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Entrepreneurship: Who to Hire

When a company is started it’s crucial to ensure that the right people are brought on board at the right time. All too often a company starts up with a slew of techies with little or no business acumen and even less understanding of markets and market drivers. And since every successful company must sell product to a customer it’s crucial that the company determine who those customers are as early as possible.

After my time at Texar I’ve come to a series of conclusions as to who should be brought on early, who should be brought on at various stages of corporate growth, and who should never be brought on. Although my take is my own it seems to jive with what most other entrepreneurs see as the correct sequence. In at least one case, though, my belief is at direct odds with what investors, especially, view as crucial to getting a start-up to success. My disagreement stems from the belief of how the senior management team should be arranged, especially with regards to how super successful high-tech companies look at the senior level. Here I’m talking about companies like Microsoft, Oracle, and Newbridge from their formative years until IPO. My beliefs in this matter I’ll leave for another discussion entirely.

In the meantime, let’s examine the timeline of a company from the perspective of hires.

Initially a company starts out as an idea that a single individual, or small group of individuals, has. A belief that they can change the way the world does something. That something can be just about anything, but let’s assume it some form of technical wizardry which will facilitate work in the office. It really doesn’t matter what the product is, as you’ll see.

With this initial idea and the small cadre of individuals who believe in it passionately we’re going to assume that enough money exists to at least get this past the “cool idea” stage and all the way to the “an idea invested in” stage. The amount invested is immaterial, although an idea invested in by Venture Capitalists will have their imprimatur as opposed to the founders’. Either way, it’s crucial that certain individuals be brought on early or be part of the initial group. Professional investors won’t disagree with this part of my discussion, although they may well disagree with what’s to come.

Every start-up, even pre-money, has a number of founders. These founders are the heart and soul of the company. They believe in the technology passionately and drive the product forward. However, if they’re typical techies they won’t drive it forward from a sales and marketing perspective. Nor will they necessarily drive it forward from a customer perspective. Techies, being amazingly arrogant, won’t focus on customer needs until later in the development cycle thinking they now exactly how to change the world and what their product needs in order to accomplish this feat. This is simply wrong — well, at least wrong-headed.

So who do you need? A number of people. Let’s enumerate them and then go into each of them in detail.

  1. Chief Executive Officer and President
  2. Financial Officer
  3. Chief Technical Officer
  4. Product Manager
  5. Quality Assurance Manager
  6. Project Manager
  7. Technical Staff
  8. Executive Assistant

Chief Executive Officer and President

Someone has to run the company, and this someone needs to have a certain amount of business acumen. They have to be able to understand balance sheets and the general books associated with the proper running of a company. They have to be able to explain to the Board of Directors what the company is doing, to the employees why certain things are being done, and to customers how this new technology will change their lives for the better — in effect, why the customer should part with their cash for this particular product.

The CEO is the visionary of the company, blazing the trail towards the customers who will buy the product. He or she must be able to understand the customers requirements while at the same time understanding what the company is building. And, if the two are incompatible they must either decide if the product is ill-suited for that particular customer, if the product is headed in the wrong direction, or both.

Regardless of direction, the CEO must retain a level of focus that remains unswerving. They must believe the direction chosen is correct and must ensure everyone in the company believes this as well. If anyone doesn’t, then that person becomes a disruptive individual who must be dealt with. The old adage that one bad apple spoils the lot is especially true in a small company. Furthermore, keeping such a person around hurts morale while eliminating the person improves morale. This may seem oxymoronic, but it isn’t.

In effect the CEO is the company’s ultimate salesperson. Driving the company’s product vision forward with customers. This person must be passionate about the technology and be technologically aware. To me, the people that best epitomize this type of person are Bill Gates, Larry Ellison, and Terry Mathews. They get technology. In fact, they love technology. This passion shows through in their discussions of their technology, their product lines, and their company. If a CEO is in it “to get rich” they will achieve the exact opposite. “Getting rich” is an after effect of the success of driven focus. Of believing. It isn’t the effect of pushing incorrect product down the throats of unwilling customers. It is the effort of matching customers with product in such a way as to ensure that the product enhances some aspect of the customer’s life. This is typically calculated as some form of return on investment (ROI). And ROIs are typically defined as cost savings, increased revenues, or improved productivity. If you can’t show this to a customer quickly and easily, then your product won’t have a chance. This is the true job of the CEO — to sell the vision as an ROI for a given customer. If an ROI doesn’t exist for a given customer then it is the CEO’s job to tell the customer that there isn’t a fit. This leaves you in good stead with the customer! They’ll remember this and when they finally do need the type of product you’re selling they’ll most probably buy from you first.

