# Product Leaders Must Speak in Currency

**Podcast:** Product Momentum Podcast
**Published:** 2026-03-17

## Transcript

The essential message is that any sentence that comes out of the mouth of a chief product officer that doesn't have a currency symbol in it is one that the rest of the executive team can't hear and doesn't care about, right?
And so the book is structured so that we can talk about the money that comes with the things we're doing.
We're building really cool features, we're building new products, we're building new subscription tiers, we're fixing bugs, we're building architecture, and notice none of that had currency symbols in it.
So a good part of my executive team doesn't care, right?
You mentioned something about three numbers, right?
So two you know and one you're gonna pull out of thin air.
Right.
Talk to me about like somebody who comes and says, like, I don't like that number.
What do you do?
So I think of it not as an assertion, it's not a demand.
I don't stand on the top of the hill and bang my drum and say I'm right.
But let's imagine the conversation that that generates.
So I'm gonna sit down with my sales and marketing partners, and I'm gonna say, I think, based on these numbers that we could get two to five percent of our folks to trade up.
But you're in sales.
What do you think?
Right?
Because me saying that sales and marketing are gonna get a target from product is not how the world works, right?
But it's an opportunity to have the discussion about the numbers in a way that everybody understands.
I'm curious what sort of research that you have product folks should be getting into to even start coming up with numbers.
Yeah, you mentioned there's the three numbers.
There are a lot of product folks who either don't have any of these numbers or don't think they're important.
And I can pretty easily identify them because they don't get promoted.
Right?
In the in the language of companies that are in the business of making money, if you can't vaguely explain how the thing you do makes money, you're a you're a cog in the process, you're an executor, you're you're on the development side, you're not on the product side, right?
The idea that I'm a product manager and I don't know how many units of my product got sold last year.
Not good.
I I don't know the list price or the or the average net price, not good.
Those are two numbers I should have in front of me every day, right?
So you may be a product manager who doesn't have those numbers, but I'd strongly suggest that those are two numbers you really want to have.
Every product manager should be getting their gross level quarterly product, you know, um profit and loss.
How much how much came in?
And gosh, what is my team cost?
And you'd really like the amount to come in to be more than what your team costs, right?
We'll get there later.
Without those two basic numbers, I don't know how we talk about product strategy.
Dan, we just got done talking with Rich Miranoff live from Portugal.
An amazing conversation.
Give me your takeaways.
Well, first off, his new book Money Stories is an immediate must-read for product managers and product leaders.
A ton of just practical insights.
For me, you know, really focusing on how I communicate the dollar impacts of product decisions.
Just took them for that.
Stay for our conversation on AI.
I mean, I think one of the biggest takeaways is right on the back of Rich's book, right?
Don't bring a backlog to a gunfight.
Right.
Practical things that we can do today.
That's what Rich is all about, right?
Let's get it.
We are here today with Rich Mirnoff.
And I'm really excited for this because we're gonna do something different than we than we've ever done before.
We're gonna introduce Rich by saying, go back and listen to the last two episodes with Rich.
Because this is going to be part three in our product momentum Rich Mirnoff MBA program.
But Rich, you are, I believe, the first guest to be on three times.
So welcome back to the product momentum podcast.
Rich, we're really excited to have you.
That's exciting.
Do I win something?
Uh Dan will tell you what you win at the end.
So our grab listening to the old episodes, you know, I going back to quotes like roadmap amnesia and talking about companies that may not have a strategy and how you propose the strategy to the executive tier, you know, just things that always resonate.
Rich has a new book out coming called Money Stories.
We're really excited to hear about the book today, but tell us about like why you wrote this book and why now.
Sure.
So this is material that's really been rattling around in my head and on my talks and blog and you know, in in public spaces for I don't know, six or eight years now.
And I got really, really tired of having to get up and give the talk again.
Um, and it's something that comes up.
So most of what I'm doing these days is I'm doing one-on-one coaching for chief product officers at B2B Enterprise software companies.
