The Right Time to Hire a CPO with Insight Partners Managing Directors Hilary Gosher & Ryan Polk

here at Insight. My group is responsible for product and technology, so we really focus on how you build out and scale an R&D organization from product to engineering to infrastructure and so forth. Previous to Insight, I was Chief Product Officer for Carbon Black in the Boston area. We IPO'd in 2018, sold to VMware last year in 2019. Previous to that, head of product for Rally Software in the Boulder area. So I've been in the industry for a while. I've been a chief product officer for a long time in multiple facets. In fact, that role has evolved. Um, and so I get to work with a lot of different great companies at Insight here and helping them evolve their story, especially in that scale-up phase. Um, we'll get into, uh, oh, I guess we went through the, uh, housekeeping and roundtable stuff, so we'll move forward here. So, Hilary, I would go ahead.

Great. So we wanted to start with a poll. We weren't sure how many people would join the session, but we wanted to get a sense on this call sort of the reason why people are here or what their interest in the subject matter is. So it's difficult to raise your hand, but on Zoom we can see a lot of faces. So, you know, if you're a number 1, a number 2, number 3, or any of those, maybe you just put it in the chat. Quickly just type it in where you are, and by a quick show of hands, we'll be able to see, you know, do we have technical founders on the phone, non-technical founders? We recognize that the CEO could be the technical founder or non-technical founder, so just put in where you're at. We're interested to see kind of who the folks are. Looks like we have a lot of CEOs, uh, some non-technical founders and CEOs. As well as some non-technical founders. Great. So, it really seems that, you know, it's a smattering, but there's a lot of non-technical founders and a lot of CEOs on this call. And I think this is very much geared to anybody who's interested in thinking through, how do I think about scaling product? It's one thing to get product-market fit, but having got product-market fit, the most important thing is now to scale, go-to-market. And the emphasis often shifts to go-to-market, whereas product is the underlying thing of everything. And so, how do you think about the product team in parallel? So Ryan has put together some slides and we'll just run through them.

