Founding a startup requires a relatively high performance in a large number of relatively unrelated areas. Besides being good enough at product and problem solving to make something people actually want, you also have to be good enough at hiring, managing, fundraising, sales, marketing, culture-building, and much more. Not to mention specific areas of expertise you might need to master depending on your domain such as security, supply chain management, manufacturing, or whatever else applies. And especially not mentioning the skill of managing your own psychology well enough to guide your team through the years of inevitable ups and downs.
This is one of the reasons I think having some work experience is so helpful before starting a company. You don't need to wait until you've acquired every possible skill before starting a company, but if you're already proficient in multiple of these areas before you get started you have that much less to learn on the job.
It's also one of the reasons I've come to believe that more startups should hire a COO than probably do. Of course they will not be right for every company -- maybe not even most companies -- but my current view is that every startup that reaches product market fit [1] should at least consider whether it's right for them.
COOs are a poorly understood role, both because they do different things at different companies, and because people simply don't talk about them that much (although there is definitely good content out there like this video with Keith Rabois and this interview we did with Claire Hughes Johnson).
Our experience hiring a COO early at Lattice
I want to share my very positive experience with hiring a COO so others can consider whether a similar role would make sense in their situation.
We hired J Zac Stein, former VP of Operations at Zenefits, as our COO in November 2017 when we were just over 20 people. The idea was that he would be a general purpose business athlete who could run a function for a while, build up a strong foundation, leave it with great leadership, and then move on to the next thing. An executive "gap filler", as Elad Gil described in a recent blog post advocating for something similar.
In the 6 months since he's joined, here's what he's done:
- He's overseen the sales team through a leadership transition, allowing me to run a multi-month process to hire a new head of sales. Not only did the sales team grow our revenue by over 100% in the past 6 months, but they've also added early versions of sales development and sales operations.
- He's built up and led our customer experience team, as well as made the decision to bifurcate the team into customer success and customer support. This was a core area of expertise for him coming into the job and it's given me the freedom to work on other areas knowing it's in better hands than it was with me.
- He's been a one-stop-shop for legal, finance, analytics, and HR (aided by contractors), allowing us to not only hold off on hiring those roles, but also to have a much more experienced set of eyes on them than we would have with more junior hires.
- Now that our new sales leader is joining, he's overseeing marketing where he can apply operational rigor and managerial guidance. This allows us to continue betting on our less experienced but extremely talented head of marketing, which is very important to me.
So he's served as multiple VP functions, both at once and over time. Arguably, a dedicated VP in each area would do slightly better because they wouldn't be spread so thinly and would be a functional expert. There is some truth in that, but it comes at the cost of countless hours of hiring, integrating into the team, managing multiple personalities, and other related trade-offs. And potentially more importantly, the "executive gap-filler" role allows for much faster adjustment of organizational structure, strategy and tactics, and all sort of other organizational frictions you get with VPs who were hired on for a more specific purpose. When you're still early in your company's life, this flexibility is extremely valuable.
Part of the reason people don't hire COOs early is that it's simply not on the list of hires we're taught to consider. Everyone knows that early on you hire engineers and designers to build the product, sales reps and marketers to bring customers on board, and people to support your existing customers. As you start getting traction and grow your team, you hire managers, and as things become more complex and strategic you hire VPs.
But there is less canonical knowledge and public discussion about the COO role, and a result founders often just don't even think about whether it's right for their company or not.
The other main reason is that people are often anxious about hiring roles with so much influence. Whether it's because of the sense of loss of control and influence, the fear of getting the hire wrong, or the relatively high expense of hiring a COO, there are many of these kinds of anxieties that give founders pause.
Yes, nothing in life is totally free and you will have to give up something to have this kind of person on your team. But great people pay for themselves many times over, great COOs know how to make their CEOs comfortable with their broad scope, and if things truly don't work you should trust yourself to make the difficult but necessary decision to part ways.
Great leaders are supposed to hire great people and give them lots of responsibility [2]. That's your most important job. It's how you scale and it's what's required in order to build something great.
-
High degree of trust and mutual respect
In a startup environment, trust is largely a function of understanding a person's motivations and believing they are aligned with the company's and your own. Trusting the other person to be a reliable steward for the company's interests is built over time spent together, repeated interactions through challenging business questions, and an open line of communication.
Relatedly, mutual respect is critical because there's simply too much going on to be in each other's business and second guessing each other's decisions. The CEO and COO should be thought partners to spar with each other on challenging decisions, but ultimately need to have the respect for one another to be willing to "disagree and commit" when necessary.
-
Low ego on both sides
Ego isn't inherently bad. It gives people the confidence to take on projects they aren't quite ready for, do things like start a company, and generally maintain a positive sense of self. However, in the CEO/COO relationship, you have to be careful to not let ego get in the way if you want it to be successful.
As CEO, you fundamentally need to have the humility to admit you hired this person for a reason and will be allowing them to run a large portion of the company. This requires elevating your COO in the eyes of your company to allow them the authority and influence to do their job, and it means handing off functions that you might enjoy leading because you know it's better for the company. As COO it means towing the line between the ego required to accept that level of responsibility and the humility required to still respect the CEO's role. If things like handing off functions when necessary are going to be stopped by either person's ego, the relationship just won't work.
-
Clear delineation of roles
Geoff Donaker, who was COO at Yelp through a decade of meteoric growth, once sat down with me and J Zac and white-boarded out the three possible relationship configurations for the CEO and COO. One is the "Ted Turner model", where the COO essentially runs the company internally and the CEO is an external figurehead. This works only in the rare cases when the CEO is influential enough for this to be a valuable use of time. The second is the "two parent model", where both executives are equally responsible for everything. This generally leads to organization confusion, friction, and one of the two executives leaving the company.
The third configuration, which he described as the only stable one for startups and is certainly what we are going for, is one of clear delineation of responsibility. The COO runs several functions and the CEO runs several functions. Everyone in the company is clear on what those are, and while the CEO and COO advise each other on challenging questions there is no doubt about who is the decision-maker for a given issue.
-
Enjoy spending time together
Finally, I think it's critical for the CEO and COO to enjoy each other's company. It's simply too much time together, too many things you need to discuss, and too many issues that are intellectually and emotionally challenging that you will go through together. The relationship won't work if you don't actively enjoy each other on a personal level. You shouldn't start a company with a cofounder you didn't enjoy being around, and the same thing goes here.
One final thought for founders considering this role (or other very senior roles) is to remember the human truth that the more ownership and responsibility you give someone, the more they're going to care. Being a founder can be a lonely job, and bringing on an executive who grows to deeply care about your company makes the job a little less lonely.
[1] My favorite working definition of product market fit is the ability to hire a stranger who can sell your product to another stranger in a repeatable way. YMMV but this framework has been helpful for me.
[2] As an aside, I think people are often afraid of hiring people truly great people and giving them lots of control and responsibility. This is an especially common pitfall for first-time managers who are afraid that if they hire and enable someone who is too good at their job they will lose their job to them. In practice this never happens, and the exact opposite is the case; the hallmark of a great manager is someone who builds and empowers a great team, and anyone who knows what they're doing will evaluate a manager that way.