And the thing that comes up over and over and over again, and I wish it wouldn't, is that we as product folks really really love what we do, and we're really impressed with ourselves and our processes and our product operating models, and we want everyone else to love it too.
And so a lot of my coaching is about trying to explain to the folks who are chief product officers at these companies that the rest of the executive team just isn't very interested in that, which comes as a shock, right?
And you know, having done this in front of big audiences and one-on-one, and you know, it it seemed time to come back and put it in a little book that said if you want to communicate really well with the revenue side of your executive team, you have to talk about money and not product processes.
That's something that you when you were at our conference and you led a workshop, that was what we worked on for four hours one day.
And that was how many years ago?
Uh it was 2023.
Okay.
So all right, not too long ago, right?
Um, so I have I have some questions there, but I want to I want to stick with the book.
What talk to me about like different types of money stories, help qualify for us for people that are listening.
Right.
Oh, and the the essential message is that any sentence that comes out of the mouth of a chief product officer that doesn't have a currency symbol in it is one that the rest of the executive team can't hear and doesn't care about, right?
And so the book is structured so that we can talk about the money that comes with the things we're doing.
We're building really cool features, we're building new products, we're building new subscription tiers, we're fixing bugs, we're building architecture, and notice none of that had currency symbols in it.
So a good part of my executive team doesn't care, right?
I would like them to, I would love them to.
So the book lays out a really, really simple model.
It says uh a money story has no more than three numbers in it, and we only multiply.
And two of the numbers you know, and one of them you're gonna reach into the air and make up or estimate.
So, for instance, there's a whole section on upsell stories, and we as product folks tell these stories all the time.
We say, if we could just add this really cool feature, actually, this year we'd say, if we could add this really cool AI feature to the silver tier of our product, because we have a bronze silver gold subscription model, we get a lot of our bronze subscribers to trade up to the silver subscription and pay us more money, right?
That's why we do it.
We're gonna put this this really cool feature, this you know, insight generating feature in the silver version of the product, and our bronze customers are gonna pay us more money.
But what we don't do is we don't finish the sentence.
We don't say to the executive team, well, we have 25,000 bronze subscribers, and the upcharge from bronze to silver is a hundred bucks a year.
And we guess, we think, we hope that we might get five or eight or ten percent of those folks to get so excited about this feature that they're gonna pay us more money.
And if we multiply twenty-five thousand subscribers times a hundred dollars, so that's two and a half million times ten percent, that's two hundred and fifty thousand, right?
Now it's a wild estimate, we always do a range.
But as soon as I say there's a quarter million dollars or a half a million dollars, if we can build this feature, I have everyone's attention.
So the middle part of the book is me laying out five or six of these very generic template stories.
There are upsell stories.
If we do this, people will trade up on this subscriptions, right?
There's the boosting volume story.
So if we're in the per transaction we sell airline seats or clothing online or books online or units of things, we want a story that says, well, if we made these things more attractive, the folks who are gonna buy 10 next month would buy 15, right?
Or 12 or 100, right?
Um, and if and if we multiply the numbers, say we have a lot of customers and they're gonna buy six more, and on each one we make an extra four hundred and seventy-two Euros or whatever currency we're in, then we're telling an upsell story.
Now, mathematically, it's exactly the same as the volume story, right?
They're all the same.
But but the way I laid out the book was to have these sections of upsell story and boosting volume story and retention story and new customer acquisition story, so folks could find a story that feels like the one they need.
I love it.
You mentioned something about three numbers, right?
So two you know and one you're gonna pull out of thin air.
Right.
Uh we had a guest on recently, uh Phil Hornby, you said that we're paid to have an opinion in product.
Yeah, we're not paid necessarily to be right all the time.
That's correct.
Talk to me about like somebody who comes and says, like, I don't like that number.
What do you do?
So I think of it not as an assertion, it's not a demand.
I don't stand on the top of the hill and bang my drum and say I'm right.
But let's imagine the conversation that that generates.
So I'm gonna sit down with my sales and marketing partners, and I'm gonna say, look, we have 25,000 bronze customers, and if we can get them to go up to silver, it's an extra hundred bucks a year.
