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James Mitra is the Founder and CEO of JBM and the host of 40 Minute Mentor Podcast.
Connect with James
LinkedIn
https://jbmc.co.uk/
Additional resources
40 Minute Mentor – https://linktr.ee/40minutementor
COO Secrets - https://jbmc.co.uk/insights/category/coo-secrets/
Chief of Staff hiring guide - https://mailchi.mp/jbmc/the-chief-of-staff-role-uncovered
Ravio (real time comp data) – https://ravio.com/partners/jbm/
Listen to the full episode here.
Understanding the Real Value of a COO
Before we dive into the hiring process, what's your take on the real value of a COO? What can a COO actually solve for a CEO?
Bethany: This is actually an interesting topic. I've been asked to talk to so many CEOs over the years to help them decide whether or not they need a COO. What I've discovered is that it's kind of irrelevant what I do and what's much more relevant is what they do and also what they don't do.
The CEO-COO relationship is really around forming a great partnership and creating a complete human. So understanding where your strengths are, where their strengths lie, and it's also oftentimes not just strengths, but what gives you energy and what you love doing versus what is enervating and you hate doing.
If you can find somebody who you can partner with, who can do all of the things that you hate with joy, that is a special combination and what you should be looking for in a COO.
So it's the "other half" effect - the CEO has certain things they're interested in and good at, and the COO complements that?
Bethany: Exactly. And this is part of why it's so hard to quantify what is a COO and what are the skills that are needed, and why no two COOs you've ever met look the same or have more than maybe 60 or 70% of overlapping skills. Every single one will be different depending on what the CEO is looking for.
When to Hire a COO
When should a company actually hire a COO versus other roles?
Bethany: It's interesting to specify the difference between hiring a COO and one of the co-founders being a COO. In terms of hiring, there's a difference between needing a chief of staff - an extension to a CEO, another pair of hands, somebody who can run special projects - and getting to the point of scale where you actually need a COO.
You need to have enough scale for a COO to make sense, and that would probably be around 120 people maybe. It would be the time where bringing in somebody to professionalize and prepare for the next layer of scale would make sense.
Brandon: I think at the seed level - when I say seed, I'm talking about £3-5 million - the chief of staff makes tremendous sense to really be that extension of the CEO.
At the Series A level - £8-10 million, around 40-45 individuals in the company - I think that's the right time for a COO to come in. You need somebody to pair with that CEO to help grow and professionalize the business and really get it to a point where scale can truly happen in a Series B.
The Executive Search Perspective
James, when a CEO of a Series A company comes to you and says "we need to hire a COO," what's your first question?
James: Where I would typically start, before diving into the role per se, is getting a holistic understanding of where the business is currently at. So that's the long-term and short-term strategy. Super important for a COO that's either going to be tasked with operationalizing and executing that strategy, or if it's a more commercial version of the COO role, driving the growth of the business.
Getting that clear in my mind early doors is really important, and that helps me define the right type of COO. Then digging into the size of the team, the revenues, the funding situation, runway, organizational structure, leadership team - just building that picture of the organization is critical.
Really importantly, what are the challenges they're facing right now? What's keeping the CEO or founder up at night? By starting more high level, you start to see what type of hire is required. Is it a COO? Is it a head of ops or VP of Ops? Is it a chief of staff?
It sounds like you're a bit of a matchmaker - not just about skills, but so much around personality. How do you put similar effort into understanding the COO candidates?
James: Matchmaking is exactly the way to describe it. The way we work as a business is we want to work with great people, great talent, and we really want to get to know them. If you get to really know these people, both candidates and clients alike, and you can feel fully invested in them and you know their long-term aspirations...
For a COO, do they want to become a CEO down the line? Do they really just want to stay as COO forever, but maybe build new spikes in their skill set? Do they want to be part of a high-grade scaling journey, or would they prefer to just run the business day to day? All of these things, their personal situation and their life goals, all come into play.
The art of a good headhunter is to ask the right questions and build a really good picture of the needs of both sides of that equation, and then ultimately put them together at the right time with a rigorous process behind it.
Designing the Interview Process
You mentioned process - can you walk us through what an effective COO interview process looks like?
James: I don't think there has to be a one-size-fits-all, but I do think there are certain essential steps that need to happen.
One of the first things for me is that they speak to the founder off the bat. The first step is that the CEO speaks with them - that should be the first conversation, because there's no point running a search without sense-checking that chemistry from the off.
