Back when I was a seed stage VC I was always amazed to meet founding teams where every one of them had a C level title. CEO, CTO, etc. Now the beauty of having your own company is that you can call yourself whatever you want. But when dealing with institutional investors its important to be open and self aware enough to judge whether you truly have a C level team in their eyes.
I’ve been part of many startups now as either an investor or management team member. But FreshBooks is the biggest so far (Shopify is bigger but was much smaller when I was involved). We are at the growth stage, well beyond startup. And what we need in terms of leadership and management differs very much from what my past companies have needed.
When you all fit into one room or a small office, it’s relatively easy to lead and keep people focused on the right things. Today, we have about 150 people at the company and are growing rapidly (BTW, we’re hiring!). We have multiple teams and functions and people from diverse backgrounds – some from pure startups, some from big companies. As a growth stage company in a massive market there are many ways we can take the business. So pulling all of these pieces together to weave magic takes real leadership and experience.
What I’ve come to realize in my time at FreshBooks is “C Level” to us is very different from what it meant at smaller companies. It’s not that those other leaders were bad. They were great! It’s just that if you’re building a valuable, high growth, company your needs will change. The CTO you need at the start will likely not be the same person you need when you’re 100+ people. Some people scale and grow to stay ahead of what the company needs. Others don’t.
So one lesson for me is that it makes sense to build your C level team later. The further you can go before bringing in that team, the better people you will get.
Some startups try to import proven big company talent early. Sometimes that’s founder driven. Other times, investor driven. In my experience that rarely works out. By and large, “Big” co execs just don’t know what to do with small startups – especially before the market has been truly created. Validating and creating a market is very different from growing and fulfilling market demand. Also, you probably don’t need the process, frameworks and other scaling tools that these folks bring at this stage. You just need people who can build and sell product.
Don’t rush to anoint C level folks. If you feel the need to give an early hire or co-founder a C level title, realize that you will likely reinvent your management team multiple times between here and the finish line. That involves having frank conversations with your team members on a regular basis. Evaluate them based on their ability to lead where you’re going, not just where you’ve been.
Encourage your leaders to seek out peers and mentors and to work on growing themselves. My friends at Shopify take this seriously. They even have a full time coach on staff to help the leaders. It’s no coincidence that all three remaining founders hold C level leadership positions even as the company scales rapidly.
One caveat to bringing in the heavy hitters: Every company is unique. Your company’s culture is a reflection of you and your early team’s values. When evaluating leaders to take parts of your baby and grow them, spend a lot of time on cultural fit. It’s relatively easy to find the technical skills you need. It’s harder to find the cultural fit.
Related to that, spend a lot of time on alignment. Be frank about what you’re trying to achieve and when. If you’re looking to build an enduring long term company, but your management hires are looking to engineer a quick flip and then move on to the next – only bad things will happen. You need to be aligned on direction and timeframe.
With product, your mantra should be: ship early and often! With management teams your mantra should be: build late, change rarely and handle with care! Good luck…