Do you need a VP of Product?

You’re the founder of a startup and your product is starting to get traction. You’ve been scrappy building a product and making adjustments based on early customer feedback, and now you’re wondering if (and when) you should hire a VP of Product.

There is no one right answer because there are a lot of different variables, but here are five questions to guide your decision. The main advice is that you should be really clear on why you think you need a VP of Product — what problems are you trying to solve or avoid?

1. Do you have product market fit?

Typically a VP of Product isn’t needed to find product market fit (PMF) — a great product manager, yes — but not necessarily a VP.

Indicators of PMF are:

• Is your annual recurring revenue (ARR) close to $10M?
• Is your customer retention healthy and trending up?
• Are your sales close rate and customer growth healthy?

But really the best way to gauge PMF is to send a survey to existing customers asking, “How would you feel if you could no longer use [your product]?” The response options include: Very disappointed, somewhat disappointed, not disappointed. If at least 40% of your customers say they would be very disappointed if they couldn’t use your product, then you are at (or near) product market fit.

2. How big is your company and do you need cross department collaboration?

Once you hit about 100 employees you’ll start to see communication across departments breakdown and your PM(s) will be overloaded and struggling to align with other departments — especially if they are spending a TON of time talking to customers like they should be. A big role of the VP of Product is acting as the glue between key stakeholders in the company, including the CEO and the Board.

3. How many product/dev teams and product managers do you have and how many are you hiring in the next 12–18 months?

A key role of the VP of Product is to build, coach, and manage a stellar product team. If you have two PMs and aren’t growing your team for 12 months, you probably don’t need a VP. But if you are growing aggressively, the VP can carry the weight of hiring and will hopefully hire much better folks than a PM or non-product executive would hire.

4. Who is currently filling the role?

Are you a product-minded founder who is running product? Or do have a CTO or someone else with product experience running the team? If so, you could get by a little longer before hiring the VP, but keep in mind the opportunity costs of that person. Could you spend your time in other places making an impact?

5. What is the risk of hiring or not hiring a VP of Product?

Hiring the wrong person is a HUGE risk and you should be very careful (and if possible take your time) to find the right person. Double and triple check references of people who have worked with your final candidate. Ideally you’ll get the trifecta of references — someone who reported to them, a peer, and one of their managers. And try to find folks beyond who the candidate gives as references. This requires you to be a part-time private investigator, but the time spent will be worth it.

Risks of hiring too soon:

• The VP may be frustrated because the company isn’t mature enough to handle their role. But if the person is the right hire for a startup, they should be scrappy and able to adapt to the maturity of the company.
• A good VP of Product will be expensive — both compensation and equity.
• Who you can attract pre-PMF may be different from post-PMF. And likewise, the skills needed pre and post-PMF are different.

Risks of waiting too long:

• Opportunity cost of your time or the time of the person overseeing product (assuming they have another job)
• Lack of product vision and strategy — you may just be spitting out features with no cohesive strategy
• Chaos between departments. This is recoverable but can cause unneeded confusion
• Hiring the wrong people. The worst thing you can do is hire a bunch of product managers or product designers right before hiring a VP of Product.

At the end of the day, you’re probably better off hiring the right person sooner than later, but be clear on expectations and the current context of the team and product.

For more information on what a VP of Product does and how to know if they are succeed, read my other article.