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It’s extremely difficult to identify which consumer companies may be breakout successes. What do you generally look for when evaluating early-stage consumer investments?

It’s always hard to predict when things are going to breakout. Think back to how many people were skeptical of Snapchat, and even of Twitter and Facebook at the beginning?

What I like to think about are things that address core human needs, founders with a vision of why it’s time to build the product now (instead of before or later), and clusters of early traction with very high engagement.

I prefer to see small groups of highly engaged users than a lot of disconnected people who are lightly engaged in the product.

I’m seeing several cases of PMs turned VCs. Does having product experience help in the VC business?

As a VC, you are betting on a founder and team to create a great product and build an enduring business, so having that product instinct and understanding is extremely helpful. Personally, I have been at companies in similar situations to many of those that work with are now in. This helps me provide insight on how to resolve certain challenges and help build a highly engaging product.

That said, a lot of product managers focus more on process, and on internal workings of the company, so don’t always have a view on what’s going on outside the rest of the world. It’s important to have both in VC.

Josh, do you invest in non-US companies? What is your criteria for evaluating them?

We know that it is possible to take a company from 15 people to 10,000 people in the Bay Area and many companies around here have done that. We think it is always possible but potentially harder to do so outside the Bay Area. Snapchat in LA is a great example of one who has done this.

We have seen plenty of great successes outside the bay area – in fact, three of my investments have been outside of the Bay Area (DC, Israel and Shanghai). One important discussion in each investment was understanding what advantages the founders felt in their areas and having a specific idea of how and why it can grow to be a large company.

For companies outside the Bay Area or outside the US, we are always open to exploring investing. Every region and area is unique so it will be important to let us know how you will grow your company specifically in your area. The main objective is to invest in founders who can reach and build a company valued in the billions of dollars.

What’s your least favorite thing about being a VC?

There are so many great people and companies I’d like to work with, but when it comes to actual investing decisions, we as a partnership only invest in a select number of deals a year.

One of toughest things about being a VC is not being able to invest in all the companies and founders I would like to work with.

What are your thoughts on entrepreneurs who cold email you? Is it a deal breaker or do you sometimes do connect with them?

Cold email is fine. I can’t respond to all of them, but at least try to respond to the ones that are well targeted and within my interest area. Depending on how far along they are, I will start tracking them and take meetings if it makes sense. Over time, it could be a great way to start a relationship!  No matter what, this gets a company on my radar regardless of a meeting.

What are your top 3 lines that people pitching you say that make you tune out?

(1) What are cohorts?

(2) I picked this idea because I thought it would be the most likely to get funded

(3) I think Facebook would never want to do this.

Josh, I’ve been following your career for a few years. Any tips for PMs who are aspiring to pursue VC as the next step? Does getting MBA help?

For a PM who is interested in VC, I say the best thing you can do is work at companies that go through the massive scaling stage from 15-20 people up to 500-1000 people. Seek those out.

An MBA does help you have a business perspective and framework, but it’s not necessary. Many of my partners don’t have them and I only completed one semester of business school.

1. When you realize that you can’t invest/engage with some great people/startups, do you still keep the conversations going or revisit the thread when variables have changed?
2. What is your advice on managing change at a large scale? When you know a product/company is going through a strategic shift over many months, whats your advice on day to day activity for PMs?

(1) For companies that are early, I certainly keep in touch and am always willing to revisit as things may progress. For my first investment SmartThings, we said no many times over the first year until we said yes. And we’ll often do this at a later stage too.

(2) For PMs, my advice is to do everything you can to keep shipping and building towards the new vision. If you start debating and your team stops building, you’ve already lost.

As a VC, what do you look for from the product team to contribute to a successful board meeting? Experiments and results? Strong vision? A roadmap?

At the board level, we look to see a solid roadmap and a cycle of learning and iteration. The founder/CEO should be great at communicating that vision and showcase how he/she is learning with the team and using their learnings to iterate or invest in bigger new ideas.

Deep learning and AI, over hyped or as big as the noise?

They will both be big, but it’d still very early and it’s unclear exactly how these technologies will be applied to specific areas or problems and where they will have the strongest impact.

Right now, I worry we are talking about these terms as “hammers” and trying to make everything look like a nail.

What should Twitter do?

I still think Twitter could be a 1B+ user product. Billions of people every day wonder “what’s happening?” and look to news from some sources to find out. For me and many active Twitter users, Twitter is by far the best product for that question. I think the real challenge is getting people to a Twitter feed that they care about and feels tuned to them.

The onboarding and ways to find “channels” of content could be so much easier. It has lost of a lot of momentum since so many people have tried it and given up. Now, they also need to do something different and cool to lure them back and then show them what an easy and powerful experience Twitter can be.

What are some smart examples of distribution baked into product itself? Specifically in enterprise market.

