Entrepreneur Jay Batson recently wrote an article about the trend for some startups to have a heavy usage of “chief x officer” titles (e.g., CEO, CFO, CTO, COO, CMO, etc.). In Batson’s view, such heavy use in early stage startups is unnecessary for a few reasons — one, CxOs report to the board of directors, which in an early stage company generally only consists of the founders; two, it can come off as a little pretentious; and three, it makes it difficult to hire a professional CFO/CTO/CMO when your company expands and starts doing serious business without it seeming like it is a demotion of the founder with that title.
I’ve seen founder teams get a little off-track when I bring up the issue of officer positions during an entity formation and structuring matter. In Massachusetts at least, a corporation must have someone holding at least the President, Treasurer, and Secretary positions on the board. Although I tell clients that those are the only positions that need to be filled, sometimes they begin to delve into CxO positions, so I have to gently remind them that they aren’t necessary for a company that is just being formed.
As for using CxO positions, Batson believes that having a CEO is fine, since someone needs to be readily identifiable as “the person” in the startup (although since someone has to be President, that can be used in lieu of CEO as well). It may also be acceptable to have CFOs and CTOs from the get-go, if those founders have the experience and skill to remain in those positions once the company expands, starts doing significant business, and begins hiring professional CxOs. Any other CxO positions, Batson argues, are really unnecessary in a company that at best only has a few employees.