Today we have a special episode on the Second in Command Podcast.
A few years ago, Cameron Herold was invited to an event called War Room to talk to a room full of CEOs about how to find and recruit a second in command. In this episode, you will learn what it takes to be a COO and how to match the right one with the right type of organization.
This episode was originally recorded on video and is now available in the podcast format, which you can find and subscribe to on your favorite podcast platform.
In This Conversation We Discuss:
- Defining the role of a COO and how to find the right one
- The cost of hiring the wrong people
- Why reference checks are important to finding your key hires
- How to leverage your top players
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This episode is a live speaking event that I was asked to do years ago for a group of about 250 CEOs who wanted to learn how to recruit, hire, and onboard a great second-in-command or a COO like most of our audiences. We’re going to replay that episode for you. Imagine me walking around with my jeans, my white sweater, and a little bit of manic pacing and scribbling a bunch of stuff on a whiteboard. You will get all the core content that I shared with that audience. I would love to have you share this episode if you think it was great and also like and subscribe to the show. I hope you enjoy the show.
Cameron Herold, I’m excited. What’s the podcast’s name, Second in Command? What an amazing name for a podcast. It’s not for CEOs but for seconds-in-command. Help me welcome Cameron Herold.
Thanks very much, everybody. Here’s a quick question for the group. How many of you have a second-in-command? About half of you. How many are actively thinking about hiring a second-in-command sometime in the next six months? Another half. I’m going to try to cover both sides of this audience for you. Some will talk about the recruiting, interviewing, and selection of a second-in-command. Some will talk about leveraging a second-in-command and how to get that true yin and yang relationship going.
I’m also going to switch gears into a topic area that I brought into a company as a second-in-command. Who here is familiar with a company called 1-800-GOT-JUNK? I took them from 14 employees to 3,100 employees as their second-in-command over six years. We went from $2 million to $126 million in revenue in six years with no debt. We gave up no equity, and we were profitable every year. We also ranked as the number two company in Canada to work for.
I’m going to walk you through how that real power relationship can go. Before I also dive in, I want to get some quick questions. If you had a question about the COO relationship, what would it be? In your specific business, what’s bugging you about your second-in-command or thinking about hiring one or recruiting one? I want to make sure I cover it in my talk.
“How do you not drive her crazy? Does the COO have a sales and biz dev background? Do they have that experience? How do you manage them and lead them?” I’ll talk about that. “How to bring in corp?” We’re not going to bring a corporate person into entrepreneurship. We will bring in some experience but I’ll talk about that. Last one, “Is it someone with online and offline or both in marketing?”
I was at a conference years ago. Verne Harnish was running an event called the Gazelles. I was speaking at his event in Atlanta and finishing off my seven years as the Chief Operating Officer at 1-800-GOT-JUNK? I come off stage, and this guy came running up to me. He goes, “You’re Cameron. I thought it was a saying.” I said, “What do you mean?” He goes, “People have been saying I need a Cameron. I thought I need a BHAG and core values. I didn’t know it was a person. I didn’t know that was you.”
I’m like, “What are you talking about?” He goes, “All these people throughout the EO and YPO world were saying that they needed someone like you.” Brian and I at 1-800-GOT-JUNK? had such an amazing time together growing the company, and they thought it was a thing. I’m going to talk about why that was so powerful. I started an organization years ago called the COO Alliance for one core reason. I strongly believe that we’re teaching the wrong person how to grow the company.
We shouldn’t be teaching the CEO how to grow the business. We shouldn’t be teaching you how to build teams, run meetings, and do planning and marketing. We should teach you about it but we should be giving the skillsets to the COOs to let them do it because we all tune out at about the five-minute mark on a one-hour content where the COO will give a crap the entire hour.
I started this as a network for them. There are 1 million organizations for CEOs, and there was nowhere for them to learn. Our members are in this demographic. You need $8 million in revenue now to join the COO Alliance. We don’t allow any seconds-in-command who aren’t in that demographic. Members have to at least have that second-in-command title, whether it’s Director of Operations, GM, or COO. It doesn’t matter but they’re the ones who would be running the company if you were sick. That’s what the organization is about.
