funds, life insurance, wills, etc. And, finally, since they manage investments for a living, they have access to a lot of information about the markets and presumably have plenty of data to make good decisions.

Now, on the flip side, disciples of John Bogle would tell you that the passive investing approach is a better, safer, bet than active management. The research would be on their side. But, on the other hand, there are many who work with financial advisers to get their financial life in control before branching out themselves. Financial advisers can also be a boon if you have a high net worth as they can help optimize your portfolio for taxes.

Finally, I lump “Personal Capital” into the financial advisory zone. Even if they claim to be a Robo advisor, fees of 0.89% are in the “high” territory. While I wasn’t on the look out for a full blown financial adviser, I did meet with them to understand their approach (I use their free product). I am admittedly a tad skeptical about their approach as I didn’t find much research to back it up. That said, 1) I’m clearly no expert :-) and 2) I’m looking forward to checking back in a few years to see how their strategy plays out over time.

2. DIY complex investing (Zero cost, High effort): This is for folks who love the art and science of investing. These folks have read the books and the research, follow investment managers and trends, manage their portfolios carefully, read SEC filings of acclaimed investors, and have earned investment experience through years of experience. Most important, their eyes light up when they talk about investing and diversification.

While this would be “high effort” for most people, folks who go down this path tend to do it because they enjoy the process. It definitely isn’t for everyone.

3. DIY simply investing (Zero cost, Medium effort): Folks in this bucket just work with a simple portfolio of Vanguard funds and invest/re-balance on a monthly/quarterly/half-yearly basis.

There are two keys to success in this approach. The first is a threshold level of interest in investing to make sure the overall strategy makes sense. And, the second is discipline. Most folks on forums like “Bogleheads” fall in this category. While I’ve seen folks in the Bogleheads community use phrases like “anyone with half a brain can do this,” I think they often mix interest and ability in their judgment of how easy this approach is to follow in the long run.

And, again, the importance of discipline and consistency in the long term success of this approach can’t be overstated. The biggest long term challenging to DIY investing success is managing your own psychology.

4. Robo advisers (Medium cost, low effort): I think there are two categories of Robo advisers. The more popular category is led by Betterment and Wealthfront. I think of both of them as Vanguard++. They take your Vanguard account, overlay it with a fancy UI that restricts you to a few index funds, optimize the mix for your long term goals, automate the process, and perform tax loss harvesting. Both claim they more than make up their 0.25% fee thanks to tax loss harvesting. Most folks who use these services seem happy – so, I think they’re doing a good job.

The second category is Vanguard’s Personal Advisory service. This service is a marriage between the robo advisers and the financial advisers. The main downsides to this service (versus Betterment and Wealthfront) are the absence of tax loss harvesting and a minimum of $50K in investments. But, on the plus side, you get access to a human advisor for 0.3% in fees. The human adviser can, thus, help you craft a reasonable overall strategy for your investments and ensure you stay disciplined.

We weren’t in the market for a full blown financial adviser as we tend to be pretty disciplined about our expenses and didn’t feel this would be as valuable. I have experimented with DIY simple investing (2013-2015, 2017) and attempted a version of DIY complex investing (2018). But, I realized that it isn’t something that I enjoy doing. While it may have been fun to spend time and learn more, time is a constraint with two kids. So, I was in the market for robo advisers for 2019.

After reading most of the reviews in the first few pages of Google searches for Betterment/Wealthfront and Vanguard PAS, we decided to experiment with Vanguard this year. We really value the presence of the human adviser and thought it would be helpful to have conversations about our overall strategy versus maximizing returns on one account. These conversations over the past 3 weeks have turned out to be very valuable and are well worth the fees in our book.

Finally, we love the simplicity of keeping investments in Vanguard as it makes it easy to just discontinue the service if we think we aren’t seeing value or believe we’ll be able to do what they do ourselves.

Looking forward to seeing how this automated approach works out in 2019. I’ll keep you posted.

PS: A big thank you to those of you who responded to my post with your approaches and notes. As always, it was much appreciated.

Maniacal prioritization

I’ve been mulling the the idea of “maniacal prioritization” recently.

When you’re the type who tends to have more you’d like to get done than the amount of time required to get all of it done, the only way I know to get through the experience with a semblance of sanity and satisfaction is maniacal prioritization.

Maniacal prioritization = Always push to have 1-3 clear priorities. Write them down when possible. Execute against them – ideally in order.

In the absence of clear priorities, I find myself flailing about in a flurry of activity with that niggling feeling that I’m going to be disappointed at myself for doing the wrong thing.

As an example, maniacal prioritization (for me) often involves clarifying that – as important as getting something done on a weekend might sound – rest and time with the family are more important. Doing this consciously guides the trade-offs that help with daily decision making.

