We’re Hiring! – Timing & Factors for Recruiting Startup Senior Executives

By Valerie R. Wagoner, Founder & CEO, ZipDial | Twitter: @valrozyckiAn essential quality of an entrepreneur is the passion and confidence that you and your company will be the next Steve Jobs and Apple. And equally important quality is the ability to have an unemotional and analytical view of what, or rather whom, your company needs for success. Even Apple was not a one-man show, and it is critical as an entrepreneur to scale the capabilities of the team, and especially the senior executive team, to plan for the growth of the business.

First let us define “senior executive team”. This is not your two college roommate co-founders whom you decided during one late night of chai-fueled coding would complement you the CEO as the ideal CMO, CTO or whatever other CXO sounded most snazzy at the time. This is the stage of a startup when the product is stable, the business is proven, the team size and customer base are meaningful and the next step is hitting an inflection point of growth. In this stage it is critical to identify the key areas of need and recruit experienced executives to complement the existing team.

My own company, ZipDial, is now at this stage. I am sharing what I have learned and how we have handled this inflection point for the company and the search to bring in ideal new executive team members.

Making Room at the Table Early On

If you plan to create a big business, you must plan ahead hiring senior executives, and there are important things to do early on to accommodate these team members.

Reserve ESOPs

Compensation packages at startups are often more variable and success-based than larger companies. Employee stock options are an important part of that structure. A senior executive joining your team is not only brining a large amount of value to the table, but he or she is also more likely to be leaving higher paid, more secure job options to join you. Executives you hire, particularly at the CXO level may require a higher amount of equity than other employees, even very early employees. It is important to plan the allocation of your ESOP pool to accommodate for these executives who may join long after the founding team. Makings the pool big enough at the beginning, and reserving ample equity early on may help you avoid any discomfort in board resolutions or additional dilution to expand the ESOP pool later.

Reserve Titles

Managing designations is not as trivial. Impressive designations are important to founders and employees alike for various personal and professional reasons, so there is a tendency in young companies to inflate the titles of early team members. Carrying a weightier business card can also have a meaningful impact on external perceptions by customers, press, etc. However, this tendency must be balanced against the future growth needs of the organization. By your sweat, blood, tears and a fair amount of luck, your company will grow beyond its original flat structure. When it does, you will need to manage the expectations and aspirations of not only the senior executives you wish to bring in, but also your existing team. Any designations with the letters “C_O” or “VP” should be bestowed upon team members thoughtfully and with future growth in mind.

Are You Ready to Hire Executives?

Not all startups are fortunate enough to reach a stage of expanding the executive team. A company ready for this stage should be able to claim most of the following:

1. Validation of the product or service and business model
2. Proof of market opportunity and demand to support the expansion of the business
3. Financial stability in terms of revenue traction or funding to support these higher cost resources

Without these factors, starting an executive search may be futile or premature. If your company has not yet achieved the first stage of validation, then you may actually be looking for a co-founder rather than executive team member. Without the second and third points, you will have difficulty attracting and eventually compensating senior team members.

Finding Mr. or Mrs. Right

If choosing your co-founders and investors is like a marriage, then hiring your fellow senior executives is the next closest thing. When approaching these decisions, it will help to keep the following in mind.

Start Dating Early

Finding the right fit can take months. Additionally, given that the right person will inevitably be transitioning from a senior level position at another company, wrapping up the previous assignment will take time. Therefore, start early. Of course “free time” is not in the vocabulary of an entrepreneur, and there are always numerous high priority issues to address, but do try to set aside a little time to research profiles and have early conversations with potential candidates over lunches or coffees. For example, at ZipDial we have only very recently initiated a truly active executive search for a CMO and VP of Sales, yet for a few months I have been spending a bit of time browsing LinkedIn and starting conversations through my professional network.

Find the Spark

It is a true achievement to inspire a growing organization to maintain the passion of the founding team. Finding this same passion in the senior executives you recruit will be critical to maintaining your company’s drive and culture. While experience, skills and influence in the market are the qualities evident on a potential executive’s resume, the softer factors of attitude and passion can be just as important.

Leave Your Ego at the Door

Anyone who joins a young and high-growth company needs to be flexible to meet the demands and tackle the opportunities that arise. Even senior executives may need to roll up their sleeves and help QA the product in the wee hours of the morning before a big release. Many highly talented people with long careers become comfortable in larger company settings where there are ample resources and things can be left for tomorrow morning. The sweet spot for a startup is an executive with the right seniority and attitude to truly drive success. Similarly, founders themselves must also check their egos at the door. Avoid the tendency to cling to your own CXO position in your startup. Be rational and strategic about the best thing for the growth and success of the company. Set targets and metrics for yourself to prove you are the right leader, and keep an open mind about making room for fellow executives. For both newly recruited as well as founding senior executives, leaving aside egos and focusing on the best assets for the company will ensure success.

Thanks for reading! I welcome all comments and feedback. Please tweet @valrozycki