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CMO, VP-Marketing, Director of Marketing:

Usually in my experience a Chief Marketing Officer (CMO) may be warranted only if there is a heavy consumer component to your offering (like FaceBook or YouTube) and that too usually it is done when there are many products and you need to strike a Consistent set of Corporate Marketing Messages. Like the large and famous Department stores like Nordstrom or Marks and Spencer or a highly priced product like Rolex watches where you will have to guard the Brand like a hawk and don't want to do anything foolish to reduce the brand! Or a Proctor and Gamble or Unilever with a wide variety of products.

A VP- Marketing position is more than enough even for the most insistent VC or PE investor. The right time to recruit this person is when you are in V3.0 or V4.0 of your product or your VC investor needs to see a full-fledged team before they invest their money in your company, whichever is earlier!

However, a Director of Marketing position may be more than adequate even for VC investors as long as you are clear in what the function, duties are and you can present to the VC, the marketing activities you have planned for them to do.

Hiring someone with a lot of promise as a Director of Marketing first and promoting them to a VP-Marketing position is perfectly a good way to go without spending too much money too soon without knowing what a person may be capable of. Of course, of you get somebody with a lot of FMCG experience as Arvind or somebody pointed out in another note in this forum, they may demand a VP-Marketing Position.

Compensation wise, the VP-Marketing position commands only about 75% or 80% of a VP-Engg position or about 100% of the Base Salary (without commissions) of a VP-Sales position.

By nature, VP-Marketing positions or any Marketing position is very difficult to measure and compensate because of the nebulous nature of what they do - But some combination of an assessment of Leads generated and attributed to Marketing activities, favorable mentions in News, etc can be used. But the CEO/President has to do some objective assessment of the subjective things they want the marketing VP to do. They need to have a clear idea of what the function is and what they expect of the Marketing person yearwise and monthwise if appropriate.

It is also usual to offer two options to a candidate if you can work out Employee Stock Options in your company after meeting RBI regulations which I am not clear about:

a. Higher Salary with a Lower Total Stock Options Package

b. Lower Salary with a Higher Total Stock Options Package.

Of course, the above will work only after executives in India have some experience and success with stock options paying big. Most will choose option a.

Of course, these are true of the typical U.S startup. You may need to assess the demand, supply, etc of the kinds of people you need for the function and make adjustments for India.

Mohanjit Jolly, Managing Director of Draper Fisher Jurvetson writes an excellent column in the VC Circle website and newsletter. See what he says about dearth of management talent in India and the pluses and minuses of importing them from the U.S!:

http://www.vccircle.com/columns/investing-india-vs-silicon-valley-part-ii

Hope this helps at least for the Marketing Position., I will attempt similar ones for other functions.

I am looking forward to hearing from others here in this forum about what they have done and what they found out!

Founders, President and CEO Positions

The position of founders within a company, especillay when it attracts Venture Funding will undergo some surgery than what companies in India are used to. The Founders will stay on and take their turns as CEO and President, is the conventional wisdom in many Indian companies including those that were SMEs before and now are giants like Infosys!

With product companies, this could change drastically with companies emerging out of SME land into the big time.

The usual temptation is to just gather up friends you are comfortable with and found a company if you don't want to go alone. Many times this may come back to haunt you, especially when you grow!

A single strong, capable, well-rounded founder is more than enough if they can inspire and motivate all functions in the company. However a two founder combination where one is a "Thinker" and the other one is a "Doer" is also a good counterbalance like in our own company. If both are techies or technology oriented, they will be getting in each others' way and if both are Sales oriented, they will again be getting in each others' way.

It is easy to overestimate your own capabilities and underestimating the skills you lack and need to bring in. Complementary skills and making very clear boundaries always helps!

Whether it is one or two or four founders, as long as you can make sure that somebody in the founding team has a flavor for business, technology vision and Sales/marketing skills, the founding team would be a good one.

In the initial stages of the company, if it is a product company, having more technical founders may be O.K. but as soon as you hit V1.0 of your offering, the Sales/Marketing skills need to be accounted for with additions.

Founders usually will have skills suitable for a small company but may not know how to manage growth when they are larger. The large company game is subtantially harder than in an IT services company and so needs a special kind of person.

It might be good for founders to get someone who has managed sales for a larger company like iFlex or Ramco and trust in them to grow the company from there onwards. 100% of a 10$M company is the same as the 10% of a $100M company.

One single founder can have both the CEO and President positions or the two main founders can ake the two positions separately if they can handle working together.

Otherwise, one will have to become a COO and have a clear division of labor and responsibilities.

