Startup COO

The COO in today's technology startup

Written by Ian Sharp PhD on May 2nd, 2019

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I've started 12 technology companies by myself or as part of a larger group. 4 of those companies hired a COO from the very beginning and I can say that I've seen a pattern emerge. It's a simple one. They all get fired. The only question is 'when', and I have the answer to that too. Let's dive into what happens when we observe the COO in nature. First, there's an extended period of non-work which can be explained away by pointing to the fact that the product is not ready yet, followed by a period of a MVP or shaky product.

At, around and after the 'shaky product' stage, there is a continued period of intangible work performed by the COO. It's as if the COO is waiting for the right time to do something once the product is ready. I wonder what it is exactly that they are planning to do. If it's sales, well that's cool but you don't need to wait for the product to be built to start building relationships. On the other hand, if the COO is waiting to handle 'operations', what does that mean? A startup by definition has no operations. It's a startup. A small group of people who should be working hard and already know what their goals are. Sometimes the group decides the COO will 'handle emails' when the reach the scaling phase. I have yet to see the COO's do something phase in action.

On the other hand, I've noticed some of the COOs are not waiting for the right time to do anything at all. There was never a level of expectation set that at some time in the future, they would be actively involved in a specific task. As such, there is no understanding of what that task would entail. Then we move onto the next phase. This is how several companies start. The next phase is the what I call, the 'shaky product' stage and it comes usually within a year. Timing can vary.

During the 'shaky product' phase and even out into the next 'it definitely gets the job done' stage, sometimes the COO often participates by pointing out what is wrong with the product. Though I've yet to find a COO with a track record as a QA engineer or product management. For this reason, it's kind of like .... "well ... anyone could have said that and pointed out flaws". What is true is that pointing out what's wrong is a more tangible way to contribute and typically the COO is very much looking forward to contributing instead of being 'left in the dark'.

Another pattern I've seen is COO outrage. Outrage when they are left off of any email chain or an opportunity to form a 'relationship' with a potential buyer. Why is my team so injust to me?, they might question. This really only happens to COOs who know they want to do something. I have not seen this conflict arise in COOs that know they are never going to do something. If the COO goes through this stage, they usually try to force all communication to 'go through me first' before talking to the CEO. The COO wants to take credit for building relationships and way to do that is to prevent other members in the team from building relationships first.

The months and years by, the COO's achievement list are uncomfortably empty. It becomes uncomfortable for the COO who wants to do something. Wanting to do something (having tried QA and relationship building at this point), will likely if not already jump into the role of project manager. The only issue that could arise here is the COO has actually never been a project or product manager. Now, because this task again is outside their scope of responsibility, it's outside of their area of expertise, and the team is small - project/product management is not really needed. Nevertheless, in a way this kind of management at least on paper feels like an 'operation', and the COO knows they are there to 'manage' the operations.

Again we ask ourselves, 'what operations?'. It's a startup. You build product and you sell it. If you look up what a COO does, you find phrases like "communicate to employees" and "oversee human resources". You are the employees. It's your company. Are you going to pay someone to oversee a human resources department that doesn't exist? Manage 'hiring' that doesn't exist. The team is in place already. The goal should be clear. Another phrase that comes up is the COO "oversees day-to-day operations". Are you going to pay someone and give away part of your company to "watch you as you work"?

For 100% of the startups I have worked for, the answer was "No". However, the decision for "No" came at different times much later in the company. The decision might've come after 18% of company equity already vested to their COO, or it came after 1 or 2 years worth of 6 figure salary came out of the startup funds. But there is hope and good news. The good news is, the CEO is 100% responsible for exhausting resources (equity and salary) and for hiring on someone with undefined target milestones and ambiguous goals...

Once the product can be sold or is being sold, there are a few users and the dust settles a bit, the pattern is, the clan usually takes a moment for introspection. Each person looks back over their time spent on their venture, counts their achievements and hopefully has a lot to be proud of and thankful for. After spending some time looking inward, the clan looks outward at itself. At this point, each member starts to consciously compare their achievements with everyone else's. It becomes crystal clear what everyone has done at this point in time, contrasted with the equity/salary taken. If the COO hasn't been fired yet, que the resentment.

If you haven't read my article on why time-based-vesting destroys companies before they start, it's coming soon...

So is there room for a COO in a startup? Sure, if they are willing to build product or make sales. But then technically their title should probably change to 'engineer' or 'sales'. If you do need someone for operations, I'd recommend a virtual assistant. At around $20/hour it's a great investment and you don't need to give up equity in your company or any significant finances.

Whatever your company position is right now, there is at least at a subconscious level an understanding (or should be) that there really are only 2 roles of importance. Firstly creating something to sell, and then secondly selling it. That is it.