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.

Do You Suffer from Induced Success-a-phobia

Silicon valley is a great place to meet entrepreneurs who, at first glance, have good or even great ideas with serious potential. In many cases, however, I've seen entrepreneurs afflicted with something I call induced success-a-phobia (my term) - or induced fear of success.

It’s easy to get stuck and distracted by the wrong things. After all, there’s no shortage of service providers trying to sell startups their services, sometimes waving the FUD (fear, uncertainty, and doubt) card or sometimes dangling promises of funding or customers. Some of these consultants are really good, sensing an insecurity or chink in the entrepreneur’s armor, and finding a way to extract money from the entrepreneur for non-core issues. It might be legal docs, business plans services, detailed financial projections, patents, revenue models and forecasts, slick marketing plans, etc. While those administrative tasks should not be ignored, entrepreneurs need to really ask themselves if what the service provider is selling will help the business succeed. Without answering that question, it’s easy to get so buried in the administrative distractions that they never execute on their vision.

A friend pointed me at a young, 23 year old CEO, whose first two companies were not ground breaking or even high-tech, but this CEO had a vision and repeatedly executed, simply following through on what needed to get done. He created a business where there was none, recognizing the needs he could fill, then taking the steps to fill them. He did not appear to lose much time on raising money, either, mostly focusing on customers and sales. Both of the first two businesses did not sound like they were VC backable, but as an entrepreneur with a vision, he plowed ahead and executed anyway, seemingly oblivious that he was pursing tough businesses with few technical advantages on his side.

This CEO epitomizes the gumption that I often see missing here in the valley, regardless of age and experience. He saw a need and filled it, without an if, and, or but. He just went for it. He had an idea, figured out what needed to be done, then put the plan in motion. In his case, even flying to China to setup manufacturing, building a sales team, then aggressively building channel at Mac World. He did all that at 19. Of course, that’s a rare case, but compare that to what I often see entrepreneurs doing here in the valley. If they don’t get stuck in analysis paralysis by simply going to endless meetups and startup seminars, they come down with induced success-a-phobia.

While my advice may sound flippant, there’s a key concept where many would-be entrepreneurs should start - “Nothing great was ever built by worrying about why it can’t be done”. I sometimes use a sports analogy to lay it out in simple terms, and my apologies to the original idea owner: “You can never take a swing if you don’t step up to bat, and you can never hit a home run if you never swing the bat.” Know the key elements that matter in your business, and take the steps necessary to get where you want to go.

Are you an expert? or Where do I put in my 10,000 hours?

I few months back I spoke with a young marketing intern, and I asked him how he was preparing to enter the job market and land a marketing job. He responded “I’m reading alot”, and then proceeded to name some online magazines he was reading on a weekly basis. He then expanded on how he attended two webinars the previous week on viral marketing. Fast forward to this past week, when I just finished reading Malcom Gladwell’s “Outliers”, which has a section on expertise and gurus.

Gladwell speaks about the the sheer number of hours of practice the experts put in, citing the 10,000 mark as some commonly accepted level. Somehow, by sheer force of will and desire, the examples in the book put in 10,000+ hours to become recognized experts - the truly exceptional. Gladwell places Bill Gate, Bill Joy, and even Wozniak and Jobs in that group. Now 10,000 hours is alot, that’s about 5 years of practice 8 hours a day or 10 years at 4 hours a day. It’s possible, and somewhat realistic, then, that software developers and coders that I’ve worked with could have reached their 10,000 hours around 7 years of full time work, if they only wasted 1-2 hours a day in meetings, code reviews, QA, etc. Fortunately, most web developers work in only one to three languages, and the coding principles are highly leverage-able between languages.

So I asked this fellow who would he would hire - someone who read alot, or someone who was actively trying to test the things that he learned in his reading. He said that the person who practiced what he learned would be a more valuable hire. His words “you take the guy who probably screwed up elsewhere, so he won’t screw up on your dime.”

So how has my simple questioning impacted my young friend? The next time we met, he had joined a group that was creating and implementing a marketing launch plan for a non-profit. They were meeting every week and slowly moving the project forward. When I pressed for details, he added “this is nothing like the webinars - the team has so many conflicting priorities and resource constraints that nothing can be done in a step-by-step fashion”. I asked if he learned anything. He said he did, and that next time he could avoid the mistakes his team was making now.

While it’s only a start, my young marketing friend has started his journey toward the 10,000 hours of practice he needs to become the expert he wants to be. More importantly, he’s started to learn that experience is more than reading and watching webinars, and that getting his hands dirty gave him a new and marketable perspective.