Financial Officer

Someone’s got to keep track of all that money you’re going to make. If you’ve been funded by investors someone is going to have to explain monthly to the investors where you’ve been spending the money they gave you before you start earning revenues. As it’s highly unlikely that you’ll have someone in the company that is capable of handling the books in a proper and professional way, the best thing is to bring a financial officer on board. At the very least you’ll have to bring a comptroller aboard. Whoever you choose should be someone you trust implicitly as they’ll have access to all of your books, your bank accounts, etc. Initially this person can be on contract. There are a lot of qualified financial people out there doing this type of work for startups. Look around, find said person and bring them onboard.

A good financial officer can do way more than just the books. They can handle human resources, benefits packages, leasing, office provisioning, legal requirements, and investor liaison; as well as all the financial issues including budgeting. When you move into real office space he or she’ll also be able to handle finding brokers, assisting in negotiating the lease, hiring contractors to set up the space correctly, etc.

In terms of human resources they become invaluable resources that can deal with the various issues that will come up. A good financial officer will understand the workings of the company and ensure that individuals work together correctly and head off potential conflicts. They also deal with remuneration issues, ensuring that everyone understands that they are getting paid fairly and that individual remunerations are kept private. A good financial officer will know the pulse of the company as well as its character. He or she will easily and quickly assist in determining whether or not a potential new hire is a fit or not.

Monthly reports to the investors and CEO as well as quarterly Board meetings will be coordinated by the financial officer. When done correctly the Board will be presented with the numbers and no questions will arise from their presentation. The Board may have questions concerning particular expenses, but nothing should be out of the ordinary. In fact, if spending is getting out of budget the financial officer should inform the Board and the CEO as soon as possible. Yearly shareholder meetings will also be coordinated by the financial officer and all issues pertaining to options and shares will be handled by the financial officer.

Chief Technical Officer

The technical officer is often one of the key founders, but one that is both managerially and technically adept. This person must be able to motivate the technical staff while explaining complex technical details to the Board and to potential customers. They will inevitably be on sales calls. With start-ups potential customers will want to talk to the founder and CTO. They will want to have the CTO “nerd” with their techies, ensuring that the technology is something that is realizable and will actually meet the requirements as outlined by the customer. The risk profile associated with a start-up is much higher than with an established company. Anything that can calm the nerves and lessen the perceived risk of the potential customer will be welcomed. This is especially true of any early adopters who want to live the life of a start-up vicariously but can’t afford to assume too much of the associated risk.

The other major job task for the CTO is to work on designs and development with the technical staff and instill in them the long term technical vision. This vision is what the product means technically. The CTO also has to take customer requirements and ensure they are being properly reflected in the product and design. In some firms the founder is both the CTO and CEO. Initially that’s fine. But long term it may end up being two jobs, with the founder opting for the position he or she feels is the best fit.

Finally, the CTO is not a paper pushing job. It’s a hands on job. The CTO is the first techie. The first developer. As the team grows they will become more abstract in terms of the work they do, but initially they need to be familiar with the technology, the process of developing software, and how software is marketed and sold to customers.

Product Manager

I’ve said numerous times that a good Product Manager is worth his or her weight in gold. The reason for this is simple: it’s just so hard to find a good Product Manager. Finding poor ones is easy, but finding one that stands out — that’s hard!

One of the strange things is that when you have a poor product manager you may not be able to tell for a while but when you find a good Product Manager you can tell immediately! And the difference is striking. The good one is always in contact with everyone. He or she will be buddies with sales staff, and marketing staff. They will become one with the technical staff, they’ll hang out all the time with the QA team and senior management. They’ll be there with the other managers worrying about process and ensuring the process that is there benefits the company and doesn’t just meet the letter of some favoured development process.

One thing you’ll rarely find in a good Product Manager is that he or she is in their office. You’ll walk past the office and you’ll see hat and coat, various personal paraphernalia, perhaps even their computer but rarely will you see the Product Manager. The only time you will see the Product Manager is when they are doing one of the following:

  • arriving to work;
  • on the phone with customers, sales staff, or marketing; or,
  • leaving for the day.

Oh, you may well see them other times as well but usually it’s because of one of the above are occurring. And if you watch them closely you’ll realize that the phone calls are all done at the same time each day. That they operate on a schedule, dealing with QA issues at one time of the day, marketing at another, senior management at yet another, technical issues at still another, etc. It’s quite amazing to watch.

