When To Hire Your First PM

In addition to running Product for a technology company at scale, I’ve also been fortunate enough to invest in and advise roughly a dozen other startups, primarily in SaaS. One of the most common sets of interesting discussions that I have with tech leaders concerns when startups should hire their first product manager.

Many companies find it tempting to hire a first PM somewhere in the range of $250K to $1M ARR. Several factors combine to make hiring a PM especially tempting around this point in the life of a company:

  • This is the stage when most companies are entering the long startup slog of being busy essentially all the time
  • Many companies (including very successful ones) have often been toiling away for several years at this point, and fatigue is setting in
  • The business is growing more complex, and execution feels like it requires more moving pieces just to get basic things done

Although tempting, I believe that hiring a PM early in the life of a company is usually not optimal, and often stems from misdiagnosing fundamental needs. This is particularly true before $1M ARR.

In this post we’ll discuss when to hire your first PM, when not to hire your first PM, and what to consider doing instead. This post is addressed to whoever is running product at your early stage company. This is typically a CEO or CTO, and occasionally a technical CPO – essentially, whoever writes the most documentation that engineers use to build the product itself.

Early Stage Products Are Too Small for PMs

The job of a PM is to figure out how to turn code into happy customers in a way that makes money.

But PMs don’t personally output any of the components above: They don’t write code, they don’t close customers, and they don’t make those customers happy. What PMs produce are great decisions, and since anyone smart can theoretically make great decisions, PMs are best conceived of as highly specialized resources for when you need to make frequent, important decisions, particularly about how to build and guide your product.

The situation of having many important decisions to make occurs most frequently when you need to:

  • Define what to build next. This is most relevant when you have more good ideas than time to build them, which tends to occur when you have roaring product-market fit and customers are yelling demands at you from all sides while shaking fists full of money
  • Define viable products in a domain where it is not obvious how to get a product built. This occurs most frequently in products that have very complex workflows, or in arcane industries that require sector-specific knowledge (more on this later)

These criteria don’t actually pertain to most early-stage, post-traction startups. Early stage businesses are small and have little surface area to expand, and relatively immature so most workflows are still simple.

As a result, most PM hires are worth less than the same salary deployed elsewhere. PMs hired too early end up either optimizing a lot of unimportant decisions (should the button be green or blue?) or splitting hairs on trivial tasks (let’s calculate the exact optimal order of the 9 items in our backlog). When you have precious few resources, it’s a mistake to spend them on a team member who won’t be fully utilized.

There’s product management work to be done, of course – but probably less than you would expect, and it should probably be done by you. You’ll do it faster and be able to express a unified vision.

There is also a related situation in which hiring a PM too early actually becomes a detriment: When PMs don’t actually have that much work to do (say, because you don’t actually have product-market fit…), there is a not-particularly-rare species of ambitious but uncreative PM who will actually start to invent work like a mad scientist in a lab – adding processes, tweaking sprint ceremonies, setting up new meetings, the works. This is poison to a young startup.

Many First PMs Are Deployed Incorrectly

A related danger when hiring a first PM is deploying them on menial tasks, rather than strategic product work.

One reason that I see founders hiring an early PM looks a little bit like this:

  • You’re the founder who runs product management at a startup, typically the CEO or CTO. You’ve made all major product decisions to date, owning the vision and strategy but also writing Product Requirements Docs (PRDs) and user stories, building wireframes, helping to QA, creating documentation, the works
  • Your business has grown to 5-50 people and you’re getting inundated with other stuff from sales to fundraising to support to HR
  • You know that your product vision has been integral to your initial success, but you just don’t have time for detailed product work, leading to a brilliant realization:
  • You can hire a PM to do the tactical product work that’s bogging you down (user stories, PRDs, occasional project management, QA), while you continue to do the important work™ of setting the vision and strategy

This strategy of hiring a PM to do the tactical dirty work pencils out on paper, but I believe that it is a serious mistake for several reasons.

First, it doesn’t actually provide the leverage that PMs are meant to create. The magic of a great product team is that it allows you to split your organization into smaller units, all of which can strategize and execute autonomously. As a leader, you want to divide your resources and your brainpower across major product areas and trust that teams will find and exploit opportunities.

PMs are the strategy arm of this process, and should be empowered to own the roadmaps for how they’ll better the business, not just the execution of getting things built. In an ideal world, PMs will have better decision-making and execution than you within their domains due to focus and proximity to customer needs. This is how you scale. If you continue to hold all of the strategic decisions close to the vest and use PMs as glorified interns, you’re wasting all of the focus that they could be bringing to bear.

Second, this strategy of having someone help turn strategy into execution adds an additional translation layer to your product development process. As a startup your only true advantage is your ability to move quickly; more layers of reporting impedes the only thing keeping you ahead of the curve.

Finally, the type of person you can hire to do a tactical PM job is generally not a real killer. Who wants to just be an order-taker for someone else? A great PM with a good background would probably rather start their own business (venture capital is everywhere) or take a job at a more established company with momentum and higher pay – ironically, they’ll get more autonomy at that sort of job, even if it’s at a much larger company. By cordoning off the strategic side of the PM role, you’re tasking worse candidates with a less important job.

