The Controversial First Role to Hire After Your “A Round”

Posted on Oct 28, 2011 | 106 comments


I’ve thought a lot about team construction of early stage companies.

I was once asked on Quora what my idea startup team would be. I wrote the following:

“I like to invest at the seed or A round.  My ideal team is simple:

Assuming 6 people
1. 5 engineers
2. 1 CEO who doubles as head of product management
3. Nothing else

But obviously I am open to other configurations.  The key important things are:
- strong tech DNA
- dominance of tech personnel relative to others
- strong product focus on CEO

I never invest in:
- business people who outsource tech dev to 3rd parties (“to speed up time to market”)”

If you like that feel free to go vote it up on Quora – it fell back a bit in the rankings ;-)

I’m looking to back technology companies so I naturally have this bias and I care deeply about product design, the ability of the team to have a good sense of what is working on the Internet & mobile and thus to make the necessary changes in the market as market conditions change.

You know the old adage (I first heard from Guy Kawasaki) – how much is an Internet company worth? Multiple each engineer x $1 million and subtract each MBA by $1 million and that’s your valuation ;-) As an MBA I can say that.

But what comes after the original team? Who do you hire after you have a product built & shipped and being used in the market? Who do you hire when you raise that first $2-3 million?

My answer will surprise you and I’m sure many will not agree. But I give this advice to nearly every company I work with so at a minimum you’ll know it’s authentic and not intentionally controversial.

Your first hire after that first round of capital is an office manager / company-wide assistant.

“What? You’re joking, right?”

No.

While I’m passionate about being scrappy when you start and controlling your costs, I’m equally passionate about performance when you have a bit of cash. And I’ve seen way too many CEOs / founders get bogged down in minutiae because they were used to it from the scrappy phase. They’ve struggled to scale.

Think about it. Your single most valuable asset in the early days is your senior team and presumably nobody is more valuable than the founding team. And you’re bogged down in expense claims, booking hotel rooms, scheduling meetings, dealing with a leaky toilet, processing payroll, ordering computers, etc.

So what would you look for in an ideal world?

Somebody who:

  • Knows that their job is to be administrative so that they won’t feel like they’re being asked to do a role they feel is “beneath them”
  • Aspires to be more than the CEOs admin
  • Is extraverted and pleasant and has great “bedside manner” with customers, investors, press, recruits, etc. who might be calling
  • Is organized, disciplined & trustworthy
  • Can work with many people. You’re not looking to hire a personal assistant so much as an “office manager” who doesn’t mind helping with coffee, copying, faxing
  • Is numerate and can do some basic data entry, accounts payable, collections, etc, until you’re ready to bring on more accounting staff.

I know that some will say all of these things can be automated and that this is money wasted. I’ve told every startup team I know that when you have your A round done this is your first hire. The number of people who have thanked me has validated my point of view and encouraged me to say it a bit louder.

What have your experiences been?

Image courtesy of Fotolia

  • Alejandro Rivas-Micoud

    I think the advice is good but may be misinterpreted as hiring an “only PA”, which I think is a mistake, even at medium sized companies.

    I would suggest to hire a young, dynamic, “internet savvy”, sales & marketing oriented personal assistant, but not give him or her that title, and let them know that although administrative support of the CEO is part of their duties, a lot more is expected, and the company may need to hire a replacement soon if he or she does well.

    I find that approach to be extremely motivating (the reverse effect of asking more qualified people to conduct tasks they may think are beneath them)

    I have had the fortunate experience, in a previous medium sized firm I led (>400), of seeing a smart, ambitious, employee go from receptionist through my PA on to Marketing Manager.

    Currently, in a small 7 person startup I am experiencing something similar; a person hired as an admin/PA but with the expectation of perhaps progressing further is performing in an astonishing proactive and reliable manner; I think she will go far…:)

  • http://www.mealdrop.com Michael Zaro

    I think that’s the key. The Office Manager is only as valuable as they enable everyone around him/her to focus and do their jobs better. I was talking with a mentor of mine about this last week and the point is, as a founder/CEO  you have to balance working “in” your company with hiring for everything.  In your words, there are some lawns that you *should* keep mowing, in order to obsess about product.