And there’ll be output. They’ll send you questions that will leave you scratching your head. Not because they’re stupid questions — although we all send our fair share of them around — but rather because their deep. They’ll question assumptions because they don’t have the baggage you have with respect to the product. They’ll ask why repeatedly until you start to question why things are done the way they are. They’ll try to find out why the product or technology was designed and built the way it was so that they can reflect that back to the marketing materials. They’ll want to ensure the customer’s needs are handled by constantly asking for the system to operate in ways that seem simple and yet belie the complexity of what’s being asked. For example, the simple interface is usually the hardest to code. A GUI, for example, appears simple to the end user; the command line appears difficult. The former is difficult to program correctly, the latter trivial. The developers will want to design and build to the latter, the Product Manager will rightly demand the former.

Thus the Product Manager will not be well loved at times, but a good one will always remain well respected. Even when delivering the worst possible news about how the product should behave according to the customers, the delivery will be such that no-one will take offense. The most amazing thing you’ll ever see a great Product Manager do is have the sales, marketing, QA, and engineering teams all agree with him or her while violently disagreeing with everyone else. As a good friend of mine would say: it’s a beautiful thing!

Sadly, at the early stages this very valuable individual is someone you probably won’t have the capital to hire — unless you’re well funded. Instead, the duties will fall upon the CTO or CEO or the senior developer. But the tasks need to be taken care of so that when you grow you’ll be able to bring in a Product Manager who will actually be able to get up to speed by reviewing the process as it currently exists. If the place is run by intuition and chaos any growth necessary will be seriously hampered.

The good thing, though, is that today there are a lot of great process-oriented tools that can help run a software project. Wikis and blogs, for example, allow for a simple, centralized area to keep track of ideas, bugs, information, design, etc. This allows new hires to easily integrate since little if any information is locked in someone’s desktop. In fact, a well run development team will do most of their communications via a wiki leaving the number of emails circulating down to a minimum. And that’s a very good thing.

Quality Assurance Manager

This isn’t the 1980s anymore. You can’t just have the source code compile, pass a couple of simple tests, and then ship it out the door. It has to work nearly flawlessly. Your initial customers won’t stay long if you deliver crap. You’re software is the corporations first impression. If you deliver shoddy work it will paint your company as a company that delivers shoddy workmanship. If the support you offer is similarly bad, then you’ll have major problems. And, since initial customer support should be handled by the original technical teams (quality assurance and development), any additional work downloaded due to poor quality delays future releases, which result in missed deadlines, which, in the end, create a poor reflection of the company’s ability to deliver.

Whoever is hired as QA Manager must be able to stop the product. In fact, each of the QA staff should be able to halt production of the product if they see fatal flaws. The QA system should be set up to quickly deliver errors and bug reports to the development team and the development team should be in constant and friendly contact with the QA team. Their efforts aren’t at cross-purposes, both teams are striving for the same thing — deliver a salable product to the customer that meets the customer’s needs.

A process, put together with the Product Manager and Project Manager, is crucial to ensure the smooth flow of information concerning the qualitative state of the product to the entire company. Part of that process should be the internal deployment of the product, if at all possible. “Eating your own dog food,” as it were, is one of the best ways to discover flaws in the design and implementation of any product. Having to deal with your product the way your customer must deal with it is vital so as to understand where your customer is coming from when he or she finally calls in that first complaint or feature request.

Don’t scrimp on a QA Manager. A good one will utilize his or her knowledge to leverage the QA staff via technology to make them even more effective than otherwise possible (think Wikis and version control and automated bug tracking and automated testing). In fact the QA Manager should play a crucial part in the hiring of technical staff and for that reason I place the QA and engineering staff under a single header, technical staff.

Project Manager

Initially you need someone who is process aware. Later you’ll want to move this person up in the organization, either as head of deployments (professional services) or, if sufficiently technical, as CTO if you have someone doing double duty. The goal is to get some semblance of process in early during the chaotic period of the company and then replace that person with someone who is process driven.

This may seem odd but is, in fact, totally logical. In a small team having a process will only slow things down. It’s best to have something that evolves, something that will be tuned to the company and how it works. The Project Manager in conjunction with the QA Manager and Product Manager will create a loose process that facilitates the development and testing of the first version of the product. This initial process won’t be onerous and will, in effect, insinuate itself as part of the technical culture. Once insinuated it can be formalized as “the way we do things”. At that point the process has a life of its own. New hires are indoctrinated by the technical staff.

Think this won’t happen? Take a look at any open source project. The initial team members set up the process and then it is mandated by these same members to future team members. If anyone doesn’t wish to abide by the process they are summarily ejected out of the group. Without this type of control most open source projects of any size would be totally unmanageable.

