(This post was written by my colleague Bethany Crystal and originally published on the Bolster blog yesterday. While I am still trying to figure out what posts to put on this blog vs. Bolster’s blog since the blogs are pretty similar, I will occasionally run something in both places.)

At Bolster, we believe that 2021 will mark the rise of the on-demand economy for executives. More than ever before, executives are seeking out roles that distinctly aren’t full-time for a variety of reasons – they’re in between full-time roles and want to stay engaged and meet a wide range of potential employers; they’re retired or semi-retired/post-exit and want to keep working, just not full-time; they’re fully employed but are looking for advisory opportunities to help others; or they are committed to the more flexible lifestyle that being an on-demand affords. As business leaders, you might be wondering how to take advantage of this trend and incorporate on-demand talent onto your existing team. Don’t worry – we’ve got you covered.

Let’s start with a quick primer on the distinct types of on-demand talent. Here are the four most common themes we see among our member network at Bolster:

The Four Types of On-Demand Talent

1. Interim: Someone who is partially or fully dedicated to working with your company, but only temporarily (you can think of them as “filling a gap”)
2. Fractional: Someone who works part-time (or “fractionally”) with your company on an ongoing basis (they “own” the function on a long-term, part-time basis)
3. Advisor or Coach: Someone who supports your existing team by offering external advising, coaching, or mentorship as needed (this might be on a temporary or long-term basis)
4. Project-Based: Someone who is brought on to complete a specific project or a fixed span of work (this is the closest to typical consulting work)

Depending on your business needs, the capacity of your existing team, and your resourcing, you might find it useful to have one or more on-demand executives in the mix at any given time. We’ve also found this can be a great way to keep things fresh at the leadership level and make sure new ideas are circulated with some regularity.

Business Opportunities for On-Demand Talent

While every company’s on-demand talent needs will vary, we’ve already seen a few patterns emerge from the 2,000 executives in our member network. Here are a few times to think about bringing on-demand work to your business.

Choose interim work if you need…

• A temporarily placeholder at the exec level
  Whether unexpected or planned, transitions at the executive level can come with a high cost: Any week that goes by with an unfilled seat adds more work to the team, contributes to business lag, or both. While full executive searches can take six months (or more!) to get right, many CEOs find it helpful to bring on interim help as a “stopgap” in the meantime. The most obvious benefit of interim on-demand work is to prevent your business from falling behind in areas where you may not have a deep bench below the executive level. And you might also consider that bringing in a seasoned professional as you conduct your full-time search will give your team a proxy to compare against, making that placement process a bit easier. Last – while it’s not a guarantee, there’s always the chance that your interim hire is a great fit for you and wants to stick around for the long term! You then benefit from an on-the-job “interview” or audition.
• Surge capacity staffing
  Imagine a situation where your business doesn’t need an executive in a particular function. You’re small, scrappy, and you’re getting along perfectly well with the team you have in place – and you can fill in the bits of executive leadership required for that function yourself from time to time. But then something pops up where you need to be the CEO and can’t afford to ALSO be the CXO. An interim CXO could be the right solution. For example, the 3-5 months run-up to a Series A or B financing could be a good time to bring on an experienced CFO if your only relevant team members are handling AP, AR, and Payroll. Or you could be working on your company’s public launch with a less experienced marketing team and an agency – and an interim CMO could make all the difference between success and sideways.
• Parental leave coverage
  With a growing business trend of increased parental leave coverage, CEOs are starting to use interim executives to fill holes that might temporarily exist on the leadership team. Interim work is particularly useful if there isn’t an obvious “second in command” role on that team who might take on a stretch project in their absence. Implemented correctly, bringing on an interim exec can also help to squash any fears of “getting replaced” while someone is away on leave. As an added bonus, bringing in a new face (if only temporarily) can give the remaining team a chance to “try out” a new leadership style and share feedback about what worked and didn’t work during the interim period.

Choose fractional work if you need…

• A seasoned professional’s experience and skillset (but not all the time)
  Before every full-time leadership hire, there is the sticky “in between” period of need. That’s the period when some work starts piling up, but not quite enough to fill an entire work week for one person at the executive level – or the period when you know you need a more seasoned leader in a function but just can’t afford one full-time. If you don’t have an experienced executive in the role, you miss opportunities for effectively setting up scalable practices and processes. Often, a lack of senior focus in a functional area means that you miss strategic opportunities, and sometimes it also means that you expose yourself to risk that could be avoided with the right person having ownership of the function. This is the perfect time to introduce fractional work to your business. The most classic example of fractional executive talent is the CFO who oversees the bookkeeping and accounting for several companies at once. But you can find a fractional executive for just about anything. You might consider this type of on-demand executive if you don’t yet have anyone in that functional area, if you have a team of less experienced specialists or even a more junior generalist leader in that functional area, if you want a taste of what it’d be like to dedicate more resources there, or if you need just a few things done right, without having to think about them yourself.

