The Product Gap in PE Value Creation 5/5: Stop Spreading the Peanut Butter
Most funds that recognize the product gap try to close it the same way. They add a technology or product-minded operating partner and point them at the portfolio. Makes sense right?
Say an operating partner covers twelve portfolio companies. Take out the fund-level work: diligence on new deals, LP reporting, IC, internal meetings. What's left is a few days a month per company. That buys board prep, a quarterly review, and a phone call when something breaks.
It doesn't buy what product change actually requires: time with customers, time in the roadmap tradeoffs with the product team and time rebuilding how R&D is allocated. Plus months of follow-through after all of that.
So coverage turns into oversight. The partner reviews the roadmap slide, asks good questions, and moves on to the next company. The management team nods, and nothing structural changes. Everyone is working hard, but the outcomes don't move. That's the peanut butter effect: a capability that needs depth, spread across breadth.
I think part of the problem is that closing the product gap takes two different kinds of work, and funds try to do both with the same person.
The first is a rapid turnaround at a specific company at a specific moment. A growth story that has stalled. A CPO who just left. A new platform deal in its first hundred days. An AI story that won't survive diligence. An exit twelve months out. That needs someone deep in the business for a defined stretch of time, someone who has owned product with a board watching.
The second is a model the fund can scale, you know, the standard Value Creation team page seen on most PE firms’ websites. It's a system, and it's what lets a fund hold every software company to an optimal product standard without an expert in every room.
An on-staff operating partner covering a dozen companies isn't well placed for the first job and rarely has time to build the second.
Full disclosure: this is the gap I built Provex to fill, so weigh my view accordingly. But I think operator-led advisory works best as an addition to the on-staff team, not a replacement for it. On the turnaround side, you bring someone in to go deep on one company for a fixed scope: buy-side diligence, the first hundred days, a bridge CPO through a vacancy, an AI readiness review ahead of a sale, or a stalled growth story nobody can explain. On the model side, the same person helps the fund codify what worked so it stays after they leave.
The operating partner then stops spreading thin and starts directing. They decide where deep product work is needed, send the right resource there, and use the shared model to hold everyone to the same bar.
If you go this route, be picky. I'd want four things from anyone doing this work. They've held the seat, owning a roadmap and answering to a PE board for the results. They've shipped AI products commercially, to B2B customers. They work one engagement at a time, not as a senior name on a proposal staffed by juniors. And they leave something behind that the fund owns, not a dependency.
That's the end of the series. If any of it matches what you're seeing in your portfolio, I'd like to compare notes.
