The chart below shows the percentage of start-ups that had each “C-level” position, categorized by the rounds of financing raised by the company. (This is from the start-up survey conducted in early 2005, which had responses from 263 private IT companies.)
ISSUE #1: Hire ahead vs. Hire for now
Should you hire senior people before you need them, or hire junior people now and then add senior people above them as the venture grows?
The benefits of hiring ahead (i.e., hiring senior people before you need them) might include:
- Having the senior people hire their own teams below them, possibly increasing the chance that they will work together effectively.
- Avoiding having the junior person (e.g., the early-stage Head of Engineering) feel “displaced” when you hire a C-level person (e.g., CTO) to whom he now reports, rather than promoting the junior person to CTO.
The benefits of hiring for now (i.e., hiring junior people now and then adding senior people above them later) might include:
- Having a much lower burn rate during your cash-poor stage of growth.
- Being able to wait and see which early junior hires can “scale” (i.e., become those senior people) and which will have to be supplanted (i.e., either replaced or moved into a less important role while reporting to someone new).
Questions: Are there other benefits of each approach? How have you approached this hiring issue?
ISSUE #2: Signs of scalability
The last bullet above brings us to a related question posed by founders: How can you tell ahead of time if a person will be able to “scale with the company” or whether that person will have to be replaced?
Questions: Have you found reliable indicators of whether or not someone will be able to scale with the venture? More generally, what other hiring challenges have you faced?
Note: This applies both at the founder-CEO level itself (i.e., for VCs and other board members who are evaluating whether a founder-CEO will be able to remain CEO for a while) and below the CEO level (when the founder-CEO has to judge whether the people she is hiring will be able to grow with the company).