VP-Sales, Director of Sales

Some years ago, I attended a fabulous talk by Jayaram Bhat, who was VP-Marketing of the Israeli company Mercury Interactive that came up with Test automation products like WInrunner and Test Runner. Now Mercury is part of HP when they bought them.

Jayaram conveyed the importance of the Sales function in a startup company and conveyed a lot of very useful information on how to pick a VP-Sales and compensate them, motivate them and leverage them for the company's growth. A lot of what I say here is from that talk! Thanks, Jayaram!

Now Jayaram is CEO of another company - www.zenprise.com

Without the Sales function, the company is nothing. Especially in Product companies, without the Sales function and the precisely the right person heading it and producing results, others may as well go home!

THIS IS THE MOST IMPORTANT POSITION YOU CAN FILL!

This is why the Dorector of Sales and the VP-Sales should be carefully filled. In the initial stages it would be perfectly O.K to go with a Director of Sales position but VCs and PE Investors will absolutely insist in seeing a proper VP-Sales even if you don't have a VP-Marketing.

Depending upon what your product or SaaS offering is, you can go after the right Sales background for the VP-Sales position. As someone else observed in this forum, in India you have a lot of very smart people in FMCG Sales Positions that have a lot of experience in that area that can translate to your startup if it is a FaceBook or a Social Networking kind of startup. For more technical sales, it might be better to get someone with experience selling similar products, possibly being poached from existing product companies.

Strange as it may seem, in my experiences recruiting VP-Sales positions, we have always looked for that person who is shallow and taken in with the luxuries of life! Look at successful Sales heads in software companies globally, they will all be fighting with each other on who has the bigger boat or larger house!

Jayaram said that you want precisely that person for your VP_Sales position since that person will always be gunning to earning as much of sales commissions as possible and have disdain for your fixed basic compensation part. Jayaram said that just remember that for every dollar the Sales person earns for you, they are adding much more Sales to your company!

This is why Sales heads in many successful software companies earn the most in that company, even much more than the CEO and it shoulsd be o.k with the CEO. Tom Siebel of Siebel Systems used to be the top Sales person in Oracle. He was driving Oracle's Larry Ellison crazy with his humungous commission earnings!

Director of Sales or Sales VPs get paid about 60% of what a VP-Marketing or VP_customer support earns as fixed basic compensation. All the rest is earned as commissions on sales.

Incentives are also discussed here in this forum :

 http://www.nasscom-emerge.groupsite.com/discussion/topic/show/92650

VP-Finance, Director of Finance

The VP-Finance or the Director of Finance function is very easily handled by an external accountant organization like a CA/auditing outfit in India till such time you go for Venture or Private Equity financing. At that time, the investors may need to see a properly qualified Finance Person at the Management Table for them to feel comfortable funding you.

In Services companies, the Finance function may not be as important as in a Product or a SaaS product startup company just given the pure nature of the cash flows. The IT services company cash flows are somewhat predictable given the predictable nature of it, especially if the majority of your revenues come from On-site people. Then it is only the skill to multiple no of hours X rate and raise an invoice. Unless the onsite person is a total idiot, these revenues are somewhat predictable.

Product companies with initial large outlays and subsequent annuities in terms of Annual Maintenance Charges (anywhere from 5% to 20% in India depending upon how far back the customer can bend your hand behind you!) have a jumpy kind of cash flow. It takes a seasoned Director of Finance or a VP-Finance to help you smooth out these bumps and ensure steady cash flow.

In Venture funded or PE funded companies you need a VP-Finance who can advise you on taking money WAY BEFORE YOU NEED THEM. This will help you raise money with the right kind of lead times (anything takes twice as long, you need to remember) so that you don't need to do drastic things like layoff people for cashflow purposes.

A good VP-Finance also institutes a good accounting and finance function automation program. There are very inexpensive SaaS offerings these days to automate a lot of the finance function and Microsoft/Navision accounting software on Microsoft platforms is a very useful, not so expensive option these days for companies that are 25 people and above. The VP Finance functions needs to have experience working in similar companies. If it is difficult to find a person with that kind of experience, at least some one who is familiar with high tech startups and has experience dealing with PE investors.

The VP-Finance can provide a buffer between PE investors who need some kind of financial information almost daily. A CEO/President needs someone who can take care of those things independently so that they focus on the business rather than answer questions about row 4 , column AA in an Excel spreadsheet!

Nari: Great Effort! Amazing Energy! Am sure it will become like a hand-book on Management Team. Slowly you can address specific questions as well or link to other resources. For Example, following details in FAQ format:

1. VP Sales or Young SalesForce managed by CEO ?

2. Marketing Vs Sales

3. What other roles CEO can take?

Lakshman:

All great topics. Will addreess them after I address each position of the Management Team in a sequence! Thanks!