We’re starting to get a lot of press about it as well. We appeared in a hard copy or the physical print edition of Fortune Magazine with Sheryl Sandberg talking about the rise of the COO group. It was about our COO Alliance and how we’re finally starting this tribe for seconds-in-command. I’ve also played the role of the COO three times in not only building 1-800-GOT-JUNK? but I was also the Second-In-Command for Gerber Collision.
Gerber is now a $900 million company. We did that acquisition. We started the company with seven locations. When I left, we had about 80. We took the company public and then did the acquisitions in the US. That was my second COO role. My first one was with College Pro Painters. College Pro is the largest residential house painting company on the planet. I was also the COO there. I understand this whole role that I’m talking to you about.
To nail it, it has to be that yin and yang experience. It has to be that pure balance with the CEO. It’s almost like a love relationship where you have to get all the components right, or it won’t work. First off, before you go and hire a COO or a second-in-command, if you don’t have an assistant, you are one. I want to save you $250,000. Hire an executive assistant first and then hire your COO second. We often go to the wrong person. We’re trying to free up our time. When we hire a second-in-command, we could free up a lot of our time by getting a good EA in place first.
Years ago, Harvard wrote an article. It was called The Misunderstood Role of the COO. In their research, they realized that, unlike a chief financial officer that runs finance or a chief marketing officer that runs marketing, the COO was this anomaly. They identified seven distinct types of chief operating officers. I think about the COO this way. They could be very outward-facing and be all around marketing or PR and sales. They could be inward-facing around operations, execution, and engineering. They could be engineering and process-focused. They could be IT-centric.
What is the balance? The balance is they’re great at whatever you suck at. That’s the core difference between the COO function versus all the other second-in-command functions. The second-in-command is the person you can trust implicitly who is strong at the stuff that you suck at. At 1-800-GOT-JUNK? I ran everything except IT and finance. I didn’t understand IT. I didn’t like finance.
I have a form of dyslexia where I flip all my numbers around. I get frustrated with looking at numbers but everything related to operations, execution, culture, PR, marketing, sales, and branding, that’s the stuff that I’m world-class in. In the area of people, recruiting, interviewing, selection, onboarding, and training, I’m probably among the best in the world without exaggeration.
Kimbal Musk, Elon’s brother, worked for me in 1993, as did his cousin who built SolarCity. I was a reference for Elon in 1995 for his first round of funding for Zip2 because we understood how to build companies. They backed Kimbal and Elon Musk based on Kimbal’s College Pro Painters experience because they didn’t understand Elon’s vision, which seems crazy now but at the time, he was just the statistics savant.
Operations were what I was good at. Brian wasn’t good at operations. He was my best friend. We were best friends for 3 to 4 years before I joined him as his COO. You’re looking for that piece. When Harvard did the research and came up with these seven core roles, the first one they came up with was called the executor. The executor is the person that you’re going to put in place to get stuff done.
When I wrote my first book, Double Double, the working title was How to Get More Shit Done with Less People Faster. That’s the executor, the person who you want to come in and take all your ideas. You transfer the information to them, and they can get it done for you. That’s a core role for many in hiring a second-in-command. The second one that they came up with was the change agent. That can be done in a takeover strategy when you’re having to completely pivot your company or when you realize that stuff needs to be done differently, and the team isn’t going to listen to you.
It’s almost like teenagers. Chris, when you and I were growing up, I probably would have thought your parents were amazing. You probably would have thought my parents were amazing. I was never going to listen to my dad. You probably weren’t going to listen to your dad. If your dad had come in to teach me, I might have learned something. That would be a change agent role. That can be a role that you’re looking to play in your company or your organization.
You may have the mentor role come into your organization as COO. This is probably the role that I played at 1-800-GOT-JUNK? The reason is I’ve already grown two franchise companies. I had very high trust but I also had all the skills to do the stuff that they had no idea what to do. I went in the first couple of weeks to coach their Head of Operations, Jesse.
