What's the value of someone like this joining a team of engineers? What should their relationship be with the company? How long should we try to go without?
In general, I like to think about hiring a manager the same way most startups think about hiring a designer. While all programmers can do some UI design, many startups realize that they're not going to do UI design as well as they write code, so they hire designers. The same principal can apply to hiring management, hiring lawyers to handle patenting, etc: You can do it all on your own, but it might make your life a lot easier if you hire somebody who loves and excels at the specific challenges you're facing.
You can hire someone junior to add 'professional management' - by which I mean reporting, analysis, forecasting, planning and investment appraisal. They then feed these things into the senior decision makers in the same way as technical or design staff do.
These people are normally called 'management accountants' or 'project managers' or something similar.
For a startup hiring someone with an accounting degree and two or three years experience offers you the chance to:
- Get hold of someone bright who is disaffected with working for a big firm and driven to do something new, and do it well.
- Won't believe they have a god given right to tell you how to run your business, but _will_ have a solid understanding of the basic business techniques that offer a big return on investment.
- Can be given the opportunity to grow into a senior member of staff that really understands the business you are in.
That way you can treat it like hiring a designer. Hiring a (senior) manager is more like hiring a CTO - something to do only when you _want_ a more radical direction change.
My cofounder has management experience and technical/mathematical chops, and he's been a joy to work with. He has sort of taken a management role, ensuring that tasks are scheduled coherently, keeping the lines of communication open, and pinging sources for funds, parts, advice, etc. But we all have, to some extent.
So it can work. However, bringing in outside managers, especially at an early stage, can be hugely problematic. My advice is to nominate the best of you to take on that role, and grow into in gradually. If you're over your head for a specific reason, then bring in a manager, and measure their success by that metric.
My experience is that I am too technically focused, but my advisor's help me and teach me about the business side of things. At a later date, when I have employees, then I will think about getting managers, and I will also try and keep hold of my advisor's as directors.
People who have done it before and raised funding will help you shape the business to raise funding, not managers.
The hacker founder might not think of himself as a manager, because of the PHB stigma. But there's always management to be done.
I understand you didn't ask exactly this. You want to know when a "pure" manager should be brought on board. But if you realize that there're always things to be managed, the question becomes: Would this company run better if the engineers didn't have to manage? If they were free of worries about how much soda is left at the refrigerator, if the revenue/income ratio is sustainable, if John's productivity is better with one monitor or two, if there's money to buy these monitors, and if there isn't, when the budget will allow it, how to explain to John why the extra monitor will only come next month, actually research the monitors, price, negotiations with suppliers, the wall socket where it'll fit, etc...
IMHO, "pure" managers should join the ship when more work can be outputted with him onboard. BTW there's nothing wrong with "promoting" an engineer to management. S/he doesn't have to be a manager all day, and this person knowledge about the products will actually help with the management part.
But really, just mutate your question. It's not when, it's how.
I'm going to make an assumption that what you mean is not "product manager" or "project manager" or any other kind of specialised manager, but a "general manager", aka a managing director or CEO of some kind.
I read somewhere that start-ups go through 3 phases to become established companies:
1) Develop the product (build something that can be sold)
2) Sell the product (create a process of selling it that makes money)
3) Optimise the money-making process (i.e. squeeze every last drop out of that process).
You don't need a non-tech CEO before phase 2, but at that point, if your team is mostly technical, and don't want to learn a whole new field (sales), or feel that they won't get good at it quickly enough, then it might be worth bringing in a CEO with sales experience to help build your ability to sell the product. Selling is a difficult problem, as difficult as building a product, and putting an expert in the lead can make a difference.
The problem arises when managers have more power than engineers. In large organizations, by default, managers have more pay, perks and power than even the seniormost engineer/hacker. Avoid this imbalance and you'll be fine.
Maybe its because I'm a business student, but I think if there isn't someone with a perspective on strategy, finances, marketing and management in general the StartUp will fail because of lack of direction and the costs involved in changing direction later on (and I'm not saying it needs to be someone who has an MBA or something similar)
You ask what someone with management experience could contribute to your company. I would suggest that someone with a business perspective can help you to get a new perspective on things which might be quite different from your technical point of view. Also, as mentioned in other comments, a manager can ease the workload and help others to focus on what they are good at.
The history of business is replete with examples of engineers, lawyers, authors, and designers running successful businesses. Take Apple, for instance.
There's also plenty of examples of "business"-types coming in and fucking everything up. Start with Ars Digita.
Someone in your company needs to keep their eye on the ball. It's easy to take your eye off the ball when you're chest-deep in commit logs. But there's no reason at all that person needs to have an MBA.
I just think that someone needs to keep an eye on the business perspective and take responsibility for those things related to it.
Why the assumption that business folk have those skills?
Yes, some do, or rather, some have one of them, but the claim was stronger.
How about going through them and discussing some specific instances where "business" types add extraordinary value? (Note, this comparison will require knowing what engineers know. If, for example, you say "selling equity", you must describe what you know about that that we don't.)
I'm particularly suspicious wrt strategy. Why the assumption that you know the customers better than engineers? Doesn't that depend on the customers, the engineers, and the business folk?
> management in general
Sorry, but you don't get to argue for management by saying management.
> the StartUp will fail because of lack of direction
Startups fail because the folks involved stop working.
What's the evidence showing that business folk usefully add direction in a way that reduces the odds of that happening? Again - the comparison involves knowing what engineers actually do.
HR, legal, administrative: just outsource it to an administrative firm.
Raising money: get a CEO. You will need to get one in the VC image. Make his remuneration dependent on the investment raised.
Sales: figure out your strategy first. Sales forces are expensive.
Engineering: probably needed if it's outside your area of expertise, say software for hardware guys. Then you want a doer, not a manager.
That one made me curious. You say that as if they came boxed off the shelf (best before 09/12, store dry). Where and how do you "get" a CEO?
If it is shape our business. I would say you need someone with a background in what you guys are working on. I think it'll be difficult to find this person out of your core group. One of you needs to do this job for the time being.
If as engineers you are progressing the business as a whole (not just the product and what you think it is), then you might be fine to continue on, but a bit of outside guidance can't hurt.
If you guys are struggling with lots of issues (related to the product or not), then you might want to bring in somebody who can manage those areas (manufacturing, partnerships, marketing, etc).