Product Management Confabulation
What Product Managers are talking about.
India, long in the tooth when it comes to co-opting tech to persuade the public, has become a global hotspot when it comes to how AI is being used, and abused, in political discourse, and specifically the democratic process. Tech companies, who built the tools in the first place, are making trips to the country […]
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While North American VCs can see the potential value in backing European startups, it hasn't been easy for firms to launch strategies.
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As product managers, we all want to be responsible for products that our customers really, really want. That’s why being a lingerie product manager sounds like a very good job. You make a product that has the ability to transform your customer and because of that they will seek you out. However, lately, changes in how lingerie is made is starting to have a negative impact on the bottom line of this product. No matter how magical they may be, if they cost too much nobody will buy them. What is a product manager to do?
Product managers had sold the Natalia Underwire Bra for $68 at department stores and specialty boutiques since it was introduced in 2016. However, this year, the maker of the bra, the lingerie company Journelle, raised the price to $98. The result of this significant price boost was that some retailers stopped carrying it. The reason that they stopped was because they knew they wouldn’t be able to sell it at the higher price. The Journelle product managers had to push through the price increase anyway to offset rising costs, which in some cases have doubled since 2019.
I think that we all realize that when it comes to our products, price hikes aren’t arbitrary. They are deliberate decisions by product managers as they contend with a complicated set of factors. In the world of lingerie there are an unusually large number of inflationary forces that are converging on bras. In the case of the bra that is made by Journelle’s, the product can have as many as 27 components. We need to understand that the Natalia bra may be an extreme case; however, it shows the stress manufacturers are facing as they navigate rising costs rippling through their global supply chain. Inflation has recently hit a four-decade high, although some economists said there are starting to be signs that the price increases are starting to peak. Once these higher prices get baked into products, they can be hard to reverse. Product managers have to realize that many price increases may be here to stay.
Product managers need to understand that things change. Some lingerie brands were able to benefit from the shift to more comfortable bras during the pandemic. In the world of lingerie, wirefree and bralettes have fewer components so they are less expensive to make. Product managers discovered that as more women left the house for both work and social events, they started to gravitate to more structured styles. Product managers at another lingerie maker, Lively, raised their price of its bras to $45 from $35 a year ago. This was the first increase since the company was founded. Product managers at Victoria’s Secret have said that $110 million of supply-chain costs have weighed on their profits in the holiday quarter. The product managers have raised prices on some items.
Product managers need to understand that the reality is that the whole world is facing the same pressures on inflation, in raw materials, in transport, in people, in freight. The surge in costs for the lingerie industry comes as bra sales have rebounded from the depths of the pandemic, when many women stopped wearing the undergarments while sheltering at home. Bra sales totaled US$10.2 billion in 2021, a 36% increase over 2020. The average price for an underwire bra is currently $17. This is up 13% compared with a year ago. The increase is broadly similar to inflation that has occurred in other types of women’s apparel.
An important point that product managers have to be aware of is that the rising price of bras might be less noticeable to shoppers than items they purchase regularly like groceries or gas. Lingerie customers often feel as though they are going to pay whatever they have to pay to get one that is comfortable. In part because of that mentality, the product managers at Journelle are not expecting a big drop in sales of the Natalia product. The Journelle product managers didn’t want to sacrifice Natalia’s quality because of the rising price. This product has only 16 components and no molded cups and it is made almost entirely of lace.
To offset some of their pricing pressures, the product managers at Journelle are changing the way that they do business. They have pulled out of Asia and now source most bra components from Europe. Molded cups come from Tunisian factories. Italy provides the metal rings, wires and boning. Even though production in Europe can be more expensive than in Asia, the Journelle product managers believe that they are saving money by reducing shipping costs, which have also skyrocketed. The product managers realize that they can control energy costs more than they can control shipping costs.
The goal of any product manager is to create products that our customers will want to buy. In order to make this happen, we have to be sure to price our products in a way that they are affordable for our customers and they make a profit for our company. In the lingerie business, they are currently experiencing a sharp rise in the cost of getting their products into stores. The result of this is that they are having to raise the cost of their product. How should product managers handle a situation like this?
