Shifting Our Hiring Mindset
Hiring Product leads in a down economy
Startups face headwinds when hiring for crucial functions: the clock is against us, we can’t afford market rate for the seniority levels we need, we’re hiring people for disciplines we ourselves don’t practice, and so on. The best candidates provide high leverage: fast ramp-up, high productivity per unit time, additive domain knowledge to the existing team, etc. In short, startups need people who can produce more value more quickly and sustain that productivity for longer periods of time. We look for resilient, internally-motivated talent with enough experience to avoid unforced errors and see challenges before they arise.
A New Reality.
But in the past decade, many founders have chosen to invest in lower-leverage, higher-potential talent, especially in Product. I cannot count the number of times I’ve been asked for mid-career PM referrals who have the potential to “grow into” a CPO role. This strategy gives founders the ability to shape their future team while spending less money. A grow-to-CPO hire also gives founders more time filling the Product function, staving off the anxiety of handing off the future of their baby to another person (debatable whether this is a good thing). This runs contrary to the “more value more quickly” philosophy outlined above, but when tailwinds produce inexpensive growth we are able to take more calculated risks as we bet on our own success.
These tailwinds are gone. Startups that found success in the past decade are tasked with retooling around new economic realities. Failing to increase our team’s leverage becomes a risk to meeting milestones. Hiring plans increasingly expect Product leads to be “player coaches” rather than grow into the role. And startups have to hire this suddenly-more-senior person on a reduced budget as runway concerns mount.
The shift in mindset is dizzying. Anyone under 35(ish) has spent their entire career in an easy-money, tailwind-heavy economy. Younger founders lack the lived experience to navigate the shifting expectations of the new market. Even more experienced founders have built their businesses around the rocket fuel of the last decade, finding themselves in quite a pickle as the economy has slowed down. Leverage in hiring was already best practice; in this new economy, it’s a non-negotiable.
A New Challenge.
In the case of Product, we must zoom out from “building the thing,” mastery of which is reduced to table stakes in this new model. “Building the thing” has always been a solve for the higher order problem of generating revenue and sustaining growth. By over-indexing on Product leads’ ability to organize roadmaps and facilitate efficient builds, we risk obfuscating the leverage we need in our first hire. As a result, we set incorrect expectations for the role and lay the groundwork for conflict as our build-centric Product lead fails to deliver the growth the business requires.
The need for Product to drive business growth does not obviate the need for building the product, however. This is where the idea of a “player coach” comes in: the Product lead “plays” as an individual contributor and “coaches” as a strategic lead for growth. Seasoned Product leaders are all nodding right now; for many, this is not a change and not a surprise. It’s how it should be. But the conflict between the founder desire (need?) to be close to the product and the need to empower Product leaders to make risky decisions makes it difficult for founders to design or fill this role with an appropriately seasoned leader. The “grow into a CPO” model allowed founders to avoid this transition, at least for a time. The high-leverage CPO needs this empowerment to be effective.
Unfortunately, beyond the aforementioned lack of leverage, the lack of Product empowerment leads founders to fill growth roles without the understanding that the product itself drives growth, and thus Product as a function needs be in the room at all times. When growth teams (marketing, sales) are managed within a separate revenue organization, conflict often ensues. We can avoid this by starting with the assumption that our Product lead is responsible for growing the product they build. They are then committed, not just involved, in the creation of the revenue organization. They’re part of it. They are it, for some companies.
A New Hiring Model.
Ok cool. So Product leads need to bring more to the table in a down economy. But we also have less money (and time) and fewer tailwinds available to meet our goals. Growth is more expensive than it was, or simply slower. So how the hell do we hire this increasingly unicorn-sounding individual in 2023?
You don’t.
(Bear with me)
If you’re limited by runway or need an immediate solution, starting a talent search is not the right approach. And if the salary requirement for a seasoned Product lead seems hard to justify against the growth you’re currently showing, it’s likely you’re not ready for a full-time CPO. The leverage they bring will be offset by the added burn as they develop strategy and carve out space for Product within the org. This doesn’t tick either box: we need to find a way to activate a Product lead’s full potential without waiting for a full talent search or an expensive ramp-up period.