I think, based on these numbers, that we could get two to five percent of our folks to trade up.
But you're in sales, what do you think, right?
Because me saying that sales and marketing are gonna get a target from product is not how the world works, right?
But it's an opportunity to have the discussion about the numbers in a way that everybody understands.
So sales can say, Well, here's a really, really long list of folks who've been demanding this.
Maybe five percent's too low, and marketing comes back and says, Well, we've run a lot of campaigns and we've never had anything that got more than a half a percent uptick, right?
And we're gonna argue about the one number that's the swag, right?
And it's really not important whether we get it accurate.
It's important that we build some consensus around the table that says, yeah, marketing and sales and product think we're vaguely in the right space.
It's something between two and five percent.
Right?
It drives the discussion instead of me saying, I'm smarter, I'm right, take my number, right?
Yeah.
And that just doesn't go over so well.
Folks who are just getting into the money story game.
I'm curious what sort of research that you know product folks should be getting into to even start coming up with numbers.
Yeah, you mentioned there's the three numbers.
Yeah.
So there are a lot of product folks who either don't have any of these numbers or don't think they're important.
And I can pretty easily identify them because they don't get promoted.
Right?
In the in the language of companies that are in the business of making money, if you can't vaguely explain how the thing you do makes money, you're a cog in the process, you're an executor, you're you're on the development side, you're not on the product side, right?
And a lot of people are put there, maybe their organization doesn't want them to do that or they don't have access.
But the idea that I'm a product manager and I don't know how many units of my product got sold last year, not good.
Uh I don't know the list price or then or the average net price, not good.
Those are two numbers I should have in front of me every day, right?
How many did we sell and what are they gross worth at the top line for the company?
And if I multiply those by the way, I get the revenue for my product, right?
And if I don't understand how revenue is created by my product, and somebody else who doesn't understand anything else about it is making decisions for me that aren't so good, right?
And and I'm being put in the closet where I get to sit with engineering and design, but not with the people who make decisions and allocate money and set strategy.
So you may be a product manager who doesn't have those numbers, but I'd strongly suggest that those are two numbers you really want to have.
Every product manager should be getting their gross level quarterly product, you know, profit and loss.
How much came in, and gosh, what is my team cost?
And you'd really like the amount to come in to be more than what your team costs, right?
We'll get there later.
Without those two basic numbers, I don't know how we talk about product strategy.
Yes, customers love us, yes, we have an NPS score, but that's not what drives companies every day.
That's not how decisions get made, that's not how money gets allocated, that's not how head count happens.
So so you could decide that you don't know those or you don't care, but I think you're playing a different game than the product managers who are gonna advance their products, advance themselves, and make a mark in the world.
Yeah, I think so for product managers out there.
Like if you don't have that information, there should be a a rallying cry to be curious and start finding it out.
It should.
And and I in most places, if you just asked, it would be very easy to find.
And there are some companies that hide their financials, but again, I don't know how you'd be a product manager and grow your product if you're not allowed to know how much money it's bringing in.
Sure.
So one one of the money stories you mentioned in the book is around yeah, kind of the cost savings story.
Yeah.
Um and you have a bullet in there that I thought was especially applicable, right, to kind of today's market climate of like, hey, these money stories we should be extra careful about because like now we're talking about things that potentially impact people's lives and you know how organizations are structured.
So I'm curious how how in your experience do you kind of handle those conversations with with clients?
Let me take a step back too, because what what I find is that the cost saving stories are much less powerful than the revenue stories.
If there's a revenue story you can tell about why the thing you're doing is gonna bring money into the company, it's almost always way bigger, way more interesting, and leads to the right place.
Right.
Um, typically when we're telling cost saving stories, and let's let's exclude RD for just a minute, right?
Let's say we're a big logistics company and we have a lot of trucks and a lot of people who drive trucks and who put boxes on trucks, and we have some bit of tech that's going to route the trucks better so we need fewer trucks, or somehow makes it easier to load the trucks and drive the trucks, right?