The lingerie product managers at Journelle have had to make a significant price increase in their product because of rising costs. The result of this price boost was that a number of the channels for their product have said that they will no longer carry it. Product managers realize that rising costs are rippling through their global supply chain. Once a product’s price goes up, it can be very hard to lower it over time. The pandemic caused women to change the types of lingerie that they were buying. The whole world is facing the same pressures on inflation, in raw materials, in transport, in people, in freight. The cost of bras is going up just as the demand for this product is also going up. Lingerie may be a special product: customers may not notice the price increase as much as they search for the perfect product. Lingerie product managers are shifting production to Europe from Asia in order to reduce their shipping costs.
The good news for lingerie product managers is that they are responsible for a product that their customers want. They need to be careful with their price because if it goes up too much, they can have a variety of channels start to refuse to sell their product. However, changes in the world cause product managers to have to make changes to their prices. If they can do this carefully, they may be able to cover their costs and keep their customers.
– Dr. Jim Anderson
Blue Elephant Consulting –
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The Accidental Product Manager Blog is updated.If you are like most people, you have started to get used to being able to log on to your computer and order up just about anything. What’s even better, is that what you have ordered seems to show up very quickly. What a lot of us don’t spend much time thinking about is where all of this stuff is coming from. Sure, we’ve all see those pictures of the immense Amazon warehouses where books, TVs, and shoes are quickly picked and packed. However, what about ice cream? For that matter what about milk? There are certain items that we like to order that have to stay cold or even frozen before we buy them. Where do they get stored?
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A few weeks ago, Bloomberg reported that OMERS Ventures, the venture capital firm backed by the Ontario Municipal Employees’ Retirement System, was calling it quits in Europe just four years after opening a London office, hiring a team and setting aside $332 million to invest in the region.
At the outset, it may seem as if the lackluster state of the European venture market may have motivated the exit, but it appears that wasn’t the case. Instead, OMERS’ exit was rather due to logistics related to being a solo LP operation, a source familiar with the matter told TechCrunch+.
OMERS Ventures did not immediately respond to requests for comment.
Even though OMERS didn’t leave because of how things are in Europe right now, it wouldn’t have been that surprising if it did. The startup ecosystem in Europe doesn’t look that great at the moment, with lower deal and exit activity than the U.S., which itself is struggling.
Europe had only 1,332 deals in the first half of 2023, marking a decrease of 34.2% from the second half of 2022 and a decline of 60.8% compared to the same period a year earlier, according to PitchBook. The U.S. is the world’s biggest startup market at the moment, but the difference in deal count and activity is stark, even accounting for the general slowdown: The U.S. had 6,514 deals close in the first half of 2023.
European startups also seem to be finding it hard to exit, or are at least unable to land deals at valuations they might like. Through the first half of this year, startup exits only generated €3.5 billion ($3.8 billion) in total. If things don’t improve soon, the European market will not be able to surpass, or even match, the exit volume of any year from the last decade.
Investors from elsewhere in the world seem less interested, too. U.S. investors participated in 746 deals in Europe in the first half of 2023. compared to 1,704 a year earlier, according to PitchBook data. Given how much U.S. investors have pulled back from the region, OMERS wouldn’t have been out of place had it done so because of market conditions.
The European Commission (EC) has confirmed that it’s opening an in-depth investigation into Adobe’s proposed $20 billion bid for digital design software rival Figma.
The Commission said that the acquisition “may reduce competition in the global markets for the supply of interactive product design software and for digital asset creation tools.”
First announced last September, Adobe’s megabucks bid for one of its biggest competitors was always likely to attract scrutiny from regulators around the globe, with the U.S. Department of Justice (DoJ) looking closely at the deal and the U.K. also recently confirming that it was preparing a deeper probe on the basis that the merger would lead to a “substantial lessening of competition” in the U.K for designers.
Europe, for its part, revealed in February that it was looking at the acquisition on competition grounds, so today’s news that it’s launching a full-scale investigation comes as little surprise.
The crux of the investigation will focus on whether buying Figma will remove one of Adobe major rivals from the market. In terms of interactive product design tools, the EC points to Figma as the “clear market leader” and there is unlikely to be any other “credible” players entering the market post-acquisition. And while Adobe leads on digital asset creation tools, Figma currently serves as a “constraining influence” over Adobe. Thus, buying Figma may prevent Figma from continuing its role as an “effective competitor.”
“Adobe and Figma are two leading providers of software for the creative community in the digital sphere,” said Margrethe Vestager, the EC’s executive vice-president for competition policy, in a statement. “Many users and businesses rely on their digital design tools to excel in their work. With our in-depth investigation we aim to ensure that users continue to have access to a wide pool of digital creative tools among which to choose.”
