Smarter Executive Hiring for Startups

Fellow executive Michael Stewart once told me that his ideal position was to be head of sales for 5 startups, pulling in 25%+ salary from each with a percentage of sales plus equity. I don’t know if he still feels that way, but his statement resonated with me on several levels as it made alot of sense.

While Michael and other executives I know definitely earn their salaries, those same salaries are hard to justify for small or growing startups. Startups are then faced with a dilemma - hire an expensive senior exec who brings the strategy, planning, and wisdom you likely need, or hire a cheaper, more junior exec with some of what you likely need, but fits in your budget. Of course, the real answer lies in what you need, but there’s the rub. Do startups really know what they need? Early stage startups are almost always defined by a market vision that a group of customers want a product or service. They have an idea or early prototype, and they’re trying to make sure the product fits their intended customer or they are working to really define the customer that will buy and use that product. Sure, field research of 5 to 20 people may have helped, but does that really scale into the enterprise, retail, or massively deployed Internet presence?

Change that around a bit. If you think you really needed a seasoned executive, but your marketing or sales staff budget was $12k/month, would you hire one senior executive at $12k/month? A seasoned mid-level exec at $10k/month with change left over, or one senior executive, at 25% for $4k, plus another mid-level marketer for $7k/month. You would probably need to provide an equity incentive as well, but that’s par for the startup game.

While a number of executives in Silicon Valley have the strategy and implementation skills and experience to plan and execute, it’s not uncommon to find senior executives who dismiss implementation as ‘work that marketing staff does.’ Hiring the seasoned mid-level exec might get the job done, but there’s almost certainly going to be gaps where he/she will lack the experience or skills. Going with a part-time senior exec and full-time mid-level marketer would provide both the experience and implementation skills with the best odds for success. 

Now the part-time senior executive model might only be a short-lived solution, as success could require more management time, more executive team integration, and additional implementers, but this is also the beauty of that approach. Success has pushed off the full salary load of the full-time exec until there has been some success allowing for a cost-effective and cost-justified conversion to full-time.

The problems of this model are not insignificant and will come from both the executive and the hiring company. The executive will naturally want to be paid contractor rates to guarantee the perceived value for his/her services and will likely require equity even in a part-time role.  The hiring company will likely require board approval for all VP level candidates, possibly dragging out a 3k or 4k/month hire into the same hiring process for a $15k/month salary load. If the benefits outweigh the risks or complications, both parties will come to a mutually agreeable solution.

From a progress-minded view of things, I have no problem seeing that it could work, where I, as one of these executives, could find a way to make it work. On the other hand, I would like feedback from others on ‘Should it be done?’ I look forward to your opinion.

Startups and 'It's not my job'

After my article on 'hiring Moron X', I was lucky enough to get feedback from colleagues with experience at both small startups and larger companies. One comment led me to this article: "startup types may be ineffective in big companies due to turf wars."

Let me explain, with some background first. In well run startups, there's one phrase you rarely hear "That's not my job". On the rare occasion it pops up, it's usually followed by "well whose job is it and why aren't they in this conversation." In most startups, the team is well focused and aligned, everyone is/should be working toward the same goal. If an important job isn't getting it done, the team rallies, offloading, reassigning, or sharing responsibilities to ensure that the important things get done. When something needs to happen and resources aren't available, someone should, and usually does, step up to execute, even if it means night and weekend hours. It is important, after all. There's usually plenty of work to do, so people routinely step up, taking on tasks above and beyond their normal skill-set or training, even crossing functional boundaries.

In larger companies, operations are often broken down into more discrete tasks, where employees are hired as specialists in one functional area. This can lead to departmental and functional optimization where employees do a few tasks and are expected to do them well. If a task comes up that a specialist is not trained to do - they often have little interest and/or knowledge about how to execute on that task. Literally, it's not his/her job, and the task can be accomplished by someone more experienced with the proper skill-set.

Herein lies the potential conflict for startup types in larger organizations. When a startup type joins a large company and finds an important task not being addressed, they find a way to make it happen. They might do it themselves or try to acquire resource to quickly move forward. Unfortunately, trying to get it done and making it happen have different processes in a larger company. "Trying to get it done" may mean identifying the related projects, the required resource, the managers, and the chain of command that would normally get the task done. The startup person's task is one tiny priority among dozens of others, and when pushing his/her agenda, they often get the "I won't have resource until Y days/weeks in the future" response. In frustration, the startup person may do it himself, imperfectly, w/o the resources and w/o the blessing of the other managers, but doing it in a day or two instead of waiting two weeks before resource became available. This is how egos get crossed, walls get built, and turf wars begin against the startup person.

It doesn't have to be this way, and no one is really at fault, but this same cycle happens over and over again when the mindset and culture of the startup person is implicitly applied in the larger company environment. Often the manager who hired the startup person feels like he/she hired a rogue who doesn't fit, but in reality, a gap in communication and alignment has been exposed. It's really a learning moment and opportunity for the startup person and the larger company to operate more efficiently and effectively.

The solution is communication and goal alignment. When urgency, priority, resource, corporate advancement and opportunity can be weighed, managers and resources can be highlighted to allow a project to be executed in a more scrappy and nimble fashion, or the project urgency can corrected to more realistically reflect the priorities and goals of the company, focusing the startup person on higher priorities. I have seen communication and clarification work well, pushing a larger organization to new levels, but I've also seen the reverse, where the larger company manager is intimidated and insecure or the startup person can't adapt to the new structure.

Have you been involved either way? Successfully or not? Feel free to comment or contact me with your feedback.