If we tell a story like that, we're gonna come back and say, we need fewer trucks, we need fewer drivers, we need fewer truck loading people, right?
And so we're gonna multiply the the average salary of those folks by the number of them that we don't need anymore, and we're gonna get savings to the company.
But obviously, in the front of that is we're gonna have less people.
We're either gonna fire folks we have, or we're gonna not hire more folks as we grow.
And my observation over and over again is that it's easy to overestimate how much savings we're really gonna get, and that it's really easy to fire a lot more people than the savings we're gonna get, especially if we haven't gotten it yet, right?
So here's a six-month project to build some piece of tech that's gonna save us a lot of money later in the year, but everybody's believing in enough, and the software's gonna arrive on time and be perfect, of course.
And so we start firing folks before the evidence is in, before the stuff is ready.
And yes, it blows up people's lives and livelihoods, and it's a terrible product approach.
So I'm always much more cautious with these cost-saving stories because I understand that it's easy to overestimate and it's easy to fire people, at least in well, not so much in Europe, but certainly in North America, right?
Um it's easy to fire people and it really blows up folks' lives.
And so I'm much more willing to go out on a limb and talk about revenue in a way that's a little aggressive than to talk about cost savings in a way that's aggressive because the human cost is really high.
And I guess just because you know, if anybody read the headlines last week about some particular CEO of a tech company who fired 40% of all the employees of his company because he's pretty sure that AI is going to replace them all, I really really hope that he's already seeing that savings.
I want to ask about another kind of money story because this has been coming up in conversations with me with clients recently, is about retention stories.
So if we don't do X, we might lose Y, right?
Right.
I like to tell it the other way.
Okay.
Um let's let's take a churn number, right?
The churn and retention are mirror images of each other, right?
So generally we measure churn, we say we're in some you know consumer software thing, we're doing music streaming, whatever it is, and you know, 35% of our of our signed up subscribers drop out every month or every quarter, every year, right?
If we ask the question that way, we say, well, what could we do that would reduce the churn rate by two or three or four percent?
Right?
Now that's also equivalent to saying, what could we do that increases the retention rate by two or three or four percent?
And and the language the different companies use tend to fall into one or the other, and they're the same.
But if you're at a company that talks about churn, you want to talk about churn reduction.
If you're a company that measures retention, you want to talk about increasing retention.
The math is the same.
But either way, we want to we want to assert something.
We want to say, if we made the onboarding process easier and folks got to their aha and their joy moment sooner, we think that would increase retention by, right?
Or if we fixed the renewal paid such that it actually processed credit cards correctly and let people renew their their subscriptions, we think that would reduce the churn a lot because folks abandoned it because they can't figure out how to do the job, right?
Um either way, you're talking about some piece of tech or some piece of UI or some piece of training or whatever, but we want to tie it to a guess as to how much churn it reduces or retention increases, because then we can talk about it in money.
Because for every one percent churn we reduce, that's figure out what your company is, right?
15 million bucks on the top line.
And suddenly everyone in the room wants to know how we're gonna reduce churn by one percent because 15 million bucks on the top line really got their attention.
Instead of talking about dark patterns and workflows.
When we talk about retention, are we talking about bottom line then?
No, I think so.
Generally you measure your total subscription revenue, right?
Yeah.
And more retention means you have more people who renew.
Now, some people divide new accounts from renewing accounts.
I think that's silly.
Maybe it doesn't matter, right?
But but if we lump all of our subscribers together, we say, look, we're we're keeping 72% of them at the annual renewal.
If we could keep 78% of them, 6% more, that would be worth top line money, right?
It's more dollars in for the subscriptions for what we do.
Okay.
So say I'm listening to this podcast and I'm like, this is excellent.
I want to start flexing my money story muscle.
How do I get started?
Right?
What's the first thing that I should do?
Well, uh, the first thing you should do is buy a copy of the book, I think, right?
Is it very it's very short.
It's 88 pages, including all the footnotes and the acknowledgments.
It's you know, it's an hour's read if you go through it.
But there are there're probably 40 or 50 examples in there.