CTO, VP-Engineering, Director of Engineering Positions

In startup companies, founders are often the first to be in the management team and quite often they are technical folks who will become the CTO of the company also. But not all successful startups need to start this way. I have known well known companies like SalesForce.com being started by Sales people like Mark Benioff who beefed up his team with technical people after he had the idea for his company.

Usually the CTO position is reserved for a Visionary type of founder or when Private Equity or Venture money is invested, to "move up" the founder where they can do no harm!! However, if a technical founder is very active, once the company grows to a  certain size and there is way too much to be done, a VP-Engineering may make sense.

For example, if you are a SaaS company, the CTO may be involved in plotting strategy and upcoming products and features along with product management that they may not have time to attend to the nitty gritty details of making sure that the SaaS platform is running stably and infrastructure aspects are taken care of. For example, the development-testing-production rollout cycle of new features and big fixes are rolled into the current SaaS offering may all be the domain of the VP-Engineering while the CTO is focusing on the bigger picture. Believe me, if you are a growing SaaS provider there will be enough work to be done by a CTO and a VP_Engineering.

If you have many product development efforts in the works, getting a VP-Engineering and making them responsible for deliveries of current products is also desirable.

From the PE investor or VC perspective, they do not care as long as there is somebody filling the CTO or the VP-Engineering role. They may just need one person they have confidence in and experience doing similar things before successfully!

CTO compensation is usually higher than the VP-Engineering and is about 80 - 90% of the CEO's compensation as a rough guideline. VP-Engineering may be paid about 80% of the CTO compensation although it depends upon the country, location within the country and the person you are targeting and ho much in demand they are!

Usually if you have a CTO, you can start with a junior level Director of Engineering position (usually someone with atleast 7 years of hardcore engineering and engineering management experience in a company of similar operations). This person can be given a timeline, goals and promoted on achieving those goals to a VP-Engineering position.

If I were hiring personally a VP-Engineering or a Director of Engg I would look for hardcore programming skills first in a large company as well as experience working in a startup before. Large company engineering experience comes as a roadblock to getting things done quickly in a startup since their thinking might be already set in large timeline expansive process projects! Large company experience usually makes sure that the person's breadth of engineering skills is good. Most importantly, they need to have enough experience to know what works and what does not in practical software development and how to mold many different approaches to get things done in an elegant, dependable, reliable and extensible base of code!

Great post Nari, thanks.

Sachin:

Great that you liked it!

VP- Business Development, Director-Business Development

Business Development is neither Marketing nor Sales but somewhere in between. Usually Business Development VPs focus on generating new marketplaces for the products or services you sell. In that sense it is more strategic and also product or service specific.

Early startup teams do not need a VP-Business Development for investor funding. It is usually done after a second round of funding or the company has grown into multiple sets of products and services. Business Development also becomes more important if the business has aspects of OEMming the technology to other companies. For example, if it is a search technology or web 2.0 kind of startup, where revenues depend upon many partnerships, the Business development VP becomes important.

As with marketing, setting goals, measuring performance and compensation of and for Business Development directors and VPs is a fuzzy exercise and needs to be done with great caution and thought. Business Development VPs usually get about 80% of a VP Marketing and again it is dependent upon the nature of the business. A Business Development VP may be much more important in a company like YouTube while a Marketing VP may be much more important in a software products company.

As usual, you can hire an enthusiastic Business Development director and then promote that person instead of hiring a VP-Business Development right away.

VP - Customer Service or VP- Customer Support

Usually if your company provides a service like Cleartrip you would go in for a VP-Customer Service and if you are providing a product like a software product you would opt for a VP-Customer Support.

The functions are very different and the person you want in these roles are also very different. For customer service you want someone who has handled irate customers on the phone, like customers who are irate about their call taxi not reaching them, or their phone service not working properly. There are a lot of skills transferable from those arenas although you need to look for skills and experience in recruiting, staffing, motivating and improving service in general.

For Customer Support you would look for people who have managed large help desk operations, even in a BPO kind of setting, even if you are a software product company.  Here you need to be looking for someone who is capable of automating many of the customer support functions as much as possible in addition to staffing, recruiting, retaining, managing perfformance, etc. There are a number of ways of improving product documentation, placing FAQs online., leveraging interactive customer support hosted platforms like www.rightnow.com to create and maintain an online portal of frequently asked problems and solutions.

