#035 - Meituan PM Course Summary
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Laws
In Business
In Management
The Peter principle is the law of gravity [#027]
Lessons [#001]
Search the Hidden Truths, Then Stick to Them (a.k.a Non-consensus and Right)
Become a π-shaped talent
There are only two real core competencies:
The ability to discover opportunities
The ability to learn, continuously
Luck accounts for 90% of success.
Product Management (#002)
In most product categories, it’s not the first product that succeeds. Product managers play an important role.
Product managers need to be both specialists and generalists.
To be a great product manager, what matters most is your value system. And it should align with what the industry requires.
Product management requires cross-disciplinary thinking to solve new problems that pop up all the time.
The best combo is Professional PM's professional skills + Founder PM's mentality.
Heart vs. Data [#023]
Mental Models
Network Effects [#003]
Shape (Exponential, Linear, Asymptotic)
Scope (Honeycomb, City, National, Global)
Coefficient (the level of activity in the network)
Matthew Effect [#004]
Most people don’t make choices on perfect information, they just go with the first thing that “seems right”.
Market Concentration (1,2,3,7, ∞) [#005]
Big markets aren't enough; you need markets that allow big companies to exist.
Measured by concentration ratio (lagging indicator)
To determine the eventual market concentration of the industry, you need judgment. (leading indicator)
Network Effects + Matthew Effect + Market Concentration [#005]
Pay attention to the interplay of different effects that benefit or suffer from scale, understand the trade-offs, and find the optimal balance through experimentation.
=> Rule of Thumb: Be top of mind (i.e. top three), while optimizing for capital efficiency.
Market [#007]
Incremental Market vs. Reserve Market
Measured by penetration rate
The difference in customer acquisition costs between Incremental and Reserve markets is at least 10X
The key to win in a reserve market is through differentiation.
High Frequency vs. Low Frequency
High-frequency Apps have unfair advantages (e.g. user acquisition costs, retention rates, consumer perception) over low-frequency Apps
The key to win in if your product is low-frequency is to go deep into the industry value chain.
Industry [#008]
Chain Owner has the most initiative during an industrial change while other players can only be passive.
Smiling Curve
The best place to be in an industry chain is either upstream - close to core inputs or downstream - close to the end consumers.
The Ecosystem Model is prevalent for Internet businesses.
If establishing an industrial ecosystem can improve industry efficiency, then you must either become an ecosystem builder or join as a productive member, otherwise, you will be eliminated from the ecosystem.
The Game between Upstream and Downstream
Market concentration affects the relationship between upstream and downstream.
Your upstream or downstream can interfere with the market concentration in your segment.
For a company, the best situation is that the concentration of both your upstream and downstream are very scattered, and only your concentration is high. This kind of luck is hard to come by.
If a) your upstream or downstream concentration is higher than yours, or b) because of your high concentration, your upstream and downstream have to game with you to change your concentration, the game will persist for a long time.
The most fierce games occur when the numbers of upstream and downstream companies are almost the same, and the numbers are small.
Entrepreneurship
Timing [#009]
Timing > Environment > People
The window of opportunity for a category usually lasts for three months.
Due to FOMO, even for the wrong opportunity, you may still get funded.
How does a window of opportunity open?
Changes in PEST (Political, Economic, Social, Technological) factors
Change in Industry Practitioners’ Cognizance
All the great needs most definitely have been tried many times in the wrong way or at the wrong time.
Many teams working at the same thing will accumulate to the overall industrial cognizance of what works and what doesn’t.
Two rules
“If you believe something will eventually happen, try every 3 years." - Marc Andreessen
“As long as you can stay alive, it's always better to enter early than to enter late.” - Wang Huiwen
Strategy [#010]
Strategy = Insight + Action Plans » Highest ROI (in different times & spaces)
Standard Strategy vs. Effective Strategy
Standard strategies (from consultants) are often ineffective when they are applied to a specific company.
An effective strategy for a particular company is like a doctor treating a malaise, there is a diagnosis, hypothesis, and testing process. A strategy working for a company is the result of multiple factors (e.g. product, operation, marketing) combined together.
Meituan used a Platform Strategy
Total Addressable Market [#011]
When starting up, TAM is the most important thing to look at. It’s hard to guess right, especially when it’s early. Overestimation and underestimation can both be fatal.
The appropriateness of the investment depends on the judgment on future market size.