And to me, they're all the same because it's the same three numbers we're multiplying.
But again, market entry story, uh, new customer acquisition story.
I've grouped them in a way that you might only go to one of those sections, say, okay, I'm in the subscription software business, so the upsell and the retention are the two I care about.
I can skip the other four.
So let me read through these and then I'm gonna take a does anybody still use paper and pencil?
Whatever, right?
Uh whatever it is that we use, and I'm gonna try to think of the three numbers because it's no more than three, two of which I already know, and I'm gonna see if I can multiply three numbers together and see what I get right uh nobody gets it right on the first time or the second time uh I've got a whole bunch of blog posts there's a whole lot of other folks out there who can help with this but like anything else in the privacy of your own office or or whatever it is you try it out yourself and you see what happens and you get it wrong the first time and you're terrified because as a product person you believe in accuracy right and this is wildly inaccurate if we can get within a factor of six I think you're doing pretty well.
If you so say you're using your money stories for the first time and you have that executive audience that we're hoping to get because that's who wants to hear these stories.
If you're doing it for the first time is that something that you prep that audience for well I would just I would do neither of those things okay so so let's say I'm the product manager on this particular product I would first try to socialize that with my peers.
I would bring it to my marketing counterpart or my product marketing counterpart and I'd walk him or her through it and say look I know this is wrong.
Well, I know two numbers are right, and the third number I made up.
Let me walk you through the logic and give me a hint.
Higher, lower, and give me a reason, right?
I'd go to sales, I'd go to support, I'd I'd I'd find the good folks in there who want to get the right answer and will help me, right?
Because the first time I'm gonna do it, it's wrong.
Now I don't know if it's way higher, it's way long, but it's wrong, right?
And that also gives me some ammunition now.
By the way, I would also run it up my organizational chain.
If there's a director or a VP, I'd want to run it past them and ask them the questions of who in that executive meeting is going to be interested in care and what reactions I'm gonna get, and right.
I wouldn't walk into an executive meeting cold with any of this, right?
But if I've socialized it with some of my peers who work for those executives, by the way, when I get slammed and somebody says, Oh, come on, we've never had a campaign that got us four and a half or five or six or seven percent conversion, I can say, Well, I actually sat with this really, really smart person in your marketing department, Mr.
Ms.
Marketing VP, who told me about these three campaigns that I was really impressed that you guys ran that had eight percent returns, right?
And I don't think we can get eight, I'd put five down here because whatever, but you have really, really smart folks who've done better than this, right?
Now, first of all, I've praised the people who work for them and who helped me and who I need, and second of all, I brought some internal evidence of what we've been able to accomplish, right?
Whenever I'm doing this, I use the we word, right?
Not the I word, nobody cares about me.
And so if if I've socialized it at the do-er level at the IC level, now I'm ready to trot it up the line a little bit, right?
And the other thing that I I always recommend is bring a bucket of humility with you.
Okay.
First couple of times you do this with the executive audience, you say, I say, I know this number, I know that number.
The third one is a wild guess.
It's my best estimate.
If anybody in the room has a better idea, I'm going with yours, but stick with me long enough to let me talk you through it, and then let's see what the what the temperature in the room is, right?
Because I know uh that I'm not accurate here, and the smart folks in that room know I'm not accurate, but we have to get past that to talk about what's real in the future.
And by the way, I don't know if you guys know this, it's really hard to predict the future.
Very hard.
So I could also t testify that yeah, the book is a really great read.
I mean, I read it and I like to hear you talking, Rich.
Um, so that was fun.
Audio version coming later.
Yeah, well, it's uh one of the things that I thought was interesting with how you structure the stories is like for each story type you have a things to watch for, right?
Which kind of get into the complexities of those scenarios.
Yeah, and I and I try to do different what to watch for is for different things, right?
So, for instance, if I'm looking at the upsell stories, right?
One of the things to watch for is it's easy to think of all your users in one big lump or segment, right?
But it might be that, and we're thinking about your bronze users, the 25,000 of them, that some of them are in a different geography, or some of them are earlier in their usage patterns, or some of them have different problems.