Yeah, so, and I would say at any point in time, drop something in the chat. We have some time here at the end, definitely to answer questions, but I want this to be as interactive as possible. So as I'm going, drop a question in the chat, raise your hand, we'll accommodate as we go. So when we think about— sorry, working with my multiple screens here. We think about that initial team kicking off your, your product or your company. We think about the roles inside of that team, your founding team. You typically have 2 to 3 standard roles, right? You have your technical person, usually becomes your CTO. You have your business person, your CEO. Some teams are lucky enough to have someone who is more sales-focused, call it the people person, although that's usually not the greatest title. And, uh, when you think about office space and some other caricatures in the market. But think of this team as, you know, somebody who can help build the product, somebody who is the visionary around the business and lots of times around the product, and then somebody who can help you sell the products. And lots of times those roles are intermixed. There's 1, 2, 3, 5 people. Do you really need this foundation to start? When we go through and we think about what the next evolution of this looks like, You start to grow, you've got maybe your first round of funding, maybe it's seed funding or it's a small Series A style funding at the beginning. You start to grow the team, you of course are investing in engineers. In fact, when we're building a product, that's the first thing we do. It's like the first area we go is we need to have somebody to help us build it. We need to get a few people on this team, whether or not that's hiring out to an organization or hiring those people in, it really doesn't matter, but we start to build that out. On the sales side, maybe we know our people person, our head of sales typically is that first salesperson and does that for quite a while. But as we start to get some success under our belt, a little bit of revenue, a little bit of funding, we start to hire in some sales and maybe some marketing people as well. At this beginning step, we also start to think about product design and interaction with our customers, but most of the time that's actually filled in by your CTO or your CEO. As a leader and visionary of where the product is going. Right. And so that is the leadership team filling in that role. And in fact, a lot of times there's not enough room for a, you know, to hire in someone. In fact, you wouldn't want to, right? You don't spend money on this vision. You have the vision at the beginning. Your first product hire is typically an execution person. You're looking for somebody to take the ideas of the leadership team and start to think about How do we execute on this inside of our engineering organization? That's as you get to maybe 5, 10, 15 people in your engineering organization. Your first product hire is the person who's going to take the ideas from the leadership team and help execute on them. And that's where you usually go there. Your CEO, though, is that stopgap person, or your business person is that stopgap. Lots of times they're acting as your head of product management. Lots of times they're filling in within sales and marketing. You know, half the time they're running your finance activities, your accounting, and who, who has HR at this size, right? You're doing all of those different activities as a CEO. Um, you're definitely this, this jack of all trades, uh, when achieving this, this level of the business. Um, I like to call this the CEO teeter-totter, um, and this is really this balance between I'm running back and forth. I'm running over and I'm helping the product team vision where we should be going. I'm running over and actually actively doing sales and marketing the product. And not only that, I'm trying to choose which area I focus on in the business. And then of course, it's more than just a teeter-totter. I'm more or less balancing on a ball on a teeter-totter. My wonderful graphics here. The idea of the ball is the concept that the market pushes me in multiple directions. As I see deficiencies in my sales team, I'm being pushed to that direction to jump in and help. As I see deficiencies in where the product is going, I'm being pushed in that direction to help. I'm constantly balancing back and forth. And you see the reaction in a lot of organizations as they start to really hit that $5 to $10 million in, um, in scale is to create some specific roles in the organization. So you see this evolution of, you know, the CTO as an official title, the CFO as a new role that you're bringing into the organization. You see that head of sales— I keep calling it the head of sales. You might evolve this into like a chief revenue officer style position or something along those lines. But you also see marketing and HR start to float up inside of this company, start to see them become kind of a core aspect of, of, of the leadership team as well. Um, one of the things you don't see in a lot of companies at this level, when you're starting to get to the $5 to $10 million You're getting to that scale-up range in ARR. You don't commonly see the product team start to float up to the executive team yet. You're still in that execution mode. You're looking for a product leader who is still taking the ideas from the leadership team and starting to execute on them. Now there's a new evolution of this. I like to call this the facilitator-in-chief. This is, you know, a new role that we see a lot of companies hiring. At this level. It's a product leader who has a little bit more expertise in your area, but is really still involved in, I would say, herding the cats of the executive team to make decisions around where the product should go. They're facilitating those activities. They're bubbling up decisions to the leadership team, and they, they create a framework for how they manage those decisions and how they bring them back and execute on them as well. So it's a slightly different role than that execution-focused product manager that you hired at the beginning. This is more or less somebody you might hire at like a director of product management level. This is somebody who is coming in to help you cajole and corral everyone into the right decisions and creating a framework for making those decisions.

Yeah, and if I could just add to what you were saying. You know, when I've been— I've taught at Columbia University and NYU for the last couple of years, and the students always ask me, you know, as a CEO, I'm the founder of the company, you know, I've hired someone who's technical, or that's my technical co-founder, you know, what's my job? And, you know, to Ryan's point, your job is everything. Everything. You own market, you know, you own the market, you own marketing, you own the customers, you own those first core deal relationships, you own everything. When you get to this phase, which is sort of the scale-up phase, you know, you may have a technical person, but you still own product. And the CEO, together with the CTO, own product. What are we trying to deliver to the market? Where's the market? Going? What's the pain point we're seeking to solve? Are we solving it better than anybody else? Why are customers implementing or not implementing? Why do we lose deals? You're asking all of yourselves. You're very close to the tech and product team, even though you don't have a product leader necessarily. Because you and the CTO or the technical or the engineers, you are product. The head of sales has got nothing to sell and the CFO's got nothing to book unless product works. And so, you know, product is the linchpin of the organization. What we start to see in scale-ups is that, that the kind of emphasis starts to move, especially if you start to hire an aggressive sales organization, the emphasis starts to move to this really aggressive sales and marketing team who are fixated on meeting the customer needs. And so, slowly but surely, you as a CEO start to spend less time with product or thinking about product because the go-to-market motion becomes all-encompassing with the company as you try to scale through. And in the process of raising capital.

