I met with a 10 person company the other day and once I got to Slide 2, I immediately started having questions about the opportunity. What struck me was a company that had a CEO, COO, and a VP of Marketing and a VP of Sales. You have probably heard this many times before but I will reemphasize the point – companies have different personnel needs at different stages of development (start-up, first customer sales, rapid growth, maturity). It is also more costly to bring in the wrong hire then to wait to bring in the right hire. The entrepreneur was obviously quite proud of his team thinking that he would get over some major objections from investors. I, on the other hand, saw a startup that had too many chiefs and not enough indians. I also saw a team that probably did not have enough discipline to ask the tough questions and make difficult decisions. I mean why does a 10 person company need a CEO and a COO? As an early stage investor, I would rather have a company with a clean slate that we can build a team around rather than a fully-baked team when we don’t necessarily know if the market is the right one to go after and if the product is the right product. When I fund an early stage company, I would typically rather have an entrepreneur that has product vision, a development team to execute around that, and the openness to build a team around him as the company grows. It can be death to have a top-heavy organization from Day 1 because startups change and change frequently during the early days. Don’t lock yourself in with big salaries, big options, and big egos until you really know what market you are going after, the skills and experience you will need to win that market, and the product is ready for prime-time. In a future post, I will walk you through one of the biggest and costliest mistakes I have seen early stage companies make – hiring a VP of Sales too early.
Published by Ed Sim
founder boldstart ventures, over 20 years experience seeding and leading first rounds in enterprise startups, @boldstartvc, googlization of IT, SaaS 3.0, security, smart data; cherish family time + enjoy lacrosse + hockeyView all posts by Ed Sim →