When founding Qumra six years ago, our vision was to invest in mature, fast growing companies with passionate founders looking to build large companies, that can lead their global markets and are here to stay. Since then, we have invested in quite a few such companies that have scaled quickly. All of them are reaching annual revenues of tens of millions, a good number of them surpassing $100M, and on average continue growing at above 60%! It became clear to us, that in order to continue this growth rate, these companies’ CEOs must dedicate more time to the company’s growth strategy and execution, develop a strategic approach to the product roadmap, raise capital to continue the growth trajectory, and create alignment between the executive team and the board of directors. This tremendous effort requires being freed from day to day administrative and operational functions. and this is where the role of a COO (Chief Operating Officer) becomes a necessity.
Essentially, the role of the COO, reflects the maturing Israeli tech market. With the evolvement of a growth market, there are numerous CEOs that have reached a point where they need a strong and skilled counterpart for general management in order to turn strategy into operational and financial success.
Qumra Capital’s Growth Forum, which took place recently, brought dozens of COOs and CEOs of leading companies to hear from four of our own portfolio COOs. We sat down with Orit Goren, JFrog’s COO, Naama Ofek Arad, Riskfied’s COO, Hila Klein, Fiverr’s COO and Eran Lefler, COO of Appsflyer to hear from their experience. Noteworthy is that 3 of the 4 COOs are female. Coincidence? I don’t believe so. Think of Sheryl Sandberg@facebook, Belinda Johnson@Airbnb, Marne Levine @Instagram and many more. Rightly or wrongly, women are perceived as excelling in multitasking, quick learners, consensus builders, having high EQ and not having a large ego. These qualities, according to all four panelists, are crucial for success.
We set out to look for additional traits of accomplished COOs. Where traits of successful CEO are commonly agreed upon; visionary, strategist, inspiring, motivating and charismatic, those of successful COO are still hard to define.
We tried to create a check box for what makes a good COO. Requirements vary company by company, sector by sector, stage by stage and CEO by CEO. As this is a close and deep relationship, the CEO needs to have complete trust in the COO and needs to have someone that complements him or her.
We found that COOs need to be problem solvers and process oriented, they need to be strategic thinkers, yet detail oriented and need to be data driven using actionable metrics. They need to have versatile experience and be well rounded, and need to be a people’s person, creating ways for people to work better, driving the company to be greater than the sum of its parts. And despite owning all these powerful qualities, they need to be intrinsically motivated and humble, leaving the limelight to the CEO.
CEOs in our audience asked; as a CEO where should you look for a COO? There were no constants; all four COOs came from different backgrounds, some from within the company, some brought on from other companies and they all ascended to the role, changing scope and responsibilities alongside the company’s lifecycle.
We tried to put a finger on what was the “COO moment”, when was the right time to bring a COO on board, but there is no one answer. As a CEO, when you bring on a COO, you should know that the COO is an extension of your hands, because starting at one point in time as you scale, the business will require more that you are able to give, whether it’s operating multiple geo locations or managing hundreds of people, and you will need to understand and recognize your limitations. As a growth company, this is another natural phase of your growth.
We also talked about KPIs. Apparently measuring success is possible. As one of the COOS stated, if the CEO had time to sit in on product reviews then she had done her job. She had created a window in time, an opportunity that was not available before. No one needed to know and recognize that she had done so behind the scenes, the COO was the “Operating System” of the company ensuring optimization and a smooth interface.
The COO position is also a testament to the maturity of the venture ecosystem backing great growth companies. Historically, VCs were questioning whether the founder/CEOs can scale alongside the company. In many cases, CEOs which were great visionaries and leaders were replaced because they were lacking the managerial skills needed to run a larger organization. There was a common wisdom that good entrepreneurs are not necessarily good managers. Replacement of founder/CEOs by hired CEOs had disastrous implications for companies and for the venture environment in general. These are the roots of the invention of the COO position. Today, it is well proven that the most successful companies are run by founder/CEOs, and that managerial skills can be complemented by great COOs.
At Qumra, we are great believers in the CEO/COO teams of management and encourage all our companies to consider this as they grow and scale their business.