And that's where having somebody at the leadership level in product here is definitely the shift in a lot of companies, starting to think about layering that more onto a leader in that organization, having them have some ownership of the product strategy, starting to think of them though as both a, an owner but also a facilitator across the leadership team. As you get that more, you know, powerful sales and marketing engine going, you have to have strong collaboration across the group. You have to have strong decision-making at the executive team level, and you have to have somebody who drives that and owns it. The same way you start to think about bubbling up an HR leader or a marketing leader in the organization and giving them that, that perspective of being on the executive team, the product leader, the CPO role starts to bubble up. Now, this may bubble up in the form of a VP of product management, not as a true C-level title, but you start to think of that moving up through the organization. Where other roles may not.

Yeah, and right, I would also just emphasize the HR is not really HR. The HR ends up in talent acquisition. So, you know, you're not hiring a true HR leader, that still devolves to the CFO and each of the managers and the, and the CEO. The HR role is really, I'm hiring very quickly, I need someone to run talent acquisition. And so you're normally hiring a recruiter.

Yep, you're starting to get in that phase of some conflict resolution, some management of risk at the HR level as well, but you really are just trying to scale the business. And that's— that is— there's multiple ways to do that. When you think about what this organization is lacking, when we look at this structure, we really need to have, um, a way to scale our people and our technology in the business. We need to start to create frameworks for decision-making. We need to start to come up with ways to align the work to the teams from a product management and engineering perspective. We need to have that bridge between the business and the engineering side as well. You need to start to build out an actual product strategy system, right? We're moving from that gut-based intuitive product framework that the executive team is driving, the founding team is driving, to a way of understanding our markets and understanding where we need to go and starting to do research on that to drive our product strategy, not just being direct customer interaction and gut-based, which is at the beginning of a company is very important to have that connection to your customers across your founding team. But as you evolve, you need to start to add a bit of a scientific method to the way you're actually driving your product strategy. You need to have those, of course, strategic roadmaps aligned to both the market and to your internal teams. You need to have that communication of a strategic roadmap. I will say, you know, whenever I'm working with startups You know, the strategic roadmap is something written on the back of the napkin of the CEO, usually, right? As I get to a higher level, um, as we start to get to that $5, $10, $20 million in ARR, we need to have a structure for this. We need to be able to communicate our roadmap to our customers and across our business. And that is something that the CEO, you know, does very well in their head, but we need somebody who can take that and actually turn it into a mechanism for communication. You need to have that overall product process that goes from strategy and understanding the market all the way to the execution, all the way then to commercialization on the other side. That means, you know, understanding where you're going, aligning with the engineering teams and getting that built, and then taking that and actually taking it through your product margin— marketing activities all the way to enablement and delivery to the customers, right? And that's, To some degree, when you don't have all those groups as you're starting to grow and scale, your product management team does a lot of that, right?

They are—

I see a lot of product managers who are product managers, product marketers, sales enablement. It's all rolled into one role as you start to scale that organization. You get a ton of leverage out of building some of those roles inside of the organization. Um, when we think about, uh, the connection to the customers, that also needs to evolve, right? It can't just be one-on-one customer interaction. It has to be aggregation of your customer pool as you start to grow. And so you think of this team as creating your idea management system, allowing you to think through how you manage ideas as they come in, how you evaluate investments, and how you then grow your roadmap based on a systemic connection to your customers more than just that day-to-day interaction with the customers.

So this is—

when we think about this organization, we think about the CPO role This is somebody who is building out all of these aspects in your organization and allowing you to scale effectively as you invest more. Sorry, we got a couple of good questions here, but I'm gonna finish off this and then we'll jump into questions here in just a second, 'cause we got good timing for the questions coming in anyways.