At the end of the first day, Jesse walked into Brian in the CEO’s office and said, “I can’t do anything Cameron is trying to teach me. I’ll never be able to learn what he does. We need to bring him on board.” That was after day one. That was more of a mentor relationship where I knew what we had to do, and I could come in and do it. They all called me uncle because I was a little bit older than everybody else in the company at the time.
You have the other half, a role that Harvard came up with. It’s the two-in-a-box. That’s when you’re a very seasoned and solid CEO but you recognize there are some areas that you might not be that strong in. You can get someone to play off of you. You don’t need a mentor role but you need someone strong in some areas to then leverage it up to the next level. That’s the other half role.
The next one is the partner. The partner could be somebody who brings some other skillsets to the table that you don’t have or who can free up more of your time as well. Often, the entrepreneur or the CEO is running at 100-hour weeks or 80-hour weeks, and they need someone to give them some of their life back. That COO partner role can help out there as well.
I was thinking about this as funny. This is Prince Charles with Queen Elizabeth. I’m thinking, “Can you imagine spending your entire life waiting for your mom to die so you can be king? Wouldn’t that be horrible?” You know that’s what he’s thinking. The heir apparent is a role that often as a mature company is growing where you realize that to keep that strong person, you have to move them into a COO role, or you recognize that you’re going to be leaving as CEO at some point, and you’re trying to groom that person so you appoint them or name them as the second-in-command so that you can exit or move into a chairman role.
I’m coaching the current number 2 company and the current number 12 company to work for on Glassdoor. I’d been coaching them for years before anyone had heard of them. The current number two is called Elite SEM. They’re a big digital marketing agency. I started with them when they had 30 employees. They’re now at about 400. The current president and CEO is Zach Morrison. Zach used to be COO but when they were getting ready to position the company to exit, Ben wanted to move into a chairman role. The heir apparent was Zach, and then Zach took over the COO role. That can be a role that is played by the COO.
The last is the MVP. The MVP is someone who you see is so critical in the business that is doing something that no one else can do. If you push them up into that role, it elevates the brand to another level. A great example of this would be Harley from Shopify. Harley is one of the first people I interviewed for the Second in Command podcast.
Harley is someone that Tobias, who’s CEO, would never want to lose because Harley is the biz dev, the outward face, and the total MVP. From the early days, they positioned him as COO even though he didn’t have the experience for it but he was that MVP perception that they needed in the company. You can see the different roles being played.
The hard part when you’re bringing a second-in-command into your company is to identify what role they’re playing and why you’re putting them there so that you can explain to everyone else in the organization why it’s not going to be them. This is one of the most critical roles in your company. The data says that the cost of the wrong person is fifteen times their annual salary. If you put the wrong person in place, and you’re paying them $200,000 to $300,000 a year, it’s going to cost you $3 million to $4 million per year to have them there. You have to be very careful at putting these people in place.
I’ve mentioned a couple of times this $250,000. I want you to think for a second. Why don’t you all write down on a piece of paper what you pay your COO? If you’re going to be recruiting one, what are you planning to pay them? Write that number down. If you multiply that number by fifteen, if you’ve got the wrong person, that’s what it’s costing you because of other employees not joining you, opportunity costs, the time lag that’s going on, the misinformation that’s happening, the decisions that are being made by the wrong person, a board that won’t invest with you because they don’t trust that person, and relationship issues between you and them that everyone else in the company is seeing.
It’s like mom and dad fighting, and the kids all don’t want to be around them. The cost of the wrong person is powerfully expensive. How do you find one? This is around how much you’re willing to pay them. We asked all of our members in the COO Alliance how much they got paid. Somebody here mentioned Organifi. Mae from Organifi is a member of the COO Alliance. May’s compensation was at the right level. She was around $250,000 to $300,000 a year.
I had another member of the CEO Alliance who was making $90,000. I’m like, “$90,000, and you’re the COO?” We realized she wasn’t the COO. She was more of a general manager. I want you to think about what are you paying and what should the appropriate title be to match that compensation because you could be a general manager, a director of operations, a VP of operations, or a COO but you’re still the second-in-command. The bigger title that you give someone, the more inflated sense of ego they have, the more inflated sense of expectations they have, and the more ideas there are of what they should get paid. That’s all inflation that happens because you don’t care about titles.