Choose advisory or coaching work if you need…

• Mentorship for your current executives
  Sometimes it’s helpful to see what “great” looks like in order to achieve greatness yourself. If you’re looking for a way to give a current leader an added boost to their development plan, consider bringing on someone who can serve as a mentor or advisor on a temporary or long-term basis. Someone who has been in your shoes before and can give advice and guidance based on their experience. This on-demand exec role has two big benefits: The first being that it demonstrates to your executive team that you’re committed to their ongoing success and growth, which boosts morale (and hopefully performance). The second is that you’ll be able to equip your current team with the tools they each need to scale instead of having to bring on a new wave of executives for each business stage. The advisor or coach usually works a few hours per month, once they’ve set up a strong coaching relationship.
• Access to top talent without the full-time price tag
  Just as remote work unlocked the potential to find “the best of the best” without geographic constraints, on-demand work does the same at the executive level. More and more, we’re seeing CEOs incorporate advisors to their business as a way to gain exposure to best in class talent (at a fraction of the cost). This can be a great way to introduce subject matter or functional expertise into your organization without committing to a full-time salary.

Choose project work if you need…

• A fixed-scope expert engagement at the executive level
  Just as tools like Task Rabbit made it possible to find experts to accomplish tasks on a personal level (such as moving furniture or painting a bedroom), on-demand talent makes it possible to find seasoned executives to complete one-off projects at an expert level. That’s why, on Bolster, we ask each each member to indicate what roles they can take on, and also what projects they can be hired to do. As a CEO, you might consider outsourcing some of the crunchy stuff at the exec level that might take a lot of time, or in cases where you need a quick turnaround to get to an MVP. Common projects we’ve seen to date include building sales commission plan structures, designing a go-to-market launch plan for a new product, running due diligence on an acquisition, overhauling pricing and packaging, working on a strategic plan, TAM analysis, budgeting process, or creating a diversity & inclusion strategy for the company.
• An experimental project that won’t distract the current team
  One final area where you might consider on-demand work is for a project that feels more like an addendum to your current business, or an early experiment. At Bolster, we brought on an on-demand executive to help us think through and roll out a brand new product that we’re in the early days of testing right now. We’ve seen other CEOs use project-based work at the exec level for things like evaluating market expansion possibilities or speccing out the MVP of a potential new product.

This is just a short list of some of the possibilities where on-demand talent might support you in your business today. One of our favorite parts about this type of work is just that – the flexibility it offers to you and your team. Whether your business is just getting started or if you’re operating on all cylinders, don’t forget to consider on-demand work as part of your CEO toolkit for this year and beyond.

– Bethany Crystal, February 2, 2021

Almost a year into my second journey as a startup CEO at Bolster, and I’m getting more and more questions from other CEOs about what it’s like doing a second startup after almost 20 years at the first one…and achieving pretty good scale by the end.  The short answer is, it’s the same, only it’s way better.  Here’s why.

I’m more confident.  So is our whole founding team.  When Jack and I started Return Path, we were 29.  This time, we were 49 — and the average age of the founders was probably 46 or 47.  The bottom line is that we don’t know everything about the business we’re building, but we know what we’re doing in terms of building a business, a startup, a software company, a service-oriented business, leading a team, planning, executing, and on and on.  Confidence in all of those areas means large portions of our day and brain space are freed up to focus on the actual construction of the business without worrying if we’re doing things right or wrong.

It’s much easier to build a startup today.  1999 wasn’t the dark ages, but it feels like a different millennium in terms of what it’s like to start a technology company from scratch.  The cloud and micro services/APIs mean that we are able to build our platform much more quickly at much lower cost than in the past.  And in terms of tooling the business, we got up and running with about 20 different DIY cloud/SaaS solutions in about 6 weeks for a cost of less than $10k/year.

We are sharper on execution and impatient for success.  Your first startup in your 20s is a lot about “enjoying the startup journey.”  This time around, our team is significantly more focused on critical stage-gate success metrics.  In both cases of course, the objective was to win, but this time around, we are much more focused on getting to that point sooner and with less waste.

We are a lot more productive.  Ok, fine, we’re cheating because of COVID and working from home.  No train commutes.  No plane trips.  No water cooler chatter.  No fluff.  It’s not sustainable, and I’ll write about that more in a future post.  But it’s leading to a surge of productivity like I’ve never experienced or seen before in my career.  I do like to think at least some of it comes from professional maturity — we’ll see when life returns to something more closely approximating normal.

I am having a blast being on the front lines.  I went from running a 500-person company, where I’d honed my job and skill set around communication, people issues, and mobilizing the army to go do things…to spending less than 5% of my time running the company and managing people.  Now depending on the moment, I’m an SDR, a customer success manager, a product manager, and a marketing copywriter.  And probably some other things, too.  And I love every minute of it.  It’s a lot more fun to see the direct impact of my actions on the business as opposed to only really seeing the direct impact of my actions on the people in the business (and occasionally then on some aspect of the business as an individual contributor).

Maybe I’m not having a typical second startup experience.  I know some friends who had successful first exits and hated going back to square one, or failed at a second business and were really disappointed about it, only to shift careers.  But my experience so far is a much better second verse, even though it’s a bit like the first.

