Existing subject matter expertise is highly overrated. Much more important is the ability to quickly gain subject matter expertise.

Obviously you want both-- a PM with both great generalist skills and excellent subject matter expertise. But when forced to compromise on one or the other, I always lean towards experienced PMs without industry experience over industry experts without strong PM skills.

After 15 years managing PMs, hiring PMs, and working with PMs at both BigCos and startups, my impression is that great PMs can quickly come up to speed on a new customer segment, technology, and competitive landscape within a few months. It's a joy to watch this learning process and how fast it can be for PMs who are good at quickly getting inside the heads of new customers and quickly understanding what it takes to satisfy those customers' needs.

The reverse-- subject matter experts without PM experience who can quickly become great PMs-- seems to be fairly rare. I've also seen cases where industry experience is as much of a hindrance as an advantage. PMs who are too familiar with "how things have always been done" might be bringing too much baggage and not enough critical distance and open-mindedness to the table.

I'm not implying that industry experience is irrelevant, only that it tends to be easier and faster for a great PM to learn a new industry than for an industry expert to become a great PM.

When recruiting, I find the sweet spot is to look for PMs who have solved similar problems for similar customers in an unrelated industry and whose background suggests empathy for our customers.