Should a Product Manager be one of your first 15 employees?

April 27, 2010

I was talking to a friend the other day who is a CEO of a 25-person, VC-backed, software start-up in the greater Boston area.  He was talking about the great Product Manager he just hired, which got me thinking…

When is the right time to add a Product Manager to a start-up?

In the early days of a start-up, all of your efforts are focused on creating the product and validating your product concepts with potential customers.  And of course, unless you have a very rich uncle or your own truckload of gold, there are the endless fund-raising activities.

So if you don’t have a Product Manager, who can act as the primary voice of the customer to ensure that you are creating a product that your customers will buy?   We all know that everyone in a start-up will help collect and communicate customer needs, but who will synthesize all of these needs into generalized product requirements?

Let’s consider some options…

In a typical start-up you have a CEO, CFO, CTO (or VP of Engineering), a few Sales Reps, around 5 Developers, an Office Manager (who also handles Admin and HR tasks), and an IT Specialist who keeps the network and computers going.   In other words, you have about 10-15 people.

It’s unlikely that the CFO, Office Manager, or IT Specialist could represent your customers — this is not their role and they will have enough of their own work to do anyway.

The Developers could potentially represent your customers — but their primary function is to create the product, so the more time they spend meeting with customers, the less time they will have to create the product.   And there is no guarantee that they will be able to meet enough customers so that they can identify generalized requirements.  So, this is probably not the best use of their time.

Likewise, the CTO is probably not the best choice.  Someone has to ensure that Development progresses smoothly.  This means sorting out architectural issues, planning the efforts of the Development team, and allocating tasks to individual developers.  The CTO could also visit with customers (either in-house or at customer sites), but this could decrease the efficiency of the Development team or elongate the schedule.   Some issues arise very quickly within a Development organization and they need to be resolved very rapidly — before their effect becomes wide spread.  So if a problem arises and your CTO is on a plane somewhere visiting a prospective customer, who will solve the problem?  And how much time will be lost waiting for a correct solution?

So, how about the Sales Reps?   After all, they have been talking to prospective customers about the product’s proposed capabilities, so they should have a good idea of what these customers think.   Right?   I’ve worked with a number of sales representative in early stage companies and they have one thing in common — they know how to identify a potential customer and convince them to purchase their product.  They have an excellent knack for telling a story so that the customer has a good picture of how the product will help them and so that the customer is completely convinced that they simply must have the product.

Sales Reps are also very much focused on the customer in front of them.  They know that every sale is about the relationship that they have with that customer — and less about whether the product does (or does not) contain some small feature.   Therefore, they tend to focus on the general capabilities that the product will deliver and may not even know all the individual features that the product contains, especially if the product is highly technical.   As a result, Sales Reps are not so great at synthesizing requirements from a group of customers into the type of generalized requirements that Development needs.

The only person left is the CEO, who is often one of the founders.  Thus, it is safe to say that the CEO really understands the value proposition of the product, what the company is trying to achieve, and undoubtedly they have a very good idea how much (or little) of the product has been completed so far.  However, these characteristics are exactly why the CEO needs to spearhead the fund-raising activities for the company.   After all, potential VC investors will want to meet the CEO so that they can determine if they have confidence in the CEO’s ability to delivery the goods.

And let’s not forget that the CEO is also the ultimate closer in many sales situations — the person that some customers will want to meet before signing their first contract.  In other words, it sounds like the CEO has already got one, if not two, full-time jobs.

Thus, I’m forced to conclude that a product manager is critical to the success of a start-up company and should be one of the first 15 people who are hired…

But then again, I’ve spent a fair number of years in various product management roles, so perhaps I’m prejudiced…


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