Hiring for a Start-up – Your CEO

Hiring for a Start-up – Your CEO

The next series of articles targets overseas managers tasked with setting up an office in Japan (Tokyo) and who may be wondering what a typical hiring model looks like – or entrepreneurs fighting for access to the same bilingual personnel as the big boys. First, let’s look at the importance of the CEO and your general strategy for making initial hires.

Because I know the software industry reasonably well, let’s assume that you are building a software company that will be between 10 and 20 people at its maximum. If you’re in some other technology or knowledge-related industry, your costs are probably going to be somewhat similar.

Most likely your organization in Japan is going to be primarily involved in marketing and technical support, with some direct sales while you are building out a channel sales organization. You will also have some localization upkeep work, after having outsourced the initial mountain of translation to a competent localization firm.

This kind of marketing and support business model for new foreign start-ups is common in Japan and I would say that besides just leaving everything to a distributor or local partner, this is the most popular means of entering the market. Importantly, it is a common enough structure that it is well accepted by both distributors/resellers and potential employees alike. It also means that your operation can be small enough to be manageable and integrate more easily into your global operations – but not so small that you have difficulty attracting talent and maintaining operating stability in the event of employee resignations.

I usually see successful software firms start out with 5-10 people in the first year, and grow by another 5-10 people in years two and three, after which the company is earning sufficient profits to the point that it no longer qualifies as a start-up.

Usually your first hire will be the CEO, followed by a personal assistant (PA) who doubles as the office manager. You should know that most CEO’s in Japan are not used to working alone and in fact become somewhat dysfunctional without a good secretary/PA/administrator. If necessary, factor her (usually female) cost into the CEO’s overall remuneration package, because you are going to need her. Although this is an added cost, it is a worthwhile early investment if you want the right CEO. Besides, a well-functioning CEO should be able to help you recoup some of this investment by doing many of the other hires later without using a recruiting company (with the possible exception of the bilingual engineers).

Among the first people the CEO will bring on are a sales manager and an engineering manager. Optimally, both of these individuals should have been close to the CEO in a previous company, especially during the start-up stage, because you will want to have a hold over them and not have them jump somewhere else after receiving copious training and exposure to customers and vendors. A key manager leaving early on in your company’s development will blow a huge hole in your company’s prestige and credibility, possibly sinking your ability to win or maintain larger corporate accounts. Needless to say, until you have back up people in place, a defection will also create a huge operations hole for the 3-6 months it will take to find a suitable replacement. And in this very tight labor market, 3-6 months for a new, top-quality person may be optimistic!

If there is sufficient budget in the business plan, and there should be, the CEO should ensure that a marketing manager appears soon after the other two managers. This person usually gets 3 months or so before operations start in earnest to prepare marketing materials, arrange press interviews, and generally get the company’s name out in the marketplace. At the very least, the target customer base MUST know about your company, else the sales staff will have trouble getting into prospective accounts and company development will be retarded for months while they try to establish some credibility on a personal level.

I find that CEO’s with a strong track record but a predilection for switching jobs every 3-4 years, have often worked out that to get a good start in a new position, they need to take a management team with them. These guys can therefore offer great savings and much quicker business ramp-ups, because they know their staff and can pressure them for positive results without having to bond first. However, it also means that you need to do some succession planning after a couple of years, because needless to say, by then your CEO is probably eying the next opportunity. You probably want to load up the CEO’s remuneration package with performance bonuses after they have been in the job a year or so – this will encourage additional longevity and ultimately consistency in the local office during the time it is most needed.

Terrie Lloyd is the founder of DaiJob, Inc. He also writes a weekly newsletter for entrepreneurs and business people about business and political opportunities in Japan. You can find the newsletter at www.terrie.com. For further contact with Terrie, email him at terrie.lloyd@daijob.com.