The Tension That Will Come With the Future of Work

A lot has been written about the Work From Anywhere life that knowledge workers are leading right now due to the pandemic, and what will come next.  Fred has a great post on it, and I’m curious to see how his and Joanne’s “Home Office Away From Home” space called FrameWork does when it opens.  In that post, he references a few other posts and articles worth reading:

• Imagine Your Flexible Office Work Future – Anne Helen Petersen
• We’re Never Going Back – Packy McCormick
• The Future of Offices When Workers Have Choice – Dror Poleg

Instead of entering the debate about what the future will look like, which no one really knows other than to say “not like the past,” I want to focus on a tension I’ve been mulling over lately, and that is the tension between a company’s leaders and its employees.  You could also call it a tension between extroverts and introverts.  And in this regard, Packy McCormick is both right and wrong about the debate:  right in the sense that employees will make the decision, not companies; wrong in the sense that the best employees “are not going to work for companies that make them shave, get dressed, hop into a car or a crowded subway, and sit at a desk in an office five days a week with their headphones on trying to avoid distractions and get work done.”  That’s a blanket statement that, as with most blanket statements, misses an incredibly important point.

That some people like, want to, need to, or benefit from working in offices more often than not.

That those people are some of the most talented, creative, and high potential people in an organization.

And that those people are frequently the ones with the least “voice” in an organization — new employees, younger workers, introverts, and people from underrepresented groups.

It will be really easy for senior people who, in many cases, have longer commutes and kids they are now accustomed to seeing a lot more, not to mention really nice and private home offices, to default to working from home.  In many cases, they’ve already done more of that than most employees, well, because they can.  But the problem is that those people are perfectly fine working from home.  Work and decisions come to them.  Their career trajectories are pretty set.  They will seek out anyone in the organization to ask them any question, any time.

But think about the topic from the perspective of an entry level account coordinator, an associate product manager, a graphic designer in marketing, a financial analyst in the FP&A group, or an AR specialist in accounting. .  Less exposure to decision makers can’t possibly help this.  If you’re one of those people, here are the things you miss out on when there’s no office:

• You don’t get to participate in or overhear interesting conversations in the break/lunch room or at the water cooler about something going on in the company that you’re not working on.  This reduces your ability to learn in unstructured ways at work or get thoroughly onboarded into a new company
• You don’t get to see who comes and goes from the office or different meeting rooms.  This may sound silly, but watching a business in, seeing who is in a glass-walled conference room or what slides are up on the wall, helps employees stimulate good ideas about their day to day work.  This limits your ability to connect the dots and better understand the big picture at work 
• You don’t get to have a casual conversation with your department head or CEO in the elevator or hallway or a conference room between meetings.  That “skip level” leader is much less likely to know who you are or what you do.  This can make it harder for you, the next time you have an idea you want to share or feedback you want to give, to approach a leader.  It also makes it a little tougher for you the next time you’re in line for some kind of promotion or development opportunity

Of course all employees CAN in theory make themselves known, can learn, can seek out others in the organization, and can try to re-create hallway serendipity from the comfort of their own Zoom screens.  It just doesn’t come naturally to most; practically speaking for many, it’s impossible; and it’s particularly hard for younger or quieter team members.  There’s a ton of research about how women in particular aren’t as comfortable advocating for themselves when it comes time to ask for a raise or a promotion.  If you’re the CEO of a 100 person organization, you might be inclined to chat with the new entry level AR person at the coffee machine for a few minutes; you’re unlikely to be excited about a 30-minute Zoom with her.  

(By the way, this whole construct may be different for engineering, where engineers are likely more comfortable with remote work AND aren’t held back in their career development as a result.)

I’ll close this post with an anecdote.  As part of our work at Bolster, I was doing something called an Executive Team Scalability Assessment with the CEO of a $75mm SaaS company a month or so ago.  When we were doing a review of how strongly each of his leaders role modeled company values, he paused when he got to one leader and said, “I honestly don’t know.  That person has only been here 10 months, but don’t worry, that’s just because of the pandemic.  I haven’t seen them in action.”  10 months!  People will discover at some point that it was much easier to “lift and shift” an existing organization to the cloud in year 1 of the pandemic than it will be to sustain or build a culture with a lot of new employees in year 2 or 3 of remote-first work.

CEOs who care about their culture, their people, inclusion and belonging, and their people’s professional development will have to really re-think how things work if they are going to steer their companies towards remote-only policies, or even remote-first employees, and still be inclusive workplaces.  That doesn’t mean it can’t be done.  But gravitating to a remote-only way of life, even if it’s personally enticing or if some talented and vocal employees demand it, may not be in the best interest of their overall company and employee population.

Last week, I blogged about Bolster’s Board Benchmark survey results, which really laid bare the lack of diversity on startup boards.  There are signs that this is starting to change slowly — one big one is that of all the board searches we are running at Bolster, about ⅔ of them are open to taking on first-time directors; and almost all are committed to increasing diversity on their boards.  

This is also something that I would expect to take some time to change.  Boards are small.  Independent seats aren’t necessarily easy to open up.  Seats don’t turn over often.  And they take a while to fill, as CEOs are thorough in their recruitment and selection process.