For both Customer Service and Customer Support the stretch goals for the position should not be who manages a growing population of support people but who keeps it unnecessary to add more support people. Who can leverage the internet to AVOID incoming support or service calls by working with Product management and engineering to automate a lot of service or support through effective use of the internet.

Compensation wise, a VP customer support gets paid about 60% of a VP-Engineering, roughly, but you can set a number of very attractive, concrete goals for this position for which you bump up the bonus at multiple levels of achievement. You can also recruit a Director and then promote him/her based on accomplishment.

Remembering that Customer Support or Customer Service is a function that your cusstomers SHOULD not have to call should be the goal!

VP - Product Management, Director of Product Management

When the demands from endusers regarding what is missing in the product is overwhelming, you need  a gatekeeper to regulate them through the narrow gate of engineering resources available in a prioritized way! That's what product management does - balance, prioritize and guide product development.

If it is software in support of a service like Cleartrip.com or Seventymm.com product management may still be very relevant and needed but is slightly different from product management in a software product company.

For software in support of a service, the product management person usually needs much more experience in web solutions and web savvy. For software product companies, the experience needs to be in translating rough vision and mission of the company into crisp products that make sense individually and together!

A VP of Product Management primarily needs to be a diplomat - being able to listen to conflicting, competing demands of different user groups and placing the most strategic ones' ahead of others so that the company benefits financially rather than keep everyone happy! It also demands somewhat strong technical knowledge, enough to know the difference between a requirement that takes a lot of time technically versus something that is simple to do.

They also need to be perceived as unbiased towards any of the groups that they are trying balance - sales, marketing and engineering. It is a high wire act and only a few people make exceptional VP  and Director of Product management.

A VP_Product Management gets about 60% of the salary of the top technical VP like a VP_Engineering. The performance assessment parameters need to be carefully thought out - placing equal weights on getting things done on time and planning releases in a way that user requirements get prioritized and taken care of on time and at the same time, they make engineering sense in the form of releases.

VP- Human Resources, Director of Human Resources

Startup companies rarely need a Director of Human Resources or a VP level position in the same function. They become useful only when your company experiences enormous growth and you need to handle simultaneously the twin headaches of making sure you hire large numbers of good quality people in competition with other companies that may be in the same field and making sure you streamline Personnel Policies and procedures that a larger company cannot do without before everything descends into chaos.

That said, even large companies go through intense periods of rapid people growth or stabilizing the existing workforce and making sure that personnel aspects are streamlined and smooth. Each of these different phases may require hiring a different kind of person for the job. I know that India has the unique opportunity to hire people with MBA in HR from institutes like Xavier Labor Relations Institute (XLRI). For me personally, I would look into past experiences of this person in similar situations even though on a smaller scale and what their approach was in those cases. Unconventional thinking, unique but intense approaches towards recruitment would all be the actual experiences I would look for even if the person has unusual backgrounds (I have known CAs and ICWAs that have made good HR VPs!

If the company is steadily growing, then the kind of HR VP you need is more of someone who can institute sane policies and procedures and most important of all, shape the company's culture, popularize it, mythologize it and make it real! Company culture is a matter of the top management team showing it in ACTION not in just repeating it in words over and over again, ad nauseum. The right HR VP will  make a big deal of this culture, make sure that the policies are conducive to the culture they are trying to institutionalize in the company.

These can be policies towards layoffs, performance appraisals, promotions and in general how employees are treated. The HR VP may need to ensure that the company not just talks about these things in their culture but becomes an advocate for the employees in making the culture actually happen!

Compensation for the VP-HR would be roughly about 60% of the CEO's as a guideline although it depends upon if someone with other skills in the top management team takes up this position because it is important enough for someone trusted enough to take it up. Performance appraisal for this position is also a very subjective exercise but can be done if the overall objectives are clearly articulated in the beginning.

I have worked in India as far back as 1980 and deal with Indian companies and Indian management since 1994. Company cultures in india have definitely changed somewhat but in many fundamental ways remains the same. HR Vps and Directors have the power to change these for the better and keep the ones that may be different from Western Ways of management but better in some ways. He/she should have the education, multiple sets of experiences in many companies to know the difference and also the ability to push it through the management team.

It is easy to see the HR function as a passive, inferior one but ironically is the most important one that can determine whether your company is going to last for a long time and prosper through multiple up and down cycles!

Hi Nari,

I would like to thank you for this series of excellent posts. We're currently in that stage of organizational growth where we exactly needed this kind of information first-hand.

Cheers,
Pallav

Pallav:

Glad that these posts have been useful for you. Please do add your wisdom and learnings so that we can all benefit from them also!

Please do pay it forward!

Nari