Three Ways to Judge TAM
Modeling based on data
Deduce based on human basic needs
Estimate based on analogous markets
First Mover vs. Last Mover Advantage [#012]
Last Movers benefits from
The market needs less convincing
Knowing it can be done
Being able to zoom out and consider things from a market perspective and avoid blind spots that innovators are prone to.
Strategy For Product
Product-Market Fit (PMF) + Diffusion of Innovations [#014]
Find a sharp enough entry point: rough-and-ready product targetted at Innovators & Early Adopters
Why now - why, at this point in time, this need has surfaced
What changed that changed the feasibility of a product
Ease of use increases as we move beyond early adopters
How to find the Early Adopters
The best situation is that you are the Innovator yourself or you often hang out with them.
Short of that, you can do it through the correct segmentation.
Age is often an important demarcation for early adopters
Segmenting, Targeting, Positioning (STP) [#015][#016]
Segmenting - divide the market into many segments
Coordinate system, dimensions, altitude
Segmenting is not to choose the final market, but to choose an entry point.
Targeting - select one of the segments as the target market
Now (entry point) & Long-term (eventual target market, network effects)
Competitive Environment
too broad a target market leads to unbundling
When choosing T, you must have product design, marketing efficiency, organizational ability, and capital efficiency in mind.
Positioning - form the cognitive connection between the market (demand) and the product (supply)
T is more focused on demand and customers while P is more focused on supply and products
Effective marketing is one that can quickly associate T and P.
Price, Product, Place, Promotion (4Ps) [#017]
Price > Product > Place > Promotion
STP should connect with 4Ps
e.g. your product decisions strengthen your positioning in your target segment.
4Ps are a combination
e.g. the price that people pay should correspond to a certain expected product experience
Internet 4Ps [#018]
Bits vs. Atoms
bits travel a lot faster
bits have a close to zero cost of replication
bits are programmable
How It Affects the 4Ps
In traditional industries, all the 4Ps have their job to do and they're well separated.
For software, since the marginal costs are extremely low, the price can be compressed even to 0. When the price is 0, it’s Promotion by itself.
Because bits are programmable, a widely distributed free software Product can become Place or Promotion and earn from those activities.
Many powerful business models can be simplified as making one of the 4Ps 0 and instead charging from another P. The Internet greatly increases the possibilities to do so.
Strategy For Operation
Tiering [#022]
No single product can satisfy all the needs in its category, and no single tiering (i.e. product mix) can satisfy all the needs.
Two Types of Tiering
One Product, One Tier
The danger is a disruptor eating into your market segment
Multiple Products In One Tier
The danger is chaotic product mix and cannibalization
Tiering & Consumer Perception
When a brand doesn't form a sharp impression in consumers' minds, the consumer recognition of that brand would go down. That declined recognition would slowly make room in the STP segment and let a more sharply defined company occupy that space.
More Subtle Tiering
Coupons (price differentiation)
Membership
Clients Tiering for Software Companies
For B2B software companies, the most profitable segment is the “waist“ (mid-sized) customers
Categorizing (The A/B Sides of the Internet) [#023]
A - Supply And Fulfill Online
A1 - Visible to direct correspondence
WeChat, WhatsApp, Line
A2 - Visible to friends, friend’s friends
Facebook
A3 - Visible to everyone, followers see first
Twitter, Weibo, Tiktok, Kuaishou, Instagram
A4 - Visible to everyone
Toutiao, Google, Baidu, Tencent Videos
B - Supply And Fulfill Offline
B1 - SKU-based Supplies
E-Commerce, Marketplaces, Hardware
B2 - Location-based Services
C stays, B moves
Delivery, On-Demand Services
C moves, B stays
Group-buy, In-store Services
C moves, B moves
Ride-hailing, Bike Sharing
Cross-Cities
Hotel, Travel, Plane/Train Tickets
Categorizing & SuperApps
Categorizing determines which products can be made into one app and which can't.
Needs
Needs > Requirement > Demand
Needs is the basic motivation of the users.
Requirement is the product design considerations based on those needs.
Demand is the quantity demanded by the market once the product is made, and it's usually used in tandem with the quantity supplied.
Characteristics of Needs [#025]
The Unsatisfiability of Needs
Technologically Feasible > ROI Positive > Returns Over the Cost Of Capital > Can Support A Competitive Firm
The Time-Variability of Needs
Needs of individuals are perhaps always changing; it’s scenario-dependent.
