There comes a point for many startups when they must build an executive leadership team, but choosing the right people, the best time and the proper circumstances are central to the firm’s future success.
Experts gathered at the Wisconsin Early Stage Symposium in Madison last week agreed that finding the best fit can help avoid wasting precious resources and bring valuable insights to an emerging firm.
“You’re the one with the idea, but you’re starting to experience some capacity problems,” said Nora Roughen-Schmidt, executive director of StartingBlock Madison. “When you start to see some signs that your to-do list is way more than you can achieve in one day, in a week, in a month, it’s time to start talking about having an actual leadership team in place.”
That moment can be highly individual, depending on the founder and the business, Roughen-Schmidt added.
Sometimes relying on a network of trusted advisors, mentors and individuals with specialized skill sets can help build a firm and keep costs down in early stages.
“I’m a big fan of developing advisory boards,” said Bob Wood, co-manager of Wisconsin Investment Partners, a network of angel investors. “Everybody likes to be invited to advise. Just ask for advice. … It’s to their credit that they know something well enough to advise, and they work cheap.”
But eventually, success requires a more robust approach. Sometimes that can involve using contract or informal experts to help in leading the company, as a bridge to a more full-time relationship.
Ben Camp, CEO of Madison-based RehabPath, which helps addiction treatment programs connect with patients, hired two members of his leadership team after working with them on a contract basis.
“Getting to date before you marry is really great,” Camp said. “Startups don’t have a lot of margin for error and a wrong hire at any level—but especially the executive level—can really set you back and could potentially be devastating.”
What’s more, working on a contract basis also exposes the potential hire to the startup’s culture and mission. If they buy into the company’s goals and purpose, Camp said, it can make hiring experienced leaders easier.
“If they’re really interested in what you’re doing, they might be willing to take a pay cut and, obviously, have some equity involved,” he said.
Wood advised that if a startup picks the wrong person, they need to act fast to remedy the situation.
“If you have a problem, solve it early,” he said. “If you’ve made a wrong pick, don’t try to make something happen that’s not. Move on quickly.”
Roughen-Schmidt urges startups considering beefing up their leadership teams to contact a human resources expert to make sure job descriptions are crafted correctly and interview questions are carefully thought out.
“If you’re looking for a problem solver, there are ways to ask those questions in a way that you would be able to tell right away if this person is a problem-solver or not, and also ways to test for creativity and street smarts, too,” she said.
StartingBlock Madison is a hub for creative startups, and a community of entrepreneurs, accelerators, investors and support groups. Roughen-Schmidt often sees startups there having success with a consensus model of leadership.
“It’s really something that seems to give all members of the team a real stake in the game in an important way,” she said. “Everyone on the leadership team understands the messaging, what they’re trying to do, how to fundraise, how to contact the appropriate HR or marketing person. There’s a lot of sharing of duties and responsibilities.”
Camp said that the founders of startups are often required to wear numerous hats in the early days and establishing a successful leadership team provides welcome relief.
“As a founder, the exciting thing as your company grows is getting to take off those hats and find new leadership,” he noted.