“Engaging with engagement” was a new year theme for 2017 and the early part of 2018. My lesson from observing my ability to be present was that any failure in this regard came to a lack of clarity about what I was optimizing for. If I wasn’t clear that I was doing what was most important, it was impossible to be present. When I wasn’t present, I was less effective and I definitely wasn’t seeking to understand.

The solution?

You guessed it.

Maniacal prioritization.

Pay back and forward

Reciprocity is wired deep within our psyche. As a result, our natural response to getting help tends to involve asking ourselves “how can I pay this back?”

It isn’t a bad question. Every once a while, we might find ways to give back to the folks who helped us.

But, more often than not, this isn’t possible because it is context dependent. Many of the folks who’ve helped us out in times of need in our careers (for example) are often many years ahead of us in terms of the problems we’re facing. The best we can do in such situations is express our gratitude.

That’s why asking ourselves – “how can I ensure I’m paying it forward?” – tends to be a better question.

If someone gives you a great gift, share that gift with two others. If someone gives you great career advice, find two others who would love to receive career advice from you.

There is always someone we can help. There is always an opportunity to pay it forward. And, letting someone know of the ripples their gift to us created is often the best gift we can share with someone who helped us.

John Clifton “Jack” Bogle

I learnt today that John Clifton “Jack” Bogle passed away. John Bogle created the first index fund and then went on to build Vanguard.

I loved a line on Marketwatch about his impact – “Thanks to index funds and Bogle, millions today live better retirements. Millions of college funds are fuller, millions of charities are better funded, and millions of aging grandparents have better resources in their old age.”

Morgan Housel pointed out that he did all this by creating a $5T non-profit whose profits went to retirees. He may be the greatest undercover philanthropist of all time.

I can say plenty about his impact on my life. For a boy who knew nothing about the financial world, the knowledge that Vanguard had my back gave me the confidence to invest and helped me pay for graduate school.

It is hard to explain how big an impact it made on my life.

Thank you, John, for showing us the way.

Solution space to Problem space

The common approach to solving problems is to get a team together, brainstorm, and agree on a prioritized approach to get to the solution. Spending time in solution space can be both fun and energizing. This is what we were trained to do as kids in school after all – solve problems.

But, as I look back at the many occasions in which the solution space failed to yield a solution that worked. I realize that it wasn’t because of the intelligence of the team or the effectiveness of time spent in the solution space. It was because of a poorly defined problem.

While good problem solving is undoubtedly important, we get the opportunity to make disproportionate contributions when we hold back these natural impulses to jump to the solution space and, instead, take the time to define the question.

Problem space >>> Solution space.

2 million points and counting

I recently met someone who collects points as a hobby. He mentioned he currently has more than 2 million points – enough for fully funded airfare and hotel stays for more vacations than he has time for.

But, that doesn’t stop him from collecting points. He does it because it feels like play. The process is far more interesting than the outcome.

This exchange reminded me of the power of combining passion and purpose. Passion asks “what has the world got to offer that fits my interests?” while purpose asks “what have I got to offer the world that has value?”

We’ve seen a lot of good rebuttals to the “follow your passion” advice over the past few years. The central theme is that we don’t often know what our passion is. Instead, we’re better off focusing on purposefully getting good at something that has value as passion often follows expertise.

While it is the pragmatic approach and one that at least ensures we’re not waiting around for the universe to reveal our passion, it has its downsides too. For example, if collecting points was a lucrative profession, I could become an expert at it. But, the process will never feel like play.

Ergo the power of combining passion and purpose.

It is magical when we’re able to get good at something we care deeply about. For most of us, that may mean a long and winding road to understand what this is and a lot of trouble to eventually get there – but, the juice tends to be worth the squeeze.

The Product Marketing Sales Manager

A note for new subscribers: This post is part of a monthly Sunday series on my notes on technology product management (this is what I do for a living). You might notice that these posts often link to older posts in the series on LinkedIn even though they are all available on this blog. That is intended for folks who only want to follow future product management related posts. Finally, for all those of you who don’t build tech products for a living, I believe many of these notes have broader applicability. And, I hope you find that to be the case as well…

We kicked off this series – “Notes on Product Management” – by defining the role of a product manager and outlining the 4 key skills required to do the job – problem finding (solving for value), problem solving (solving for usability and feasibility), building effective teams, and selling.

We then spent time working through why problem finding is the most important skill and how to approach building problem statements and hypotheses. The next high priority skill we’ll spend time on is selling. For the sake of simplicity, I referred to the process of persuasion using marketing and sales as “selling.”

Today’s note, thus, is focused on how to think about Marketing and Sales in the product management process.

Why Marketing and Selling are part of the job.

“If you need to persuade someone to take action, you’re doing marketing.” | Seth Godin

Marketing, thus, goes beyond price, ads, placement, and product. It is the story about what we do and why it matters. It begins with the product and extends beyond the product.

The popular adage that people don’t buy a drill and instead buy a nine inch hole is incomplete. They don’t buy the hole or even the photo frame they hang on the wall. Instead, they buy the experience that comes from looking at something they care about. Great marketing generally starts with great products. But, great products don’t guarantee great experiences. Harley Davidson motorcycles aren’t special because they’re the most technically advanced motorcycles (they aren’t). The Harley Davidson experience, on the other hand, is something else altogether. There aren’t too many other brands who get their customers to willingly tattoo their logo.

So, what then, is the difference between marketing and sales? I’ll defer to Seth’s elegant distinction –

“Marketing tells a story that spreads. Sales overcomes the natural resistance to say yes.”

Marketing and sales are thus part of the job description of every educator, executive, and knowledge age worker. The proportion of the job involving marketing and sales might defer. But, they’re always key.

As far as the product manager goes, the importance of marketing and selling are self evident if they’re working on a (usually B2B) product that is sold by a sales team. But, these skills are just as vital internally.

It is common for marketing and sales to have a negative connotation when used in the context of the workplace. I’ve seen them used as a proxy for politics. That is unfortunate and is a result of a loss of purpose.

Good marketing and selling exist to make important change happen. Product managers who do marketing and selling right ensure their companies don’t ship their org chart. They use these skills to ensure good ideas that add value to users and customers are given a fair shot at changing the status quo. When marketing and selling is done right, the user wins and wins big.

On the other hand, when marketing and selling are used just for the purpose of career advancement, the user loses. The good news is that bad marketing and selling never survives in the long run – but, that is a discussion for another day.

How to think about marketing and selling in the product management process

As Product Managers, we are always attempting to persuade people to take action. We attempt to persuade our customers and users to use our products. We attempt to persuade our executives to resource our problem areas. We attempt to persuade our teams to do their best work. And so on.

My visual of this persuasion process is as follows.

We have 3 elements of persuasion at our disposal to make the change we seek to make –

(1) Direct marketing: This is everything that we do that is content led. When we combine easy-to-use flows and thoughtful in-product copy that attract “self-serve” customers, we’re doing direct marketing. Similarly, when we create a thoughtful strategy doc for a new initiative that wins readers over before the meeting, we’re being effective direct marketers.

(2) Sales: The other alternative is to employ the human touch. When we build a product that works and combine it with a narrative that inspires our sales team to be more effective, we are doing our job as effective salespeople. Similarly, when we facilitate an effective discussion that persuades our executive team to support that new idea that will massively improve the way we serve our users, we are selling effectively.

(3) Brand marketing: Brand marketing is the friction-reducing atmosphere in our persuasion process. When great brands deploy sales teams, they need to focus less on acquisition and more on customer success. Similarly, when we’ve acquired a reputation in our organization for someone who does great work on behalf of our users’ needs, it becomes easier to get cross-functional buy in.

The next step is to explore how we might get better at these skills – more on that in the next two posts.

A career and life sidebar: Our lives are an endless chain of persuading people to do things. And, while the process is hard enough when we’re dealing with adults, the difficulty level only goes up further when dealing with kids. While understanding how to apply these skills has a lot of obvious applicability in our careers, they extend well beyond work… making for a fascinating life-long learning journey.

Activation Energy

Activation energy is the minimum quantity of energy required for a reaction. The activation energy idea shows up every day in our lives in the form of the minimum amount of energy required to build momentum toward what we want/need to do.

Activation energy is why its hard to get to the gym on a cold morning. It is why getting started on something important is painful.

But, for those of us who have (at least on occasion) managed to make it to the gym on a cold morning, we have likely experienced that is easier to work out long and hard once we’re there.

Activation energy, thus, regularly stands between us and desired habits. So, it is worth understanding activation energy and how we can work with it.

Overcoming activation energy requires willpower. In the long run, the best use of willpower is to create habits. Habits, in turn, help us reduce the amount of activation energy required to get something. But, it isn’t easy to create good habits. So, here a couple of interesting questions for us to consider in our quest to do so –

1. What are ways to reduce the activation energy until we create a habit? For example, we could start the year with a commitment to go to the gym with a friend for the first 6 months. Or, perhaps, we might pay for a personal trainer.

2. Are there ways to bypass the friction and still reach the end outcome? A consistent home workout for a month may be a great way to get us into the habit. Once we consistently begin to feel the benefits of a good workout, it becomes to lower the activation energy threshold.

Like most things, activation energy is neither good or bad. It just is. And, our experience with it is what we make of it.