Monday, April 28, 2014

10 C-Level Positions That Are Red Flags For Funding

Red_flagIt’s your startup, so you can give early partners any title you want, but be aware of potential investor and peer implications. VCs and Angel investors like to see a startup that is running lean and mean, with no more than three or four of the conventional C-level or VP titles. More executives, or other more creative titles are seen as a big red flag.

In reality, startup titles should be more about the division of labor than an executive position. The most common ones I see and salute are CEO, CFO, and CTO. A few other credible ones would include Chairman of the Board (COB), Chief Operating Officer (COO) and Chief Marketing Officer (CMO). Some would say that if you have a title at all, you are not doing enough work.

Where the titles don’t seem to fit the situation or size of the startup, investors start looking hard for other anomalies. Here are some pre-conceived notions about what non-standard titles in a startup, like the following, might mean:

  1. Chief Inspiration Officer. This person may be an extraordinary communicator, who rallies employees, customers, and colleagues around the vivid future he sees. Or he may be the founder’s brother, idea person, or inventor, who can’t be bothered actually working on the nuts and bolts of the real business.

  2. Chief Evangelist. This is a role made famous by Guy Kawasaki in the early days at Apple Computing. Evangelism marketing is an advanced form of word of mouth marketing (WOMM), now largely replaced by Facebook and Twitter. Unless your business is a religion, I don’t recommend it for a startup these days.

  3. Chief Sales Officer (VP Sales). What you really need is a VP of Marketing and Customer Development, who can help with lead generation and honing the message, rather than an executive to manage a sales team and existing customers. See this anecdote by Steve Blank on how a hotshot sales executive can sink your startup.

  4. Chief Brand Officer. Branding is indeed an important role within a startup, but the implied scope of the role is far too narrow. The more conventional VP of Marketing role should cover branding, as well as other marketing advertising, design, public relations and customer service requirements.

  5. Chief Risk Officer. This role is most common in financial institutions, and it seems like it should apply well to startups, since they carry the highest risk of failure of any businesses. But here is another example of a role that everyone carries in a startup, so investors can’t imagine paying anyone uniquely to do that job.

  6. Chief Human Resources Officer (VP Personnel). This is a fancy title for a personnel manager in a large corporation who keeps track of all the hiring and firing, and has a staff to build job descriptions and personnel policy documents. In a startup, that’s your job as founder, and it’s a job you can’t afford to delegate.

  7. Chief Diversity Officer. Diversity is generally only an issue in large organizations, and if your startup is that large, investors will definitely be nervous. In general, I’ve not known diversity to be a challenge or problem in startups, especially if Gen-Y is part of the team.

  8. Chief Information Officer. All the IT work in most startups is done by a college intern, or the owner’s son. Assigning them the title of CIO seems like a bit of overkill, especially these days of serious “cloud” computing, meaning big servers have left the building.

  9. Chief Legal Officer. Also known as General Counsel, this position is an expensive one to fill and maintain. If your business is managing contracts and patents, it makes sense, but the CLO for most startups is LegalZoom on the Internet.

  10. Chief Security Officer. Here is another role that shouldn’t be so large in a startup that it needs to be a full-time task, separate from other executive roles. Frankly, the CSO role has always sounded like the warden at a prison to me, so I would be hesitant to recommend it, even to a large business.

What other strange titles have you seen? In all roles, a startup needs executives who are comfortable with daily chaos and change, rather than defining and following a repeatable formula for success. In addition, you are looking for executives who don’t need a title to get things done. They should get their satisfaction from building their business, rather than building their title.

Marty Zwilling


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