Deep Tech Founders: Why You Need A CPO (If You Don’t Already Have One)
Written by Marc Rougier. Edited by Anya Brochier and Louisa Mesnard.
For early-stage, deep tech startups the fulfillment of a CPO role should be the first step after raising a seed or pre-seed round. Why is this so essential? Deep tech disruptions are born from outstanding tech skills: a strong CTO profile inevitably exists in a deep tech founding team. Founding a startup typically also includes business-minded (co-)founders who wish to develop and market said disruptive technology. However, businesses do not sell technologies, they sell solutions, they sell values. Product is what transforms technologies into values.
While there are examples of “product” CEOs or “product” CTOs, often, in deep tech teams who have been focused on developing technology, this role needs to be fulfilled by another person; the CPO.
The CPO translates the core technology of the CTO into a value that can be understood, bought and used by the CEO’s customers. Tech or business-minded founders can also have this product acumen. But more often than not, they underestimate the critical importance of the role — and have their hands full of too many other critical tasks to fully assume the mission of the CPO. Founders often optimistically assume that if they possess a working tech that delivers best in-class performance, and if there is a large market that could make good use of this new technology, then it ‘just’ takes connecting the two in order to be successful.
Well, the gap between the working technology and the target market is actually huge. Translating a core technology into a market-ready deliverable is the next critical mission for pre-seed or seed level deep tech startups. Hence the hunt for the elusive, yet so critical CPO.
The below playbook outlines in three practical steps the initial data your CPO must identify to lay the foundation for an effective and targeted product roadmap that takes your early-stage company from pure deep tech to a product-driven startup.
What’s the mission of a Chief Product Officer?
CPO (Chief Product Officer) stands as a company’s interface between the market and the tech. Per Product Plan, the official role of a CPO is to be responsible for strategic product direction, with myriad functions, ranging from, “product vision, product innovation, product design, product development, project management, and product marketing.” Furthermore, the CPO acts as a balancing counterweight, helping structure the overall team. For example, if your current team’s skill set is more tech oriented, the CPO will be more market-oriented and vice versa.
While the functions of this role vary, the CPO role is intrinsically connected to the market and has to have a clear sense of how to translate market requirements into specifications that the tech team can deliver. Strategy is a key part to all CPO roles: early stage companies’ CPO can deliver most efficiently by first nailing down (and delivering) the product positioning, then focusing on the product roadmap at a later stage.
The CPO role has a human element: while the mission entails a rigorous logical process, there are continuous exchanges, data collection, brainstorms and surveys involved in building out the product playbook. The CPO role connects as regularly and efficiently with internal team members (scientists, dev team, sales team, customer success) as with external stakeholders (prospects, clients, partners, analysts, KOL). Multi-cultural communication skills and strong capacity for synthesis are key components to the CPO personality. Sometimes the CPO’s arrival can feel like a shock to a tech-heavy team, but, if the CPO is asking the tough questions, that can be a sign it’s the right person for the role.
Once you’ve identified the right candidate, what should the CPO do first?
Step 1: Outline your Why
What is the essential purpose of your product?
The seminal act of a product journey, identifying the mission of your product, is akin to defining the DNA or raison d’être of what you’re building. As the founder, often the ‘why’ seems obvious — otherwise, why would you start this venture at all? However, you must ask yourself the question: is it obvious to others? The first task of the CPO is to translate your product mission so it’s equally crystal clear to others as it is to you.
If the ‘why’ of the product can only be understood by its founders and a handful of experts; then it’s probably not the right product.
While it can be tempting to develop an internal language to describe your ‘why’ (we understand, it’s special!), this language needs to translate to both your team who knows the product inside and out and also to external stakeholders that will begin to engage with your company in the wild. Extracting the essence and distilling this ‘why’ into recognisable and widely-known phrases and expressions, taps into the universal lingo that instantly makes your product ‘why’ clear and accessible to new audiences. If the ‘why’ of the product can only be understood by its founders and a handful of experts; then it’s probably not the right product. If your ‘why’ immediately resonates with a wider audience, you’re good to go.
Step 2: The PP x ICP x USP matrix
This defines your targets: Pain Point x Ideal Customer Profile x Unique Selling Point, aka, knowing what problem you solve, for who and how.