  • stacy murray

    I agree, the admin IS a full-time job. I just prefer that person managing vendors whenever possible, rather than building a kingdom and becoming invaluable to the whole team. 

  • http://twitter.com/JordanJWoods Jordan Woods

    This is a kind of bizarre response. I’ve worked in many organizations that had exactly the kind of office manager described by Mark. 

  • stacy murray

    It can be a trap if you want to grow fast in a competitive environment. Now days, I hire admins who can get things done through others (vendors, associates, customers) as much as possible, rather than the high-touch, hungry generalist. The choice here probably depends upon your experience building company, like you suggest.

  • http://www.activetheoryinc.com Alex Gourley

    How do you feel about paying for more expensive professional services firms that are more hands on? E.g. higher service level accountants, HR firms, bankers. It feels like they are worth it for the peace of mind, but then isn’t having an accounting/HR literate office assistant kinda redundant? And if you’re worried about the garbage and coffee, there are service providers for that too. I guess all thats left is managing all those service providers… hrrmm. Really curious what people think here.

  • Ctelles

    Although I somewhat agree with Jordan’s comment about this response being bizarre, I also know from experience as CEO in my first company how true your comment is and how relevant it is too this position. 

    I’ve hired for this position in three companies, and in each had an “office manager” that could run the day to day operation of our business. They fell just short of making critical decisions, but also offered valued advice when making critical decisions. Its easy for a CEO or other founders to regard them as junior and not part of the critical team, but once they’ve been with you for a while and helped save your ass a couple of times, they begin to innately understand your business, and if its the right person the protect the business as if its their own. 

    Paying this person the right amount is important to retain them as employees. My advise would be to advertise a salary range (not hourly) that grows by 40% or more to attract quality candidates. Start them out at a salary range that is commensurate with experience and then hire them on a six month temporary basis with reviews every thirty days. If you’re paying attention, you’ll know in 90-120 days whether you’ve found the right person.

    If you have found the right person then you can start bumping up the salary to reward their efforts. In addition, we also used time off and vacation travel as incentives. A good office manager appreciates being able to take their family on a vacation to some distant place at the expense of their employer while only earning the salary of a typical office manager. Cabo, Hawaii, Bermuda, all of these places have packaged deals that are pretty cheap for a family of three/four. The cost of this pays dividends when you have work that need to be completed or you need to meet with your office manager on a Saturday or Sunday. They also appreciate it when the boss pays for their kids baseball/softball team to have pizza after one of their games. The small, and big things help them stay satisfied.

    As for my fourth business, my wife held this position. She left the world of “stepford” to help us reduce overhead and build the company. 

  • http://twitter.com/galica Matthias Galica

    Timing on this is uncanny, my CTO was literally telling me that we ought to get this person the night before.  And if that person is reading this: contact at getsharesquare dot com

  • http://www.justanentrepreneur.com Philip Sugar

    Here’s the thing though.   Do you spend more than one hour a week exercising???  If so why not mow the lawn instead of being on the treadmill.

    That is the problem I have.   I live in a very rural county.  People laugh at guys lifting weights and say come out and work with me.   A huge part of what you do is learning while you solve problems.

    If you take this to the fullest you outsource development because you can do it cheaper…which I will never do.

    Its figuring out the line.

  • http://jelpern.blogspot.com Jordan Elpern-Waxman

    This guide  is so useful that this post feels incomplete w/o it. Before reading it I thought this person would be harder to find than a technical co-founder. It also describes the position more in terms of someone who is ambitious but green, rather that someone who is unambitious but organized (which seems to be what many of the naysaying commenters are picturing).

  • http://about.me/humphrey HumphreyPL

    Great advice and so timely. I have just met a startup who is suffering from the same problems or being all tech focused but not having anyone to help them with little things which is actually starting to concern them since they are pretty bad at letting things go.

