Editor’s note: Joe Procopio is the Chief Product Officer at Get Spiffy and the founder of teachingstartup.com. Joe has a long entrepreneurial history in the Triangle that includes Automated Insights, ExitEvent, and Intrepid Media. He writes a column about startups, leadership and management weekly for WRAL TechWire. These are published as part of our Startup Monday lineup. Check out previous Procopio columns here.
RESEARCH TRIANGLE PARK – A long time ago, I was consulting for a company that raised its first big round of VC funding and then immediately hired a dozen VPs away from companies whose names you would be familiar with.
I’ve never seen 12 people do more damage to a business in a shorter amount of time. You couldn’t have more than two of them in the same meeting without it devolving into an ugly, awkward argument over who knew better based on their experience at the dying brand-name corporation they were so eager to leave.
I’ve come to believe there is one universal truth when it comes to company leadership: A startup’s leadership team, whether we’re talking about executive management or individual team leaders, needs to balance both the steady hand of experience with an unbiased approach to new ideas. You need that unbiased approach to take you to new places, but you need the steady hand to keep you away from costly rookie mistakes.
More often than not, those two traits seem mutually exclusive. But they don’t have to be. In most cases, finding effective leaders comes down to developing the talent you already have.
In the beginning, you have chaos
Usually, when a new company forms, the initial team is built almost magnetically, with founders attracting and retaining employees who are highly passionate about their idea and likely close by — through either physical proximity or a personal relationship. Because of that passion and familiarity, this initial team — say, the first five to 10 employees — will work harder and longer for less. But there’s only so much equity and goodwill to spread around.
Very quickly, a founder is faced with having to appoint and fill positions of authority within and around that initial team. Growth always brings chaos, and as more new employees come aboard and more new business comes in, there’s less time to communicate, collaborate, and understand the impact these new people and new customers have on the company. When that chaos starts to boil over, it usually means the demands of the business have outgrown the initial talent, and some critical decisions will need to be made.
There are no hard-and-fast rules for a startup about deciding who to hire and who to promote and when to do either. But here are some guidelines to keep your young company on the path to structure without overburdening your future company with too much structure.
Promote from within, to a point
There are very few downsides to promoting from within, especially at first. I think of it this way: One year of experience at the startup is equivalent to about two to three years of experience somewhere else.
It’s a common mistake to fill all your early leadership roles with C-level and VP-level titles. If you avoid filling these roles early on, then you have a high ceiling and a lot of room to work with over a longer period of time. I always like to keep titles nebulous in the beginning, right up until about that 10-to-20-employee mark, at which point leadership shifts from “assumed” to “defined” roles.
At that point, the business needs become a little clearer, and the leadership selection process becomes a matter of defining a leadership gap and filling it with the right resource. If you’re lucky, those resources might even identify themselves, and one of the most freeing things about startups is that you can promote a team member to leader without having to wade through a lot of corporate bull. In other words, if Tami has been naturally assuming the leadership role for technology, you promote Tami.
However, this method works only up to a point. You can do a lot of damage promoting from within when the folks who are promoted aren’t yet ready to handle the responsibility and authority of leadership. Always bear in mind that any C-level employee should ultimately be prepared to lead dozens or even hundreds of different types of people. Just because they crush the leadership of a small team doesn’t mean they’ll grow to have that breadth.
Always be honest and transparent when promoting from within, especially if you’re making “battlefield” promotions where the growth is quick and the gaps need filling immediately. Let your leaders know what the expectations of that role are now and in the future, and that anytime you promote from within, that promotion has to be perpetually re-earned as your company grows.
Don’t confuse seniority with leadership
While a good rule of thumb is that a year working at a startup is worth two to three years elsewhere, keep in mind that it’s worth no more than that. When you need a leader, you might need an employee with more experience than you already have on hand.
It’s rare that a startup comes together with an initial team built exclusively of leaders. In that first 10 to 20 employees, even within the founding team, you might have a leader or two, some midlevel managers, and a few nonmanagers.
Just because an employee — or even a co-founder — was there at the beginning, that doesn’t necessarily make them a good leader. Yes, those early folks are valuable and should be compensated for taking the early stage risk in ways above and beyond the outsized amount of equity they should have been granted for their role. But extra compensation doesn’t have to take the form of a title they’re not suited for. In fact, if you do promote an early employee into a leadership role too far ahead of schedule, you’ll do harm not only to the company — you’ll do harm to them.
Reward early employees with money and equity, not with titles.
Don’t hire too much outside leadership at once
When you’re ready to hire someone with more experience than you already have, make sure they can operate in an early-to-growth-stage startup. And hire them in slowly — one at a time if you’re under 20 employees, a few at a time if you’re under 50 employees.
When you do hire in experienced leadership, team them with people who have been at your company for a long time. Even though these experienced folks have already learned the ropes at other businesses, they need to learn your ropes — and, ideally, help improve them.
Don’t hire industry leadership — hire growth leadership
I’d always rather hire someone who has successfully grown companies across several different industries than someone who has been working in the same industry for ages without a track record of growth. There will always be the temptation for outside hires to fall back to their experience, so make sure the experience you’re getting is about creating new solutions, not repurposing the same things your incumbents and competition are already doing.
Remember: If you’re building your startup correctly, you won’t be simply copying the incumbents — you’ll be disrupting them. Find leaders who can and want to do that, and hire them, develop them, or do both and pair them together to help balance each other out.
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