For the whole human species, needs are everlasting. But the quantity of a need changes according to the overall societal conditions.
On a human desire level, needs are already written - the need either exists or it doesn't. But the intensity, prevalence, and feasibility are affected by many factors.
The window of opportunity for the great needs is like lightning in the sky. It is the moment when the positively and negatively charged clusters penetrate the air. At least one of the charged clusters needs to be in motion - either the need itself or the feasibility to satisfy it.
Two types of needs.
Bottlenecked - the needs have always been strong and prevalent but it is difficult to realize them.
Catalyzed - although the needs have always existed, their intensity and prevalence have become greater in recent times.
How to Identify Needs [#026]
Study the past successful failures - those that gained traction or almost made it but ultimately failed
All the great needs have been attempted by people in the past
The prevailing method of realizing needs at any point in time bottlenecks the needs being satisfied to the easiest-to-realize needs of an appropriate group of the population. In the next iteration, the realizable needs achieve a breakthrough, and the serviceable population expands.
The Microscopic Needs [#027]
Rarely can users tell you what their needs are. Even though they may say they want certain things, they may be thinking in terms of “supply” - they already have the solutions in mind. It’s no different from the ideas that a product team or higher management think will work.
On user research:
Beware of confounding variables. e.g. Hawthrone Effect
Most of the time, you can only guess what people’s needs are. Therefore, the accuracy of your guesses is very important.
One way of guessing is to offer options for the product features and based on people’s selection of the options to deduce the underlying need.
How to listen to customers
In the early days of building a product, it’s probably futile to ask people who don’t use the product why they don’t use it. The more effective method is to ask the people who use the product.
Demand & Supply [#028]
As products scale, or for B2B products, getting the demand & supply relationships right is critical. Sometimes, teams even have a strong incentive to get it wrong.
The supply and demand of things are affected by price (i.e. price elasticity)
Factors affect the demand-supply condition in an industry
Space [#029]
Time [#029]
Whether to develop a certain organizational competency within the firm or not depends on the characteristics of your industry.
e.g. If your outsourced your business analytics and R&D capabilities, when industry changes actually come, you don’t have good people who can respond.
Macro or micro level
The demand-supply condition changes slowly in the retail industry on the macro level (i.e. decades), but fast on the micro level (i.e. seasonal).
Segmenting [#030]
Usually, the high-end segment has an abundance of supply while the low-end segment has a shortage.
Regardless of whether it’s an oversupply or undersupply, in the high-end market, both supply and demand have a greater elasticity (more responsive to price change). In contrast, on the low-end, both demand and supply are more inelastic (i.e. things tend to be necessities).
The Hierarchy of Human Vanity
Necessity → Differentiation → Showing-Off → Class, Prestige → Non-monetary resources → Status, Tradition, Culture
Non-market Factors [#031]
They may cause some markets to be artificially imbalanced in terms of demand and supply, but these imbalances may have their reasons to exist. e.g. we don’t have the resources to satisfy a need unlimitedly. We’ll need to adjust accordingly to the context.
Online vs. Offline [#032]
The advent of the Internet industry and its development has broken the demand and supply equilibrium of the past. As it’s being broken, a new equilibrium is built with new business forms.
On Business Classics
Industry Chain [#008]
Smiling Curve
Porter’s Five Forces
The Game between Upstream and Downstream
Porter’s Three Generic Strategies [#010]
Cost Leadership
In the Internet age, products without the same scale just can’t deliver the same user experience. Cost leadership in today's context should be Experience Leadership powered by Network Effects.
Differentiation
With Internet products’ ability to offer personalized experience (i.e. each person gets his own product), the room for differentiation is greatly compressed.
Focus
Internet companies have a greater ability to operate multiple differentiated products as compared to traditional companies. It almost doesn’t matter if a company is focused on not. (i.e. there are too many strong scale/network effects)
What’s most important is the company’s core competence (i.e. A/B Sides of the Internet)
4Ps [#017]
4Ps in the Internet Age [#018]
Disruption Theory [#030]
Christensen probably didn’t consider segmenting. High-end disruption is real.
Books Mentioned
Marketing (STP, 4Ps)
The Innovator’s Dilemma (Segmenting)
The Pyramid Principle (MECE mental framework)
Product Strategy
Needs
The Salmon of Doubt (Three rules of technology)
The Selfish Gene (altruism)
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