So think about the next poll.

I'd love to get, I won't lose your questions here. We've got a couple of them here. I'd love to see, you know, areas of your organization you'd like to improve as a CEO, as a, as a non-technical founder, as a technical founder. You know, go ahead and throw in the numbers here, just separated by a comma. Love to see kind of your feedback on areas that you think are important to the product, product owner, the chief product officer role. Apologize for my background there as well.

All right, we'll let everybody continue to do that. Give another 10 seconds here and then we'll move forward.

Got a lot of 6 alignment, a lot of 1 and 2. All right. Great.

So let's define the role and then let's come back around here to the beginning of this conversation around where this role fits, right? We've gone through this evolution of the, of the product team in your organization. We start off with that execution-oriented person, we move to the facilitation-oriented person. Now we're moving to the true CPO, which is your systemic improvement person, right? This is somebody who is building the system for how you grow your organization. Of course, they're the head of product manager—

management.

Usually they're the head of product management, user experience, product operations. As you grow into, you know, a $50, $100 million business, you're starting to see more and more of these teams parent underneath the product management leader, the CPO. They're a member of the executive team, and that is key. This is somebody who needs to be a part of that team and regularly be in the conversations around where the business is going and part of the decision-making process for your corporate strategy above and beyond your product strategy. Of course, they're the leader of the product roadmap. And what I think of this as, when you look at the CPO role, is tied at the hip with your CTO. This is somebody who is driving execution in the business along with driving the future of the business as well. And they have to be tied at the hip. Now, when we look at the investment profile of business, this is also somebody who starts to set that high-level pie chart for your team. So they're thinking about what is our investment in certain areas, certain areas of innovation versus maintenance versus architecture versus roadmap, and how do you lay that out in a way that we can all understand. We also think of them as that facilitator of the decision-making process with the leadership team. You can't lose that facilitator mindset as a leader in product management. They have to be key— a key member of the executive team, helping that team continue to make decisions around where you're going. You don't just hand over the product strategy to your product leader and say, you own this. They become a person who helps the executive team make high-level decisions that are important to them, right? That's the important portion of this. As the, the role grows, you start to see this person have more and more ownership of the strategy, and they intend to continue to invest the executive team. But especially at the beginning, it's not just a handover, you own this kind of role. When we think about the difference between the roles in the beginning and the end, the idea of having a startup— startup execution framework is important. But as you scale up, You really need to think of this as building a process for innovation. How do we drive that process of innovation in the business? And how do we have a person who owns that as part of our leadership team?

Ryan, a question for you that I often see is, normally, because engineering is the first in the organization and they own product, potentially with the CEO, um, the CTO is often reluctant to want to have a peer and prefers to have the head of product report to them, and so that they still feel like there's one throat to choke. How do you get through that complexity of bringing in a peer, a true CPO? What do you think about the head of product reporting into the CTO or the head of engineering?

I tend to think of this, and in fact, actually, that leads well into this next slide here as well, as you need to create a cohesive team. As a CEO, you need to create that cohesive team that is more broad, and you have all of those different roles on the team, representation of of the product and the strategy around the product is important to be on that team as you scale. Now, early on in the earlier roles, I'm perfectly fine with an execution-oriented product manager being underneath your CTO, right? I think that as you get to a facilitation-oriented product director, you're probably pretty good at still having that person under the CTO. But as you scale to a point where you're really looking to, to attract talent from a CPO perspective, you need somebody who is direct line to your executive team, is part of that team. And that's really going to get you the right level of talent in that role as well. Now, the CTO side, what I actually typically find is at this level, at this point, your CTO, who is usually your more technically focused person, is already willing to kind of give up these different elements of, of this role because they're typically struggling in this area. They're typically having an issue, you know, building a roadmap that is balanced, that is customer-focused. And so a lot of these things that we're bringing in in this role is bolstering their position in the organization. I don't see a lot of pushback from CTOs. Now, if I do, I actually question whether or not they're really a— they're a CTO, or maybe they are your CPO and you slide them over into that title and you start to look for bolstering the engineering side of somebody who wants to be more of that owner of the, you know, the execution side. And so there's a lot of different ways to kind of pivot around this. But when you're really looking at attracting the right talent into that CPO-style role, you want this on the executive team.