When to Actually Hire Your First PM

There are 3 main times when it’s fine to hire an early PM.

When you have a real product for them to own

PMs are ideal when you’re fully in the mode of exploiting a huge market opportunity. As mentioned above, the primary advantage of PMs is that they help you split your company’s strategic function and go after many customer needs (or markets) all at once – this isn’t the move at $500K ARR for a single use-case, but it is definitely the move when you have 3 major customer use-cases (or revenue lines) and you need to make all of them best-in-class.

This criteria tends to come into play when you have both strong product-market fit and a business that can fully take advantage of fast-moving product advancements: Strong sales reps, mature support, solid marketing.

This is the standard point to hire your first PM.

When your business sector demands it

Some products are more complicated than others and demand PMs sooner. Many SaaS businesses are glorified note-taking apps, but some products like Procore (construction) or Zuora (billing & accounting) or ServiceTitan (trades) are highly nuanced and industry-specific. Because designers and engineers will have less familiarity with these domains, these products hit a point where the problem distillation that PMs provide will speed up development early in the life of a company. In these industries it’s fine to hire PMs much sooner than you otherwise would.

When you can hire a great one

Sometimes you can just get a great PM onboard – and due to their high leverage, they can reshape your company:

  • Former / future founders from your network
  • Transfers with strong relevant experience
  • Industry experts

But most startups don’t have access to special talent at the earliest stages, because the way that you build your career as a PM is by running a successful product, which usually means scale. Be honest with yourself and only make an opportunistic early PM hire if they’re really special.

If you’re going to pull forward a PM hire, I recommend that you make sure they have a secondary skillset to avoid the case where they start to create work out of an attempt to help. You ideally want them to be able to double as a designer or engineer so they can accelerate velocity, although doubling on product marketing or customer success / support duties can also work.

Hires to Consider Instead

But just because most teams hire their first PM too early doesn’t mean that you shouldn’t hire anyone. There are a few vital hires to consider instead.

A Founding Designer

There are diminishing returns on great design, but the returns diminish very slowly. Nobody likes a poorly designed product and design expectations are rising constantly. Immature product design slows you down twice: Once at the start of a new product when you second guess all of your decisions, and a second time when you realize that you need to rebuild your product due to its unintuitive design choices.

Product design can be make or break. It can break a company at the low end – many businesses (for example, bottoms-up SaaS) are essentially non-viable without great design. And it can make your business at the high end – you can sometimes enter huge markets with fierce incumbents and differentiate on Design or UX alone (think of Monday.com, Stripe, Figma).

“But I’m great at design!” you might be thinking. Maybe… but I’ve found that many people think that they’re a lot better at design than they actually are, because:

  • If you’re senior, people on your team will tell you that your designs are good in order to avoid upsetting you. Criticizing a design feels very personal
  • There is a vast difference between being able to tell when a product is well designed (having good product taste) and being able to design it yourself

Hiring a great startup-ready product designer is a great way to accelerate your execution and improve your product’s quality at the same time, and if you don’t yet have a PM or designer, the designer is almost always the wiser hire.

A Better Engineering Manager

If you’re struggling with execution in vague, unspecific ways, a better engineering manager almost always helps. Think of cases when you think:

  • We know what to build, we just can’t build it
  • It feels like this is taking too long
  • I can’t tell if our engineering team knows what they’re doing

All of these questions are improved by better engineering management. Bringing in great engineering talent has immediate benefits and essentially non-diminishing positive returns – many of the greatest companies have been propelled by their superlative engineering. You’ll ship things faster, with more predictable timelines, and at a higher level of quality. This always helps.

Of course, sometimes execution is slow too because the product isn’t defined well enough, leading to the temptation to hire PMs. This is actually where great engineering management shines the brightest. One of the first critical skills that every great engineering manager learns is how to identify and flag poor product definition, because simply accepting shoddy PM work and failing to deliver impact is a career killer in engineering. If the problem is that you are defining products poorly, great engineering management will actually help you become better.

A Demand Generation Hire

One of the easiest ways to have poor results on important metrics like retention and new bookings is to try to sell to the wrong market. And one of the best ways to sell to the wrong market is to be bad at demand gen, forcing you to try to force your product down the throat of anyone who you can get your hands on.

If you can improve your demand gen to the point that you’re able to sell to your ideal customers, and you have a good product, you’ll see marked improvements in many of the core metrics that make your business tick. Poor demand gen forces you to warp your product to fit the wrong customers, as bad-fit buyers ask for things that your core market doesn’t really need. Great demand gen allows you to strengthen your product-market fit by building the right products for your target market.

Of course this can start to play into a happy fantasy of bad companies – our product is the best, nobody wants it because we just haven’t reached them yet. Demand gen probably won’t help you if you don’t have any paying customers. But if you have even a bit of demonstrated non-trivial traction, Demand gen is a great way to continue to establish strong product-market fit, which is a core part of the product management function.