  • http://jelpern.blogspot.com Jordan Elpern-Waxman

    I would like to hear from some of the people who have held this role and get their perspective on it.

  • Andrea Cordonier

    Jordan, Ctelles et al my point is this:

    If you advertise and hire for subservience, that is exactly what you will get.  

    As Mark Twain said:  “If you always do what you’ve always done, you’ll always get what you’ve always got.”

    You will be shortchanging yourself and the company, whether you realize it or not.  This is a strategic, value-added hire (as all hires should be) so you should treat it as such.

    First, before hiring anyone:

    1.  Buy a high-end espresso/coffee machine so everyone can help themselves.
    2.  Put up a sign in the kitchenette/coffee corner that reads: “Your mother doesn’t live here.  Clean up after yourselves.”
    3.  Consider the budget but lose the miserliness.  Focus on your strategic, long-term objectives and how this person – whoever he or she turns out to be – can help move you quickly and efficiently towards those objectives.  That is the value proposition.

    I would then write an advert (incidentally, this is not a job description) like this:

    Smart, resourceful, forward-looking individual with unbelievable communication skills required for ABCstart-up.  While this is currently a generalist position, there is ample room to leverage your existing skill set up and develop others.  Yes, there will be some admin work but this is not an administrative position.  Compensation, and your title, will be dependent upon a combination of experience, entrepreneurial ability, attitude, education and performance.  Think you’re value-added?  Pitch us: founder@ABCstartup.com.

    Find ways to get this advert OUTSIDE your usual circles.  You’ll want to attract people that will be complimentary to the company but not the same as everyone else you already have or talk to on a regular basis.  There is a lot of talent out there which you don’t see and I think you will be pleasantly surprised by the quality of the candidates.

    You will know that your approach has been successful when you start to receive offers to pitch from people in a variety of backgrounds.  You’ll know you’ve found the right person for your company when they’ve done their homework and they immediately bring useful information/ideas/solutions to the table.  They will also be frank about the level and type of compensation/benefits they expect.  Don’t anticipate that they will want pizza for their kids’ soccer team nor suggest it.  How would you feel if someone suggested that to you?

    Best case?  You’ll find a fabulous person to meet the immediate need , as well as other talented individuals that you can flag for other/future start-ups in the same position.

    Worst case?  You’ll end up with someone that will eventually want a cut of the action.  

    But good skills are worth good money, aren’t they?

    Good luck!

  • http://hirethoughts.blogspot.com Donna Brewington White

    Love your response to “Met someone?” and it did not surprise me that you were that someone! Especially when I looked up your LinkedIn profile. (I admit it, I’m a total snoop!)

    I fully *get it* that ANYONE at a startup needs to be willing to multifunction to some extent. That’s part of the fun, right? And sometimes hybrid roles (for compatible functions) may be in order. Although, not sure how CEO/Janitor fits into this.  

    (Apologize if this comment eventually shows up twice — the one sent from email did not take.)

  • http://hirethoughts.blogspot.com Donna Brewington White

    Thanks, James.

  • http://hirethoughts.blogspot.com Donna Brewington White

    Hi SKI — our paths haven’t crossed in the blogosphere for a while.  Hope you’re well.

  • Anonymous

    Looking ahead if the office manager/CEO assistant should aspire to more than being the right hand of the CEO. What do you think would be the next position for that person?

  • http://www.KevinKruse.com Kevin Kruse

    QUESTION: Mark, when would you hire a sales dog, and when would you hire a marketing person?

  • Anonymous

    Ideal qualifications/configuration of a 6 person startup team:

    (1) six people who do something
    (2) see (1)

  • http://twitter.com/spapa44 Steve Papa

    Sounds good Donna, thanks for that!

  • http://www.aaronklein.com/ Aaron Klein

    We’ve only raised a small seed round so far, so I’m doing all this stuff myself right now, and I’m totally okay with that. But in every job I’ve had before, filling this role made me at least 3x more effective and focused on what actually needed to happen.
    And my sister managed to get this job on a “temporary basis” at a growing startup, and I told her, “work hard and your CEO will think you’re the most valuable employee at that company.” It became permanent shortly thereafter because they figured out how much faster they were able to move.