Then for me, it's incredibly important in a COO role to have the buy-in from the key stakeholders across that executive team. So I would quite quickly get them to meet different people across the business that they'll be interacting with in their day job. That's about establishing levels of trust and credibility from both sides.
What about presentations versus working sessions?
James: I personally prefer working sessions over assignments. Ultimately, a lot of people are great at putting together an assignment and great at selling themselves and presenting, but I think you've got to test the working dynamics of that executive team.
It shouldn't just be a stand-and-present situation with Q&A - it should be interactive. It should be really getting to see the thought process and the way you react to things on the fly, making it more inclusive, because I think you get the best out of people that way.
I think it's also getting a board involved and investors to give a different perspective and assessment. That's important to get their buy-in on what is often the most fundamental role to the success of an organization.
I personally would also at some point bring in direct reports, people that would be reporting into the COO, because their buy-in is super important to get that executional buy-in and assess leadership capability.
I'd always finish with something more informal - an informal dinner for the founder and CEO to really connect further and cover off any outstanding questions.
Compensation and Market Rates
Let's talk salary and equity bands. What are the ranges you're seeing right now for Series A COOs?
James: At that Series A stage, on average, COO salaries will range anywhere from £130k right up to the high hundreds. From benchmark data we've got from VCs, the 50th percentile is about £140k, and then equity can range anywhere from 0.1% all the way up to 3-4% in the extreme, but I would say mostly at that Series A point it's around 1-1.2% equity.
I've seen such variance on this over the years, so I find it quite hard to give absolute concrete advice because it does change. But getting the incentives right - the holistic package - is really important, and it will depend again on the type of COO. Whether it's a commercial COO where there's upside in terms of bonus versus a more traditional biz ops COO that might not be bonused, making sure they have a decent slug of equity to incentivize them as well.
As someone very aware of the pay gap, what advice do you give to women or others who might be accepting less than they should?
James: It's symptomatic of many years of women being underpaid and this salary gap, and it's something we are very keen to help rectify. My personal view is at the start of a process, we will have a good idea of that bracket, and I think it's really important to be transparent upfront with candidates about that.
If we're headhunting anybody for a Series A COO role, we would expect candidates to be in and around the right range regardless of their current comp. They might have been undervalued and underappreciated in their current role, and we are very happy to help facilitate them getting to the right level.
We will fight for our candidates to get fair comp and the right comp that's in line with the job. If you're placing a COO into a startup, you do not want them to start on the back foot feeling disincentivized or underappreciated. You want them to go in thinking, "I'm gonna give the next chunk of my life to this mission."
The Reality of Reference Checks
There's nothing worse than hiring the wrong COO. By the time you realize it's not working and go through the process of trying to coach them, you've often burned through a 2-year fundraising cycle. What's your take on reference checking, particularly the difference between standard references versus back-channel referencing?
James: I did a post on this recently and it was contentious. It is a bit of an ethical quagmire, to be honest. The truth is, I didn't used to do tons of backdoor referencing myself, other than getting to know a lot of people over time and building relationships.
But I then realized how prevalent backdoor referencing is. You can like it or you can hate it, but it's a reality and it's not going anywhere. On one side, I know from running many executive searches that this is incredibly time consuming and expensive, particularly for a COO-to-CEO partnership. There's often a huge amount at stake.
My general perspective is both sides should be doing backdoor referencing - extra referencing, going even deeper on the due diligence. And yes, ideally that would be transparent.
The key for me is that backdoor references ideally come from trusted sources, and it's a way to help validate your assessment, give an alternative point of view. But it really shouldn't be taken as gospel. It should not be to the detriment of what should be a fair and rigorous process.
My general feeling is it's a small world. Don't burn your bridges, be a good person, be honest, be transparent, have integrity, and it's very unlikely that you'll have very bad references.
Getting Connected
For people thinking about their next role or becoming a COO, how should they get in touch with you?
James: We always want to work with great talent. A caveat is that at the moment there's a lot of great talent on the market and fewer roles, so we try to be really transparent. We absolutely do our utmost to talk to as many people as possible, but we also have a duty of care to be transparent.
We have our video series, COO Secrets, and our podcast, The 40 Minute Mentor, to provide career advice and mentorship at scale. If we aren't able to spend an hour with somebody doing a real deep dive, which we would do if there's a live opportunity, there are still ways we can add value to anyone's search.
But yeah, absolutely, we're always keen to talk to great COOs. And if any founders are listening to this, COO search is a real sweet spot for us.