My new mantra for Startup Boards is simple:  1-1-1.  

1 member of the management team.

Then 1 independent for every 1 investor.

Simply put, this means you should grow from having 1, to 2, to 3 independent directors as your board grows from 3, to 5, to 7 members.

Here are four tough conversations you may have to have along the way, with some suggestions on how to navigate them.  All of these conversations need to come with a point of view of why independence and diversity matters to your company, a lot of empathy, and appreciation for the value the person brings to the table. 

The conversation with your co-founder about only one founder/executive on the board.  This one will be the most personally difficult, since you likely have a strong personal bond.  Expect to hear things like “Aren’t we partners in this business?” and “How come my vote doesn’t count?”  Just let your co-founder know that while of course they’re a key partner, the company has a limited number of board seats to fill — each one is a golden opportunity to get an outside perspective on your business and get really good mindshare of an industry expert and create a new brand ambassador.  You already have 100% of the mindshare and ambassadorship your co-founder has to offer.  You can make that person a board observer, you can make sure they’re in all the key board conversations, and you can even give the person some special voting right in your charter or by-laws if you need to.  But do not put them on the board.  It’s obviously easier to do this from the beginning as opposed to removing them from the board down the road, but at least try to have the conversation up front that someday, it’s going to happen (note this could be a different dynamic if the person is a founder but no longer active in the business).

The conversation with an existing VC about leaving the board to make room for new investors or an independent.  This one will be less personally difficult but will require you to be very artful since the VC is likely contractually given a board seat – meaning you’ll have to get them to give it up voluntarily.  You may also want to align with another VC on your board to help the conversation or process along.  Depending on the circumstances at hand, your key points of logic could be one of the following:  (1) you don’t own as high a percentage of the company as you once did, and I’d like to make room for the new lead investor to join the board without compromising our independents or making the board too big; or (2) I’d like to replace you with an independent director who brings operator perspective and comes from an underrepresented group – it’s important to me that we build a diverse board, and it’s not great that we have don’t have gender or race/ethnic diversity on our board in this day and age.  As with a co-founder, you could change this person’s designation to a board observer so they’re still present for key conversations, you’re not changing their Information Rights, which are likely contractually given in your charter, and if required, you can give the person or firm some sort of special voting rights if there’s something they can no longer block (but which they have a contractual right to block) by losing their board vote.

The conversation with a new potential investor about not taking a board seat.  If you have a big new lead investor writing a $40mm check into a growth round, you may not have a leg to stand on.  But new investors who write smaller checks as you get larger, who might only be buying a 5-10% stake in the business…there, you might have some wiggle room to negotiate.  Your best bet is to do it early in the process before you have a term sheet, and do it as an exploratory conversation.  Otherwise, your talking points are the same as talking to an existing investor above. Investors are starting to realize the power of a diverse board, and may be open to this conversation. Some are making this a proactive practice, notably two of my long-time investors and directors Fred Wilson and Brad Feld (and some of their partners at Union Square Ventures and Foundry Group) — and those investors have also been willing to mentor the new, first time board members once they join.

The conversation with an existing independent director about leaving the board when their term is up.  Perhaps you have an existing independent director who is not adding to the diversity of the board, but you already have a full board.  Or perhaps your existing independent director isn’t doing a great job or has grown stale in the role.  Once a director is fully vested, you have an easy opportunity to thank them graciously and publicly for their service, extend their option exercise period multiple years, and affirm that they’ll still take your call if you need help on something.  You should set this expectation up front when you give the director their initial grant.  If they ask why you’re not renewing them, you can simply say something like “We’d like to add some fresh outside perspective to the team.”  One thing to think about, particularly for early stage companies, is only giving new directors a 1 or 2-year vest on their first option grant, so you can make sure they’re a high value director…and so you can have the option of an easy exit (or re-up) in a shorter period of time than a traditional 4-year vest.

The net of it is that as CEO of a venture-backed company, you wield an enormous amount of (mostly soft) power around the composition of your board – probably a lot more than you think.  You just have to wield that power gently and focus on the importance of building a diverse board in terms of both experience and demographics.

In addition to our work on helping CEOs understand board-building best practices, which I posted about last week, I’ve spent the past several months publishing a second series of blog posts to help current and aspiring directors (really, any senior executive!) understand the behind-the-scenes details of private company board service. This second series is also now an eBook and its content will also feature in the upcoming second edition of Startup Boards that I’m collaborating on with Brad Feld and Mahendra Ramsinghani.

When Bolster published the findings of our Board Benchmarking study, we revealed that 4 out of 5 seats on private company boards today are held by individuals who are white, and 86% of director seats are held by men.

And we also learned that 2 out of 3 CEOs are open to bringing on first-time directors to their boards, largely to help add some much-needed diversity to the most senior ranks of corporate service. To assist current and aspiring board directors out there, we decided to aggregate our team’s collective brainpower to shed light on how to get recruited for a board role, what to expect once you’re there, and how to make an impact.