There's some sub-segments, and we might say, well, about a quarter of our bronze users have this other qualification.
They have multiple employees in multiple cities, right?
And so they're going to be the ones who really trade up on this feature, which has to do with coordinating across time zones, right?
Um, whereas the ones who are in one location and don't have a lot of employees won't care about this feature, right?
So that's a that's a what to watch for because just grabbing some segment, if you haven't thought about who in that segment cares about this, who who are the users, what are the jobs to be done, what matters, right?
So for upsell, that's one that I put in the things to watch, trying to think, oh, one other one, uh especially in in the upsell in the in the tiered product strategy.
Um, new features don't sell themselves mostly.
We have to promote them and remind our users and set up demos and do newsletters, and there's a lot of marketing and maybe a lot of selling to get anybody to notice that we added a new feature.
So me saying I shipped a new feature and therefore it should make money, not so much here, right?
We need to have coordinated with the folks who are gonna turn it from some bit of tech that nobody heard about to some bit of tech that people are excited about and send us checks.
Right.
So so for each of those sections, I tried to think about what was different about upsell versus transactional versus you know, certainly we we touched on the the people saving stories, right?
They're all very different.
And so the the lessons learned, the hard lessons learned from section to section varied because I was trying to highlight what was different about each of those kinds of stories.
Yeah, I mean think you know, one of the takeaways I had there, and it goes to something Sean and I have been talking about for a while in the pod is like kind of this back to basics approach that like before you get the money story, right?
You still need to do the product diligence and the thinking about what you're solving.
Absolutely.
Consider that before you start going up to the exact team and be like, yeah, I think I got a yeah, a ten million dollar idea here.
Right.
Um and you want to be careful because when you say I have a ten million dollar idea, you know what the executive team does.
They say, Congratulations, when can I have it?
Right?
Yeah, next week.
And and next week, by the way, I I'm told that development with under AI development is instant, right?
And customers will instantly adopt it.
So if you think there's ten million dollars, you've got until five o'clock today, right?
So you we want to be thoughtful about the kinds of stories we tell because we're gonna be taken at our word.
And again, uh something that takes six months or eighteen months to build, there's a lot of things that happen in the world between now and then.
And, you know, odds are the delivery date's late anyway, right?
Because almost always it is.
So I always talk about ranges.
Look, I think this might be worth between 200 and 800,000.
Okay, that's that's good enough to get a budget.
That's good enough to figure out where in the ranking it goes.
That's good enough to decide if we're gonna fund it.
I have a question around your philosophy over the last few years as specifically in software development, how the market we know that the market's changing with AI.
Sure, right.
Uh-huh.
Um and Dan, there it is right there, our contractual obligation to say AI.
Right.
Uh so you mentioned early on that one of your motivations for writing the book was because you got sick of traveling and doing the doing the roadshow.
But what what's changed?
Has anything fundamentally changed or even even maybe not fundamentally, maybe it's too much of a a lead.
Like what what's really changed over the last three or four years of your philosophy around the way that we should be talking about money?
I don't think the philosophy's changed much at all in the last eight years.
But if we look at the last eighteen months, back to your AI, right?
So just for uh historical interest, uh I worked on some AI stuff in nineteen seventy-nine, right?
And by the way, it didn't really work then either.
And you know, we've been those of us who are old enough have been through four or five or six AI winters and AI hype cycles.
This one's real.
This one's big, this one's got investments like no one's ever seen on the planet, right?
It's all gonna come crashing down soon, I think.
But so there's no way to avoid it.
There's no way to hide.
But if we think about the things that are automatable and the things that we're gonna get assistance on, they're the same ones that don't really earn us a place in the game.
Okay.
So taking notes and doing transcripts is something I used to do by hand and listening to to recordings, right?
Not value add.
But knowing which questions to ask somebody in an interview because they said something interesting and they took us off the standard interview question path is something I'm not willing to automate or outsource or delegate, right?
Because the administrative is not important.
The setting up calendars not important.