We have gotten sloppy with titles in the last few years. Years ago, to have a COO title, you had to be a major player at a major company. Who’s got a Chief Marketing Officer? How many employees do you have? There are no employees and subcontractors, and you have a CMO. Who here has a CFO? How many employees have you got? Twenty-five employees with a CFO. Think about something. Is it a director of finance, a VP of finance, a controller, or a CFO?
In the last few years, what’s the new C-level title that’s magically appeared? Where did that come from? The Chief Revenue Officer came from guys like you, the head of sales, who didn’t have a C-level to match their CMO, CFO, and COO people so we gave you a title and called it Chief Revenue Officer. That’s all it is. There has never been a Chief Revenue Officer title in the history of ever until you finally were the odd one out, so we gave you one. It caused inflation in our salaries across our company.
Be very careful with the titles that you give out and the compensation level you give out but you do need a second-in-command. How do you find one? The first thing I want you to do is what I call an activity inventory. I took this from Strategic Coach. I want you to take a look at all the stuff that’s on your plate. Pretend that someone follows you around with a video camera for a month.
I want you to replay the video and write down every single thing that you see yourself doing over the course of a month like opening emails, replying to emails, booking meetings, following up meetings, booking flights, checking into flights, getting your boarding card, showing up at events, running one-on-one meetings, or attending masterminds. Write down everything that you do.
I want you to categorize the stuff you do in 1 of 4 ways, either I for Incompetent, C for Competent, E for Excellent, and U for Unique Ability. Incompetent means you suck at it. Competent means you’re okay at it. Excellent means you’re good at it but you don’t love doing it. Unique Ability is you love doing it. You’re good at it. You get more energy while you do it. People get energized watching you do it. It’s the stuff that you would do for free except your kids have to eat.
I also want you to put down a dollar wage. If you were to pay someone to do that one job all day long, what would you pay them, $15, $30, or $500 an hour? What would it be? When you’re looking for a COO, you want to get all the Incompetent and Competent off your plate to other people. Either stop doing it, outsource it, optimize it, automate it, delegate it to an employee, or get an EA to do it. The stuff that is on your plate that’s excellent tends to be the stuff that you’re powerful at but you don’t love doing, hire a COO who loves doing those things and has done them before.
That’s the key point. They love doing the stuff you don’t love doing, and they’re as good at it as you are but they get energized off of it. Poke holes in my eyes if I have to sit and look at diagrams of IT infrastructure and building software but Brian from 1-800-GOT-JUNK? loved that stuff. He loved poring over the balance sheet and the numbers. He loved meeting with investors. Kill me. He hated hiring people. I was like, “I love that. It’s amazing.”
The next thing you want to do is create a scorecard for the role. Think about what are the top five things the COO has to get done in their first year with you. If you want an example of this scorecard, email me. I’ll send you this exact one. This is from a client from Toronto that I coached from $3.2 million to $52 million in four years. His company on Amazon is called Viva Naturals. He sells coconut oil and krill oil. I coached Husayn for four years.
This is his COO’s scorecard that we created when he was getting ready to interview them. Use another version of the scorecard that we use for the COO Alliance and rate your prospects on this so you can see where they are in alignment with the core eight areas that you would want as a second-in-command. What you’re looking for is, “How am I going to measure their success? How am I going to measure how they fit with the organization?”
I want you to go out, recruit, interview, and hire people that have done it before. You’re not looking for people that know how to do it. You’re looking for people that have done it. Let’s say you were hiring a swimmer. This is a weird analogy but run with me on this one. If we were hiring a swimmer, do you want somebody who knows how to swim all four strokes and someone who knows how to win an Olympic gold? Do you want someone who knows how to break a world record? Do you want someone who has won world records, gold medals, and events in all four disciplines?
You want the experience because I know how to win a gold medal, break a world record, and do a butterfly. I would drown but I know how to do it. What’s that dolphin kick thing? I know how to do it. I suck at it. The problem is we often don’t dig deep enough to find out if they have done it. I had a CEO. He said, “It takes about 90 days after the person has started to know if you have the right person.” I said, “That’s because your interview process sucks.” If you interview properly, you know the day they start.