You can see the full list of blog posts here:

• Introduction to Startup Boards
• How to Prepare Yourself to Get on Your First Board
• Should You Serve on an Advisory Board?
• Interviewing for a Board Role
• What You Need to Know About Board Compensation
• Preparing for Your First Board Meeting
• Corporate Governance as a Board Member
• How to Be a Great Board Member
• When Things Aren’t Black and White: How to Deal with Murky Areas
• Giving Difficult Feedback and Making Your Voice Heard
• How to Know if You’re Doing a Good Job as a Board Member

You can download all of these in an eBook, How to Succeed in Your First Board Role, from the Bolster web site.

We hope this book helps inspire and empower you on your own journey as a board director. And if you’d like to get access to more exclusive content like this and be considered for a board role in the future, you can sign up as a Bolster member here.

Someone asked me the other day how things are going at Bolster, the new company I started along with a bunch of long-time colleagues from Return Path last year. My visceral answer was “I’m having a blast!”  I thought about it more after and came up with five reasons why. 

First, I am working with a hand-picked group of people. My co-founders, I’ve worked with for an average of 15 years – we know and trust each other tremendously. And for the most part, the same is true about our cap table. Almost everyone else at the company is also someone multiple of us have known or worked with for years. That may not last forever, but it makes things so much easier and almost friction-free out of the gate here. 

Second, this is the “second lap around the track” for a few of us on the founding team in terms of starting something from scratch, and even those at the company who haven’t done a raw startup before are super experienced professionals and many have worked in and around early stage businesses a lot. All this combines to cut down our error rate, reduce anxiety, and speed up the pace of work. More friction-free or at least low-friction work.

Third, after a 20-year run at Return Path, it’s great to start with a clean slate. No mountains of tech debt and legacy code bases. No installed base of customers with contracts or pricing we no longer like or offer. No institutional debt like a messy cap table, legacy people issues, leases for offices we don’t want or need any more.  This also points to low friction as part of what’s going on…and while that’s a theme, the next two areas are different. 

The fourth reason I’m having a blast at Bolster is that I love — and really live in — the problem space we are working in.  When we started Return Path, I was deeply familiar with email marketing and the challenges faced by our client set and had a good vision for the early product.  But as the years went on, the product got geekier and nicher — and even when it wasn’t, I was never a USER of the product since I’m not an email marketer.  In fact, at our peak of 500 people, the company employed one email marketer and therefore had one user of our own product.  At Bolster, we have three user personas — Member, Client, and Partner.  And I’m all three of them.  I’m constantly in the product, multiple times a day.  I’m deeply familiar with all angles of the executive search and board building process.  It’s MUCH better to be this close to the product, and the same is true for many of our team members.

Finally, the thing I was really worried about with starting another company from scratch — moving from a leadership role into an individual contributor role — has been nothing short of fantastic.  I love working with clients.  I love talking to members.  I love advising and coaching CEOs. I love being a pretend product manager.  I love writing marketing copy.  It’s just great to be on the front lines. (I still love working on strategy and leading the board and engaging with people internally — but those are things that never stopped being part of my day to day.)

I was trying to think if there’s some priority to this list. Almost all of these items are or can be made to be true in your second+ startup. But while four of the five can theoretically be true in your first startup as well, I don’t think it’s quite the same. So I’d have to weight “second lap around the track” a bit higher and also note that during your second lap around the track, hand-picking your team and cap table, appreciating a clean slate, and appreciating individual contributor work are that much easier and things you can appreciate a lot more as a repeat entrepreneur.

(This is the second post in the series…the first one on How to Engage with Your CFO is here.)

What comes before a full-fledged CFO?  Lots of startups have nothing more than an outsourced bookkeeper or one junior staff accountant.  Sometimes a founder or a founder’s spouse even steps in on this front.  As startups scale, they are likely to hire a more senior accountant, maybe an AR/AP/Collections staff member, or even a Controller or VP Finance.

Depending on the complexity of your business you might be able to hold off on hiring a full-time CFO, but if you have any of these signs then it’s time to start thinking about bringing someone on board. One sign is intuitive, and it’s just the feeling that you’re concerned about cash. Maybe you wake up in the middle of the night and that’s what’s on your mind—not just that you’re running out of cash, but that you aren’t clear on how much cash you have and how fast you’re spending it. Is it concerning that you’re tight when it comes to payroll? Are you getting calls from vendors about late payments? Are you way under market in compensation and trying to overcome that by offering equity or “perks” to attract top talent? These are all telltale signs that your financial situation may be under duress, and a full-time CFO can be a solution.

 Another telltale sign that you might need a CFO is more tangible: Are you spending too much of your own time managing fundraising, debt, investors, and cap table questions and issues? If you are in the weeds with the financial reporting, either fixing what’s there or creating a lot of things from a blank slate, then there’s an obvious problem, and solution.

 Another sign that you need to hire a full-time CFO comes in the form of things you can’t answer. If your board asks you about some small-to-mid-level analysis or metric like CAC, customer profitability, margins, or ROI, and you don’t have a great answer that’s a signal that your finances are out of control. And if you can’t figure out how to get to an answer, that’s even worse.

