Why You Shouldn’t Have Too Many C-Level Executives
I was in the lobby of “Donald Ventures” office on Sand Hill Road after I completed my 1:1 with “Raul,” the partner leading DV’s investment in our company. One of the associates at the fund walked by me, and said hello.
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I asked him how things were going, and he said, “I’m now Donald’s Chief of Staff.”
“Really,” I said, trying to keep my poker face intact. “Congratulations.”
We chatted for a minute until we both went our separate ways. Then, I walked out of DV’s office to my car, and I started laughing.
“What a joke,” I said to myself. Then, knowing Donald, I said, “That’s a vanity play for Donald’s ego.”
Let me put it in really simple terms for you:
Your startup doesn’t need a Chief of Staff!
Sorry to burst your bubble, but you’re not the president of the United States. You don’t need a chief of staff.
You don’t even need an administrative assistant when you’re starting out. All you need is a calendar.
However, if you want to have title inflation galore at your startup, then go for it. Make someone your Chief of Staff.
That reminds me of one of the worst mistakes I made as a startup CEO. “Randy,” one of my co-founders really wanted to be Chief Operating Officer.
We had already agreed on Randy’s ownership in the company and his salary, so all that was left was the title. Randy had over 30 years experience, and he was a true heavyweight.
So, even though Randy was going to managing test engineering for the company, I gave him the title of COO. And, man did I pay it.
Giving Randy the COO title was one of the worst mistakes I made as CEO.
Why? We didn’t need a Chief Operating Officer. And we likely wouldn’t need a COO for a long, long time.
I had violated the basic rule for titles: Give someone the title they deserve, not what they want.
Randy wanted to be COO for all the wrong reasons. Randy had never been a C-level executive before, so becoming COO fed his ego.
Becoming COO also put him ahead (at least to Randy) of the three other founders. Randy was a bull in china shop, overstepping his bounds every chance he could.
There were so many interpersonal problems Randy had that I had to fire him.
I wondered, after I let Randy go, if we would have had these problems if I had given Randy the title he deserved (VP of Operations)?
I’ll never know, but I do know that giving Randy too big a title was the wrong decision. So, with this life lesson in mind, here are my basic rules for early stage startup titles:
A. Beware of giving C-level titles.
I’m not saying to not give someone a C-level title to save money, I am saying stay away from C-level titles unless there truly is a role for a C-level executive. This leads to the next rule…
B. The only C-level founder you should have (besides CEO) is maybe a CTO.
Giving some the CTO title makes sense f you have a technical genius that is going to provide the technical vision for the company. Having said that…
C. You never need a CFO, CMO, CSO, or COO as a co-founder.
Sorry. You don’t. And someone that “needs” that title to join your company is not the right fit (for more, read: How Do You Join (or Build) A Great Team?). Plus…
D. You will not need a CFO at the start.
You will need someone part-time to help with the books, but you will not need a full-time CFO until maybe the $10 million/year mark. And…
E. VP Sales will be your most important hire at the executive level.
So choose very carefully because this person is going to have a large say over your success. And, along these lines…
F. Wait a bit to hire your VP Sales.
You will likely not get anyone good until you get well beyond the $1M/year level, so wait until you have a repeatable selling process. That means…
G. You, the CEO, are going to be your company’s first VP Sales.
Being VP of Sales turns out to be really important for CEOs because you learn how your products actually sell.
H. Too many C-Level titles may hurt your chances of getting funded.
Okay, this last one may sound counterintuitive, but hear me out.
If you have an eight person team with a CTO, COO, CFO, CMO, and CSO, that's a potential warning sign to investors. The reason is that a small startup, as I explained earlier, doesn't have a need for these roles.
So, it will appear to investors that your executive team is onboard for the wrong reasons (the title), instead of for the right reasons (a belief and fanaticism about the company). You don't care about titles if you're fanatical about the cause.
That's why you need to be very careful about adding too many C-level executives too early in your company's life. It can hurt you in ways you never imagined.
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