A number of our companies have been addressing this question recently, so it’s been on my mind, and having just read some thoughts on the question on Elad Blog I thought I would get my own thinking straight. These two posts from Vinod Khosla are also a good resource on COOs and the evolution of senior management teams generally.
In companies with under 100 people COOs typically do some or all of the following:
- sales operations
- process improvements across the business
- people management
- strategic planning
Reasons it might make sense to hire a COO:
- when CEO bandwidth becomes a bottleneck (i.e. hire a COO to cover some of the time-consuming but less critical/less top-of-mind/less well-executed aspects of what you do)
- when the critical questions shift to how to do things that have been seen elsewhere before – e.g. sales are growing fast and there is a need for good sales process, an implementation team, and a customer success team
- there are signs that operations are creaking – deadlines get missed, too much time is spent fighting fires, key people are leaving the company (or won’t join)
- there are lots of people to hire
If some or all of the above conditions in place it is worth thinking about a COO, but deciding whether to go ahead will also depend on the availability of budget, trade-off with spending in other areas, and the ability/desire of the existing management team to adapt their roles and cover the gaps. If you push ahead, recognise that it is a key hire and take the time to find someone good. Ideally they will become a critical member of the team on a par with the founders.