Here’s the reason I can say we were so strong at recruiting and interviewing. At College Pro Painters, every year, we had to go out and get 800 brand-new franchisees. They all started on May 1st. By August 31st, we produced $64 million in revenue but in that four-month period, those 800 franchisees hired 8,000 painters that were all college students. We went from 0 to 9,000 employees in 6 months and produced $64 million in 4 months. On August 31st, all 8,800 kids quit and went back to school. On September 1st, we woke up and said, “We got to do it again.”
You become operationally world-class at recruiting, interviewing, selection, training, and onboarding but if you don’t do it properly, then you have 90 days on the job to see if they’re the right fit. I want to save you all that pain. Your job as the CEO is to find somebody that works well with you. You have to know yourself first to find somebody who matches you perfectly.
I’ve said it a couple of times. One of the number one core things to look for is trust. I want you to know everything about this person so that the day they start, you give them your master password to 1Password. You give them your bank account information. You give them the keys to your house. You let them take care of your kids. You let them travel with your wife for a week. You let them take everything. There has to be complete implicit trust.
Brian was my best man at my first wedding four years before I joined him. The trust in me coming in to join him at 1-800-GOT-JUNK? was already implicit. We have been in a YEO forum group together for four years. He knew everything about me. I’ve been through him in bipolar episodes when he was crying and almost separated from his wife. I got to come and join him. The trust was already implicit.
When you have all of the details of what you’re looking for, I want you to get your first job posting written and a professional copywriter to polish it and make it pop off the page. Has anyone here ever had a real copywriter write a job posting for them? Jennifer Hudye is somebody to who I get all of my clients to send stuff. She takes their rough work or stuff we would normally polish, and her team polishes it and makes it pop off the page.
If you have a job posting for a COO, the most important role you’re hiring for, and if you’re not a professional copywriter, why would you ever put that out to the market to recruit the person? Write up what you would normally post and send it to her. I don’t know what you charge to polish them. It’s $500 or $1,000. Let her polish it and make it pop off the page. You read the difference between what you will be pushing out there to the market and what you have currently.
You’re going to get a professional job posting. In usually the second interview for us, we use what we call TORC, which is the Threat of Reference Check. We learned this from Brad and Geoff Smart who wrote Topgrading. Their second book is called Who. During the first couple of interviews, I’m going to ask you some random questions, “What do you do for fun?” Ben is like, “I play tennis.” Dan is like, “I go to mastermind events.” I’m like, “Who do you play tennis with, Ben?” He gives me a couple of names.
“Who do you go to masterminds with? Who do you not like at War Room? Who do you like hanging out with at War Room? Who’s your best friend at War Room? Who did you have lunch with at War Room?” I’ll pull all these names of people out. I might ask him little bits and questions but after two interviews, I’m going to sit down and say, “We have an interview next Monday that’s going to last for two hours. In that interview, I’m going to be asking you some questions about some of your references.”
The guy is like, “I gave you three.” “I’m not going to ask you about those three. Here are the twelve names of people that you gave me in the first two interviews. By Monday, I need you to come back to me with email addresses and phone numbers for at least 80% of those twelve people. You can decide who they are.” A-candidates will get you all 12 out of 12. B-candidates will get you most of them. C-players will run away, and you will never hear from them again.
You bring the people back into the interview, sit down with Ben, and say, “You said you liked hanging out with Brad. What would Brad say about your ability to do the first thing on the scorecard? Where would he say you failed in the past? What would Brad say about this core value of ours?” I’ll switch after going through about fifteen minutes of what Brad would say about the five things on the scorecard and our five core values. I’ll say, “What would Kelly say about item one? What would Kelly say about item two?” I will do the Threat of Reference Check, “If I called so-and-so, what would they say?”
The two-hour interview is the threat of me calling all those people. The C-players haven’t even shown up. The B-players are getting all nervous. The A-players are like, “This is awesome.” If you want to do references afterward, you do them. I strongly recommend that you do reference checks. When I do reference checks, they go something like this, “Ben, I’m calling about Bob. I’m thinking of bringing him on as my COO. There’s some bad stuff in there that I’m going to find out later but I need you to tell me now what it is.”
