From product manager… to a venture capitalist? Let’s state the obvious first: Historically, that has not been the typical career path for a product manager (pm). When they’re recruiting new associates or partners to join their investment team, venture-capital firms don’t look for product professionals. In their own career trajectories, PMs often do not look for roles of increasing responsibility in product: for example, vice president of product management or chief product officer.
But the experience in a product department does give you skills and insights that many venture-capital companies lack. Forward-thinking VC firms recognize they have those blind spots. That’s why the transition from PM to VC is becoming more of a possibility today.
Product Manager to VC: How a Product Background Makes You a Better Investor
In this post, we’ll discuss how your product-management background can make you a valuable addition to a VC firm. To give you evidence that you can make this transition, we’ll introduce you to former PMs who have become venture investors themselves.
How Your PM Superpowers Can Make You a Better VC
1. You already speak several business languages.
You might not realize this, but to succeed in product management, you’ve become multilingual. You’ve learned the unique dialects of developers, marketing professionals, executives, and other departments across the companies you’ve worked for.
Understanding how various departments speak and process information will serve you well in your future role as a venture capitalist. They will help you cut through a lot of the confusion VCs face when trying to get answers from the startup teams approaching them for funding, and for attempting to oversee the companies once they’ve already invested in them.
2. You know the product-creation process from beginning to end.
Many venture investors land their jobs after taking the traditional career route. This is often an MBA or a degree in finance, then a stint working for an investment bank or a large brokerage company. Although those are fine career paths, they don’t give investors a behind-the-scenes look at how a real company builds a product from scratch and then releases it to the market.
Your product management experience gives you a unique insight into how businesses come up with product ideas, vet those ideas, and decide which ones are worthy of pursuing the company’s limited resources. When you review a business plan or speak with an entrepreneur, you’ll have a valuable real-world perspective that many of your VC partners won’t.
3. You know how to assess a market that doesn’t exist yet.
Traditional venture investors—the ones with financial-industry backgrounds—understand the financial markets. They know how to research the size and growth potential of existing industries. But would they know how to assess the viability of an innovative idea presented by an entrepreneur for a market that didn’t exist yet? A sharp product manager might bring valuable insights into this type of opportunity.
Here’s one real-world example. Ring, the company that develops home-security doorbells and cameras, created a new industry. There was no pre-existing market for home-security doorbells. And when Ring’s founders went out for funding, many VCs turned them down. But do you know who saw the potential and gave Ring a large part of its $4.3 million Series A funding? A firm called VTF Capital—whose founders include Zach Ware, the former Head of Product for Zappos.com.
Bottom line: If all of the managing partners at a VC firm share a similar background, that firm’s narrow experience will leave blind spots that could cause them to miss enormous opportunities to partner with industry-changing companies. Your experience as a product manager could fill some of those blind spots and help a VC firm capitalize on opportunities they might otherwise miss.
The Big Adjustments from Product Manager to VC
Having said all of this, it’s worth pointing out that many PMs who switch to venture investing find the transition difficult for several reasons. These professions are very different, and becoming a VC could require you to give up some of the things you’ve enjoyed most about being a product manager. A few examples:
1. You won’t get to be as agile.
As a product manager in a modern company, you can launch a minimum viable product in a short timeframe and start gathering market feedback immediately. You can monitor how users engage with your product, listen to their thoughts about it, and update them based on that feedback. Product managers can discover quickly whether or not their product is resonating.
As a venture capitalist? Not so much. After you’ve invested in a company, you might need to wait many months or even years for its product or service to reach the market. The pace at which you’ll learn whether or not your investment becomes a market success will be slower.
2. You’ll need to focus on a lot more than a product.
Effective PMs know the ironic truth that to develop a successful product, they need to spend much of their time focused not on the product itself but also on the problems it’s supposed to solve. Smart PMs learn about the needs and fears of their users, study the competitive landscape, and keep an eye on emerging trends that could affect their building solutions. They’re already somewhat skilled at focusing on several strategic factors at the same time.
But as a venture capitalist, you’ll have to take an even broader view than you ever have as a PM. To make smart decisions about which companies to invest in, the potential success of a company’s idea for a product is only one of many factors you’ll need to consider. You’ll also need to evaluate the team’s experience and chemistry, financial strategy for success, and even broader macroeconomic factors that could affect the company’s ability to survive.
You’ll also have to focus not only on a single product, or even a product portfolio for one company but on a wide range of products and services across many companies, each with their metrics for success.
3. You’ll have to delegate product strategy.
For some PMs, this might be the most challenging aspect of the transition to becoming an investor. Many product managers find overseeing and directing their products’ strategies the most rewarding part of the role.
But as a VC, your job will be to support those teams you believe have the greatest chance of developing solutions that achieve product-market fit. You can offer guidance and resources to the company along the way. But as an investor, you will have to leave responsibility for directing product strategy to the company’s product team.
PMs Who Have Made the Move to VC
If you’re still excited about moving from PM to VC, even after reading those potential challenges above, you’ll find the following stories encouraging. These are people who successfully made the career switch from product management to venture investing.
Jess started in Google’s Associate Product Manager program and rose to become the Product Manager for Google Maps. From there, Jess joined the social-commerce company Polyvore as its PM, and she eventually became that company’s CEO. From there, she made a move to Sequoia Capital—becoming the famed VC firm’s first-ever female partner.
Amy began her career according to a traditional VC path. She started as an investment analyst intern. Then she shifted to a series of marketing and product roles—first at Microsoft and then at Uber, where she became a product manager. After another product management role at Facebook, she moved to VC as a Sequoia Capital partner.
After earning her MBA, Ashley held a series of product management roles. She rose to product leadership positions at DocuSign, Optimizely, and SurveyMonkey. Then she made the switch to venture investor, becoming a partner at the firm Social Capital.
Paths from Product Manager to Venture Capitalist
Amy Sun is a notable exception, but most product managers do not move directly from the PM role to becoming a partner at a venture firm. Ashley Carroll held product leadership positions before she joined a venture-capital firm. Jess Lee served as Polyvore’s chief executive before she became a VC partner. You will probably have to hold positions in product leadership before you can expect to join a VC firm as a managing partner or venture partner.
And if moving up on the product org chart appeals to you—whether or not you’re interested in becoming a VC someday—we have a free resource that can help you better prepare for those advancements in your product career: