Ten years ago, if you were the founder of a high-growth company it was reasonably likely that your investors would want to bring in “adult supervision” as CEO to run your company. This has shifted, in recent years, to a slate of COO hires, following the example set by Facebook with the successful run of Sheryl Sandberg. It is now much more likely for a breakout high-growth company to hire a COO to support the company founders, rather than a CEO to replace them. 1
Box, Facebook, Stripe, Square, Twitter, and Yelp are all companies that chose at one time or another to hire a COO as a complement to the founders, rather than replace the CEO with a “gray-haired professional operator.” 2
Why a COO?
Hiring a COO is not about adding a title to your org chart, but rather finding the background and experience you are looking for. Optimally, you want someone who will come in to complement, operationalize, and execute your vision as a founder. Many technical or product-focused founders want to (and should) remain focused on the product and overall market strategy. In parallel, the COO would build out and manage areas that the founders lack interest or experience in, or simply don’t have the bandwidth to oversee.
“You want someone who will come in to complement, operationalize, and execute your vision as a founder.”
– Elad Gil
The responsibilities of a COO, for example, might include:
1. Adding executive bandwidth. The COO can serve as a business partner for technical or product-focused founders.
2. Scaling the company. High-growth companies have special needs around scaling and implementing simple processes (e.g., recruiting infrastructure, corporate governance, etc.).
3. Building out the executive team and organizational scaffold. COOs are often responsible for executives and teams in areas founders don’t understand well (e.g., finance, accounting, and sales). They can help in screening and hiring executives for product, engineering, and marketing as well.
4. Taking on the areas founders don’t have time for, are poorly suited for, or don’t want to focus on. Typically, a COO takes on responsibility for ongoing management of the “business side” (corporate development/M&A, business development, sales, HR, recruiting, etc.), while the founders continue to focus on product, design, and engineering (e.g., Mark Zuckerberg’s focus on product at Facebook). There are some counterexamples of this too where the CEO wants to be sales focused and hires in a product-centric COO.
5. Shaping the culture for the next phase of the company’s life. Sheryl Sandberg has impacted how Facebook is run across the entire organization by, for example, bringing a culture of people development and managerial excellence.
Why not a COO?
All growing companies need to build out their executive teams, as well as the ability and expertise to scale. That can be done by hiring or promoting a set of people who, in sum, complement the founders and allow the company to grow rapidly and effectively. It is not necessary that one of these team members have the COO title. For example, prior to Polyvore’s acquisition by Yahoo!, the company’s CFO owned multiple areas beyond traditional finance.
Additionally, the COO title sets a very high bar for who you hire for the role.3 You can’t really hire above the COO later like you could with a VP, which means losing some flexibility in your future organizational evolution as the company goes from, say, 100 to 5,000 people. If the COO is out of her depth, she often won’t accept a demotion to VP and will leave instead. 4
- If a company is not a true breakout, it might be hard to hire a COO of the same caliber that you could get in a CEO—i.e., there are still great executives out there holding out for a CEO role that would not be willing to do anything else.
- Other interesting early examples include Microsoft, where Bill Gates in the 1980s had seasoned “presidents” working for him, and Oracle, where Larry Ellison has gone through various COOs over the years. Gates, of course, only brought in venture money after Microsoft was profitable, so he had sufficient control of the company to not worry about being replaced.
- Some companies will first hire someone with the “general manager” title and then convert him to COO later. This allows them to ensure that hire’s fit and capabilities prior to committing to him as COO.
- Of course, another option is to replace yourself as CEO instead. Reid Hoffman wrote a great piece about this topic; see the link on eladgil.com. [http://www.reidhoffman.org/if-why-and-how-founders-should-hire-a-professional-ceo/]