Josh Elman has been part of several of the most significant internet and social companies in his career as a product manager, and is now a venture capitalist. He was a product manager at LinkedIn and then Twitter, and is now a partner at Greylock, investing in new consumer products and services. We talked with Josh about what he learned as a product manager, and what he’s seen after transitioning to the other side of the startup experience.
You were a product manager at Linkedin back in 2004 and then last at twitter in 2011, what were the most significant changes in “social networks” during that time?
Back when we were first building out Linkedin, social networks were something people didn’t know they wanted. Putting your real identity on the internet wasn’t something that you did. You didn’t think about having a page online that was about you. It was all very foreign. You were actually afraid to put yourself out there. What has been built over the years—by combining identity, communication and representation of yourself—has opened us all up to so much more opportunity and more information coming in. It’s radically redefined how we think about who we are and how we share with people around us. It’s hard to re-imagine a world where it took serious convincing for someone to put their professional or personal profile online. There’s been a massive cultural shift.
What are the top 3 things that make a good product manager?
1. Be in service of your team and founders to get the right thing done.
2. Be a great storyteller. To be able to articulate the specific thing we want to build. The founder/CEO articulates the vision of the company, you (as a PM) have to get down to the specific features.
3. Be on top of the details and the data. You have to understand every little nuance of your product and feature so that as your team is building and designing it, you’re not missing anything. You really handle the entire complexity of that feature, you understand the data and what it’s actually telling you about what’s working and what’s not.
Now that you’re on the flip side, what have you learned as a VC that would have helped you as a product manager?
You feel like, we gotta get this thing out tomorrow, everyday is a crisis, our metrics just went down, have to do a hail Mary to bring our numbers back up. That urgency is really important for a startup and it can’t go away, but sometimes it becomes such an overriding force that you forget things can calm down and play out. The thing I’ve learned in venture capital is the nature of this job is to let things flourish over time. You can’t be clinging to it every day.
You’ve backed a good number of entrepreneurs who have already had successes like Jelly, Medium and Nextdoor – how does that affect the investor/entrepreneur dynamic?
I’ve been lucky to work with some very successful entrepreneurs, because they’ve gotten to see consumer apps rise all the way through, know what that means and still went back to the beginning to say “I wanna try to do it again.” The difference working with people like that is their balance of patience and urgency. They know when to lean in and when to play out. They have a sense of confidence. Their ability to recruit or perform in front of partners or press is quite different from a first-timer. On the other hand, there are many similarities to working with newcomers. You’re still figuring out how to tell your unique story and get users to it that makes it really compounding and successful. The scariest thing about being an entrepreneur and starting a new company is you’re always going back to ground zero. And ground zero is…it’s like everybody’s naked.
Josh Kopelman of First Round Capital recently wrote a post that explained that, if you believe the numbers, a new unicorn company was created every 9 days last year. Do you think things are out of whack, or is there something else happening? And more importantly, what does it mean for the venture industry as a whole?
What we all have to remember is the kind of companies that we’re building…the way that public market equities are valued is expected value of future cash flow that will return dividends. That’s simply how Wall Street looks at any company in any industry. It’s very important that we don’t lose sight of that. And when we look at these private market valuations, they’re basically everybody taking a bet that companies will turn into something much bigger. Some of these bets I think will pay off wildly. On the other hand, it’s probably likely that many of these companies, won’t reach the valuations that they’re at now.
And that’s what we should all be caring about is companies that are built to last.
What I think we really should do though is redefine the conversation. Venture capital, seed capital, is about taking an idea in a very early way and seeing if we can even get it to a company with real sustained momentum that grows users, customers, and revenue. That’s what we’re really gunning for at the very early stage. We’re getting caught up in these multi billion dollar valuations that are much later stage anyway, and thinking that’s venture capital. That’s not. Venture capital is about finding and nurturing the early ones to really grow and do it, and that’s what I try to do all day.
We love reflection and learning, is there an entrepreneur or company you passed on that you wish you hadn’t?
One of the companies I admire a lot is Teespring, which I didn’t manage to invest in. I think Teespring has found a really unique model to let other people be entrepreneurs and to really built a platform that’s win/win value. I worked at a company called Zazzle that is in a similar space for a number of years, so I was always a little bit gun shy about going back into the same space, having known all the successes and all the challenges that Zazzle saw. But I think Teespring has learned some very interesting lessons and is doing a lot of things right that and I wish I had more seriously and more aggressively invested.
What would you tell someone who wants to become a venture capitalist?
Build and work on great companies. Try to be part of the journey in the early days of something you think can become great. You learn the most about building a startup into something great by trying to do it. You can’t always pick right and everything else, but try to pick great journeys. And play whatever role you can. Some great VCs come from financial roles, some from product, some from technical. It’s certainly important that you invest in being part of those journeys. In order to help the next company that you invest in, you want that experience.
The other thing you get is a lot of great, incredibly talented people who also want to be a part of those companies and their journeys. And as companies changes and many of those people will spin off into other things in life, and you’ll have worked with all of them, so you’ll be much more connected and you’ll have built a great network, as well as being part of something great. and have a great network of people to draw on.
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