 Of course, you don’t have to wait until these telltale signs emerge before hiring a full-time CFO—it’s also possible to have a discussion with your current finance person and figure out together what their career path could be, and what their aspirations are. If your finance person aspires to be CFO but doesn’t have the skills (yet) consider bringing on a fractional CFO. A fractional CFO may be the way to go if your business model is simple…some combination of a limited number of complex accounting issues, a limited number of customers or invoices or transactions, and an insignificant difference between the income statement and the cash flow statement.  If what you need is someone to oversee a gradually growing team, a slow-paced implementation of higher-order systems, basic financial analysis or modeling, or the occasional fundraising event, a fractional CFO may get the job done, for several years. A fractional CFO can also mentor your current finance person in the realities of the CFO role, and they can help you find a qualified CFO who will be a good fit for your company.

While there is no fast and easy answer about when to hire your first CFO, there are some telltale signs that point to that direction and if it’s not in your budget, consider a fractional CFO to help get things under control before you really do run out of cash.

(Posted on the Bolster Blog here)

This is another big week for us at Bolster. On the heels of the announcement we made last month about our Series B financing, we are now announcing the launch of a new program called Bolster Prime and a new venture capital fund called Bolster Ventures. These are important steps in Bolster’s evolution and in the fulfillment of our mission, what we call internally our “Big Idea,” which is to empower the innovation economy.  

The roots of Bolster Prime and Bolster Ventures pre-date the founding of Bolster. In our prior lives, the Bolster founders worked together to scale up a business called Return Path and also 

worked as advisors and mentors to numerous early stage founders and startups. One of the things we noted in our very first post, now part of the About Us section of Bolster.com, was:

After exiting Return Path [the company where our founding team worked for many years], we wanted to do for others what we did for each other as a seasoned executive team. We wanted to know: “How could we help other CEOs, executives and boards bolster themselves to go the distance and scale with their organizations?”

While the founding team was exploring potential business opportunities that allowed us to make a bigger impact on the world, Silicon Valley Bank and High Alpha Innovation were together envisioning a platform to help VC-backed portfolio companies more effectively navigate the complex world of executive talent needs. When our three groups came together, we realized we shared a vision to build a company that puts people first in all aspects to drive high-growth businesses.

I’ve never written before about those other “potential business opportunities” that our team was exploring along with our prior investment syndicate, Fred Wilson from Union Square Ventures, Greg Sands from Costanoa Ventures, and Brad Feld from Foundry. The one our team was particularly excited about was a concept we were calling at the time “Venture Acceleration Partners.” The key points in the pitch deck we created were:

• There is a gap in the market of investors adding “management” value to portfolio companies between Accelerators/Incubators/Studios at the low end and Private Equity firms and very large VCs at the high end. What about the middle?
  
• “The middle” consists of venture-backed companies that are neither early stage nor mature. They are typically founder-led, often by a first-time CEO with new or incomplete management teams who need a lot of mentorship/development, and with a diversified cap table of firms that don’t own operating or consulting practices to help guide the scaling process.
  
• These companies tend to have consistent and stage-unique challenges around scaling execution across every aspect of the business.
  
• By creating an advisory firm made up of seasoned operators, we can quickly identify the risk areas and provide mentoring, guidance and execution to management teams for defined periods of time to keep them on the right track and increase their companies’ performance.
  
• We want to create a firm that has enough skin in the game to have long-term relationships with management teams…and that doesn’t charge (much) for services because incentives are aligned as a co-investor.

Our original deck envisioned a firm that was sort of a hybrid of a “McKinsey for startups” and a venture investor. When I shared that pitch deck (and two other ones I’ll save for another day), with my long-time friend Scott Dorsey from High Alpha, he responded by sharing with me a related pitch deck he was working on with corporate partner Silicon Valley Bank out of the High Alpha Studio for a talent marketplace. We immediately looked at each other and said “we should put all of these ideas together with this founding team, High Alpha and SVB, and the Return Path investors, and change the way startups connect with talent.” That’s what we did, and we almost immediately started building the first part of the Bolster business, which was the talent marketplace.

About six months into our journey building Bolster, I was talking to Brad and reminded him that I was interested in bringing the Venture Acceleration idea to life now that we had a vibrant talent marketplace up and running at Bolster. 

Standing up a new program of this magnitude with limited resources at the same time as building a new venture capital firm from the ground up, on top of a still pretty brand new startup – that felt like a tall order, even for a large and senior founding team like ours. We needed another senior leader to join our team. 

Brad’s visceral response in this conversation was a very clear, “you should hire Jenny.” Enter Jenny Lawton. Jenny is someone I’d known peripherally for many years as a mutual friend and colleague of Brad, but we weren’t particularly close. We agreed to meet for breakfast at a diner halfway between our houses at a time in the pandemic when there wasn’t a whole lot of in-person meetings going on. 

As Jenny’s written about this week, it was the right call at the right time – we had a full meeting of the minds about the role mentorship plays in supporting entrepreneurs, the unmet needs of entrepreneurs even with all the support out there from accelerators and investors, and the desire that both of us had here in the back half of our careers to, as Steve Jobs would say, “make a dent in the universe.” Jenny’s experience as a multiple-time senior executive and startup advisor (including four years as the COO of Techstars) was a perfect match for us. She joined our team pretty quickly, first fractionally (the Bolster way, right?), then full-time in the middle of 2021. 