  • http://hirethoughts.blogspot.com Donna Brewington White

    You’re very welcome.

  • http://hirethoughts.blogspot.com Donna Brewington White

    Sometimes it takes experiencing this to actually understand the ROI.  Harder when you have been in survival mode to make what could seem like a hire that gives into weakness rather than continuing to tough it out.  If more people can see it as a strategic investment and just do it, then the benefits will soon become evident.  Maybe the “permission” granted by someone like @msuster:disqus and the testimonials from people like you can open the door to what can be a lifesaver.   (hmmm… maybe CEO Lifesaver should be the job title)

    The more you startup CEOs can focus on making your businesses successful — and CREATE MORE JOBS — the better for all of us!

  • http://hirethoughts.blogspot.com Donna Brewington White

    Love your respnse to “Met someone?” and this did not surprise me! Especially when I looked up your LinkedIn profile. (I admit it, I’m a total snoop!)
    I fully *get it* that ANYONE at a startup needs to be willing to mutifunction to some extent. And that sometimes hybrid roles are in order. CEO/Janitor?

    Sent via mobile

  • http://www.aaronklein.com/ Aaron Klein

    Exactly. Well said!

  • Anonymous

    I’ve worked with this type of person before.  It was her personal mission to make everyone more productive and only do the things that they needed to do. 

    Someone else recently has been telling me the same thing, get a really good office manager/assistant.  The problem is, I think I need that really good assistant to have the time to hire the really good assistant.  Maybe that’s how you know you need one.  :)

  • http://www.eqentia.com William Mougayar

    Yes and No. It depends what “office” environment the company is. Nowadays, you can be in co-location places where they offer you those types of admin services (including accounting) for a fraction of the full-time cost you would pay. 

    I think the next hire should be someone in marketing. If you’ve got new money in, it’s time to crank the volume up and become more known out there. Marketing helps you do that. 

  • http://www.instahype.it Peter Kadas, Dr.

    I held my breath reading the first lines of this post, especially the assuming 6 people part. I thought this is the first thing I strongly disagree with you, Mark… Then I kept reading and just sighed: OK, I’m not dump. The first I’d hire would be a good assistant too, as probably the most important member of the whole business team.

    As you’ve said: it saves a lot of time for more expensive people. It is particularly important for those entrepreneurs, who are “doers”, and like to be involved in more processes then they are able to. In cases like this, the assistant can be the CEO’s lengthened hand.I’m working with my personal assistant for 7 years now. I used to introduce her as the real boss at the company where I’m the decoration, called CEO.By the way, after a good company-wide assistant – if I have the appropriate amount of devs – I’d focus on hiring the best available marketers. 

  • Anonymous

    Huge ditto on the office person.  After my wife scaled her biotech (Galaxy Diagnostics) lab to 4 techs she hired someone to receive samples, do billing, make orders, and answer the dang phone.

    Like freeing up a whole CEO.

    -XC

  • http://www.alearningaday.com Rohan

    Go Donna! :D

  • http://www.alearningaday.com Rohan

    haha

  • http://www.alearningaday.com Rohan

    agree

  • http://www.alearningaday.com Rohan

    It feels like a case of penny wise, pound foolish when people equate lean cost cutting with not having an office manager.

  • http://ruthsmisko.com/ Ruth Smisko

    Agree with Mark, absolutely: In my work as interim office management and consulting confidant, I’ve worked exclusively with Founder CEOs so they can focus on their key strengths, instead of admin stuff. I build the business operations and administrative infrastructures, processes, procedures, hire the right people, and basically run the business while conditions are not business as usual. It takes a different type of person to start the business and build in that flexibility for growth.

  • Ruth Smisko

    Where would founder CEOs be without operations and administration professionals!

  • http://ruthsmisko.com/ Ruth Smisko

    Or, hire an interim operations manager to work beside you and build the infrastructure, adminstrative processes, hire your team… Someone who has experience with startups during this critical time and understands how to build in the flexiblity for growth.