Step 2.1: Identify the Pain Points your product addresses
Two main forces drive buyers’ behavior: inspirational and rational. For B2B deep tech companies, you have to look at rational behavior. These rational decisions are based on identifying a product that solves a clear, real-world problem. Therefore, the next most important task of the CPO is to describe these clear pain points.
When developing this list, keep it short and real. A product that solves a long list of problems is likely not the best solution. When developing your list, keep the problems clear and measurable (e.g., use tech and ops KPI, financial figures, real-life examples and use-cases, including quotes and anecdotes that accurately describe the issue). When reading this list, it should evoke pain! Socialize this list with people you believe could consume such products, and measure how acute their pain is: is it a business-threatening issue, or is it a mere question of comfort? This will tell you if your product is a must have or simply nice to have.
After you’ve identified the pain points, develop a hierarchy — you need to know your priorities because you will not be able to serve them all at once. Focusing on the famous low hanging fruit is key in early stage execution, so you will inevitably have to arbitrate amongst several legitimate options. Ranking can use several criteria, leading to different outcomes. Here are a few examples:
- Criticality. The more severe the pain, the higher the value of the solution
- Pervasivity: Could this be a mass market or is it a niche opportunity?
- Accessibility: If the pain point is severe but the respective clients aren’t accessible (for reasons such as: geography, regulation, cost of sales, etc.), it may qualify as a market opportunity while not being a good candidate for your earliest stage
For the sake of pragmatism, it’s usually better to begin by focusing on severe pain points faced by accessible clients — even if niche — rather than solve mild pain on the mass market or try to solve the pains of hard-to-access clients. Score your first successes, demonstrate your value and you’ll find the way to scale to the larger market later.
Step 2.2. Know your ideal customer by their first name
Who’s facing the problem you address and who’s paying to solve it? Knowing both the user personas and buyer personas (or Ideal Customer Profile, ICP) is essential. Initially, identifying the user persona, i.e, the persona who is currently experiencing the pain the product will solve, who will use your product and understand its value, is the priority. Later, you will also have to identify the buyer persona, who may or may not be the same as the user personas. Eventually, in order to be able to sell the product, you need to know both personas: understand how your product is used and its value is perceived; and how you can insert it into the value chain, up to a purchase order.
How to describe your personas?
- Describe both a segment (eg “Large Enterprise in the Finance Industry in Western Europe”) and a role (eg “CISO”)
- Be as precise as possible! These details can include explaining how your personas feel the pain you want to solve, in which precise context/use-case they experience it, how they alleviate or mitigate it without your product, how much they spend to solve it
- Treat your personas as humans, become intimate, give real-life examples
- Question, challenge, measure, compare, analyze… throughout your processes, on an on-going basis, from initial marketing discussion to in-product data collection and customer support
The description of your personas will evolve as you expand your market knowledge. Each of your contacts, from earliest discussions to every stage in your CRM, should have a “persona” tag: it’s an essential key to your understanding of your market.
Why is identifying your personas so important?
- Priority management: You will probably not be able to efficiently serve all personas at once. Mastering your personas in order to focus on the most accessible ones, for which you solve a severe pain, is therefore key to your early stage execution and hence product strategy.
- Personalisation: different personas expect and require different messaging, features, support, pricing, UX, distribution channels, etc. One size rarely fits all, especially when it comes to B2B GTM and product strategy.
Tip: it’s better if the person who fulfills the CPO mission in your startup embodies, or is culturally very close to your target persona. Understanding the context and the problem of your persona first-hand greatly helps.
Step 2.3: Spell out your product value proposition
This step takes your identified pain points one step further: by solving them. It’s time to not just identify the pain points, but spell out how the product will solve the problem — and convince your audience that it indeed does solve the problem.
Note: Occasionally, a pain point needs several value propositions to be solved, or, reciprocally, a value prop can solve several pain points..
For example:
If your product:
- consumes less hardware resources because your algorithm is leaner
- and consumes less human resources because your UX is simpler
- and consumes less human resources because your AI autopilot automates more tasks
=> then you solve one pain point: “high cost” (by reducing both hardware and human resources needs); thanks to three different value propositions: leaner algorithm, simpler UX, smarter automation.
