Comments on: I Don’t Believe in COO’s

By: peter_biro6660

peter_biro6660 — Wed, 07 Jan 2009 01:55:51 +0000

I think this is directionally right — a structure where all VP's report to the COO and the COO reports to the CEO can be a head-scratcher. But it can be organized other ways as well — , COO can be helpful in organizing customer-facing areas (support, ops, acct mgmt) into a cohesive unit, to make sure smooth business processes exist as companies scale or be the go-to person by virtue of his/her title if the CEO if off dealing with investors. Depends on the individual and their abilities.

By: Dave

Dave — Wed, 07 Jan 2009 01:55:51 +0000

I'd agree and go even further. Speaking only with respect to companies under 100 people, if there are executives within the company that are pushing to be named COO, they have the wrong attitude for an early-stage company and probably shouldn't be there. They are focused on progressive career steps, ego, and power, rather than on selling product or securities and building the company's prospects. In my (limited) experience with this, the people who take this approach are either (a) big-company people or (b) they're actually not very good at what they do and they want their career to progress through external validation rather than actual accomplishments.

A great early-stage senior exec takes on COO-like tasks and responsibilities without needing the title. If he/she feels the need for more stock or more salary, that's not necessarily unreasonable, but changing the organization to satisfy an executive's career growth needs is not.

And if the *CEO* is looking to hire a COO, there's a much simpler answer: the CEO is not qualified to be running the business and should either be transitioned to another role (e.g., CTO if a technical founder; VP Business Development if a relationship person) or simply fired.

After 100 people (and of course the boundary is rough), it's possible that a COO is a good idea. The situation where this is a good idea is when the CEO is charismatic - inspiring to the troops, marketplace, customers, and investors, i.e., a leader - and is good but not great at management. Once again there is still the option of the CEO transitioning to another role, and that's still better in some cases, but sometimes having a person at the top who is a great leader counts for more. Again, though, in the early stages the leadership and management need to be sufficient in one person.

By: Mike Feinstein

Mike Feinstein — Wed, 07 Jan 2009 01:55:51 +0000

Brad, I often agree with not hiring a COO, but one of my companies was the exception. A company that becomes very complicated operationally (with international manufacturing) while still small needed to hire a COO. In this case, the CEO was capable of managing it all but needed her time freed up to focus on big customers, future technology development, and being the 'outside' person for the company. I think that these situations fit into your 2%, but you always have to keep the exceptions in mind.

By: bfeld

bfeld — Wed, 07 Jan 2009 01:55:51 +0000

Mike – totally agree. Good example of a valid exception.

By: ed_daniels6662

ed_daniels6662 — Wed, 07 Jan 2009 01:55:51 +0000

Brad, I really enjoy your comments – few "experts" really understand the start-up world like you do. As the COO of a startup company, I actually agree with what you say about COOs – it is usually an inflated title and too much hierarchy for a small company. However, as you point out (2%?) there are exceptions. Thank you for sharing your thoughts.

By: Chris Yeh

Chris Yeh — Wed, 07 Jan 2009 01:55:51 +0000

While I don't think it's necessary to have a COO, I think it is important to make sure that you have enough management bandwidth.

Startup CEOs are asked to perform several key functions, from strategy and vision to public relations to administration and finance to people and process management.

Realistically, it's unlikely to find a single person who excels at all of those tasks, and even someone with all those capabilities is unlikely to do a good job at any of those tasks if he/she has to divide efforts among all of them.

I think it is a good split to go with the classic "inside/outside" split...visionary CEOs tend to make mediocre administrators, and vice versa. I think it's harder to find the outside skills than it is to find the inside ones.

I do agree that it makes no sense for startups to have all the VPs reporting to a COO, who then reports to a CEO. Clearly, someone there is unnecessary. Rather, think of "Mr. Inside" as more of a chief of staff, who makes sure that the trains run on time, and provides a helpful sounding board for the CEO.

By: cpa2be6671

cpa2be6671 — Wed, 07 Jan 2009 01:55:51 +0000

I agree that the COO seems to make things a little crazy in an organization. The path to COO is what really amazes me. It seems that any high-level director or manager works toward that position; even it does not match their skill. More often than not, it appears to be someone that is "title hunting" and looking to add COO to their resume.

By: jim122

jim122 — Wed, 07 Jan 2009 01:55:51 +0000

This post hits home. In my first company (under 30 people) I hired a person to "run the operations and finance" because I sucked at it. The person, with big company experience, eventually worked himself into the COO role and positioned himself with the investor to have everyone report to him and then he reported to me (the naive CEO). As it ended up when I wanted stuff done the COO didnt agree with, I had a fight on my hands that I would have to argue to the whole management team, and the company was effectively run by the COO or by committee.

Needless to say I got out of the situation and now have another company with 30 employees and a very capable "director of operations".

Oh and the company I left now has 50ish employees with the investor as the CEO, the Sales guy head became President, and the COO still runs everything that matters. LOL

By: doug

doug — Wed, 07 Jan 2009 01:55:51 +0000

Interesting post... Companies where people argue over titles have bigger problems, but as companies get bigger, the amount of necessary, but non-strategic, operational chores expands rapidly. The venture investors, in my experience, have rarely been CEOs in such situtations and don't appreciate how much of the CEOs time gets spent dealing with things that aren't problems in stable, long-running companies. Further, this is not the comparative advantage of most founder/CEOs.

Occasionally, you end up with a clueless investor who shares Dave's attitude--fire the CEO--and a big company guy is brought in too early and the company inevitably deteriorates. I got tired of running one of my companies and recruited a very smart & polished exec to run it. He was a great people manager and the board (all top tier VCs who had never actually worked in a startup) loved him. He cleaned up the organization and made the trains run on time (no mean feat--this was the stuff that was killing me & he was much better at it than me). The only problem was that he had no strategic sense and we went from 100%+ annual growth to 0% for four straight years until a much bigger company thankfully hired him away. In the meantime, all of our smaller competitors passed us by.

Having a strong CFO in place early can help. The main problem is that few CFOs have strong technical or industry backgrounds, so their operating role needs to be carefully balanced with that of the that of the founder/CEO. When the CEO and CFO really work well together, it can be fabulously productive. When they're in conflict, the organization stops functioning. This happened in one situation where I was a board member. The CEO certainly had his problems, but the CFO was dishonest and manipulative. And also stupid. He threatened one of the board members--a legendary VC--with the damage he could cause to the company if he didn't get his way. We fired him the same day. To my surprise, however, he turned up shortly thereafter at another VC (who knew the story) as a consultant. They later made him CEO of one of their companies (probably another case of "fire the CEO!"), and he promptly ran the company into the ground.

If only this stuff was easy.

By: Yann

Yann — Wed, 07 Jan 2009 01:55:51 +0000

Live. I am living this live. My company has been hiring a COO as the CEO could just not manage anything else than the vision… but the CEO should have become the CTO – The only glitch is that the CEO is also the only investor and doesn't want to let go.

There has been such a big gap between the CEO and COO that the whole company is turned on its head and can't execute. It has become a multi-direction environment with hectic decision