The first executive hire for a startup is the hardest. This is especially true for founders who have an immature business network, or for companies where product/market fit is still unclear. The pressure to hire this person is enormous. Most CEOs come into the game with a set of skills in one, maybe two, defined areas: product, engineering, sales, business development, etc. The rest they have to learn themselves. In fact, it’s a double-whammy of inefficiency — not only is the CEO learning on the job, but he must “context switch” between roles he doesn’t understand well.
That first experienced executive hire is, therefore, a force multiplier. She doesn’t just take over a job, but she does it several times more efficiently than the CEO because of (1) prior knowledge and (2) focus. Moreover, she (3) frees up the CEO to focus on less tactical, and more strategic tasks which create long-term value in the business.
The force multiplier idea is a powerful one when looking at new hires. While the term originated in a military context — describing factors enabling smaller forces to overtake larger ones — I tend to visualize it using the physics of harmonic systems. When you forcefully oscillate a mass on a spring at a specific frequency, you can create a giant, multiplicative output:
This concept is known as resonance. You may have experienced resonance the last time someone pushed you on a swing and found that perfect rhythm to help you climb to the top of the arc. Even small pushes timed properly can result in a giant amplitude. Similarly, the right person in the right context in a startup can create a type of organizational resonance. The cost in both time and money is high to find this person, but it is often worth the price because of the force multiplier effect.
thredUP, for example, pivoted four years ago from a peer-to-peer marketplace for apparel to a managed marketplace. One of the biggest challenges this transition presented was how to process actual clothing inventory. While the founders did a great job putting together an initial solution to this problem, they recognized that learning on the job in operations can be a real liability. So, they convinced John Voris to leave his job running operations at SpaceX (and previously Netflix) and join as COO — the first, non-founder C-level executive in the company. John’s leadership allowed the company to scale gross margins alongside revenue and create the virtuous cycle that has propelled the company into category leadership today. He was a canonical force multiplier for thredUP, because without operational excellence — which directly drives COGS, NPS, and cash conversion — the company would have struggled to grow revenue consistently or succeed in the other functions of its business.
I’d encourage any CEO of a small startup to consider which functional areas of his business are most critical, but lack experienced ownership, and evaluate whether a force multiplier individual can change his company’s trajectory. It’s hard to step back from the day-to-day struggle of building a company and commit the time and money to find the right person, but it can make all the difference in the world when you do.
Thanks to my Lightspeed partners Aaron Batalion and @jeremysliew for reading a draft of his post.
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