Show me the money. How to Internet for fun and profit

Product Management for Software Engineers (part six)

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When a product manager joins a new company or product or project among the first questions they ask needs to be “how do we make money off of this?”. I know that everyone in the tech business is there to make the world of better place, but… let’s deal with reality. If your company (with some exceptions and I’ll get to those later) isn’t making more money than it’s spending it’s not going to be around for long. At Google a VP once told me that “revenue solves almost all arguments”. Put simply — if you are unable to say how you’re contributing to the bottom line you’re likely to have a bad time.

There are four ways of looking at this:

  • Contributing directly to the generation of revenue. You’re working on a feature than brings in dosh. Amazing. It’s going to be very easy to write that case for promotion because you can see just what you’re contributing.

If you’re not in any of those businesses then you need to ask yourself the question — “why are we here?” because if you can’t answer that your team or product or feature may not have a future. The good news is that if you can answer that question you have found the way to the hearts of your management chain because making revenue makes them look good.

Now, let’s talk about business models because, on the surface of it, making money on the Internet should be harder than it seems. This is partly down to the massive inflation of tech startups’ value and partly because it’s just a little bit counter-intuitive. Again I’m going to break it down into broad categories.

  • Exchange of money for goods (including the creation of those goods). People are looking to purchase something. Examples here might be a iPhone from Apple or buying a book from Amazon. This is simple to understand. These businesses are margin based on the cost to build or acquire the product and ship it subtracted from the price the customer is willing to pay. To be profitable you have to ship a lot of products and/or have high margins on the products you ship.

Now you have an idea of how you might make money (and this isn’t an exhaustive list). Ask yourself — do you know how you contribute to your company’s bottom line? If you don’t then it may be cool to work on fun things but you may be living on borrowed time. If you want to progress your career you can do a lot worse than progressing your employer’s business.

Written by

Ex-Google, ex-Netscape, ex-Skyscanner. Interested in solving complex problems without complexity and self sustaining self improving organisations.

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