Reciprocally:
If your product offers a “smarter AI” (= your value prop), then it may solve two pain points:
- It automates some processes and consequently consumes less human resources, thus reducing the overall cost
- It delivers faster and better results than humans in some identified use cases therefore offering a better level of service, better business performances
Step 2.4: From lists of data to Product Target
You have now identified the pain points you solve, the personas who are experiencing this pain and the value your product proposes to said personas. Your CPO will now create the mapping between those three lists by asking this one question:
What pain points apply to what persona, what value proposition resonates most (is valued most) per personas?
This mapping will drive your product positioning and your priority planning; it defines the precise 3-dimensional space (what, for who, how) where you should focus your forces, where you will enter the market with a killer proposition. It helps focus your marketing message to the right ICP, it helps drive the product road map and the R&D investment to developing the next most valuable, more desirable, more value-creating feature.
Note: The impact of a CPO on your DNA. In the final mapping stage, go back to your ‘why’ and assess your value props against your DNA. This helps you measure how relevant the company is to the solutions you have identified:This customer discovery journey may either affirm or challenge your initial plan. If the latter, you might need to adjust your plan, all the while making sure it is completely aligned with your company’s DNA. Market-driven agility is key. And if what you learned during this process is not aligned at all with your DNA, then you might have to pivot… but this is another story.
Once Pain Points, Personas and Value Props are well identified and prioritized, and all are aligned with your mission and DNA, you are capable of building a product strategy on rock solid ground.
Step 3: You are likely not alone out there
If there are pain points, there are competitors. Knowing your competition and your differentiation is a must.
Building your competition matrix requires a clear understanding of the combination of “pain points x ICP x value prop”, as you mapped in the previous steps. You will assess your competition accordingly: do they address the same pain points, do they serve the same persona, do they offer the same value prop? The idea is to identify weak spots in your competitors’ value proposition and uncover acute pain points that your competitors do not well serve.
Reminder when you assess your competition: B2B customers will not move from an established supplier to your product if your value prop is only marginally better. Displacing an existing product that’s already integrated into an operational workflow is hard! Your value prop must therefore be compelling, a quantum-leap improvement from its nearest established competitor, otherwise it is not worth the risk and cost to the user to switch.
Not all combinations in your matrix will be light-years better than your competitors. Using this matrix helps the CPO pick their battles, helps show reasoning to the tech team for driving a specific product forward: selecting (only) the fights you can win, prioritize your efforts on the combinations in your matrix where you indubitably disrupt the status quo.
Reminder when you assess your competition: B2B customers will not move from an established supplier to your product if your value prop is only marginally better.
The competitor matrix completes the product mapping in its environment: with these steps, you now know exactly what you solve, for whom, and how much better you are compared to alternative solutions.
Warning and tip: knowing the competition can be a full-time job; it’s a dangerously time-consuming undertaking. The early stage deep tech startup CPO is not expected to deliver Gartner-level market analysis; entrepreneurs must also have faith in their mission and execute with focus and momentum and occasionally take decisions without the full picture.
The CPO-driven competitive analysis must therefore be pragmatic: it’s “just” about understanding how the product is relevant in a given competitive context. The tip is: while conducting customer discovery (and for that matter, during any contact with external market stakeholders), always inquire about alternate, existing solutions : if your prospects have a pain point, they likely have already engaged with your competitors, searching for other solutions; and if they are interested in you, they likely have relevant intel to share.
Conclusion: Toward Product Market Fit
You raised your pre-seed or seed. You’ll be able to successfully raise your next round, develop your vision and execute your plan if you now demonstrate Product Market Fit (PMF). The initial mission of the CPO, described in the five above phases, helped you identify and focus on a relevant initial product that delivers a compelling value to well-identified customers.
Now it’s time to bring this identified value to the target customers. You will learn again in the process (your first clients are design partners, after all). You’ll have to refine your priorities and once again adapt your plan, your pain point / ICP / value prop mapping.
You will then successfully sign a handful of clients. If and when these clients belong to a common persona with a common pain point who equally value your product proposition, congratulations, you’ve reached PMF. It’s time to move to the next level. Your CPO will still be very busy figuring out the road map, ranking numerous options, focusing on optimizing your capacity to grow, toward the grand vision of your product’s ‘Why’.