  • http://bothsidesofthetable.com msuster

    In my experience I’d doubt you’d find a candidate that would double as both.

  • http://bothsidesofthetable.com msuster

    “hit the ground running” – exactly what you enable yourself to do by having a great office manager. I don’t advocate it before a Series A financing, but afterwards ….

  • http://bothsidesofthetable.com msuster

    I still do a lot myself – I book my own flights & hotels – but it’s no badge of honor to spend all of your time on admin and not enough on more strategic tasks. This is most important for the most senior people in a company.

  • http://bothsidesofthetable.com msuster

    Sure, that seems like a good approach. If you found the right person.

  • http://twitter.com/allenlau allenlau

    Totally agreed. Our first hire after we closed our Series A was a part-time admin person. She does everything that takes us away from the product – payroll, book keeping, ordering drinks and cookies, etc. Best hire ever!  

  • Anonymous

    Brilliant. Thank you for sharing that. Always felt that, however was holding on as “technology makes it so easy”.
    BTW, how does it work for distributed teams? Or you don’t believe in distributed teams? Through my consulting firm I am delivering services indiscriminately in 4 Australian capitals with occasional US and SE Asia engagements. My startup team (not outsourced development, but 4 individually picked-up and managed engineers) are 9 timezones away.  And 95% of my potential TalkUp (the startup) customers are in US.

  • http://bothsidesofthetable.com msuster

    I’m very happy with how it worked out at RingRevenue!

  • http://bothsidesofthetable.com msuster

    That doesn’t make sense. 6 people who do the wrong things but “do something” does not make a great team. 6 biz dev folks and no tech people makes for a bad tech startup.

  • http://bothsidesofthetable.com msuster

    see: http://www.bothsidesofthetable.com/2010/10/12/startup-sales-why-hiring-seasoned-reps-may-not-work/

    and: http://www.bothsidesofthetable.com/2010/04/08/journeymen-mavericks-superstars-understanding-salespeople-at-startups/

  • http://aboutonlinedegrees.org Study Online Doctorate Degrees

    Another impressive & interesting article by Mark Suster.

  • Anonymous

    Interesting advice. I wouldn’t have thought of that as the next hire, but I see your point. Best to focus on each one’s comparative advantage!

  • http://twitter.com/robert_hatta Robert Hatta

    Mike was that person and so was I at Virgin Mobile USA.  I built desks, found and negotiated the lease on our office space, and wrote and evaluated the RFP for our billing system.  I agree with Mark’s advice on the admin side of things, but the next hire, if you can’t find someone with both, is someone who can scale on the customer facing side of things. 

  • Anonymous

    I was trying to be pithy and witty at the same time.  My point was that the most important thing about the founding team is that everyone “does something” rather than what often happens where one or more members of the team do the wrong thing or nothing useful at all.  

    I am not sure I agree with you that 6 biz dev folks (an extreme case) actually always make for a bad tech startup, I think if they are all dedicated to finding a way to execute on a problem they know well, they can succeed, even if they use the dreaded “contract programming”.  

    If you want to contract out your MVP development and use that MVP to prove there is demand for your product and customers will pay for it (product/ market fit) and the rest of your thesis is sound (including a plan to bring product development in-house if necessary) – that works.  Just raise your money post MVP/hypothesis confirmation and I doubt most investors are going to care how you got there if you show traction.

    It’s about the desire and the ability to execute. BTW, I have seen lots small startup teams composed exclusively of smart programmers write tons of efficient code that does nothing to solve a real world problem that people will pay for.  They don’t succeed either.

  • Tomaz Jug

    In my curent start up I have the same exact configuration, me as the CEO, 4 developers, 1 system administrator and no MBA, so I guess we are worth 6mio :)

    And on my previus start up the Admin person was probably the 4th person to come on-board… I realy don’t want to waste my time sending out invoices and stuff… And she is my right hand in many ways.

    It totaly works like magic.