Startup Execution, Startup Talent

Motorcycles vs. Jumbo Jets

I’m a speed junkie. When I was young, I used to watch A. J. Foyt battle Richard Petty in NASCAR. Since I didn’t own a fast car, the best I could do was take my bicycle off road and imagine I was a motocross racer. As I’ve aged, I’ve migrated from NASCAR to Rally racing and from motocross to MotoGP.

MotoGP racers are crazy. They ride machines capable of heart-stopping acceleration and dare to brake at the last possible second before entering a turn. And in each turn, they lean the motorcycle to the extreme, threatening to either scrape their body on the inside of the turn or lose their grip and go sliding through the outside of the turn. All of this with what appears to be minimal protection.

 

Every seasoned entrepreneur lives a similar experience. Running a startup demands hyper-aggressive acceleration and iron nerves to push the limits in order to hold your line in a turn, and maximize your speed. Riders must make dozens of split second decisions to accelerate, downshift, brake, lean in, and position the engine in the power band (the range of RPM that produces peak power output) coming out of each turn. Founders must do the same, except instead of a motorcycle, they jockey a company.

If you aren’t lucky enough to race for an established team like Ducati or Red Bull with big funding and a large support staff, you have to wear multiple hats: from racer, to mechanic, to marketer and sponsorship fundraiser. Founders often have to be proficient in multiple business disciplines — particularly in the early stages of the startup. Founders have to be willing to pick up a wrench, pull apart an engine and get greasy. Then they might need to clean themselves up, change into business casual attire, and pitch to a potential investor. After that, they may have to play diplomat and negotiate with a new customer who complains that the solution doesn’t match the claims made during the sales pitch. And then at a lunch interview, they need to quickly determine if a job applicant with a promising resume will really be a good fit for one of the few engineering roles that the startup can afford.

It’s a difficult mix of demands that call for very broad, experienced, executive skills. Unfortunately, I often see recruiters, investors, or advisors glibly counsel the entrepreneur to pull out all the stops to hire a Senior VP from a large Fortune 500 company to run their sales, business development, marketing or engineering team. The Fortune 500 SVP clearly has a strong set of skills that enabled him/her to play their role in leading 1,000-person teams that drive $1B or more in annual revenue. However, many people fail to recognize that most Fortune 500 SVPs have skillsets unsuited for startup life. Yes, they carry huge responsibilities, but the machine they ride is not a motorcycle, but a jumbo jet. Yes, Boeing 777 and Airbus A340 pilots are responsible for the lives of hundreds of passengers, but their job requires them to focus more on following rigorous safety protocols, maintaining control, and making fewer, more deliberate decisions – usually with the assistance of advanced instrumentation.

Pilots of commercial jumbo jets aren’t asked to pick up a wrench and sling code, create the detailed requirements to earn a badge in your channel partner program, analyze a competitor’s features against your own, or write copy for product marketing assets. They typically surround themselves with large teams who do these tasks for them. They are usually best at developing policy, working the politics, or mining industry contacts. (I won’t even get into the topic of whether a small startup can afford the high-six-figure salary that a Fortune 500 SVP will command.) When joining a startup, many Fortune 500 executives either move too slowly or make the wrong decisions because they aren’t used to making dozens of judgment calls in just a few seconds. I’ve seen some very senior people who have enjoyed great success in a large company stumble when going to a small company because the job responsibilities – especially at startups with less than 100 employees – are completely different. I’ve also seen some founders and investors accept a jumbo jet pilot who averages 20 mph each lap around the track because they don’t know that the real racers will average well over 100 mph a lap. The founder often doesn’t realize they are only averaging 20 mph or don’t know that a 15-minute lap time is really, really slow. Inexperienced leaders don’t recognize the problem until they’ve been passed multiple times on race day. But by then you’re way behind the competition or you’ve lost your market lead.

To be sure, many Fortune 500 SVPs are very skilled and are great at their current job. But smaller startups have very different job responsibilities. There are some Fortune 500 SVPs who also are (or recently were) motorcycle or rally car racers, but they are very rare. When you’re fighting a global war against terrorism, you definitely want the three-star general in the driver’s seat. You need their inspirational leadership, political moxie, ability to shape public opinion, and experience running multi-year campaigns. However, most young startups don’t need someone who has experience reporting to the Secretary of Defense. Startups need the Navy Seals to execute a hostage rescue operation or a special forces sniper to neutralize an enemy combatant a quarter mile away. Make sure you understand the actual detailed requirements of the startup role so you can add candidates with the right skillset. For most startups, one or two jumbo jet pilots could possibly help in an advisory role (maybe sometime near the Series B financing) or serve as a full-time employee once the startup reaches some scale. But more often than not, you’ll want a lot of MotoGP racers and pit crew chiefs.

