How to Scale a Product Team from 0 to 15

+ The Tech Wreck Is Turning Around

In Today’s Newsletter:

• The Tech Wreck Is Turning Around

• 🔒 How to Scale a Product Team from 0 to 15

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The Tech Wreck Is Turning Around

The tech market is turning around across the board - private and public markets.

Private Markets

On the private market side, we have none other than Carta to look to, which has made itself a must-watch with its constant stream of data. The latest drop, on Startup Valuations is a doozy:

The unicorns are still suffering. Series D valuations are 55% below where they were in Q1 2021. But Series A & Seed are already above early 2021 levels. Series C and D are headed the same way.

There was clearly a distortion in the growth equity funding market, with players like Softbank, Tiger, and Fidelity rushing in with all too much capital. But other than that slight hangover, tech funding - and thus hiring - Series C and below has burst back.

Most of the laid off people I’ve been working with land jobs at these venture-backed companies.

Public Markets

The big Tech stocks have been ripping and roaring, with the primary beneficiaries of the Era of Integrated Generative AI benefitting the most: Nvidia and Microsoft.

As a result, many companies that were laying people off just 6 months ago have now begun hiring. Nvidia, Microsoft, Google, Amazon, and Netflix all have been hiring PMs.

While the era of tech austerity hasn’t yet come to an end, it appears it may have taken a turn from the bottom.

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ICYMI - Some of my other writing:

• Tech: The Las Vegas Sphere (22M+ views 🤯)

• Careers: Code Interpreter Use Cases

• PM: Trudging Around in the Muck

Welcome to over 2,000 new subscribers since last week. My free Code Interpreter guide & Canva deep-dive are up next.

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How to Scale a Product Team from 0 to 15

With the turn in the markets, many of you are hiring PMs again. So this week, we’re diving into how to scale a product team.

In 2023, scaling up your product team still feels like a boogeyman. The market is slightly turning, and the budget is opening back up, but hiring and growing your org just doesn’t feel the same.

Post the Tech Wreck of 2022, the days of organization building PMs are gone. These days, product and company leaders are assessed on how much they can do with how little - not the number of people that report to them. 

The game of growing a product team from 0 to 15 has completely changed.

You need to have a much better reason to your grow your team these days. This applies as much at Series A as it does post-IPO (unless you’re a generative AI startup). Executives aren’t investing in a problem area. They’re looking for a high degree of confidence in the solution levers as well. 

So, this week, I’m really excited to bring a collaboration with Denny Klisch, one of my friends and favorite PM creators on Twitter. We’re cracking open the topic of how to scale a product team. 

Why should you listen to us? Denny has just gone through building a PM Team from 1 to 15. As the Director of Platform Product Management at ioki, he’s been living in the trenches on this stuff. 

I’ve also had to scale several PM teams in my career - from thredUP and Epic Games to Affirm. Now as a VP at Apollo, I also get to see the executive leadership side of the equation.

In today’s piece, we break down the nooks and crannies of the process:

1. Starting with Your First Product Manager 

2. Building the Foundations for a Product Management Team

3. Scaling from a Team of One to a Small Team 

4. Building a Diverse and Inclusive Team 

5. Leading a Growing PM Team 

6. Reflections and Learnings

It’s 9,000+ words of our collected learnings - all tactics, no fluff.

We had a lot of fun with this one. 

1. Starting with Your First Product Manager

Let’s start from square one. And let’s give away the TL;DR before we get there: you probably don’t need a product manager as early as you think.

When and why you need your first product manager

It’s very hard for product managers to help you find product-market fit. Just like you shouldn’t hire a sales person before you have product-market fit, you shouldn’t hire a product manager until you have product-market fit.

After product-market fit, when’s the right time? A rule of thumb that works well in this situation is:

When you have co-founders + 1 engineering squads.

So let’s say you have three co-founders and one engineering squad. Then you’re not ready for a product manager. The co-founders should just do the work.

When the co-founders are really busy, they should first hire and empower an engineering manager and designer. An engineering manager, designer, and part-time founder are really the “minimum viable” squad for a properly functioning product team.

As you slowly scale up to more engineering managers than co-founders, THEN it finally becomes time to hire your first product manager.

“But one of my co-founders is totally focused on sales/marketing!” you say. Two things. 

1. That’s fine. That should give another more time to spend with the engineering squads. 

2. The precise reason it’s so important to keep founders close to the product development process is not to get lost in sales and marketing too easy. 

When you’re an early-stage company, the worst thing you can do is start sponsoring conferences and jumping on podcasts to get growth. You should be looking for high-leverage activities like building strong product-market fit and growing via the product. 

Every example of strong product growth that we’ve profiled - from Stripe and Reddit to Coinbase and Netflix - followed this approach. 

Hiring: looking for the right qualifications and qualities

There’s two major ways to think about your first PM:

• On one end of the spectrum: people who believe you should hire a senior product leader that can build out the function

• On the other end of the spectrum: people who believe you should hire a junior tactician who can work with the co-founders

Which is best? Well, of course, it depends. Here’s factors that bring you more to the side of hiring someone junior:

• There’s a co-founder who could clearly be the Head of Product: Then you don’t need another senior leader until they give up the role.

• You have junior Engineering Manager and Design Manager/ Designers to pair them up with: Senior folks tend to like to work with other senior folks. And junior folks work better with people their age.

• You don’t have the salary for someone senior: Yes, you capture senior hires with equity. But their base cash expectations are also pretty high. In the US, most PMs Senior PM and above from reputable companies want $200K base cash minimum. Many startups don’t want to pay that, let alone $300K for a more senior person. 