In truth, the transaction didn’t actually meet the turnover thresholds set out in the EU merger regulations, meaning that the duo weren’t required to notify European regulators. However, Article 22 contains provisions that allow individual EU member countries to refer cases to the EC if they believe a transaction will reduce competition in their own market. And that is what happened here, with more than a dozen constituents referring the acquisition to the EC.
While Europe does have a fairly robust track record of late in terms of investigation Big Tech acquisitions, it has also shown that it’s reluctant to block deals outright. In the past few months it has greenlighted Microsoft’s $68.7 billion Activision acquisition and Broadcom’s $61 billion VMware bid, albeit with strict caveats and oversight stipulations in place.
So, all is not lost yet for Adobe, but it will likely have to make some kind of assurances and compromises if it wants to get the deal over the line.
The Commission said it plans to make a decision by December 14, 2023 — roughly one-month after it plans to announce the outcome of its separate investigation into Amazon’s $1.7 billion iRobot acquisition.
Whenever I spend time in the European startup world, a lot of the conversation is focused on how it can differentiate itself. One of the recurring questions is: How do we build a startup ecosystem? That’s an excellent question.
The beginnings of an ecosystem are there, but unlike in the U.S., where there are a handful of major hubs attracting the bulk of the talent and investment, in Europe, there is an appetite for experimentation that fails to fully settle into a coherent whole.
Looking to Silicon Valley might be a trope, but the San Francisco Bay Area is by far the most mature ecosystem around. California attracted more than $100 billion of venture investment in 2022. New York is in a distant second place with around $30 billion, followed by Massachusetts (or more specifically, Boston), with around $20 billion. Europe, in comparison, saw around $100 billion of investment in 2022. That sounds like a big number, but compare the size of the economy of Europe versus that of California.
Europe may be in a state of rapid growth, but as an asset class, VC is lagging behind. For every person living in Europe, $134 dollars are invested in the local ecosystem. For California, the same number is $2,650. Image Credit: Haje Kamps / TechCrunch
You can find office buildings and fast internet in most places, so how did a sprawling area around San Francisco become a working ecosystem? The history is long and complex, and hard to replicate: Stanford University engineering professor Frederick Terman was focusing on radio engineering in the 1940s. Fueled by the Cold War and a lot of defense money, he built a department and taught a bunch of the people who would found the first wave of tech startups in the area.
Stanford created a business park to go along with its research activities, and it kept evolving with the times. The region found itself in an upward spiral: More money invested meant that more engineering talent flocked to Silicon Valley, which sparked more innovation, which led to more tech companies, which in turn meant more defense money and the first few private investors looking to Silicon Valley for opportunities. Lockheed opened a plant in Sunnyvale, mostly because that’s where it could find engineers. Bill Hewlett and Dave Packard founded HP in 1939, and Shockley Semiconductors was founded in 1956 — the same year its namesake, William Shockley, was awarded the Nobel Prize for co-inventing the transistor. Early employees at Shockley left to found AMD and Intel, and from there, the rest is history: Silicon Valley had such a concentration of funds, talent and tech, that it was almost unstoppable.
Fast-forward some 70 years and Silicon Valley has only continued to grow. For startups, the way this shows up is that a lot of people got very wealthy from tech, and they further accelerated the ecosystem by founding new companies. But — crucially — they also became angel investors and advisers to others in the ecosystem. And because those acquiring other businesses are also often based in Silicon Valley, integrating the tech and the staff becomes a lot easier.
So how does this relate to Europe? Well, according to top European VC Creandum’s recent report, there are 65 cities hosting 514 “tech hubs” on the continent. Of course, it’s positive that the European startup scene is evolving and growing, but even after a couple decades of trying to make ecosystems thrive, Europe appears to be spinning its wheels. According to the report, “Europe finally has the pieces in place to challenge the US as the world’s leading tech ecosystem.” It sounds good, but there’s still a lot of work to be done before there’s a fully functioning, self-sustaining startup ecosystem in place. The truth is, every locale is trying to do it differently. That means there can’t be a single, force-of-nature strength ecosystem; instead, the result is a smattering of promising ecosystems that don’t truly get the job done.
Europe is more of a fuzzy tech cloud than a functioning ecosystem by Haje Jan Kamps originally published on TechCrunch