 


Startup Execution, Startup Talent

What’s in a Name?

Shakespeare famously spoke through Juliet, asking “What’s in a name? … a rose by any other word would smell as sweet.” That’s true, as long as you know you are truly holding a blossoming rose (and not a seedling or a plant that has yet to flower).

Many startups bring on promising talent to run large portions of the business. Because cash is usually tight and equity pools are limited, founders scramble to offer compelling packages to attract top talent. One common “carrot” or concession offered during the interview cycle is a big fancy job title. The rationale is that, if you can’t increase the salary nor the stock options, then let the candidate take a VP or a Director title. It costs you nothing, so the prevailing logic goes.

Pay Me Later

But the reality is that job titles are not free — you eventually pay for it later. Founders should think carefully before doling out executive or senior job titles. Founders need to ensure that the candidate’s skills truly match the expectations of the senior job title. Multiple challenges can arise when an employee is over-titled, including:

  1. Insecurity that leads to defensiveness. Difficult personnel issues surface when it becomes apparent that the employee isn’t capable of playing the senior role. Employees who are overly hungry for a big job title usually have a hard time facing the facts if they aren’t meeting your expectations of the role. Their insecurity often takes over when you try to provide constructive feedback and they resist any notion that they aren’t truly VP or Director-level material.
  2. No room at the top. If the candidate is over-titled, eventually founders need to bring on a truly senior employee to take over. But if the current candidate already holds a VP title, then you are left with few options other than to bring in the new person as a Senior VP. Top-heavy small companies easily become unbalanced when they have too many generals and not enough infantry. You need a typical distribution of titles within a team to properly allocate work between leaders and staff. New investors will also question your management decision making when they see an unbalanced, top-heavy organization. In addition, if you bring in the next person at a higher title just because the current person is over-titled, you run into more problems with compensation. The new person will expect a salary and equity package that is commensurate with the higher title, further draining your limited resources.
  3. Low morale among the troops. The staff working for the over-titled executive will eventually recognize that the team leader isn’t meeting the expectations of the role. The front-line staff are often the first people in the company who recognize that the leader isn’t doing the job well. They won’t want to work for the person, which results in disunity and dysfunction. Their expectations put pressure on the founders to deal with the over-titled individual, creating a messy people issue to resolve.
  4. Can’t right-title. In many cases, the over-titled individual is a hard worker and a reasonable employee, just not at the title he/she currently holds. The right thing to do is to change the person’s title to one that more appropriately reflects their current capabilities and contributions. But just about everyone will see this as a demotion. Very few people are comfortable with being demoted, leading you right back to cleaning up a messy HR issue.

Because most people hate dealing with messy HR issues, I often see founders avoid the problem altogether. Avoiding the HR issue means your company will just limp along, under-performing along the way. Progress will slow, investors will sit on the fence or lose interest, and employees will get disillusioned.

Right Titles, Right Foundations

Occasionally, you’ll find a promising candidate with great potential. Chances are the candidate will have many options to choose from, forcing you to compete for their services. Don’t give in to the temptation to over-title the candidate in order to make your offer more attractive. Do talk about your solid HR practices and culture and how you want to provide many opportunities for employees leverage their preparation. Every team member wants to feel successful, so highlight the fact that success is likely when opportunities and preparation intersect. Bring the candidate in at a lower title — the right title — and offer regular feedback and coaching. If the candidate exceeds expectations of the lower title over a sustained period of time, promote them. This approach avoids the risk of over-titled employees. It also motivates the employee when they see their contributions being recognized and their career opportunities growing.

As I wrote in my posts on interviewing and finding the right candidates, hiring game changing employees has to become a strength of every startup. Employees are the foundation of your startup. It is important to align the job title with the candidate’s true capabilities and proven experience. Over-titling employees runs the risk of creating multiple layers of complex, messy problems. But rational, consistent and accurate mapping of roles and titles can form a solid foundation for you to grow your startup. Hire well and grow well!