One of the most critical things a startup founder must do is develop a top-notch executive team. This is a topic that could fill a whole book, but in this post I will provide specific guidelines on how to hire, manage, promote, and fire executives in a startup based on my personal observations and experiences.

For the purposes of this post, definitions: An executive is a leader—someone who runs a function within the company and has primary responsibility for an organization within the company that will contribute to the company’s success or failure. The difference between an executive and a manager is that the executive has a higher degree of latitude to organize, make decisions, and execute within her function than a manager. The manager may ask what the right thing to do is; the executive should know.

The general theory of executives, like managers, is, per Andy Grove: the output of an executive is the output of her organization. Therefore, the primary task of an executive is to maximize the output of her organization. However, in a startup, a successful executive must accomplish three other critical tasks simultaneously:

  1. Build her organization—typically when an executive arrives or is promoted into her role at a startup, she isn’t there to be a caretaker; rather she must build her organization, often from scratch. This is a sharp difference from many big company executives, who can spend their entire careers running organizations other people built—often years or decades earlier.
  2. Be a primary individual contributor—a startup executive must “roll up her sleeves” and produce output herself. There are no shortage of critical things to be done at a startup, and an executive who cannot personally produce while simultaneously building and running her organization typically will not last long. Again, this is a sharp difference from many big companies, where executives often serve more as administrators and bureaucrats.
  3. Be a team player—a startup executive must take personal responsibility for her relationships with her peers and people throughout the startup, in all functions and at all levels. Big companies can often tolerate internal rivalries and warfare; startups cannot.

Being a startup executive is not an easy job. The rewards are substantial—the ability to contribute directly to the startups’s success; the latitude to build and run an organization according to her own theories and principles; and a meaningful equity stake that can lead to personal financial independence if the startup succeeds—but the responsibilities are demanding and intense.

Hiring

1. If you’re not sure whether you need an executive for a function, don’t hire one.

Startups, particularly well-funded startups, often hire executives too early. Particularly before a startup has achieved product/market fit, it is often better to have a highly motivated manager or director running a function than an executive.

Hiring an executive too quickly can lead to someone who is really expensive, sitting there in the middle of the room, doing very little. Not good for the executive, not good for the rest of the team, not good for the burn rate, and not good for the company.

Hire an executive only when it’s clear that you need one: when an organization needs to 🚩 built; when hiring needs to accelerate; when you need more processes and structure and rigor to how you do things.

2. Hire the best person for the next nine months, not the next three years.

I’ve seen a lot of startups overshoot on their executive hires. They need someone to build the software development team from four people to 30 people over the next nine months, so they hire an executive from a big company who has been running 400 people. That is usually death.

Hire for what you need now—and for roughly the next nine months. At the very least, you will get what you need now, and the person you hire may well be able to scale and keep going for years to come.

In contrast, if you overhire—if you hear yourself saying, “this person will be great when we get bigger”—you are most likely hiring someone who, best case, isn’t that interested in doing things at the scale you need, and worst case, doesn’t know how.

3. Whenever possible, promote from within.

Great companies develop their own executives. There are several reasons for this: