PMMs, the Economy & Capital Markets

Q: What does a PMM need to know about the economy? 
A: Only as much as it matters to each of your customers.

It’s been an exciting couple weeks in the capital markets. 


  1. the ‘stock’ market is still up 9.3% over the last year (emergency! Bread, milk, toilet paper!), and
  2. the U.S. economy’s is still growing, though the rate of growth slowing

The consensus narrative suggests that the Coronavirus/COVID-19 is what’s moving the U.S. equities market 10% lower in the last two weeks, and may send the economy into recession. Your humble narrator suggests that the equities market is smarter than the financial media, and the Coronavirus has merely popped the bubble of the Federal Reserve Bank propping up market speculators long after a truly ‘free’ market would have sent the market lower as the economy’s growth rate decelerated.

So what does a PMM need to understand about the economy? The way it affects your customers. 

Put the Economic Cycle to Work for PMM

Your customers are in businesses that are either pro-cyclical (they do well when the economy’s expansion is accelerating) or anti-cyclical (they do well when the economy’s expansion is slowing). 

For a product marketer, this affects which messages will be more compelling to your customers. In an economic acceleration, companies are relatively more focused on taking market share, expanding the pie, increasing revenues even at greater cost. In an economic growth deceleration like the last 5 quarters, a message about getting more bang for the buck, increasing margins, becoming more efficient, etc. will yield relatively greater interest. 

How are you adjusting your storytelling to match the current economy?

SMBs: Canary in a Coalmine

But how do I know the economy’s current situation? If you are lucky enough to have small businesses/SMBs in your customer base, you have an amazing advantage, because your SMB customers tell you about economic conditions more quickly than large diversified customers (or the larger equities markets they are part of). So how do you track smaller companies? The Russell 2000, the stock index weighted to smaller companies, is down 4.8% in the last year. What does that tell you? It tells you the economy has been slowing its growth in that time. 

Tom Siebel famously said he could see around corners. For the rest of us, our SMB customers help us see around corners.

Pro Tip: What to Do with What You Know about the Economy

Look at your messaging. Look at the above-the-fold section of your home page. Is it talking to your customers more about revenue expansion? Or more about doing more with less? Work with your web team to A/B test home page content that is more fit for where the economy is. See if it performs better, or worse?

Sidebar: the Economy is Interesting

While the above listening to customers and experimenting with messages is likely to help your company drive more pipeline, I’d suggest that the economy is one of the more intellectually interesting topics for your curiosity and your brain’s learning. 

The economy and the capital markets are just large aggregates of human behaviors. Humans are what we are experts in, as PMMs. You can learn good patterns for all human behavior by studying economies and markets.

Case Study: Challenging Frames of Reference with the GDP Number

Economics also has one of the best examples of how frames of reference can be flawed. Challenging your frames of reference will make you smarter.

The GDP calculation is worshipped by the financial markets as a pure truth about the economy, but did you know that U.S. GDP counts reduced consumption of imports as growth? 

Let me say it again: if the U.S. economy, which is a consumption economy, largely of goods produced outside the U.S., consumes fewer $ of goods/services from outside the U.S., the GDP calculation counts that as “growth”. 

Bizarre, right?

In Q4 2019, the U.S. GDP calculation showed 2.1% “growth”, but 2.0 of that 2.1% came from reduced imports. Is the frame of reference of the calculation flawed as a tool for understanding growth? (Yes) Should you challenge it in your thinking? (Yes) Challenging assumptions built into widely-held beliefs can help you see things more accurately, and make you a better PMM.

The Front Porch
Moss Beach, California

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