And the rest, as they say, is history. Working as part of the Bolster leadership team this past year, Jenny has spearheaded the creation of Bolster Prime, from selling and mentoring the first few clients personally, to designing the curriculum and programmatic learning, to figuring out the right positioning and pricing to developing the recruiting strategy for the program. We’ve worked together and along with the rest of the team at Bolster to bring in an amazingly talented group of experienced former and current CEOs and other senior operators as our first group of mentors.  Any entrepreneur would be lucky to have one of these mentors in their corner. We’ve now raised a venture capital fund as first-time fund managers from our own investors and our program’s mentors, all of whom believe in the power of Bolster as the next generation platform to help empower the innovation economy. 

Most good ideas swim in a sea of comparables. There are now a handful of other firms out there that combine advice for entrepreneurs with capital. But we believe our model, with thousands of Bolster Member CXOs already on board, is unique. Bolster Prime and Bolster Ventures, powered by Bolster’s on-demand talent marketplace, is here to help early stage founders reimagine the way they scale up their leadership teams, their boards, and themselves. We are changing the way the startup game is played. Come take a look and see what’s in it for you.

(This is the second post in the series….the first one When to hire your first CBDO is here)

One of the tricky things about finding a great CBDO is that the role is fairly nuanced and there’s not a degree a person can get in “business development.” So you’re left with searching for someone based partially on experience, reputation, and alignment with your company culture and goals. But over the course of my career I have figured our what “great” looks like for the CBDO and I’m confident that what worked for us at Return Path and Bolster will work for any startup.

First, a great CBDO should have a good balance of the three core components Ken Takahashi outlined in his section of Startup CXO.  Those three components include partnerships, M&A, and strategy.  Even if a person started their careers out as an investment banker or a management consultant, or some other specialized field, they should still be able to bring all three competencies to bear to help further the goals of their team – to optimize the company’s place in the ecosystem. A one-trick pony will get you nowhere in the ecosystem and the CBDO needs to be a competent generalist in a wide range of skills.

Second, a great CBDO will look at business strategy first before trying to solve a problem because a solution that doesn’t advance the strategy will fail. It’s not enough to be able to develop a strategy, the great CBDOs will return to that strategy constantly. If a CBDO is highly skilled at one of the components, say M&A, they are likely to risk becoming the the proverbial hammer in search of a nail and they will put a primacy on M&A deals. The strategy acts as a safeguard to pursuing something because the CBDO wants it amd instead helps them pursue something that fits with the overal strategic drivers of the business. So, strategy is king in the CBDO world.

Third, a great CBDO will see the whole system at a company, not just one thing. They’ll see product (and all of its components) as well as go-to-market (and all of its components). Like the CEO, CFO, and Chief People Officer, the CBDO needs to have a holistic approach to everything and not only be closely aligned with the market-facing organizations. 

You can find this post on the Bolster Blog here.

As I mentioned in last week’s post, I’m rebooting my work self this year, and this quarter in particular.  One of the things I am doing is getting back to basics on a few fronts.

Over the holiday break, as I was contemplating a reboot, I emailed a handful of people with whom I’ve worked closely over the years, but for the most part people with whom I no longer work day in day out, to ask them a few questions.  The questions were fairly backward looking:

1.       When I was at my best, what were my personal habits or routines that stand out in your mind?

2.       When I was at my best, what were my work behaviors or routines that stand out in your mind?

3.       When our EC was at its best, what were the team dynamics that caused it to function so well?

I got some wonderful responses, including one which productively challenged the premise of asking backward-looking questions as I was trying to reboot for the future.  (The answer is that this was one of several things I was doing as part of Rebooting, not the only thing, and historical perspective is one of many useful tools.)

Although the question clearly led itself to this, the common theme across all the answers was “back to basics.”  Part of evolving myself as a CEO as the company has grown over the years has been stopping doing particular things and starting others intentionally.  I try to do that at least once a year.  But what this particular exercise taught me is that, like the proverbial boiled frog, there were a slew of small and medium-sized things that I’ve stopped doing over the years unintentionally that are positive and productive habits that I miss.  I have a long list of these items, and I probably won’t want or need to get to all of them.  But there are a few that I think are critical to my success for various reasons.  Some of the more noteworthy ones are:

• Blogging, which I mentioned in last week’s post as an important way for me to reflect and crystallize my thinking on specific topics
• Ensuring that I have enough open time on my calendar to breathe, think, keep current with things.  When every minute of every day is scheduled, I am working harder, but not smarter
• Be more engaged with people at the office.  This relates to having open time on the calendar.  Yesterday I sat in our kitchen area and had a quick lunch with a handful of colleagues who I don’t normally interact with.  It was such a nice break from my routine of “sit at desk, order food in” or “important business lunch,” I got to clear my head a little bit, and I got to know a couple things about a couple people in the office that I didn’t previously know
• Get closer to the front lines internally.  Although I’ve maintained good external contacts as the company has grown with key clients and partners, our multi-business-unit structure has had me too disconnected from Sales and Engineering/Product in particular.  This one may take a couple months to enact, but I need to get closer to the action internally to truly understand what’s going on in the business
• Get back to a rigorous use of a single Operating System.  I’ve written a lot about this over the years, but having a David-Allen style, single place where I track all critical to do’s for me and for my team has always been bedrock for me.  I’ve been experimenting with some different ways of doing this over the last couple years, which has led to a breakdown in Allen’s main principle of “put it all in one place” – so I am going to work on fixing that
• Reading – while I have been consistently and systematically working my way through American history and Presidential biographies books over the years, I’ve almost entirely stopped reading other books for lack of time.  A well-balanced reading diet is critical for me.  So I’m working in some other books now from the other genres I love – humor (Martini Wonderland is awesome), architecture (see last week’s post on The Fountainhead), current events (I’m in the middle of Michael Lewis’ The Undoing Project and next up is Tom Friedman’s Thank You For Being Late), and business books (about to start Kotter’s A Sense of Urgency)
• Like reading, doing something creative and unrelated to work has always been an important part of keeping my brain fresh.  Coaching little league has helped a lot.  But I need to add something that’s more purely creative.  I am still deciding between taking guitar lessons (I halfway know how to play) and sculpting lessons (I don’t know a thing about it)

That’s it for now.  There are other basics that I never let lapse (for example, exercise).  But the common theme of the above, I realize now that I am writing it all out, isn’t only “back to basics.”  It’s about creating time and space for me to be fresh and exercise different muscles instead of grinding it out all day, every day.  And that’s well worth the few minutes it took me and my friends to work up this list!

Hopefully I’ll have more to say on the general topic of rebooting in another week or two as January craziness sets in with our annual kickoff meetings around the world.

September’s Harvard Business Review had a really thought-provoking article for me called How Certainty Transforms Persuasion.  Seth Godin wrote a blog post around the same time called The Illusion of Control.  The two together make for an interesting think about using information to shape behavior as leaders.  I’ve often been accused of delivering too many mixed messages to the company at all-hands meetings, so I enjoyed the think, though not in the way I expected to.

Let’s start with Seth’s thesis, which is easier to get through.  Essentially he says that nothing is certain, at best we can influence events, we’re never actually in control of situations…but that we think we are:

When the illusion of control collides with the reality of influence, it highlights the fable the entire illusion is based on…You’re responsible for what you do, but you don’t have authority and control over the outcome. We can hide from that, or we can embrace it.

Moving onto the much longer HBR article, the key thesis there is that certainty shapes our behavior, as the more certain we are of a belief (whether it’s correct or incorrect), the more it influences us:

In short, certainty is the catalyst that turns attitudes into action, bringing beliefs to life and imbuing them with meaning and consequence.

At first, it seems like these two positions might be at odds with each other, but there are other interesting nuggets in the HBR article as well that tie the two positions together.  First, that the packaging of information influences the certainty of the consumers of that information (for example, when a generally positive product reviews takes pains to admit the product’s deficiencies).  Second, that your own position in a given situation may influence your level of certainty (for example, when you are the most senior person in the room, as opposed to when you are the most junior person in the room).

The HBR article then goes on to talk about four ways companies can boost certainty in their employee population, since certainty is a driver of behavior:

1. Consensus – showing your view is widely shared (or shaping your view to perceptions)
2. Repetition – having people express their own opinions repeatedly (encourage customers, employees, etc. to express positive opinions or opinions aligned with corporate goals)
3. Ease – how easily an idea comes to mind (making good, regular visual use of key concepts)
4. Defense – people are more certain after defending a position (being a devil’s advocate in an argument to get employees to defend their position)

My initial reaction to reading both Seth’s post and the HBR article was that if Certainty is nothing but an illusion, and yet it’s a key driver of behavior, then using Certainty by definition a manipulative management technique.  Say something’s true enough, get people to believe it, hope it’s right.  Or worse, get people to say it themselves enough so they believe their own inner monologues, not just yours.  But then I thought about the feedback that I get — that I deliver too many mixed messages — and changed my view. Coming across as certain, even when certainty may or may not be real, isn’t any more manipulative than any other management or even sales technique.  Our job as leaders is to generate inspiration and activity in our teams, isn’t it?  Using certainty isn’t by definition disingenuous, even if it’s an illusion at times.  It’s one thing to be All In, Until You’re Not, for example, and another thing entirely to publicly support a position that you know is false.  All we can do as leaders is to do our best.

Having said that, I think using certainty as a management tool is something leaders need to do judiciously given how powerful it is, and also given its fragility.  If business results are mixed, you can’t stand up in front of a room full of people and say things are great (or terrible), even if your people are seeking a black and white answer.  However, you can (and should) communicate your certainty that the direction you choose to take your team or your company is the right one.  And you can use transparency to further bolster your position.  Share the details of HOW you reached your decision with the people on your team.  After all, if you’re not certain, or if the logic that drove your certainty is flawed, why would anyone follow you?