Good product managers matter, especially for consumer product or service companies. Melody Koh left Blue Apron two months after its IPO as its chief product officer. During her tenure, she helped scale the business through hyper-growth (25x in 3.5 years), building and leading a 35-person team across product management, product design, and analytics/data science. She joined NextView Ventures' New York Office in 2017.
Koh recently shared her insights and experiences as a product manager as well as her investment philosophy focusing on "everyday economy" startups in Anchor Roundtable: Women in Venture (XI) as a guest speaker. The following is a summary of Koh's conversation with the host of the roundtable Elisa Chiu, founder and CEO of Anchor Taiwan.
Chiu: You were the first product hire of Blue Apron. For an Asian kid, this is very unusual, because they love the big brand name, the title, etc. What makes you decide to work for a startup? Why Blue Apron?
Koh: My first job out of college was investment banking, and my second was venture capital with Time Warner, which was sold to AT&T in 2018. Time Warner had a corporate venture arm, US$25 million outlay a year, series A/B stuff, digital media investment.
That got me a taste of what early stage is, and the culture of entrepreneurship. Then I went to the Harvard Business School to get my MBA. Two weeks after I got there, I started my own startup. But that company did not work out.
Coming out of school, I was pretty sure I want to become a product manager. When I was a founder, I didn't know how to build software, and I didn't know what it meant to shape the digital experience. I felt if I want to have a career in technology, no matter on the investment side or on the operation side, this concept and capacity to shape how software interact with people is a very important skill.
The way I think about "risk" is different from my business school classmates. HBS is very expensive, it is US$150K a year, not including travel and other expenses. The way I think about it, is that this buys me an insurance against my career. If I really need a job, I would be able to get a job that pays. So, I should take as much as risk as I can. Otherwise, why am I paying for this (HBS tuition)?
I was at my late twenty, so I was very comfortable with the fact that all my savings got wiped out after paying for MBA, because I feel I can always earn the money back later. So, my first job out of business school was doing product manager at another startup called Fab. After that, I got hired by Blue Apron as their first product manager, when they were a 20-people company, 18 months old. I have been a customer of Blue Apron, so I have the conviction of being a customer. When I went to talk to the team, I found that the team was very interesting. They really got their stuff together. They had product-market fit right out of the gate. This company grew 3X in first 12 months. It was insane. They barely had marketing budget, and this is a consumer business.
I was with them for three and a half years. By the time I left, they went public. They were the early entree of the business called "meal kit" and dominated in the first five years. I was fortunate to be part of that growth base with my tenure, during which the business grew around 25X, thanks to the effort of the entire team. The business later contracted due to lots of competition because of low entry barrier. It was a very interesting learning experience growing the business and help build teams during that phase.
Chiu: What did Blue Apron do right? What was their secret sauce to create 25X of growth? What can startups learn from them?
Koh: People all know that ideas are not unique, execution is key. In the early days, I think the CEO has really good judgement. He is one of the smartest people I have ever met. He has got extremely good strategic sense of key decisions. In early days of startup, you don't make decisions based on a ton of data. You can't run perfect consumer experience, because data set is non-exist. Blue Apron succeeded on a combination of luck, speed, and relentless focus on the quality of execution. It is also capable of attracting good talent, and everybody was aligned to the mission, which is "to make home-cooking accessible at home." Everyone on the team was very passionate about business, and emotionally really want to be there. That was very powerful.
Speed is also very important, because you always want to out-compete your rivals, and in this case, we were creating a new market. Everyday if you are not moving forward, you are moving backwards.
The flipside, what happened to the business was that, for the first four years, every week sales was the best record in history. And that actually prevents you from experimenting and innovating ahead. For instance, you have the hot cakes that sell so well every day, but the customers tell you that they take too long to cook. But it takes a lot of work to experiment and fix the problem. When operations get big, things get complicated. This is not a pure software business, but an e-commerce business. This is really hard. We finally were forced to do it, six months before we went public. That had a lot to take on. But you get your ass kicked if you do anything wrong after being a public company. Being a public company is really challenging because everybody watches stock prices every day.
Chiu: As a product person if you were to give advice to a non-product founder or investor, what would you want to tell them?
Koh: I did not study any technical degree, and I wish I did. I got my first-hand experience as a founder, working with engineers trying to build a website and a digital product. When they told me it was too hard, or let's take this or that off, I had no idea. That's why I want to go into product management. Product management to me, is like shaping software experiences to accomplish business objectives - the KPIs you want to push and to serve your customers.
The job of product managers are the ones who understand technical constrains and try to figure out "bang for bucks," meaning impact per unit of effort. So you know what to build next. Every time you build something, you are trying to move some business matrix, without sacrificing customers, because the customers are harder to measure.
