Debunking the Myth of Hiring for Domain Expertise vs. Functional Expertise

Debunking the Myth of Hiring for Domain Expertise vs. Functional Expertise

As a CEO scaling your business, you’ll invariably want to hire in new senior people from the outside.  Even if you promote aggressively from within, if you’re growing quickly enough, you’ll just need more bodies.  And if you’re growing really fast, you will be missing experience from your employee base that you’ll need to augment.

For years, I’ve thought and heard that there’s a basic tradeoff in hiring senior people — you can hire someone with great domain expertise, or you can hire someone with great functional expertise, but it’s almost impossible to find both in the same person, so you need to figure out which is more important to you.  Would I rather hire someone who knows the X business, or someone who is a great Head of X?  Over the course of the last year, I’ve added four new senior executives to the team at Return Path, and to some extent, I’ve hired people with deep functional expertise but limited domain expertise.  Part of that has been driven by the fact that we are now one of the larger companies in the email space, so finding people who have “been there, done that” in email is challenging.

But the amount of senior hiring I’ve done recently has mostly shown me that the “domain vs. functional” framework, while probably accurate, is misleading if you think of it as the most important thing you have to consider when hiring in senior people from the outside.

What’s more important is finding people who have experience working at multiple growth stages in their prior jobs, ideally the scaling stage that you’re at as a business.  It makes sense if you stop and think about it.  If your challenge is SCALING YOUR BUSINESS, then find someone who has DONE THAT before, or at least find someone who has worked at both small companies and larger companies before.  I suppose that means you care more about functional expertise than domain expertise, but it’s an important distinction.

Looking for a new industrial-strength CFO for your suddenly large business?  Sure, you can hire someone from a Fortune 500 company.  But if that person has never worked in a startup or growth stage company, you may get someone fluent in Greek when you speak Latin.  He or she will show up on the first day expecting certain processes to be in place, certain spreadsheets to be perfect, certain roles to be filled.  And some of them won’t be.  The big company executive may freeze like a deer caught in the headlights, whereas the stage-versatile executive will invariably roll up his or her sleeves and fix the spreadsheet, rewrite the process, hire the new person.  That’s what scaling needs to feel like.