Three parameters to consider before hiring a PM in a high tech startup.
A startup is created around a product. An initial offer. Does that mean you need a PM from the start? The short answer is no. But if that’s the case, when should you do it? We have found three relevant parameters that points us in the right direction.
First of all we need to separate the function of product management from the role of a product manager. This sets a baseline for our discussion. Even though no role with an explicit title product manager exists the function of product management is still carried out.
The level of product knowledge among the startup team
In a young startup the PM tasks are done by the founders or the CEO. In the beginning the startup is the product and thus everyone should focus on the product. The PM focus should not, and in most cases cannot, be limited to one person. However, if no one from the startup team has any product knowledge to start with it could be a problem. The startup team should then consider to add that to the startup team, rather than hiring a PM.
Another aspect is neatly expressed by Steven Johnson,
“My rule is to hire a product manager to initiate the second product. The first product was the president's baby and it created the company. The second product is usually where things go wrong.”
The founders know what they want. A PM hired too early would just interfere with their work. Such a PM would have to ask for permission from founders or executives to carry out much of the work. In this scenario a PM won’t be sufficiently empowered to fulfill the role, and thus hiring a PM would be a waste of resources.
The workload of the product knowledgeable resource(s)
An indicator that it’s time to hire a PM is when the startup team is starting to lose the product focus. At some point, as the company grows, the workload of the founder (or executive) which carries out the PM activities will be too great. By then the PM activities will suffer. For instance the CEO will start spending a lot of time finding new talent, establishing company culture, creating a company vision and much more. There is no longer room for the product. Thus when the startup team is overwhelmed with more important tasks – it’s time for a PM.
The complexity of the organization
“The startup don’t need formal processes”, says the startup product guy Rich Mironov. And it’s probably true when the number of employees is low. Organizational charts and stiff processes won’t add any value to the business. But at some point, as the company grows, bottlenecks related to the product work will start to emerge. Customer requirements are coming from everywhere. Everyone have ideas. And most of all – opinions. The distance from technology to customer will increase as more specific roles are being filled. Managing this distance, gathering customer insights, understanding the product, prioritizing requirements. The list is long. At this point the product needs a champion.
But how do I know when the complexity is great enough and that point is reached? Mironov states “you’ll need your first product manager at 12-30 employees”. It seems to be the common opinion among product folks. It also seem to be where many successful high tech startups have hired a PM.
The startup team should not hire a PM from the start. The product focus is and should be among the startup team at this point. When the company grows the product work will increase and the startup team will start to be tied up with other work of higher priority. This is where you bring a PM to the organization.
“Hire a product manager after the first success and before the first disaster”, as Steven Johnson puts it.