I spend my career investing and building consumer products so can only speak to distribution through the lens of consumer companies. I always hear consumer founders talk about making their product go “viral” to grow their user base, and there are many types of virality and distribution strategies that make that works

The most basic element common to all these different types virality is inception. The goal of all viral efforts is to insert (or “incept”) an idea of what a product can do into someone else’s head, and to get them so excited about it they want to try it and use it. That’s the most important component of any type of virality.

I wrote a blog post about this here: https://news.greylock.com/the-five-types-of-virality-8ba42051928d#.i29pd872m

How do you recommend a startup balance between planning ahead (i.e. having a set roadmap for the next x months) vs being able to flexibly deal with customer demands and changes in the market?

I think the best companies tend to have a strong north star for where they want to be in a few years.

But it’s hard to set the roadmap too much in stone beyond a quarter (or maybe two) as you learn more. I like to think of a roadmap as a single prioritized list of all the things you want to do. The features you are currently building go right on top and you can keep reordering until you start building the next one. The list is fluid as it changes based on new insights and customer feedback.

What is your #1 book every person on here should read?

Built to Last. If you haven’t read it, it will reframe how you think about companies for the long term.

As a follow-up, what are the top 3 books that every PM should read?

I think PMs should read Built to Last, The Outsiders, and The Circle. The first two made me think about companies and about financial institutions very differently and the last book is science fiction but useful to think about the implications of what we build.

The other thing I encourage is reading S-1 filings and annual reports from companies you admire. You can learn a lot from how they frame their business.

What is your everyday routine like that built you up for success in the long run? What do you think you did differently from your peers?

I wish I could say I was as organized as having an everyday routine. What I did do every year was think about where else I would want to work and thought about which company had the potential to be the next big thing and touch hundreds of millions of lives.

It might have been too often as I changed jobs more than a few times, but I always liked to think about and debate with friends on what could be huge and would get excited about those.

What is a common mistake you see startups make early on?  Have you noticed any trends in what helps them succeed in the longer-term?

A lot of startups early on try to do too much – meetings with big companies, potential partnerships and investors, while also trying to build lots of new features for the product.

The hardest and best thing to do is to focus on just those few bets that will make your company successful and reduce all other distractions.

One trend I liked was what I call “deliberate action.” The most successful companies I’ve been part of were very deliberate in the actions they took. They thought very clearly about why they were doing something (a meeting, a partnership, a feature) with clear expectations of what they hoped to gain. And then looked at the results afterwards against what they had hoped.

If it worked or didn’t worked, they could evaluate and improve their deliberate actions next time.

How important do you think experience in a large established company is for a young PM?  Do you think you can get the same quality of learning at small startups?

Tricky question. The best experience is to work on something that gets adopted by users. As a PM, when you ship a product and it gets adopted by lots of users, you are presented with opportunities to learn and iterate based on customer feedback. That is extremely valuable.

You can do this at a large company when you are working on core products that already have a lot of adoption or a small company where the adoption is growing. What I worry about for younger PMs is they don’t learn as much when they work on things that don’t end up working. The risk of that happening is a much higher risk at a small company, but it could still happen at a larger company, depending on the team or product.

Can you share your best advice for career advancement?

Work with a team to build something great for users. Test, learn, iterate, be creative and try big things. If you manage to be part of things that have a lasting impact, your career will certainly advance.

Would you say that you had your career path planned out from the start, making deliberate moves…or were you just open to whatever good opportunity that seemed reasonable/in your skillset?

I always knew I wanted to work on projects that could have a profound impact on lots of people’s lives. I’ve always been drawn to products with big visions that could reach a global audience.

I have always made a list of the places I’d want to work and, in many cases, went outbound to try and get those jobs instead just following what came to me.

What are the pros and cons of building a product on the back of a big platform like Facebook, Slack or one of the other giants?

One question founders ask me often is whether it’s recommended – or even safe – to build distribution on top of Facebook, Google SEO, Instagram or other platforms. No question, these platforms can offer massive distribution, if you get the magic formula right. But your product needs to have its own path to independence. If you ever get too tied to the platform, you are at risk of it changing.

I hate to be that awkward person who answers questions with a slide deck, but I have a hopefully useful talk on this: http://www.slideshare.net/joshelman/launching-a-rocketship-off-someone-elses-back

Do any of your portfolio companies (or in your prior experience in PM roles) have an effective way of tying Product Managers’ work to incentive programs/bonuses? We’re always debating how to evaluate PM performance and then downstream reward good performers beyond a qualitative assessment.

Great question. The best way I’ve seen to do this is to take two things into account:

(1) How well the team’s products actually do in the market and achieve their goals and product

(2) How much the team that worked with the PM wants to keep working with them (similar to a net promoter score).

For consumer products, new user retention is really important. I’ve heard people advise that retention can only improve so much and that big improvements are rare post-launch, that your retention level is largely inherent to the product you have. What’s your advice on improving retention and what was retention like at Twitter in the beginning?

