The #1 cause of death for startups is a self-inflicted wound
The Product Management Gap is the period of time between having a successful demonstration of a technical innovation (the proof-of-concept) and when a full-time team member is assigned to focus on managing the product(s) that feature it.
Early-stage funded startups commonly have employees focused on engineering, design, marketing and sales, but rarely do they have a team member dedicated to the one thing they need to get right to raise additional capital: product-market fit.
“Getting product right means finding product-market fit. It does not mean launching the product. It means getting to the point where the market accepts your product and wants more of it.” — Fred Wilson, Partner at Union Square Ventures, “Product > Strategy > Business Model”
At a startup, product management is the art of defining a product for a core innovation, and strengthening an understanding of its fit in a market through user acquisition and engagement. This is a need I find most founding teams are aware of and measure, but commonly spread ownership of between team members with multiple higher priorities.
VC-backed tech ventures operate under a mandate to successfully productize a core innovation, and it’s practically non-existent to come across a pre-series B startup where there’s a Product Manager on the team.
Most startups typically hold-off hiring a Product Manager to focus on this need until their growth stages of financing — which less than one in four of VC-backed ventures eventually reach. Unsurprisingly, the most common cause of startup failure is attributed to the very thing a product manager is hired to avoid: building a product without a market need.
How you know you have The Gap
I’d wager that all founders with a product in-market have felt the product management gap… even founders experienced developing products in their own venture’s vertical are likely to split focus between multiple functional responsibilities, lack actionable insights from well-formed user research, and are challenged by the stress of early-stage team dynamics.
The most telltale symptoms of the Gap are:
- A lack of an explicit strategy to measure and grow product engagement
- Regular conflicts arise over priorities for feature development
- Sales stakeholders feel their needs are being ignored
- Early adopters provide lukewarm feedback when interviewed
- Investors are not excited by traction (they say you’re “too early”)
The perils of leaving The Gap open
Founders who are aware of the Product Management Gap and choose to ignore it are knowingly exposing their teams to the most common causes of early-stage startup failure; namely: building products without a market need, pricing issues, unfriendly user experiences, ignoring customers, losing focus, and failure to pivot.
When unguided, individual contributors have a tendency to pursue their own siloed interests and be reactionary to threats — rather than work in unison towards common strategic goals.
With proper product management, teams that work together to focus on fundamental key performance indicators (such as LTV/CAC ratios and NPS scores), and will find constructive ways to converge on initiatives that both reduce time-to-market and increase the likelihood of long-term success.
I believe the primary reasons teams don’t have Product Managers comes down to lack of awareness, a lack of understanding, and, ultimately, a lack of budget. There’s no well-defined academic or career path to becoming a product manager, so, unfortunately, there are many talented engineers and designers who have had negative experiences working with mediocre first-time PMs over their careers.
When done poorly, product management can feel like it slows a team down… but when executed well it’s quite the opposite. Not clearly understanding the risks to poor product management, and the immense upside to great product management is a problem endemic to the startup ecosystem.
In my next post, I will describe the various means I believe early-stage startups should consider when addressing their own gap.
Harlan Milkove is a repeat VC-backed startup founder, and Managing Partner at Foundational where he works with early-stage startups to expedite their pursuit of venture capital. His prior venture Reonomy, a commercial real estate data analytics platform, has gone on to raise $125M+.
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