How Startups Fill Leadership Gaps With Expert Resources
By: Joe Procopio
Tags: Leadership, Entrepreneurship, Business, Startup, Productivity

The hardest role to fill in any company is leadership. Say what you will about logic-defying compensation packages and golden parachutes for C-level executives, because I’ll nod my head right along with you. The hard truth is that experienced leadership is always the difference between success and failure. Always.

But how in God’s name do you get that level of talent at that level of leadership when you’re a resource-and-cash-strapped startup? And how do you avoid the hucksters, blowhards, and dinosaurs?

We can get just about any part of our business built for a fraction of what it used to cost. The barrier-to-entry for making, distributing, marketing, and transacting has been greatly reduced in the wake of a massive populist technology shift brought about by the Internet, mobility, and automation.

You and I, we can afford to start a business that can compete with any incumbent. Until we get to leadership. It’s impossible to automate experience, and there is no substitute for it if you want to take your company past a pedestrian level of success.

Luckily, the access and affordability of experienced startup leadership is changing too. And that change can’t some soon enough.

What Is a Fractional Startup CXO?

Would you rather hire 40 hours a week worth of recent college graduate or 10 hours a week from a seasoned veteran? Now, there’s nothing wrong with the former. I do it and do it often. It’s a great way to get potential on board that can benefit my company for years.

But if I’m early in the life of the company and I have leadership gaps that I can’t fill, it’s the latter. Every time.

Unfortunately, a lot of startups make the same mistake when it comes to hiring a fractional leadership resource. They’ll hire 10 hours a week from an experienced CEO, another 10 from an experienced CFO, and another 10 from a pick-two of any of the other executive functions. It equals one expensive full-time-equivalent to cover all the C-Level functions of the company.

This never works.

What will happen is the original startup management team will fall back into a secondary role for these functions and leave the heavy lifting and decision-making to the pros. But no one, no matter how experienced, can run a company function at 10 hours a week.

Founders do this because they’re plucking these resources from a field pool of executives who have held a singular position for a long, long time. At first blush, this strategy makes all the sense in the world, but you can’t run a startup like you run a mid-level or large corporate business.

Invariably, that 10 hours a week will get swallowed up by bullshit, usually brought on by the expert resources themselves when they realize and run away from the fact that sometimes being a startup CEO means being on the phone with an irate customer for hours at a time.

No. You need a single, experienced CXO, and you need them for a couple hours a week, tops.

The CXO Role is Changing, So Change With It

So what’s the right way to fill this leadership gap? Well, that’s all going to depend on your company’s individual and unique needs, budget, and comfort level — the last one probably being the most critical.

The CXO role is going through an evolutionary process due to a number of factors that have changed as startups themselves have evolved over the last decade. If you know those factors, you can really open up your pool of candidates, find the exact right person, and establish the exact right relationship between your company and the CXO.

Here are just a few of those evolutionary factors:

Factor #1: The pool of available CXOs is expanding rapidly.

Thanks to the proliferation of startups that have been able to push themselves quite a long way before exiting or failing, there are a number of talented, experienced people out there who have been through the ringer more than once. These are the multi-faceted experts who can speak to company growth from tech, product, finance, operations, sales — they’ve done it all.

Startups have long since realized that they don’t need a former CEO/founder with a single nine-figure-plus exit, they need a hands-on leader who has several stories under the experience belt — good, bad, and middling.

Factor #2: The roles are changing too.

Startups are also more than willing to throw out the corporate governance model until they need it, so they’ve started fitting leadership into the right place at the right time. If that time passes, they rethink it and change the role. A mentor one day might become a consultant the next, on their way to being an advisor or a board member. If any of that happens at all.

The concept of fractional resourcing has led to a reduced emphasis on fitting the role to the person. Figure out what your company needs, then find the person to fill those needs.

Factor #3: The gig economy has changed the relationship dynamic.

The old way of bringing on fractional leadership used to be a long, drawn-out process that took months to establish and resulted in an expensive and often ill-fitting relationship. This also attracted the wrong kinds of leaders into those roles — for example, retirement-ready executives trying to keep themselves busy.

Concepts of the gig economy have begun to take hold at the leadership level. Pay these people, pay them now, pay them month-to-month for as long as the relationship works, then change the relationship over time as the company evolves. If you’ve hired the right resource, they’ll be able to change with you.

Watch Out for the Bullshit Factor

I was on a conference call with a major startup bank talking about this very subject when they asked me what the top drawback of bringing on fractional leadership was.

I paused. Then I said, “The people most willing to do fractional leadership are usually the most incompetent at it.”

Luckily, they laughed. But it’s no joke.

There are plenty of organizations, programs, and individuals out there who are looking to take advantage of a desperate startup team. And there are others who are just ill-equipped to mold their experience and knowledge into something that’s about helping the startup, not just adding an entry to their LinkedIn profile.

Here are some signs to watch out for:

You should be reaching out to them, not the other way around. There are certain occasions, mostly around intellectual curiosity, that will lead an expert to contact a startup and offer to help. But those scenarios are few and far between, and when they do happen, the expert will come to the table loaded with familiarity about your company after having done the research. Because they’re interested.

Don’t fall for pretty programs or surefire methods. Proper help and advice is organic, individualized, and unique. If I had a guaranteed method for making a company successful, I wouldn’t be helping you, I’d just keep cranking out successful companies.

Get a taste of what you need before you bring them on board. Here’s a dirty little secret. Anyone who’s worth their experience should be able to impress you or give you something unique to think about within the first few rounds of communication. Don’t hire them until they do that.

But also, I’m looking at you — investors, incubators, banks, and support organizations. These folks are in the perfect position to not only vet and verify fractional leadership, but it should be part of any program or investment aimed at early stage startups, if just for the added chances the startup will succeed.

Some of these entities offer a fractional leadership type program for “free,” so to speak, but both sides just end up getting what they pay for. It’s only common sense for that model to change as well.

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