The Operations Room: A Podcast for COO’s 25. Do COO's have a two year shelf life?
Jan 11, 2024
37:30
In this episode we ask the unpack the question of: Do COO's have a two year shelf life? We discussed this topic with Casey Woo, CEO @Operators Guild.
We discuss the following with Casey:
- What is the role of the COO?
- Why does the COO have a two year shelf life?
- If that is the reality, how should one think about their career?
- What does this mean for 4 year option grants?
- What are the key terms every COO should negotiate?
References
- www.operators-guild.com
- https://summit.operators-guild.com/2024
Biography:
Casey Woo is a seasoned multi-stage operator and 7x CFO with over two decades of experience in business operations and finance from investment banking on Wall Street to Silicon Valley tech start-ups.
Casey now leads 800+ CFOs, COOs, and Biz Ops company builders as the co-founder of Operators Guild, a community for professionals in strategic finance and operations roles. He believes strongly that community is what makes the difference for start-ups and professionals.
When he’s not working, Casey is spending time in California’s Bay Area with his wife and three children.
Summary:
- CEO shelf life and software frustrations. 0:06
- Brandon and Bethany discuss their least favorite piece of software, with Brandon naming Microsoft Teams as his least favorite and Bethany agreeing due to its poor performance on Macs.
- Both agree that the entire Microsoft suite, including Word, has always been problematic and frustrating to use.
- Bethany and Brandon discuss the pros and cons of Google Docs and Microsoft 365 for collaboration, with Bethany preferring Google Docs for its ease of use and collaboration features.
- Brandon shares his experience of transitioning from Microsoft to Google Docs, finding it difficult to adjust to the new platform but ultimately appreciating its collaboration capabilities.
- Bethany: Transition from growth to optimization occurs around 50 million in revenue and 250 employees.
- Brandon: First two phases of growth and commercialization are enjoyable, but third phase of optimization is less enjoyable and happens around 50 million in revenue and 250 employees.
- Communicating option value to employees and talent acquisition teams. 7:57
- Bethany suggests using a product like Lecce to help employees understand the value of their options and how they vest over time.
- Brandon agrees that communicating the value of options as part of compensation is important, and notes that their company could have done a better job of this in the past.
- Brandon and Bethany discuss the importance of educating employees on option grants and their value, including providing a clear framework for career progression and regular updates on the terms and benefits of option grants.
- Casey Woo, founder of the Operator's Guild, shares his experience of implementing option grants for employees, including tying them to job role and seniority, and providing awards for top performers to increase their options.
- CEO role and responsibilities. 12:50
- Casey Woo shares insights from 35,000 hours of listening and talking to CEOs, highlighting the diverse reasons why people want to be CEOs, including wide impact and not being a CFO or salesperson.
- Woo challenges the common view of CEOs as a single role, emphasizing the various perspectives and responsibilities held by CEOs in different companies and stages of growth.
- Casey Woo argues that a CEO's role is not just one person, but rather a complement to the CEO and a gap filler.
- CEO roles, decision-making, and power dynamics. 16:53
- CEOs face unique challenges, including rapidly changing roles and delicate power dynamics with other executives.
- Casey Woo emphasizes the importance of clear decision-making roles and responsibilities in a CEO-founder relationship, avoiding confusion and undermining the CEO's authority.
- Bethany agrees, citing decision-making power as a common challenge, particularly with founder CEOs, and discussing strategies to address it.
- Bethany and Casey discuss the role of a CEO in a scale-up company, with Bethany advocating for a two-year vesting schedule and Casey suggesting a step-two approach to becoming a CRO or CFO.
- Casey emphasizes the importance of understanding the expectations and limitations of a two-year CEO role, and how it can lead to a more successful transition to a permanent position.
- Stock options in the UK and US, with insights on vesting schedules, taxes, and exercise windows. 24:01
- Bethany learned that cliff vesting options, where only a portion of options vest after a certain time, was common in the UK 10-15 years ago but is no longer used.
- Bethany and Casey Woo discussed the challenges of stock options, including high exercise costs, limited time windows, and uneven vesting schedules.
- Options for early-stage companies in the UK and US. 26:33
- Brandon and Casey discuss the differences in UK and US options laws, with the UK offering lower strike prices and longer exercise windows.
- Casey argues that it's employee-friendly for companies to offer longer exercise windows, as early-stage companies need time to reach value.
- Options negotiation and key considerations. 29:03
- Bethany and Casey Woo discuss the importance of negotiating options and understanding the terms, including strike price, vesting, and good lever provisions.
- They emphasize the value of having a clear understanding of these terms to protect one's interests and maximize the potential of options.
- Equity compensation and career growth for scale-ups. 31:18
- Brandon recommends revising the Articles of Association to ensure board discretionary ownership doesn't affect an entrepreneur's livelihood.
- Casey Woo agrees and adds that double trigger or single trigger acceleration of vesting is important for operators and senior operators in the event of a change of control.
- Casey Woo emphasizes the importance of understanding the stage of a company and its evolution when negotiating compensation and setting career goals.
- Casey encourages listeners to be realistic about their expectations and to transform and exit the company within a set timeframe, rather than staying for an extended period without achieving goals.
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