Luckily, there are methods of standing up the Product function without hiring a full-time Product lead. Sure, we need one eventually, but we need to “earn the right” to make the hire by demonstrating growth in the meantime. It seems like a catch-22: we need a Product lead to supercharge growth, but we need to show growth to justify a full-time Product lead. The solution lies in ditching the “full-time” modifier. We have several solid options for standing up the Product function while we justify a future hire:
Hire a fractional CPO. An increasingly popular option, a fractional CPO leads your Product function part-time. In theory, a fractional CPO is the best of both worlds: a more affordable, high leverage hire whose role is to dedicate themselves to all the Product needs the company is ready for. It can also be a great way for a company to audition a potential full-time CPO. In practice, a fractional Product lead is best deployed on “special projects” that can be done asynchronously from the rest of the team. Think: long-term strategy or zero-to-one builds for brand new products. As long as the expectation is clear, however, a fractional CPO can effectively introduce the Product structure while moving the needle.
Train a teammate. Marketers, Customer Success-ers, and Designers have deep product knowledge and work cross-functionally across the business. They produce product spec-like artifacts (design prototypes, press releases, etc) and already wear many hats. Training courses last ~3 months and cost ~1 month’s salary. As a player-coach, a senior Marketer or CS lead develops growth and product strategy while contributing to growth activities daily. Agile ceremonies and SDLC concerns are left to the Engineering team. A designer is able to do much the same albeit with more daily exposure to the Engineering activities.
Work with a consultant. There’s a reason product and growth consulting are so common. If done right, there’s no beating the efficiency and flexibility of contract relationships. The “if” in that statement is doing some heavy lifting, though: companies without Product leadership frequently lack the framework to evaluate their Product needs, thus putting the effectiveness of a consulting engagement at risk. Some consultants (hi) specialize in exactly this problem: engagements are structured to identify key challenge areas, develop strategies to address them, and train or coach the staff to execute effectively. In this model, the consultant delivers sustainable growth as well as a built-out Product function. The final deliverable is a hiring plan for a future CPO: with a leader incoming, the consultant has worked themselves out of a job.
Considerations.
When determining which path is best for your company, it’s helpful to consider the leverage you’re giving up in the process.
In the case of training a teammate, you’re reallocating bandwidth, not creating new bandwidth. If the organization can handle that shift, this is a great way to develop talent without falling into the mid-career PM trap. If it can’t, you’re just creating a new bottleneck.
Hiring a fractional CPO comes with some of the same risks of a full-time hire: you’re looking for personality, style, and domain fit. Many Product leaders take fractional CPO’ing on as a temporary gig, too: be sure to agree on an expiration date ahead of time.
Hiring a consultant is the most expensive option but also the most flexible and fastest to spin up. You can “date” multiple potential partners at once and set clear, time-boxed deliverables. Seasoned Product consultants will have domain expertise in multiple areas, making it easier to find a fit. It can also be helpful to work with multiple people: strategy creation benefits from multiple perspectives and more sets of dedicated hands. A consultant is able to parallel-track more efforts (within reason) to create the leverage we seek more quickly.
Conclusion.
Many VCs are hopping on the fractional and consultant bandwagon in hopes to extend runways for companies hit by the downturn. It’s an expansion of an existing service model for non-Product/non-tech founders with limited software creation experience. While it may make some of us tech-y folks uncomfortable, we are now in need of the same support as our business-founder peers. It’s no longer enough to rely on our network to materialize a Product lead “when we’re ready.” We have to proactively approach the scaling of our business earlier and with more intention than before. Engaging outside counsel from a fractional CPO or a consultant can accelerate our growth while providing us with the tools to scale in a new economy.
Sam Gimbel is a former co-founder of Clark (acquired 2019) and VP of Product at Clover. He consults with startups to take the risk out of creating a sustainable product function within their organizations.