And here are the factors that bring you to the side of hiring someone more senior:

• You have senior engineering and design leaders: A junior person is going to get run roughshod over senior counterparts in engineering and design, and they won’t be able to bring out the best in the team.

• You have a high pressure to produce soon: If your company needs to get it right now because of its massive fundraising, or conversely its lack of cash, a senior person is more likely to get things right with minimal ramp up time.

• None of the co-founders have worked in Product Management: The art of product management has developed a bunch of skills, artifacts, and ways of working that most co-founders don’t have. You know you’re in this situation if there are a lot of things your engineering manager and designer are asking for that no one has experience with - like good PRDs, strong quarterly planning, user research validating an approach…

What do Denny and Aakash think? Our take would be: most teams generally aim too senior with their first hire. 

Generally, teams try to hire someone and promise them that they can “lead the product team.” But a couple different factors conspire to make it so that is not so wise a decision:

1. There’s always a well-paid PM that is just out of your reach: Top PMs earn $5M per year. Most companies cannot afford them. And, in our experience, these PMs are generally worth it. 

2. This means you always want to hire more senior product leaders as you grow: they help you scale up at each step, series B/C to pre-IPO, pre-IPO to post-IPO, small-cap to mid-cap, mid-cap to large-cap, etc. 

So, instead of trying to go senior to get someone to lead your organization, recognize you’ll always end up hiring people more senior if you continue on successfully. This means it’s on you to just “right size” seniority. And you generally want an Individual Contributor PM who is willing to roll up their sleeves, not a manager of PMs. 

Here’s how we generally think about right-sizing: only look at startup PMs. Then ask yourself the following two questions:

1. Will a co-founder still be really involved in product? Start at Lead PM base; if not, start at senior PM base.

2. How many product teams do you want them to take on? Add or subtract levels for the difference between the number of product teams they take on and two. 

So, for example, if a co-founder will be involved, then start at senior PM base. And if you plan to have them PM one team, then subtract one level, now you are at regular product manager. Then you just need to find someone who has a few years of experience as a product manager at at startup. In the US, with enough equity, you can get someone like that for a mere $110K. That’s much more palatable than $300K for a startup. 

And if you set up the right roles and responsibilities for them, they can be pretty effective:

The initial role and responsibilities (R&R) of the first product manager

The most common failure pattern for early-startup PMs R&R is to make them project managers who complete the founder’s vision.

It’s a painfully easy trap to fall into, so something like 75% of startups fall into it. But the problem with this is that you’re way overpaying for a project manager. In an environment where every dollar counts, you owe it to your bank account to get the most out of this product manager.

That means not giving them features and projects to build, but giving them problems to solve. The founders are still the people who have lived and breathed the customer problems for the X number of years before hiring the PM. They have the right gut instinct and internal context about the product to prioritize problems.

But after that, you should expect the PM to work with the engineering and design team to discover the right solutions to solve those problems. 

With that context out of the way, here’s what the roles & responsibilities should look like in an ideal case:

• CONSULTED: on the overall business strategy

• INPUT: on the overall product strategy

• DRIVE: the product strategy for the problems they own

• DRIVE: the creation of the roadmap to solve those problems

• DRIVE: the execution with design & engineering to solve those problems

• DRIVE: the decisioning on whether to graduate features or experiments 

• CONSULTED: the go-to-market strategy

• CONSULTED: the marketing strategy

Notice what’s not on that list: prescriptive advice to write PRDs, holding PMs accountable for data analysis, or asking PMs to be the project managers. PMs should be held accountable to goals. But at this early-life stage, the highest ROI activity is not always big-company PM process. 

Often, a great early startup PM will be very flexible with what PM practice they actually pick up. Instead, they’re super agile to do what the business needs of them at any given time.

Onboarding your First PM

So you have your R&R ready. Let’s address one final topic: onboarding your new PM.

The first thing to realize is that their onboarding isn’t going to be cost-free. It’s going to take time from your existing team-members to ramp them up. And the new person doing their job isn’t going to have done it as well as the founders would have at first.

This is going to decrease the team’s productivity temporarily. So you want to minimize that period to as close to as zero as possible.

Don’t forget to nail all these basics:

• Get your quick win ready: PMs tend to do the best when they can be given a high conviction to execute at first.

• Write up an onboarding doc: Create a to do list for the newbie. Compile links to the key documents, key meetings, and people so they can ramp up.

• Define team-wide onboarding responsibility owners: Who is responsible for what in the onboarding process? Name a buddy (the one go to person for the newbie) and spread other responsibilities accross the team (e.g. team onboarding, product onboarding)

• Communicate your expectations: Again, it is all about preparation. Write down your expectations for the newbie in the first weeks/months. This helps to make things explicit

• Involve the new PM: Onboarding is not a one-way street. The new PM should help define goals and new expectations.

• Involve other teams: Get support cross-functionally. Engineers, sales & support should also take ownership in part of the onboarding. This new person is an important hire - not like your 100th hire down the line where those other groups won’t be involved.

After you’ve onboarded them, once the hire starts and get’s going, the team will go through some shaky patches. It’s just inevitable in product. Here’s what you can do when that happens:

• Talk proactively about the change: Make it explicit adding a new team member always leads to some shaking of the existing structure. This is normal and the team should not worry if this happens.

• Support the team: Don’t leave the team alone, support them in any given way. But don’t be too tight, the team should handle most of the part itself.

• Do retros: It must be clear that the new setup structure will be discussed in a soonish retro (e.g. after 3 months.

With all this work, you’ll be well on the way to integrating the first PM into your team and growing faster through product. But how do you go from 1 PM to 15?

That’s a different ball-game entirely 👇