In the beginning, retention in Twitter was surprisingly low. We made huge improvements by changing how we onboard people and tried to get them to better understand the platform and tune it for their interests. There is still a ton to be done here.

You could make huge improvements post-launch to get people using the product all the time – you want people to make it a habit to use your platform. There will be times that your product isn’t perfect but people are still trying to find way to use it, and that is a good sign. But if you can’t get anyone to the habit at all, then you probably need to change the core product so the experience is better for your users.

For an established company when and how do you choose to rebuild technology without alienating existing customers, as a VC how do you evaluate this hurdle in companies and long term success?

A giant “rebuild” is always a red flag since so many things can go wrong and it takes longer than you think it will.

From my experience, the model that works best is when people go piece-by-piece to rebuild and repair areas that can be improved, and add new user benefits each time.

Not all VC’s, execs, board members and alike are always motivated by “best” intentions for the company – some are toxic, pushing short time agendas, borderline disruptive etc. If you have had experience, how would you recommend dealing with such partners? Maybe how to identify such potential “threats” beforehand? Thanks.

Do references. Good people tend to stay good people, and people with red flags often make similar mistakes again. It’s those yellow flags that you really want to get to the core truth of. It’s important is to ask around and get a fuller picture of the person that you can’t glean from a resume.

The other key thing is truly open communication. Incentives aren’t always aligned (investors may have different incentives than founders) so you need to be super open about that in the discussion. Speak up if you think someone isn’t being aligned.

When are you going to take off the VC hat and start something up? If you did, what field?

I’ve actually never wanted to be a founder! I’ve always enjoyed joining other people’s journeys and helping them build and scale into something great. I’ve been doing that my whole career and plan on continuing to do that as a VC.

Often board members only talk to the founding team (CEO, CTO) and don’t really have a pulse of how the rest of the company feels about the leadership. In your companies, how do you measure whether the founding team is leading well on softer side of leadership? I have noticed attrition doesn’t always happen when there’s bad leadership.

It’s an imperfect science but I try to talk to people within the company as much as I can and try to help. It’s about listening and providing employees the opportunities to talk about what is happening within the company. And when attrition happens, it’s good to do exit interviews and get to the bottom of it.

At any given time I create design, manage emails, work with my developer, create sales leads, run marketing campaigns… would love some tips on how to prioritize it all and what signals you use there.

There is no great way to prioritize it all. A PM’s job is like spinning plates – you keep several things simultaneously going and add just enough momentum to each one.

The biggest thing I think is important is to make sure the team feels unblocked to build what matters. If your development team slows down, it will likely result in the worst outcomes.

Based on your experience in both product management and VC, what advice would you give to a consumer-facing product that is built by a group with no prior start-up experiences (college undergrads)?

Build something you like using. If you aren’t doing that, it doesn’t stand a chance.

Harangue your friends to use it. Listen to them — if they use it without you bothering them, that’s a great sign. If they stop, keep trying with something new. Once your friends like using it, then ask them to get their friends on and see if it spreads. If so, you might be onto something. If not, keep trying.

But, first and foremost, it needs to be something you want to use and enjoy.

Who is your Venture Capitalist Valentine? (aka what VC do you admire and crush on as the person you aspire towards)?

David Sze. He was involved early in LinkedIn, Facebook, and Pandora and has always had a very steady hand and long term thoughtful approach to the companies he is a part of. I have been lucky to learn a ton from him already and am still constantly learning from him.

From your past experiences working at various companies, what according to you is best way to get communicate effectively with different stakeholders and get buy-in?

I have found that the best way to communicate with stakeholders is with a clear narrative — what are you trying to build, who is it for, and what metrics you will use to evaluate it. I’ve seen people use different tools, like a document, great designs, or storyboard. You should stick with whatever is best and works for you to tell a story.

When a company isn’t working out, how do you think about exit options (e.g. selling, letting it die). Also, what can the founders do to not burn the bridges with VCs?

When building a company, the best thing a founder could do is try and make the company vision and mission come to life. Unfortunately, not all companies work out and founders could find themselves in an unwanted and unexpected situation.

VCs and founders work best as partners where everyone is communicating along the way so there are no surprises. If founders have fought valiantly and tried many things but are running out of ideas or money, then the last great thing a founder could do is to find ways to get the most value for the team and what has been created. That could mean several things including selling, winding down, or returning the remaining cash.

The situation is unique for each company, but no bridges are burned as long as everyone is transparent and doing their best for the company and team.

What’s the best way to get intro to VCs for folks who are not in bay area?

Come out to the Bay Area and start building your network. Alternatively, build something AWESOME and huge from wherever you are.

What is that one most valuable learning/advice from your Product Management and VC career?

Don’t lose sight of your big vision, and be good to the people around you.