It is like a triangle of three forces - technical possibilities/constraints, business needs, and customer needs - and you are trying to balance them. For junior level of product managers, you need a lot of technical understanding, but not that you need to be able to write codes. It's more like you conceptually know how APIs work, and what involves framework. You work on what engineers cannot grasp. You are the half business-half technical person who help negotiate with the marketing, sales, and whoever is involved. You got to have enough business sense in order to say, we are going to do this, but not that, or we are going to do half version of this. You try to make half of the people in the conference room half happy and the other half of people half happy, and prioritize what's to be build next, because everybody is going to ask you for stuff later on.
That is the skill set that I learned quickly on the job when I got into the field. Now as I look back, I think you don't necessarily need to have a product person on your founding team. But if you are building something that is very product-driven, for example, a consumer social app, or building something that connects all the best night market stands for consumers to navigate the best night market, then product experiences would be very important. Otherwise, why would people engage with your app? You've got to have better user experience sensibility, user traction, etc, to get a better knowledge of your customers and who you are targeting.
Product managers understand what the value proposition is, what the customer needs are, and prioritize what are actually critical to validate your hypotheses. In the early days, you have a bunch of hypotheses. You need to validate or invalidate them, to get your product-market fit.
From the investor side, it's like a flip mirror. We are the seed-stage investor, half of the time we are talking to startups pre-launch or pre-product, the other half of time we talk to companies which just launched or pre-product-market fit. When they tell me, "We are still at beta", that's OK, but what are the next things you want to build? What is the "wedge"? Because you can build a thousand things, why do you think this is the wedge to go to market with? What are you looking for?
Once you are in pilot, if you are in B2B software business, then I really want to know how you see the user experience.
Chiu: Now as a partner at NextView Ventures, what is your investment thesis, what stage do you invest, and sample portfolio?
Koh: We are high-conviction, hands-on investors. What that means is we need to develop strong conviction in order to get involved; once we decide to invest we act as a lead investor, set terms and write a large check, usually take a board seat and roll up our sleeves to work with companies post-investment. Our check sizes range from a few hundreds thousand for a <US$1m round to US$2m for a US$4-5m large seed round.
What kind of companies do we invest? We have a thematic focus that we called "everyday economy." There are many types of everyday users. When you are a white-collar worker, we think about future of work, how to work remotely. If you are a software engineer, we think about how to get work done by interacting on GitHub. You can be a data scientist, or a non-tech worker in an organization that want to have access to data, we think about data tooling. If you are a front-line delivery driver, or 7-11 worker, we think about how you get trained.
For consumer side, we think about food, health, entertainment, personal finance, etc. We invest in the application layer, which are the products or services that can touch on the everyday users directly. We also invest in the enabling technology layer, which means, you might not know they are the companies powering the end action that impacts people's everyday lives. We don't do things without a technical leverage, and we don't do pure hardware, either. Mostly we invest in software technology-leveraged or somehow has something to do with e-commerce. For B2B software technologies, which traditionally are sold directly to the CIO and distributed top-down, we would prefer those sold from the bottom-up or adopted by teams and spread across.
My recent investments, for example, a company called "Fam," is building a video-centric, gen-Z-focused social network. They have just closed a US$15 million series A. And another one is Prequel.co. They make data infrastructure stacks ready to use hopefully in minutes, not in weeks. They simplified the processes from extracting, to warehousing, to transforming, to the BI and visualization layers for users, so users can focus more on getting insights. And another company called "HomePace" allows you to take some money out of your home by establishing a co-ownership agreement. It is kind of like the European put option, you can structure the agreement, so that HomePace becomes an investor in your house. You get some money upfront, but if one day you want to sell your house, you share a bit of upside or downside. That unlock the ability of homeowners for getting some liquidity without having to sell or move.
As for exits and mature stage investment, we have invested in Skillz, which went public last year, and is now a US$8 billion company. They are a leader in mobile-game monetization API. And we also invest in a company called "Thredup," which went public recently, and now has a US$1.5-2 billion market cap. This is a company in the Re-circular Ecommerce space, selling mostly second-hand women and children's clothes. Another company we invest is called Attentive Mobile. They are a leader in SMS marketing. In the US, the SMS marketing landscape is still nascent, and brands and retailers are just beginning to leverage this channel. Attentive is the enabling technology layer that helps brands and retailers to build relationship with their customers through SMS. Those are the companies that we invested a decade ago and now matured.
NextView Ventures partner Melody Koh
Photo: Meoldy Koh
(Editor's note: DIGITIMES is a media partner for Anchor Taiwan's Women in Venture Roundtable, a network of 100+ female investors featuring world-class guest speakers. A powerful conduit to connect the world with Asia, Anchor Taiwan works with corporates, startups and investors with ecosystem building and venture capital for cross-border innovation. Recap of the rountable is available on Facebook and Youtube.)