If the initial Project Manager is also a strong techie, then the goal is to move that person into a higher position. The best position is CTO or Chief Scientist. Here they can think about how to better the product without having to worry about the day-to-day issues concerning process, bug reports, etc. They can interact with senior management, customers, sales, etc. ensuring they understand what needs to be done. Then, in conjunction with the QA Manager and new Project Manager, he or she can ensure that the technical staff are made aware of new requirements or directions. Markets will always drag start-ups in a variety of directions, it is the job of the senior technical staff to ensure that the market currents take the company where it truly needs to be and not towards one fad or another.

What if you don’t have a position to move that initial Project Manager to? Make one! You hired the best, right, then that person is still massively useful! And since the company is just a start-up, you’ll easily be able to create a new technical position for the person to fill. You need the person to be in a position where you get to leverage their intellect! Focus on that.

Today it’s easy to set up the process aware system what with project-oriented wikis such as Jira. You can stand up a process-aware (or process-driven) enterprise easily and cheaply. To not do so will only result in unnecessary development pain and suffering.  Plus, the tools allow you to track time, bugs, etc. that will be used to get those useful research and development tax credits some countries like Canada have, for example!

Technical Staff

The technical staff are the ones that have to actually design, build, and test the product. This one should be pretty obvious but often isn’t: you do want to hire only the best. If the people you’re hiring aren’t the best, why are you hiring them? Have the entire team interview them, put the potential new hires through their paces. Make sure they’ll work well with the existing team. If there’s any doubt at all, do not hire the person.

If at all possible hire a senior designer early on if one doesn’t exist amongst the founders. If this person can double as a Project Manager initially so much the better. Furthermore, if you can find someone who can morph into the CTO position so that a business-oriented founder can do double duty initially as CEO and CTO that would be perfect. As the business grows the task of CTO can be handed off to the senior designer as a proper promotion, bringing their deep understanding of techies politics, the product, and management into perspective.

Executive Assistant

Probably the most overlooked individual in a start-up is the executive assistant. Invariably, start-ups think that hiring an executive assistant is either below them or an unnecessary luxury. Both are wrong. A good executive assistant will facilitate the correct functioning and operation of an office. They will offload jobs that deflect staff from doing critical work early on. For example, something as simple as photocopying some documents should be left to the executive assistant. The reason? Simple. An engineer should be developing the product, a salesman should be out selling, the financial officer has to worry about the vagaries associated with the financials of the office, etc. The executive assistant will ensure that the photocopying will be done in the most effective manner. A techies will usually stand by the photocopier waiting until the copy ends. The executive assistant will load the copier and return later when he or she knows the job has terminated. Furthermore, if it is a complex job they understand that their time is worth more than simply standing around copying things and will send the job off to a copy centre to finish. Although this might cost a few dollars it saves a huge amount of a given individual’s time, and that individual’s time when calculated as standing around the photocopier is way more than the cost of having that copy outsourced.

Similar arguments can be had for booking business trips, arranging meetings, ordering in lunches, organizing the corporate documents, etc. An executive assistant understands the most efficient way of doing all of these things. Leveraging a good executive assistant actually saves time and money!

At the beginning it might be that an executive assistance is a luxury in that you can offload those tasks to the financial officer. However, as the company grows getting an executive assistant will only make the company run more smoothly.

In Summary

One of the things I used to look for in hires was someone who would present a different point of view, but present it to me intelligently. If it made me feel a bit dumb to realize what they were saying was true so much the better. I always felt it best to hire those smarter than myself. There’s an old adage that states that “Pygmies hire smaller pygmies”. If you see staff hiring those that make them feel superior, then ensure you step in quickly to quash such hires. They won’t do your organization any good. Even though employees that are disruptive have to be removed to ensure the smooth functioning of an organization, those that are no more than yes-men are no better and, in fact, are probably worse. The disruptive influence will do good on occasion, the yes-man never will.

Hire intellect and drive above all else and then strive to keep them happily employed. Give them enough freedom to create and they’ll do wonders. Ensure that you’re not bringing someone on board because it’s the fashionable thing to do. Bring them in when needed. The above list is what I consider the bare necessity for a start-up. More than what’s listed is unlikely to be required, unless you happen upon a star — then, by all means, hire him or her! And make sure each person proves their worth repeatedly. Resting on one’s laurels is the kiss of death for a start-up as that person’s productivity must be made up by the remaining staff — who will quickly begrudge the fact.

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February 2011
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