I had coffee with an ex student earlier in the week that reminded me yet again why startups burn through so many early VPs. And after 30 years of venture investing we still have a hard time articulating why.
Here's one possible explanation—job titles in a startup mean something different than titles in a large company.
You Can't Always Get What You Want
I hadn't seen Rajiv in the two years since he started his second company. He had raised a seed round and then a Series A from a name-brand venture firm. I was glad to see him but it was clear over coffee that he was struggling with his first hiring failure. "I've been running our company, cycling through customer discovery and validation and the board suggested that I was running out of bandwidth and needed some help in closing our initial orders. They suggested I get a VP of sales to help."
It was deja vu all over again. I knew where this conversation was going. "Let me guess, your VCs helped you find a recruiter?"
"Yeah, and they were great. They helped me hire the best VP of sales I could find. The recruiter verified all the references and he completely checked out. He was in the top 1% club at (insert the name of your favorite large company here.) He's been in sales for almost 15 years."
I listened as he told me the rest of the story. "I thought our new Sales VP would be out in front helping us lead customer validation and help us find the pivot. That was the plan. We had talked about it in the interview and he said he understood and agreed that's what he would do. Even when we went out to dinner before we hired him he said, he said he read the four steps and couldn't wait to try this customer development stuff."
"So what happened?" I asked, though I was betting I could finish the conversation for him (since I had made the same mistake.) "Well, he's completely lost at the job. When we ask him to call on a different group of customers all he wants to do is call on the people already in his rolodex. When a customer throws us out he wants to get on to the next sales call and I want to talk about why we failed. He says great sales people don't do that, they just keep selling. Every time we iterate even a small part of our business model or product he gets upset. When we change the company presentation it takes him days to get up to speed to the smallest change. He's finally told us we've got to stop changing everything or else he can't sell. He was supposed to be a great VP of sales. I'm probably going to fire him and start a search for another one, but what do I do wrong?"
"Nothing," I said, "You got what you asked for. But you didn't get what you need. The problem isn't his, it's yours. You didn't need a VP of sales, you needed something very different.
Companies Have Titles to Execute a Known Business Model
I offered that in an existing company, job titles reflect the way tasks are organized to execute a known business model. For example, the role of "sales" in an existing company means that:
- there's a sales team executing
- a repeatable and scalable business model
- selling a known product to
- a well-understood group of customers
- using a standard corporate presentation
- with an existing price-list and
- standard terms, conditions and contract
Therefore the job title "sales" in an existing company is all about execution around a series of "knowns."
We Use the Same Title for Two Very Different Jobs
I asked Rajiv to go through this checklist. Did he have a repeatable and scalable business model? "No." Did he have a well understood group of customers? "No." Did he have a standard corporate presentation? "No." etc. Did he and his recruiter say any of this when they put together the job spec or interviewed candidates? "No."
Then why was he surprised the executive he hired wasn't a fit.
Startups Need Different Titles to Search for an Unknown Business Model
In a startup you need executives whose skills are 180 degrees different from what defines success in an existing company. A startup wants execs comfortable in chaos and change—with presentations changing daily, with the product changing daily, talking and with analyzing failure rather than high-fiving a success. In short, you are looking for the rare breed who is:
- comfortable with learning and discovery
- trying to search for a repeatable and scalable business model
- agile enough to deal with daily change, operating "without a map"
- with the self-confidence to celebrate failure when it leads to iteration and Pivots
That means the function called "sales" at a large company (and the title that goes with it, "VP of Sales") doesn't make sense in a startup searching for a business model. Sales implies execution, but that mindset impedes progress in searching for a business model. Therefore, we need a different job function, job title and different type of person. They would be responsible for customer validation, finding pivots and searching around a series of unknowns. And they would look nothing like his failed VP of sales.
I suggested to Rajiv his problem was pretty simple. Since he hadn't yet found a repeatable and scalable business model, his startup did not need a VP of sales. The early hire he needed to help him run customer validation and pivots has a very different skill set and job spec. What Rajiv needed to hire was a VP of customer development, and part ways with his VP of sales.
I suggested he chat with his investors and see if they agreed. "I hope they don't make me hire another 'experienced' VP of sales," he said as left.
- Companies have titles which reflect execution of known business models
- Early stage startups are still searching for their business model
- Individuals that excel at execution of a process rarely excel in chaotic environments
- We burn through early VP's in startups because the job functions we are hiring for are radically different, but we are using the same titles.
- Startups need to use different titles to indicate that the search for a business model requires different skills than executing a business model.
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Reprinted from SteveBlank.com
Steve Blank is a retired serial entrepreneur-turned-educator who is changing how startups are built and how entrepreneurship is being taught. He created the Customer Development methodology that launched the lean startup movement, and wrote about the process in his first book, The Four Steps to the Epiphany. His second book, The Startup Owner's Manual, is a step-by-step guide to building a successful company. Blank teaches the Customer Development methodology in his Lean LaunchPad classes at Stanford University, U.C. Berkeley, Columbia University and the National Science Foundation. He blogs about entrepreneurship at steveblank.com.
[Image: Flickr user welshmackem]