You can’t solve
a business problem
without providing
customer value
In our latest Up-Close interview, we speak with Lissa Rao, Chief Product & Growth Officer at Hostelworld.
From your perspective, what makes a great product leader?
Reflecting on my 17-year journey in product management, I believe that well-rounded expertise has been crucial to my success across different industries, roles, and levels. As a CPO, I need to drive value across my entire organisation, which includes understanding every single product and team. For instance, Hostelworld, being a marketplace, involves managing B2C products, B2B products, Zero to One products, and optimisation products across different maturity scales. A great product leader must understand all these facets, including shopping funnels, conversion rates, and revenue per customer for B2C products. This means knowing how to get customers to buy, increase purchase frequency, and boost user acquisition and retention. For B2B products, understanding the supply side is essential. Successful end-to-end product management requires a well-rounded understanding of various product types and maturity stages. Scaling a product from zero to one is a significant leap in expertise, and it's crucial to teach these skills to your teams. Optimising products involves experimentation, testing, and user research. The best product leaders need a broad knowledge base, especially in more senior roles such as a CPO. They must understand different types of products and expertise within products, and how to scale them across the maturity curve. Applying best practices from experience across multiple industries is essential to drive success throughout the organisation.
Regarding stepping up from a Director or Product Leader to a CPO, how can one gain exposure to the different parts of what's important for a CPO?
I think that's a really good question because people often run into that issue—they don't get the exposure until they reach the role. However, there's a lot you can do to prepare. Every product person will likely say that when interviewing a product manager, they look for curiosity. You need to be able to look beyond your own silo at every level and think about how your product works with marketing. My role now encompasses both product and marketing. I have experience working closely with marketing, but now I lead it. It's crucial to have the curiosity to understand, "How do I drive traffic to this new product?" At every step, you should understand the end-to-end customer experience. This means gaining experience with all the different crafts around you and understanding how things work more holistically. It's not just about saying, "I'm a director; I only care about my remit." As a director, you need to know end-to-end what’s happening with your product. You should understand what other products in your portfolio your consumers are interacting with, which might increase adoption or cannibalise your product. Thinking about these interactions is key to gaining exposure to a CPO-level role. While you may have less ability to drive this, understanding these connections is crucial. Data literacy is also huge. Understanding core business drivers, whether they are in your area or not, is essential. If your product isn't driving towards a core business driver, consider what other ancillary or complementary goals it could support for another team. So, ensuring you understand the commercial drivers across your business is vital. As a CPO, you need to know the entire business and how your portfolio fits into it and you must understand the key levers for monetisation, revenue, retention, and conversion. This understanding can be developed in more junior positions if you have the curiosity and drive to grasp the end-to-end product you’re delivering, and the overall company remit. Gaining these perspectives is really helpful.
We’ve previously discussed how integral data is to your approach. Do you feel it's impossible to do product management without data, and just how important is it?
Indeed because if you manage a product without data, then you are essentially guessing. These are expensive guesses because you’re working with tech teams to deliver code for features that may not be necessary. Without due diligence to understand the total addressable market for a product, you could spend hundreds of thousands of euros on something that ultimately doesn't justify the investment. From a business responsibility standpoint, I expect product teams to use data to ensure they are focusing on the right things. Data is crucial for determining if something succeeds or fails, knowing when to pivot, and confirming whether the product meets the customer's needs. Without data, you can't answer any of these questions effectively. This doesn't mean that user research and customer surveys are not valuable—they absolutely are and I'm a huge believer in user research, but you need both quantitative and qualitative data. Without both types of data, you're really struggling to make the right decisions for the business and the products.
“You can’t solve a business problem without providing customer value. Due diligence helps you figure out the customer value your product provides, rather than just pushing a solution you love.”
How then has data played a role for you at Hostelworld in your first six months?
One aspect of Hostelworld that has impressed me is the abundance of dashboards, KPIs, and metrics, as there are more than I would expect for a company of this size. There is a clear understanding of how different metrics work together, which metrics may conflict, and who is responsible for driving each one. Organic traffic is handled by a different subset of my team than paid traffic, and adoption and user acquisition are managed by yet another team. The data helps us identify opportunities, such as where we can grow a channel from 2% to 5% or increase user retention. A significant part of my ramp-up has been understanding the business fully, both in terms of the product and experience we provide to our customers and how we are performing today. Drawing on my experience from working at large companies with best practices, I can benchmark where I think we can be versus where we are. This approach helps identify opportunity spaces to focus on.
What's the most important thing you've learnt about the mistakes growth companies make in products?
Consistently, the biggest mistakes I’ve seen are the result of a lack of due diligence. Upfront due diligence means considering an array of factors and ensuring that one doesn’t just look solely at the impact versus the effort or the addressable market and adoption rates. There's often this great idea of building an amazing product that can reach many customers, but what if only 10% of the customers adopt it in the first year? That’s leads to a very different understanding of the opportunity space.
