What to call an incoming member of the team causes much heartache in growth organizations, both at the onset as well as years down the line. I’ve seen organizations where titles convey very little about the experience or responsibilities of the person who holds it, and organizations where titles have been carefully crafted with precision and carry much signaling weight.
There’s no one right answer, and even the Silicon Valley elite debate the point. Ben Horowitz details the philosophies of the Marc Andreessen and Mark Zuckerberg in The Hard Thing About Hard Things:
Andreessen argues that people ask for many things from a company: salary, bonus, stock options, span of control, and titles. Of those, title is by far the cheapest, so it makes sense to give the highest titles possible. The hierarchy should have Presidents, Chiefs, and Senior Executive Vice Presidents. If it makes people feel better, let them feel better. Titles cost nothing.
At Facebook, by contrast, Mark Zuckerberg purposely deploys titles that are significantly lower than the industry standard. Senior Vice Presidents at other companies must take title haircuts down to Directors or Managers at Facebook. Why does he do this? First, he guarantees that every new employee gets releveled as they enter his company. In this way, he avoids accidentally giving new employees higher titles and positions than better-performing existing employees. This boosts morale and increases fairness.
I like clean org structures as its a great tool to create the right accountability within an organization, as well as identify any mismatch in expectations between the employer and the employee at the onset. It also creates a milestone based framing to revisit at future review periods.
It’s too easy not to invest the time upfront in setting the right expectation about layering, future promotions, and responsibility spans. This inevitably leads to organizational function and disappointment a year or two down the line.
Matters regarding founders specifically
What is a co-founder?
Early on in a company’s evolution, there’s a hazy line between who is called a founder and who isn’t (e.g. the ‘first employee’, etc.). I myself was a ‘first employee’ at onefinestay, not upgraded to the founding team until several months after joining.
Founders need not be the most senior people in the organization, but they do need to be the most emotionally vested, and the most committed for the long haul. Unless something goes wrong founders are expected to see the company through - even if it takes 10+ years. This is not the same expectation for everyone else.
Founders are also the ultimate embodiment of the company in human form - the standard of of conduct and behavior internally and externally. They set the tone and culture and live the company values.
Companies survive and fail due to trust issues in the founding team.
And even if not organizationally senior, founders should be part of strategy setting and decision making for the duration of the company’s life.
The location of founders
Perhaps I am old school, but I think founders need to be co-located for a significant amount of time. This is because the business you end up building is rarely the business you intend to build at the onset (see Fred Wilson’s recent post about this topic), and defining the product and operating model is typically a multi-year affair.
Before the operating model is 90%+ set, cycle time & speed of execution is hugely important. The problem with remote working relationships is inevitably cycle time for iteration increases, and humans are conditioned to have these breakthroughs by the ‘water cooler’, not the Slack channel.
That’s not to say remote co-founders can’t work, but a ton of proactive work needs to be done to offset this effect. Co-location is also the easiest way for norms around values and behaviors to solidify.
Over time, founders based in different locations can become an asset rather than a liability, as a foundational, deeply trusted member of the team is on point to help with expansion, business development, etc.
Broader company organizational & role considerations
Companies are hierarchies
As an old boss once told me, everyone has a boss. I would add that all companies need one CEO. Co-founders should have reporting relationships between them.
I personally love the Fred Wilson / Jerry Colonna framework for what a CEO’s job is - here’s a video of Jerry describing it
The top level functional leader for a number of conventional functions and critical component of steering the strategic direction of the overall business. If the functional org below the executive isn’t performing, the buck stops with them (and the CEO).
I prefer to keep C-titles as conventional as possible (e.g. CEO, COO, CFO, CTO), although given the importance of the broader sales & marketing function a CMO / CRO / CCO could also make sense.
Beyond this, we’re inventing C-level roles. In edge cases this may make sense to land a world-class individual, or due to the specific context of what the company does (e.g. a company where HR strategy is a critical strategic piece of the offering may want to have a CHRO or chief talent officer). However its ideally to be avoided as it sets a precedent for other senior members of the team to feel slighted and/or argue for their own diluted C-titles.
Your C-levels should also be your executive team.
I don’t like this title for the same reason as I don’t like less conventional C-titles. Suddenly a critical layer of the team (VP) feels slighted once there’s an SVP in the room.
The leader of a function of great importance to overall business impact. This can be either because a large number of people work within the function (e.g. operations), or because the function greatly influences the strategic direction of the business (e.g. product). The intention and expectation at the onset is that this individual will not be layered if things go as planned - they are expected to be the most senior representative of a function.
Your VPs & C-levels should be your broader leadership team. This may include the director/head of layer depending on its absolute size and company stage.
Is it a C-level or a VP?
I have a simple construct for settling this debate that’s most easily illustrated with the common ‘is this person a CTO or a VP engineering’? CTOs drive the strategic technology vision for the organization, VP engineering contribute to the direction but the vision is originating elsewhere. CTOs tell the company ‘here are the new strategic opportunities we can pursue with technology’, whereas the VP Eng role tilts more to execution.
Number of VPs / C-levels
As companies scale, after the founding period, they should be pyramids, otherwise not enough work gets done and the environment becomes overly political. Limit the number of Cs or VP after the establishment of the foundational leadership team. Too many Cs or VPs in a small organization is a red flag for org dysfunction somewhere.
Directors / Head of
The leader of a sub-function - common cross company examples are PR, e-commerce, regional sales. They may roll in to a VP, or have a line straight into a C-level.
It’s critical to set expectations when hiring at this level. Are the individuals expected to rise to VP within x years? Is the organizational ideally looking for a VP to lead the function? What experience is necessary for the next step up in the organization?
It shouldn’t come as a surprise that a director or head of is layered in the future with a VP - however this relates to the expectation setting exercise at the beginning and on an ongoing basis.
The leader of a small to midsize team (4+), OR an individual contributor with an outsized impact on company results.
The leader of a small team (as little as one direct report)
Over time, most employees will fit in this group. I’ve seen many titles for entry level staff or individual contributors. My only advice would be not to use any of the above titles due to signaling.
And finally I would offer a disclaimer. Your organization may not fit into the above mold, or perhaps you have a different view of titles & roles. That’s all fine - however make sure that you have an explicit view. All organizations face challenges as they scale - title drift, politics, accountability gaps. Setting up a clean organization from the beginning helps mitigate these effects to set the company up for maximum output and a higher probability of success.