Tuesday, October 8, 2013

Lesson #157: Consider Sharing Part-Time Executives Between Startups

Posted By: George Deeb - 10/08/2013


& Comment

The cost of a proven C-Level executive inside a startup can be around $250,000 per person.  When adding together a CEO, CMO, COO, CFO and CTO, that could total $1.25MM a year in salary alone, just for your five person senior team.  Most startups can't afford this kind of spend, until after they have raised a material round of venture capital or are driving material revenues.  Instead, they opt to go without that role filled, merge mutiple roles into one body or downgrade the talent level to a VP position to make it more affordable.

But, what is the most important driver of success for a startup?  The team!!  Exactly the thing startups should not be cutting back on.  So, how can a startup attract the high-power talent they need, at a budget they can afford?  How about sharing executives between startups.  You get the same brain involved with your company, on an affordable part-time basis.

As an example, let's say your business needs a CMO to set the high level sales & marketing strategies to drive revenue growth, and to help manage the junior-level marketing execution team doing the day-to-day work (e.g., search engine optimization, email marketing, social media management, creative development).  At, $250,000 per year for full time salary, plus 20% more for employee benefits and payroll taxes, filling this role is often unaffordable for a startup.  But, what if this executive only worked for you one day a week, for only $50,000 per year, saving you 80% in salary and related payroll taxes, plus not having to pay employee benefits for part-time workers.

This would work great for startups, to get high fire-power talent helping to grow your business.  Provided, the job can reasonably be fulfilled in one-day a week, until the business can afford full-time talent.  As long as you have junior team members doing the lion's share of the work in that department (e.g., bookkeepers managed by a part-time CFO), this model should work out well for you, especially if the part-time executive is open to transitioning into a full-time role after the company has the resources to afford it.  You end up getting an executive-level brain for a junior-level price.

But, why would a proven executive do this for you?  They typically wouldn't, if you were their only job.  But, if they were simultaneously filling this role for five startups, spreading their talent across five different companies on each day of the week, now they are getting paid a full-time salary that they are worth, and get the excitement of working on a diverse group of companies .  Not to mention, if they are getting a small equity stake in each company in this part-time role (e.g., 1%), they now have a diversified equity portfolio strategy, instead of putting all their eggs in one basket.

So, give this model some thought for your business.  And, if interested, pitch it to other startup peers of yours (preferably in the same industry), and maybe five of you can collectively hire the executive-level brainpower you desire to accelerate your business.  Or, if you prefer, companies like Red Rocket can play "matchmaker" for you, helping to source both the executives and the other startups to fill up their time.  So, feel free to call me, if interested in learning more.

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