The um searching for keywords may not be important.
But over and over again, what I've found as a product person is most of what I hear is junk and garbage and obvious and right and completely not interesting.
And a lot of these summaries and analysis packages here will give me the average.
They'll tell me what's most often said.
And you know what?
I already know what's most often said because I've been in hundreds of those conversations, right?
And it's not what's interesting.
What's really interesting is when the three or four percent of the leading edge folks tell me something I haven't heard before, and I have to decide if they're crazy or they're way ahead of the game, or maybe both, right?
And so when somebody says something interesting, I have to be there in real time.
When someone says, Oh, we never run those reports on Tuesdays, wow, stop, tell me more, right?
What's going on here?
Um, so that I can figure out whether there's a real opportunity here that the generic average interview questions won't uncover, right?
And so when we think about how we add value as product folks, and I would say designers too, right?
It's really, really understanding the context and and seeing the the trees from the forest and spotting the interesting thing, which I think is still something that we have to do ourselves.
Uh I think writing specs is, you know, getting uninteresting.
We may even find that writing code's getting interesting, but I think software architecture's not.
Right.
I don't think we outsource our software architecture or security architecture or you know, really understand the economics of what we're doing.
So if we peel back the things that are low value add but take a lot of time, I think we we can use the current set of tools to give ourselves 10 or 15 hours back in our week that we better use to be smarter than the other folks who are using the same tools.
Um one other thought, and I'll give it back to you, which is I'm seeing a tremendous push toward shipping hundreds or thousands of more products, right?
I had an idea in the shower, I can code it up, I can push it into my uh assembly line, I can build a product in four and a half days and name that tune, right?
What we're gonna see, I think in the next year is thousands or tens of thousands of products that are available but not well thought out or aren't positioned or don't have a target audience or a reason for being or differentiation, and the buyers and users are gonna be so clogged with slop, product slop, it's gonna be really, really hard to get the message out on the good stuff, and we're gonna see the the failure rate of new products go from you know sixty percent to ninety two percent.
Yeah, it seems like there is a lot of risk for like reputational harm for firing out, you know, kind of quick only if she wins only if you're a company big enough that has a reputation.
Duche.
Um you mentioned you know you may you mentioned uh you know with the AI uh summers and winters that may maybe this AI peak might yeah we might be almost over the summit.
Um you know what are you hearing or seeing that makes you think that well a couple things one is I think if you if you look at the aggregate market valuation of the largest few hundred AI pure play companies, you'll find out that in order to maintain that valuation they need to gather more than all the revenue that exists in the universe.
Okay.
There's not enough money in the economy on this planet to actually support the valuations of most of those companies right.
So sometime soon, and I think we're a couple or three quarters away, a bunch of those companies are going to miss their numbers which are already small and their investors going to take them out and and well it's not going to be pretty right.
And so we're going to have this moment when what was the Warren Buffett thing right?
When the tide goes out, you see who's wearing the swimsuits.
Right.
There will be some great AI companies that survive and thrive and are worth a tremendous amount of money.
But the economics of it are really hard to map.
And so the the first moment where somebody runs for the door and there's a bank run here, I think we're going to see a lot of companies close their doors because they're spending 10 X or 40X or 90X on uh of their current revenue, keeping their tokens paid for and their engines running and their AI chips going, right?
The the economics of it is upside down, right?
Yeah.
Um so that's one.
And the other is I think the every business publication I've seen in the last year or year and a half is describing the huge benefits of putting AI in place and all the people you can replace, right?
And I think that's somewhat overstated and naive and a little too shiny.
And I think we're gonna find out that we can we can improve some average company by 30% or 35%, but not 90, and that the pressure from investors to CEOs to fire 50% or 60% is gonna be pretty extreme.
So I you know, I I'm worried that those two things are gonna arrive at the same place.
Let me go back for a quick historical note again because I'm old enough.
I remember when browsers arrived in 1995, and Netscape was bigger than any other you know thing on the planet, and every company wanted to hire internet product managers.
They didn't know what they were supposed to do, right?