“Please don’t make me chase you down the street and beat you up with a baseball bat if I find this out later. Tell me the bad stuff. I will keep pushing until you tell me the bad stuff. I will call up to ten people to do reference checks on the key hires because the day that they start, I need to know everything about them. I’ve worked way too hard to get to this stage to allow somebody to come in and not know enough about them.”
You are not looking for your A-players on Craigslist. You have to poach them. If you don’t know where they are, you have to go and get a couple of executive search firms that know where they are and know how to find them. I’ve got four different executive search firms that I use. If you want introductions, give me your business card and write, “Search.” I’ll introduce you to them.
One only does $400,000-plus roles. They only do C-level. They’re unbelievable at it but they will poach people for you. The second one only does mid-level between about $100,000 and $300,000 roles. The third only does sales executives, sales managers, sales VPs, and sales directors. They’re amazing at recruiting salespeople but you’re not going to get the best players. The best players are never looking for a job. The best employees aren’t out looking for a job. They’re working somewhere. They’re happy. You’ve got to poach them and bring them into your organization.
I want you to hire somebody and recruit somebody who has already done what you need them to do. I want to recruit somebody with proven success, not just the knowledge of how to do it. Let’s say I’m $50 million and I’m building a $100 million company. I’m not going to hire somebody unless they have already helped grow a couple of $100 million companies. I don’t want to hire someone who has run a billion-dollar company and bring them in to run my $50 million to $100 million.
When I left, 1-800-GOT-JUNK? as the COO, it took them twelve months to find my replacement. They found the former President of Starbucks, Launi Skinner, to come in and replace me. Launi had run US operations for Starbucks, which is amazing. It was a multi-unit operation with a fantastic culture, a great leadership development program, and an amazing brand, marketing, and PR. It’s a strong company.
The problem was she was too corporate. They brought in the President of Starbucks. I was leaving 1-800-GOT-JUNK? going, “This is so big.” She’s like, “What a cute little company.” There was a disconnect in culture. Be careful that you bring somebody not only who has the skills how to do it but they have already done what you need them to do. That’s how you find them.
How do you leverage them? Let’s say you’ve got somebody coming into your organization. How do you leverage them? The first thing you have to realize is that everything they do is going to cause ripple effects. If you bring the right person into your company, they’re going to be successful. Your job is not to help them be successful. They will be. That’s what they do. Your job is to watch for all the unintended ripple effects, the good and the bad. What are suppliers saying? What are customers saying? What are your employees saying? What are they not saying?
With Launi at 1-800-GOT-JUNK?, the stuff that they missed was she was corporate. She was hiring consultants for everything. She wasn’t into guerrilla marketing. She was never listening to franchisees. Our whole brand was built off that. She thought stunts and PR were cute but didn’t want to follow suit with it. We had 5,200 stories about us in six years, and she didn’t like PR. Those were the ripple effects that were happening.
You need a space in your office for you and the COO to brainstorm and work or a space off-site that you continually go back to. We had two different clubs in Vancouver. Brian and I would spend every other Thursday off-site together working independently, brainstorming, and sometimes just sitting side by side and working together as a place to work, hang out, brainstorm, and disconnect.
We had what we called date night. We went for runs twice a week in the mornings. We would go for an hour run at 6:30 in the morning along the ocean in Vancouver. It was time to decompress, talk, and also hang out but we had to carve that into our schedule to make sure that we had it. This one is key. You have to learn how to share the spotlight. My role as the second-in-command was to make Brian iconic. My role was to roll out all the tough decisions and bad decisions and to be the one who is driving hard on all the results and KPIs. His role was to be the cheerleader and the culture guy.
My role was to always make him look good but his role with me behind the scenes was to tell everybody, “It’s okay. Cameron is still a good guy. He has to roll out the tough decisions.” He always had my back, and I always had his back. That’s where that true power comes in. The key is to remember what you are looking for, how close they can match you, and how close you can work on that relationship and that trust and they will be successful. Thanks for having me out. I appreciate it.