What a CPO-Turned-VC Looks for in Her Investments

Published Nov 9, 2018

If your product addresses the future of the microbiome or empowers product and UX folks while saving developers time, chances are FirstMark Capital managing director Catherine Ulrich might like to chat.

The former chief product officer at Weight Watchers and Shutterstock is over a year into her role vetting and making deals and supporting portfolio companies of the New York City-based venture capital firm. She attributes her product background to preparing her to do the job and informing her investment thesis and interests.

So far, she’s made one investment, in the fast-growing NYC-based primary care healthcare service Parsley Health. In a news release on the deal, she revealed some of her leanings as a product person turned investor: she’s looking for products exponentially better than the rest, that provide a superior customer experience and create such attachment that a customer will never leave.

“Parsley is a 10x product. It is exponentially better than conventional primary care,” she said. “It provides a better customer experience along every axis (…) I love products where once you try them, you will never go back. Parsley is that type of experience.”

Ulrich’s product chops came to her naturally. Before a main stage audience at the INDUSTRY conference last month in Cleveland, she shared how she moved from a role in finance at Weight Watchers to become its first chief product officer. Recognizing her proficiency at solving problems, a mentor told her she’d be great at product management. It wasn’t long before she took the reins at Weight Watchers, helping leadership there think of the company’s offerings not as services, but as a product.

She collected a number of unique experiences over nine years at Weight Watchers. But most notably, she says, she learned how to build influence across an organization, how to create and lead teams and to keep her cool during the highs and lows of building a product and business. Many of those skills she’s now using in her work advising Parsley and other FirstMark portfolio companies.

Her prior work also gave her a unique lens into health and wellness, piquing her interest in the work researchers are doing around preventative care and understanding the microbiome. She also recognized the bottleneck sometimes caused by development during the agile process in product management. As an investor and product person, she wants to see more tools that allow product or UX teams to make simple front-end changes without adding backlog.

Beyond that industry focus, she’s identified some criteria for any deal she vets for FirstMark.

First, like any good investor, she’s looking for companies with product-market fit in big markets. But beyond that, she wants to understand the process a company went through or is going through to find product-market fit. In the case of Parsley Health, there’s massive, organic demand for the company’s non-traditional healthcare service. But Parsley had to put systems and process in place to determine the ideal customer experience for the service.

“I believe systems are more important than goals,” Catherine says. “I care more about the process you deploy every day and if you have a rigorous process of identifying all of your possible segments, understanding users, testing and prototyping.”

Second, she flocks to customer-centric founders, those who either know the problem they are solving firsthand or have learned it by getting close to real customers or prospects. Different from an enterprise investor who knows what SaaS metrics to watch and how to build enterprise sales teams, as an investor with a product background, she looks for companies that address the right customer needs first, and implement a process for determining that focus.

“The best product people I know blend the best of agile and digital product development with deep CPG-driven consumer insights to understand the why,” she says. “That is the unique mix I look for.”

It’s too soon to say whether Catherine’s background in product will also lead to great returns as an investor. Perhaps that’s the biggest difference between her past work in product and today’s deal-making, she says.

“Venture capital is a very interesting profession because you have a very long feedback cycle versus agile product development, where the feedback cycle is rapid,” she says. “It takes 10 years to know if you’re really good.”