Because they they had to know the internet, and every company wanted a website, even though they didn't know what it was for.
Right.
And a year and a half later, we started hiring product managers based on the product they were gonna be in charge, and they had to understand the internet, but it was a thing, right?
It was a part of the tech.
In two thousand eight, maybe, when the first really smart smartphones arrived Android and iOS, right?
We didn't call it iOS then every company on the planet started hiring mobile product managers and nothing else.
And every company on the planet wanted a few apps in the app stores even though we didn't know why.
And two or three years later we discovered that mobile was part of most products and that you had to understand your products and your company and your audience and your users and their problems not just mobile.
Yeah, AI's way bigger than either of those but at some point soon we're going to have to start cashing the cashing the revenue checks that have been written for the for the stuff we're using.
And we're going to rediscover what some of us have seen over and over again which is that the economics really matters the revenue really matters meeting the user needs really matters getting people to pay for the stuff really matters and that it's not enough to have sprinkled a bunch of AI on top of the things we already ship folks are not going to send us twice as much money because of that.
The getting the people to pay for it thing is the biggest uh that's the biggest red flag for me.
That's right.
And and those of us who are using the AI tools intensively are going to have to keep paying for them until the prices get too high.
But I'm thinking of end companies.
If you're uh if you use ERP systems, big big enterprise systems, are you going to pay forty percent more because they have AI-based reporting and AI-based predictive inventory?
I think you're going to demand that because all of your vendors will have them and all of them will be in the same price competition they have now.
And I didn't get more budget for my manufacturing company because you did those, right?
And so what what I see is that very quickly these become the competitive standard, these become the must-have, these become the table stakes, and I'm not sure they generate a lot more money.
Now, maybe they th those companies save a lot because they have fewer people building it, but we're really in the same place.
So blood from a stone.
I love it.
Well, a little bit of a somber note to end on.
But I think a real I think a great business story, right?
Well, uh and and and if we come back to again, my fundamental says as a product manager, as a product leader, as a chief product officer, I can't just talk about the tech, right?
Um if I'm gonna get the next five million for really good, you know, agentic tools, right?
I have to tell a story to the executive team that it's gonna earn me 30 million bucks because RD is not a uh cost center, it's a profit center, right?
And so typically a company needs to see five or six times return on the money that goes into RD.
So if I need another five million and a bunch of data scientists and some really cool folks and very cool tools, I have to tell a money story that says the company's gonna earn that back.
Or my replacement gets to tell that story.
Yeah.
I love it.
Rich, thank you so much.
Close out your third episode.
You are you know, you've been such a vital part of what we do at product momentum.
So thank you for for being here.
Pleasure, thanks.
I've got some takeaways.
So, one, be able to explain how your product makes money, right?
That's a base.
That's a base, that's a base thing, right?
Speak to your audience, right?
So I think when you sit when you're talking about you have to use money language when you talk to the executive suite, that's you're knowing your audience, right?
That's right.
And when you're talking to engineers, then that conversation about Dungeons and Dragons is right on target or whatever it is, or Star Trek versus Star Wars.
You need to know your different audiences and what they care about.
And so this is just part of that thought.
Uh, three numbers, two you know, and one you pull.
Love that.
Socialize your idea to your team because it's wrong, right?
Maybe not all the way wrong, but it's a little, it's at minimum a little bit wrong, right?
And then you also have some references that you can use in later conversations, right?
And the one the one thing, if anything, there's that call to action of go and demand your PL.
Go figure out what your PL was for last month, last quarter, and how can you use that moving forward, right?
Right.
And and I almost always find that there's somebody, some relatively junior person in the finance organization who's waiting to be asked and will happily spend a couple hours going through the PL with you and feeling smart and helping you.
Um we're not alone in this.
There's folks all through the company who want us and themselves to succeed.
Who are the people who know the answers?
Who can help us?
Who can support us, and then we can support them in turn.
I love it.
Rich, you're the man.
Thank you so much for being with us today.
It's a huge pleasure.
Oh, it's a pleasure.
Go get 'em.