The 6-Month Chief Operating Officer
Once, it’s them. Twice it’s you. My CEOs got frustrated with me as the COO at the 6-month mark. I automated my way out of needing to work. They were paying me when I was hardly working.
The 6-month COO was born.
Often, companies look for a COO after they scale to $50-100M in revenues.
A 6 month COO at an earlier stage will increase your probability of success, build alignment and make scaling smoother. This keeps your A players happy. Then, leverage no-code systems which keep running long after the 6 month COO, like Elvis, has left the building.
How did I get here?
When I got my first COO role, I asked for it, then had to learn how to do it.
I was an institutional investor for 25 years. When I tried to move over to corporate, I was told I was “too senior for my lack of experience”. So, I broke in by going down on quality, way down, getting a VP role at a $300M crypto company that recently went bankrupt under the FTX contagion.
Next, I started talking to a startup CEO who was building software at the intersection of blockchain, finance and compliance.
If you don’t ask, how will you get it? When we were trying to figure out my role, I mentioned that I could do marketing, legal, HR, ops. I said I wanted the COO role. He said yes.
I’d never been a COO before, or even run operations. So, I called and googled. I read: How to be a COO, and The Great CEO within. The first taught me a systems and roles approach. The second showed me the types of processes I would need. Then I used my knowledge of no-code software to integrate and systematize operations.
I took a systems approach to organizing a company.
Most startups don’t start with a COO. There’s not “enough” business to run. Experts advise them to grow until they break, then hire someone to clean it all up. Spend money on engineers to build and sales to sell.
This can go on for far too long.
Back in 2000, I was speaking with the CEO of Blackberry, a rapidly-growing public company. My research showed they were losing track of revenues and double-counting sales. They had no idea how they were doing. When I asked the CEO about this, he said:
“We only care about growth. We’ll fix operations later.”
Later.
They were a multi-billion dollar company. Later they crashed and burned. They blamed product, but I hazard to say, they didn’t have the visibility or alignment they needed.
A multi-billion dollar company without visibility… well, that’s by choice.
With no-code, AI and automation systems available today, much smaller companies can have visibility far earlier via a 6 month COO!
The 6 month COO puts the strategic systems in place. The 3 pillars for startup operational success are visibility, alignment, and scalability. The startup’s team can continue hustling, growing, and innovating, without the overhead of a COO, but with all the advantages of strategic systems thinking.
Visibility
My first role in the “corporate” world was in crypto. Our company bank account, used to pay salaries, was invested in bitcoin, which was incredibly volatile. Our revenues came from crypto ATMs you see in gas stations.
We recorded what was happening, but needed to forecast what we thought would happen and measure our ability to forecast. We didn’t.
The CEO made a big bet that bitcoin would go from $62,000 to $100,000. Instead it went to $16,000. He wanted to keep that bet on while running the company, so borrowed the money to do it.
They went bankrupt.
How can you avoid this (extreme) fate?
Set up systems that track financial results:
Work with the finance teams.
Get pro-forma running business estimates and have a system in place to compare budgeted estimates with actuals.
Create a budget cycle that fits the company size and speed.
Financial results start at the beginning of the chain… with your salespeople.
Link the number of sales calls to revenues to determine win rate
Number of calls needed, conversion, upsells, and tie in to budget.
Run growth marketing metrics to measure top, middle and bottom of funnel performance.
Everything starts from sales. Once you have metrics, ask yourself:
Who is the most effective salesperson? Why?
What do you need to track?
How can you train others?
Is marketing effective at bringing in new leads for sales to close?
Which marketing programs are working?
Tie sales and marketing numbers to the revenue and expense estimates in your budget, ie number of sales calls needed to hit a revenue number based on conversion rates, etc.
Once you have marketing, sales and financial estimates tied together, you are ready to get aligned.
Alignment
The audience often doesn’t hear the message you intend.
Once I was telling a story for young men newly out of prison about how I lost it all and made it back in the stock market by selling my horse for $30K, using leverage and picking the right stocks, to double my money in 6 months. My intended lesson was that we all hit rough spots, and anyone can make money in the stock market.
What did they hear?
A horse could sell for $30K.
Their biggest question?
Where should they go to steal a $30K horse?
Imagine this at scale, growing a company 300% or 400% a year, thinking you have told everyone to row to the East, meanwhile they are all rowing in different directions, or not at all.
This is why you need alignment.
Leaders worry that self-actualized employees may all row in their own direction. Modern, servant-leaders understand that a bit more time upfront to get alignment on Mission, Vision and Values turns people from feeling they are a cog in the wheel of your machine, to an important person helping move us to a better future via the company they are a part of.
Take the time to discuss and get buy-in on mission, vision and values.
Don’t just list them out like a directive. Mission, vision, values discussions give you alignment. They aren’t slowing you down, they’re allowing for speed at scale.
Slow is smooth. Smooth is fast. - US Navy SEALS
Scaleability
My first job as a COO, I ran investor relations, fundraising, part of HR, marketing, partnerships and legal. This is the reality of a small startup. When I left, one of the co-founders said it was remarkable marketing feat that we had 4,000 followers on our LinkedIn page, with no product! We had a pre-built fan base, ready for scale.
Once you have systems of visibility and alignment within your company, you are ready to scale.
Scaling without systems and alignment creates massive burnout, wasted energy on the wrong initiatives, and many other unintended consequences.
A you build systems, think about the unique way the company will scale: via sales, channel partners, aquisition, or another method. Build this into the way you build the systems. Imagine adding a company, a channel, a partner. What is the simplest, most repeatable way to do that? That’s the way to build your systems for scaling.
This doesn’t last forever.
When companies reach new heights in revenues and employees, you have to move to larger systems like Salesforce, Peoplesoft, Oracle, and more. But until then, you can build systems that allow for more aligned faster scaling. You can put them in earlier now thanks to no-code systems and the 6 month COO.