By Parul Singh, Principal
In many ways, product managers are uniquely well-suited to be startup CEOS. Product vision and revenue plans are two critical elements of early-stage startup success, and a good PM knows how to produce both. But the skills and obsession for building products that make you a great PM can sometimes trip you up when you try to raise money. I know because it happened to me. These days, I see hundreds of pitch decks and talk to amazing product-oriented entrepreneurs every day, who make a few common mistakes with their pitch.
Many of the product-oriented CEOs who pitch me have the following slides in their pitch deck:
Can you see the prioritization reflected above? What many first-time founders don’t realize is that a killer product is just one of many aspects of a successful business. Unfortunately, former PMs tend to obsess over the product experience and underemphasize other important pieces of their pitch. In PM speak, your pitch should be the wireframe for your business.
Here are some things that product managers turned founders should think about to be more successful pitching VCs, all while leveraging your unique PM superpowers:
We don’t fund products, we fund use cases. A critical component of a strong use case are the market dynamics in a given industry. To be successful, founders need to have a strong handle on:
Competitiveness: Most investors select for the fiercest competitors to invest in, because most attractive markets are competitive, so you have to succeed as a competitor, not just within a vacuum. Remember: raising money is competitive, winning in a market is competitive, and staying on top of that market over time is competitive. Are you proving your ability to win over competitors? Also, investors will be looking for your mindsets as a competitor. Are you growing quickly and aggressively? Are you tracking yourself and your team? Product managers may dismiss salespeople, but when you become a CEO chutzpah matters as much as your ability to code a prototype for a new feature. As a founder, you should be more obsessed with your MRR than new mockups. Many entrepreneurs with PM backgrounds falter because they are not focused on the right things.
Founders, remember that you are not pitching in isolation. Every early stage investor is looking at least 100 companies a month, and writing 2–3 checks. For institutional investors, your competition matters a lot. You need to stand out among those 100 startups in your imaginary “cohort” and if you’re in a tough or too small market, you may not be able to easily raise money. In a scenario where investors simply can’t place bets on everything, they’ll place bets on the most competitive companies. It’s very easy to be dismissed as a “feature, not a company” or that you’re “too early” when competing with a startup that has a product, a full sales funnel, and measurable metrics.
Making the leap from effective product manager to effective CEO is totally doable, as long as you are can keep your macro-focus on your business, as well as your micro-focus on an incredible customer experience. Not always easy, but if you can swing it, you’ll be in good company with the most legendary CEOs of our time.