Helping startups to build a product practice

September 19, 2022

8 min read

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Eira Hayward

Eira is an editor for Mind the Product. She's been a business journalist, editor, and copywriter for longer than she cares to think about.

A European startup fund with global ambitions

EQT Ventures is on a mission to help the European startup ecosystem, Martin says. It was started by a number of former founders who wanted to build the type of fund that they wished they’d had access to when they were trying to build their businesses. Its first fund, raised in 2016, was Europe’s largest debut venture fund at €566m, and its second fund was €660m. Martin explains: “While that makes us one of the biggest funds out there, it’s not just about writing a cheque – it’s all about being founder friendly, and having as much radical support available as possible to help our startups get to the next level. One of our founding partners was a founder of Booking.com – he wanted to create a fund to help European startups to scale because there wasn’t enough money in Europe to support them as they were going through hyper growth. They had to go to the US for investment, and all that wealth creation happened in the US instead of Europe.”

They quickly learned that their international experience was valuable to US startups as well, and have made several investments in later stage US startups who are looking to go international and leverage that expertise.

There have already been a few exits from the fund, including Finnish food delivery business Wolt, a business that provides a great example of the importance of operational innovation as well as product innovation. Wolt targets what other food delivery businesses consider second or third tier cities, where you wouldn’t think a food delivery startup could be sustainable. But Wolt makes it work through a focus on operational metrics and business efficiency, Martin says.

His role at EQT Ventures is very much a continuation of his work at Mind the Product, he explains. Eighty percent of his time is spent helping companies in the portfolio as an in-house product advisor and product coach. The rest of his time is spent helping the investment team.

Finding that elusive first product hire

The startups in the portfolio typically need help to professionalise their product organisation. “That’s where I come in,” he says. “I help them find their first full-time product hire, and I help them to start to build and scale a product and design and engineering team.” He finds that a lot of startups want to hire too senior a product person – maybe someone who’s helped to scale a business to IPO – but they don’t consider that someone with this experience quite probably isn’t interested in being a product manager at a startup again. He says: “There is definitely still a talent crunch in product, but it’s an experience crunch as much as anything. There are a lot of talented product people, but it’s hard to find people who have the talent, who also have the right experience and who understand product competency and how to do it well. And then they need to know how to do it in a startup environment too.”

Every startup is different, so he can’t take a one-size-fits-all approach. Says Martin: “It’s a very consultative approach every time. And honestly, I love the work because all our startups are very open and hungry. They’re not set in their ways, and there’s a lot of openness to figuring out what works best for them and their team.”

Principles for day-to-day decisions

That said, there are some consistent themes to Martin’s coaching. He finds that startups often lack a clear strategy: “Startups are very good at having a great vision and mission, and everyone gets aligned around it and excited about it. And then they’re usually very good at the scrappy hands-on ‘let’s build some stuff’ parts. But there’s often a yawning gap between these two things. They don’t set a strategy and make sure that all that scrappy, iterative work actually takes them in the right direction.”

It’s a gap where his Decision Stack mental model comes in useful, he finds. “There’s vision and mission at the top of the stack. These are the big aspirational goals that take you out 10, 20, even 30 years. But what are you doing in the next couple of years to move you towards that goal? And what makes you different from anyone else who’s going after a similar kind of market or goal.” It means being clear and focused about what you’re trying to achieve in the short term.

Principles are also often missing in startup thinking, he finds, and his keynote at #mtpcon London will focus on this. He says product teams are often happy with what he calls “wishy washy principles, like ‘build a delightful experience’.” “Does anybody really not want to do that?,” he asks. “Did we really need to write it down? And is it actually helping us make a decision? I’m going to talk about how there’s a better way to create principles that help you with day-to-day decisions.”

Current trends

He sees a wider acceptance that autonomous teams work better, that teams need to be small, and that their work needs to be iterative – “all the basic tenets that we’ve been talking about at Mind the Product for the last 10 years”. The big questions now, he says, are how to organise product, design, and engineering teams? How do you scale them so that they stay nimble? “I think it’s the same conversation, it’s maybe just evolving to an organisation level instead of a team level.”

Sustainability is one of the current trends among the startups in the EQT Ventures portfolio, says Martin. Its investments span businesses looking at carbon accounting and offsetting to startups in the synthetic biology arena. “One of our startups basically creates cheese using precision fermentation. They create the casein protein and make real cheese from it. There’s no cow involved anywhere. We’re also working with a company that’s doing amazing things to create new eco-friendly fabrics and materials, as well as startups in the electric trucking, boating, and aviation spaces.”

But we’re living through economically uncertain times and market realities have sunk in over the last 12 months, Martin adds. While it hasn’t affected EQT’s ability to raise money, it is affecting valuations and market expectations – but a startup will still raise money if it has a good idea and a good business, he says. Another upshot of economic uncertainty is a greater focus on how to align product work with the business. “And that’s a good conversation to have,” he concludes, “because sometimes Product on its own can get a little esoteric, and at the end of the day, it has to make money for the business.” As Martin said in his seminal article to answer the question “What is a Product Manager”: “Product is above all else a business function, focused on maximising business value from a product.”

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