The question of when to recruit a COO (head of operations, whatever the title is) depends to a great deal on what you as a CEO need to focus on.
The Strategic Importance of Operations in Start-ups
This is probably the most strategic recruiting you will do during your tenure at the company, so, no pressure. It informs just about everything you will get to focus on for a long time. Really, there is no pressure at all.
For the sake of this article I will assume two things;
- The company’s product is (mostly) software based. The outline here applies regardless of the business model. I.e. SaaS, Term licenses, Perpetual licenses.
- You, the CEO, are a Products person. I.e. the reason why you founded the company was so that you change the world by developing that software solution that has been keeping you up at nights. You know, the only thing you are ever able to talk about under EVERY circumstance, with EVERYONE. (I’m sure you relate).
You haven’t slept properly in months, because you’ve been so excited about how you might build out that product. You’ve met with a lot of your peers, and people with more experience than you most of whom have given you positive feedback and constructive criticism on your plans. You’ve come up with some funding and you’ve recruited a small team of engineers to help you develop the solution.
In essence, you are Richard Hendricks of Silicon Valley fame, but hell bent on not making the same idiotic mistakes as he does on a regular basis.
You’re a products guy/gal. Up until the time when you launch the product, the most important things that you as a CEO can do are:
- Defining and over-communicating the vision
- Building the company’s culture
- Managing relationship with your source of funds (investors)
- Creating a magical product that will change the world
Why these things? Because the first two things are what will attract the best talent. Without recruiting superior engineering/creative team you will not create a world-changing product. The third item means you will have the wherewithal to develop the product and absolutely everything depends on getting the fourth item right. Without that, the skies will fall and the world will end.
And that’s all she wrote, no?
So, if you are taking care of the 4 items above. What would a COO be doing meanwhile? It isn’t necessarily obvious, especially not compared to the person you will hire as head of marketing, finance, or the CTO you will probably already have hired.
The COO’s role
The COO’s role, is probably the most varied in all organizational design. But a good COO is well versed in all aspects of the business.
- They “get” the technology, because operational decisions have to be made that are to a large extent based on technology. Everything from selecting a hosting partner to planning support management
- They have a firm grasp of finance and can do the necessary managerial accounting/reporting
- They may develop the go-to-market side of the company while the product is under development
- Handle the creation of marketing strategies, segmentation, creation of collateral and preparation of marketing communication
- Recruiting the sales team
- Ensure enablement happens
- Develop channel partners
- They work on recruiting and retaining the best Talent the organization can have.
- Select and modify the Systems, Infrastructure and Ways of working, that you will need to get off the ground and scale with a growing customer base.
- If, and when, you start Series A and B (and subsequent) rounds of finance your COO is the person that steps into most of your responsibilities so that you can focus entirely on finding the correct VCs to work with (or any VCs so that the company survives). Because that, in itself, will become a full-time job for you.
In short, they set up the rest of the organization and prepare it for running the product once you are ready to launch. And no less importantly, make sure that you can handle the growth when you have successfully launched.
So who is it?
Someone who complements your strengths. You (probably) know what you are good at, where you excel. You also (hopefully) know what needs to get done in order to successfully sell your product and grow the company. Make sure your COO can carry the load where you fall short.
It goes without saying, so let’s say it anyway. There needs to be trust, full and absolute, between the two of you. Any-, and everything needs to be on the table.
This kind of trust almost never happens unless you gel on a personal level. You will be constantly communicating, taking phone calls at inconvenient times. You better enjoy each others company. But u u uhh… before you think **Airport Test** let me stop you right there. There has to be more than passing the airport test.
All this communication means you both need to be able to “tell-all” in a frank manner. Any communication issues must be dealt with immediately so that the trust remains.
You have to be able to present a united front and speak in the same language to employees, customers and investors alike. I like to think of the role as “the other half” or “the partner”.
Now that you’ve launched. Get ready for your role to change. You’re not going to get to focus so much on the product. Sorry. I know you love it. But now you need to focus on the corporate strategy, where to take the company and expand the stakeholder relationship to include customers as well.
You will of course also recruit heads of Marketing, Finance, Sales, HR, etc. But, the diverse experience your COO has means that (s)he can wear many hats and step into different roles as needed while the company is getting off the ground.
They understand what is important to achieve within each function and drive for measuring performance towards the organization’s goals.
P.s. if you, the CEO, are NOT a products person and would rather have someone else build the product, manage the Go-to-market, handle the financials and so on. Feel free to ignore the rationale above. Recruit a COO because it will make your life easier.
Just make sure you’re not adding another version of yourself (Mini-Me went out of fashion with the second Austin Powers movie).
You need someone that compliments your skill set. Not (only) to sit with at the airport.