Tuesday, October 25, 2011

Startup Titles

Fred posted about titles yesterday: CFO vs VP of Finance. Titles are really not my favorite subject when talking about startups, because it distracts from the most important thing:  traction with customers.

I refrained from commenting because I think it's one of the less relevant pieces to early-stage startups he's done recently; it's a topic for later-stage startups, of which there are a lot fewer than early stage. Read the comments, though--some good stuff there.

So. CFO of what? If you're seed stage, a CFO is adding little strategic value; there simply isn't the cash-management, customer traction, investor relations to warrant anything more than advisory-level input.

If you're an early stage startup with less than, say, 10 people--VP of Marketing of what? If you have no direct reports, that's a pretty good indicator that a title isn't warranted.

Titles in startups do matter to the people who hold or held them; they're likely more meaningful after than during most startups, which rarely scale beyond the awkward 12 to 18-person stage.

What's important is the delineation and alignment of roles, acceptance of responsibility, execution, and reward based on execution.

That reward, in my view anyway, should be the increased value of the company, in which every employee should be an owner.

If you're a 3-person startup without funding, you really don't warrant titles like CFO, VP of anything, etc. When you give yourselves titles like these, you're signaling to potential investors that you intend to retain those roles as the company grows.

But the likelihood that each of you is right for that same role on an ongoing basis is relatively low. It's definitely possible, and you can, should, and will learn on the job, but you should be open to bringing in outside talent to help scale the company once you're funded and growing.

This is one of those incredibly tough subjects. You have the founder-leader, and if you have co-founders you still have the founder-leader, typically: the one person who carries the full responsibility for the company, organizes the resources, makes the big decisions (even with input), and is held accountable for those.

Don't worry about titles. Use the co-founder title loosely--make the first 3 to 5 people co-founders if they are taking risk--but C-level titles like CFO tightly.

Signal that you know the difference in stages by not handing out the C-level titles--the VP of marketing, the VP of Engineering.

The two titles I can see having some import early on is CEO and CTO. These are the visionaries and leaders, and responsible for building and scaling the company. Those roles are easily communicated internally and externally through titles.

And if you're a startup founder/CEO, I absolutely believe you should try to make a go of it and not give up that spot unless there's clearly a need for it:

  • you suck at recruiting and hiring true believers/great team members,
  • fail to organize the resources effectively
  • can't raise investment
  • can't grow revenue
  • make massive strategic mistakes, etc. 

If you feel you need titles, have fun with it. Signal appreciation, signal importance, but don't signal inflexibility.

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