Another major contributor to product mistakes in growth companies is that as a company, you’ve become too committed to a specific solution. You fall in love with a solution without considering whether it solves a customer problem or a business need. For example, if revenue is down and you decide to start charging for something without adding customer value, it won’t gain traction. You can’t solve a business problem without providing customer value. Due diligence helps you figure out the customer value your product provides, rather than just pushing a solution you love.
Expanding on your point about not being able to solve a business problem without addressing customer needs, can you share an examples where you have solved a business problem by addressing a customer need?
If I look at Hostelworld for example, there's a clear desire to solve customer needs. Solo travel is the majority of bookings happening on Hostelworld today. Often, solo travellers want to find people and socialise, seeking accommodations that facilitate meeting others. From a business perspective, Hostelworld also wants to lower marketing spends and create an ecosystem that provides value, encouraging repeat visits. I see that the Hostelworld team has done really well in building a social product that aligns with these business needs by meeting customers where they are. It's a unique shift in the market, helping to drive the core economics of customer acquisition and retention with that same product. This illustrates how every product you build should address both customer needs and business problems together.
Can you tell us a little bit more about the Hostelworld product and how it is solving this customer need?
Hostelworld is solving the need of how to meet people while traveling. In the hostel accommodation segment, there’s a social angle as well. However, there’s no facilitation in terms of how you truly meet someone, talk to them, or figure out who’s going to the next destination. Hostels often involve short trips to multiple locations. The Hostelworld product is creating a social network. After you've booked with hostels and downloaded the app, you gain access to all the people who will be in the same location. Even before you book, you can see signals about what kind of customers will be there, their profiles, languages spoken, age ranges, and interests. Hostelworld has built rich profiles, so you can see, for example, if there is an individual in this hostel that you’d like to connect with based on similar interests.
The app includes functionality to group people based on activities like going to a restaurant or bar crawling. It allows users to ask others in the same hostel if they are interested in hanging out. We see people making connections through the social platform, which then often appear on Instagram, where people share their experiences. It’s rewarding to see that we are solving a real customer need and a business problem simultaneously. I’ve seen this work quite well. While I haven’t been a regular user recently, I used Hostelworld when I was younger, and it’s incredible. I would have loved this feature back then. The idea presumably came from recognising a gap in the market, as no one else is doing it.
Do you believe that you need different skill sets for different stages of business and business growth?
There will always be core competencies to look for when bringing on product people. These include curiosity, data literacy, and craft expertise, such as quickly validating ideas and conducting experimentation. These skills are essential regardless of the company. However, I do think there is significant variance in the soft skills needed, depending on the size and stage of the company. In big companies, the ability to influence without direct power is crucial, whereas smaller companies are more decision-oriented and move faster, so you will probably have greater autonomy. Therefore, I believe stakeholder management and influencing without power become increasingly important in larger organisations. In contrast, smaller companies require a level of scrappiness, as resources are limited so you won’t have a 10-person research team to use. Therefore, a product manager in such an environment might need to play multiple roles, such as conducting customer interviews and quickly testing the riskiest assumptions, even stepping into marketing with strategies like painted door tests on marketing landing pages. This adaptability and ability to quickly validate ideas are vital in growth or scale-up phases. Larger, post-IPO companies by comparison often have an in-depth understanding of their core products and offering, so will tend to focus more on optimisation and exploring additional verticals or adjacent spaces. Thus, commercial understanding for example is going to be important. So, there are definitely some soft skills that do change depending on the company's type and product maturity. All that to say though, when hiring, lack of specific experience isn't a deal breaker if candidates possess curiosity, drive, and core competencies. People can transition successfully between big and small companies. The key is having the drive to do what needs to be done and taking on the role of a product manager to achieve those gains.
Expanding on the hiring process, what are the key things you look for?
As mentioned, I definitely look for people who have curiosity. For example, if I'm interviewing someone and they haven't looked at the product or considered what the product is doing in the space, that lack of curiosity is a significant concern. They should understand the product in a way that shows they can contribute meaningfully. If they haven't examined the product, it raises a red flag because their goal should be to put themselves in the customer's shoes and figure out how to improve the product for the business, the customer, or both. Additionally, I value structured thinking. With products, many issues are complex, like conversion rates. How do you start breaking that problem down? Do you think about it in terms of phases of the shopping journey, customer cohorts, and different drop-offs within these funnel stages? What hypotheses might you have? It's crucial to have a structured approach to dissecting big problems or opportunity spaces into manageable pieces, whether it’s to build a product or just to understand the problem space before starting development. I look for individuals who can think through issues from end to end, break down large tasks into smaller pieces, and then take action.
