Ask HN: Reporting structure for a three-product startup?

A startup I work with is splitting its product into three, each of which will have around 10 people working on it, consisting of engineers, one PM and one designer. Plus there'll be a senior PM and a senior designer for the company as a whole. The question is what reporting structure makes sense for this company. The founder believes in a PM-led org, so each PM will be the main decision-maker in that team. So one option is to formalise this by having the engineers and designer in each team report to the respective PM. You probably don't want the formal authority to diverge from the real one. The alternative is a functional structure, with all engineers reporting to a head of engineering, all designers reporting to the head of design, and so on. The founder is not in favor of this because he (and I) believe that people should be aligned based on the business outcomes they're supposed to be working towards, rather than the skills they happen to bring to the table. What other factors or aspects enter into this decision, and how should we think about them?