That makes sense. And the other thing that you mentioned that struck me that I know I often get a lot of questions about, you know, and then we'll let you finish your slides and go to the other questions, is the question of what do you mean by building a process? You know, being an individual contributor, owning the roadmap, owning the sort of strategic vision and direction with the kind of rest of the executive team. But what do you mean by building a process?

Yeah, so most certainly it's— it is, um, starts at the beginning. We'll go all the way to the left here, right? From a perspective of, um, you have to have an understanding of your market. You have to unders— have an understanding of, um, your competition in that market. You have to have an understanding of where you fit. You have to have a systemic way of assessing that. I like to use the Where to Play, How to Win framework. Which is a great way of kind of breaking down your overall market view, being able to see that in an effective way, and then connecting that back to a product strategy. So that's one of the systems or the, or the processes that you want to have in place is an annual cadence of reassessing your overall product strategy using a framework. Then you need to have a perspective on how you lay out your product management team to then align it with the work as well. So thinking of you know, your teams are working on tasks or stories and you're— you have something bigger than that. You have features that you're applying to your product and then having product managers own some kind of larger structure and initiative or something that you're investing in throughout the year and creating an alignment to the work with your product management roles. That's another system or another process. And then at the bottom, you've got on the execution side all the way over here, You've got a systemic way of running your engineering teams that is aligned to your product management team. So it's not just process, it's aligning the structure of your organization along with how they work and into the roles that you put into the organization to bolster that process as well. You have to think through that whole thing. Now that is of course a collaboration between your CPO and your CTO and your CEO as to how you structure your R&D team and how do you get them effectively delivering with a strong connection back to the business and to the customer. And that whole process breaks down— there's all kinds of different ways of describing that, but it really is being systemic across your R&D organization.

I notice that we only have 5 minutes left, so do we want to— I just noticed— do we want to address the 2 questions around is product revenue or is the sales team the driver of revenue?

Yeah.

And so if you want to have—

also, if you have other questions to put in here, please feel free. So product is a revenue driver versus sales and marketing. Yes. So we're starting to see the term product-led growth pop up all over the place, right? And it's actually not a— it's a new term for pretty old concept, right? Which is when you look at B2C style products, you know, the idea of building a product, getting it out there, testing how your customers interact with it, using that A/B style testing framework to then— it's more than A/B testing, don't get me wrong— but testing that, using that testing framework to then make decisions around how you guide the roadmap of the product and how you deliver the product is, is second nature in B2C style businesses. When we look at B2B businesses though, product-led growth is really driving this concept of how do we pull forward the concept of both opportunity and lead gen and have the product drive that as a mechanism for delivery, right? So that might be a freemium model in your product where people can sign up and use the product for free and you have tiering pricing structure. It might be just an easy demo process that allows people to get in and use the product and then creates leads. It might be a subsection of the product that you make available to the public that they can get data out of that then drives leads. There's all kinds of different ways to think of bringing the product into the lead generation cycle and the opportunity generation cycle and making it a part of that process. That's not to say that, you know, you're taking something away from your, your revenue organization. It's really saying you're giving more capabilities and the product is bolstering those capabilities in a B2B environment right now. There is, of course, you know, a shift in model and a lot of newer SaaS companies, you think of the Slacks of the world, where the product is truly driving a lot more of the revenue cycle, where the sales team is coming in at the end after the customer is already using the product and working more on upsell from a free or, you know, low-priced product. And that is, you know, that's an eventual outcome of some of these models, but not all of them. What I like to focus on is a balance