In this World of seed / micro VC funded startups, round sizes are smaller than they used to be. That’s a good thing. But it can pose challenges when it comes to building out your management team. Either you can’t afford/ don’t need a full time exec or those execs won’t join because you don’t have enough cash in the bank to make them comfortable.
One way to deal with these issues to hire part time executives. I see this happening more and more.
For the two years right before joining Real Ventures, I was doing part time CFO work. Turns out there was huge demand for that. I learned some lessons along the way that I hope you can apply to your startup.
Part time execs work when:
You hire in non-core areas: Finance is super important to any company, but it is not a core aspect of the company’s mission and vision. It’s also a stand alone function. I could provide CFO services for a company without having to interact with different departments. So, finance is a perfect function to outsource to a part time CFO.
It can be more challenging for core areas. How do you deal with 1/2 a product manager or 1/2 a VP, marketing? Product definition, development and customer acquisition happen every day.
I know some marketing folks who split their time between multiple startups, but they were always juggling time and people were always disappointed. You can’t tell a startup “no, today’s not your day. I’ll get to that on your day”.
You work with people that are not just between jobs: If you’re sitting around waiting for your next startup gig, it can be tempting to hang out your shingle and say you do part time work. But, beware of people like this. They are not committed to part time work and will leave you when the right full time gig comes along.
Sean Ellis had an interesting model as an outsourced VP, Marketing. He would join full time but be focused on the initial phases. Once a product was launched and an initial user base built, he would hire his replacement and move on. I like that for core areas like product and marketing.
Some other thoughts on this:
Active advisors can play a role: Many startups put together “advisory boards” filled with people who have a sprinkle of options and provide no value. Not a surprise – you get what you pay for. A middle path between this and part time execs is paying advisors to be more active and giving them specific tasks.
You can’t be a little bit pregnant: Don’t fill your roster with part time people and expect to have a complete, dedicated management team. Don’t delude yourself. And don’t try to delude investors about it either. A part time exec is a great stop gap and can help get a company to the next level. But it’s very different from a committed, full time management team member who places a lot of value in his or her stock options in the company. As an investor, I don’t really want to spend time with the part timers. Only the full timers that are all in.
When I was doing my part time CFO work, some investors would forget this and treat me as if I was a real CFO in these companies. I would have to remind them that I was not there every day and not in the critical path of major decisions in the same as I would be if I was there.
Anyway, that’s it. Do take advantage of part time expertise. It can have a big impact on results and cash flow. But beware the pitfalls and only work with people who committed to part time work as a business and only do it in areas that won’t slow you down by having a part time body there.