How to build the right management team

By boris, August 26, 2016

There’s a lot of debate surrounding the right time to bring executive level hires into your start-up. But one thing is clear: how you build your team over the first few years can determine the trajectory of your company more than any other decision you make.

There are no right answers here. Every start-up is unique so the same path won’t work for every company and management team. With that said, here are some general guidelines I have developed over the years for building a management team.

First, your hiring/team building strategy should follow two key rules. Founders should focus their time and efforts on the areas that create the most value. They also shouldn’t spend much time in those areas where they face a huge learning curve and better outside talent is available.

Next, the DNA of the original founding team plays an enormous role in shaping the culture and essence of a start-up. When debating whether to hire in one area versus another, you should prioritize based on founders’ interest/knowledge in certain areas.

To dive into more specifics, I’ve found that building out a strong management team should typically follow this progression:

1st hire: VP Engineering

Building an efficient engineering organization takes more science than art and adding an experienced VP of Engineering to your team will maximize your chances of being able to execute on product development in the most efficient way.

2nd hire: VP of Finance

Brad Feld has a great post on the importance of hiring a VP of Finance sooner rather than later. If your start-up has at least 15 people, you should hire a VP Finance/VP Accounting.

At 15 people, you want someone who will do all the work, but also has the ability to scale up and manage a small team. You want someone who reports directly to you (the CEO) and is able to handle a wide range of administrative stuff beyond the accounting, but doesn’t need to hire a bunch of direct reports to manage the people who do the actual work.

3rd and 4th hire: VP Sales/VP Marketing

It’s important that founders stay involved early on in sales and marketing as the company tries to find product-market-fit, define its pricing and develop the product roadmap. But once an early playbook emerges, it is time to add more experienced sales and marketing leaders to scale up these functions. Even after you hire your VP Sales, founders should stay involved in “experimental” sales, situations in which you sell either new products or into a new vertical.

5th hire: VP Product

I recommend that founders stay involved the longest in this area, since they’re often the ones with the product vision and the best understanding of customer needs. However, you will need to bring a VP Product in at some point in order to scale this area. But, realize that this is usually the most difficult to position to hire, both because of its impact on company performance and the limited number of great people available to fill it.

Any thoughts or lessons to share? If so, please leave a comment below. I’m interested in hearing from others about any experiences with their first few VP-level hires.

Originally published at versionone.vc on August 26, 2016.

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