I continuously get approached by executives in Design, Product, Engineering, HR, and Marketing about my “Fractional” title on LinkedIn, so I thought it’d be helpful to write about what it means and why I think it’s happening now.
Some in venture funding and tech are saying that the overhiring and subsequent layoffs were due to the FANG’s having a “vanity metric” or were just hiring to keep the talent from working at competitors. Marc Andreessen of A16Z formerly Andreessen Horowitz tweeted back in April 2022, “The good big companies are overstaffed by 2x. The bad big companies are overstaffed by 4x.”
What impact do those behaviors have on small to mid-market startups? “My company has grown by this many people in x amount of time” is a vanity metric for startups and FANGs alike, for sure. But according to Andreessen, “almost every company makes the classic mistake of hiring executives too early. They hire a chief marketing officer, a chief revenue officer, a chief strategy officer, a chief operating officer, and a chief finance officer before they have any revenue. All these people sit around and have meetings, and nothing happens.”
I’ve personally been laid off from several high-growth venture-backed companies, along with several Recruiters on my teams. The layoffs typically happened three to six months after delivering double- and triple-digit growth in new hires.
It is clear to me now that if I had been hired on as a fractional leader it might have been a better business decision. I could connect with leadership, figure out their business goals, and then plan and to some extent execute that strategy. There’s a wealth of expertise to tap into on a part-time basis. Why not hire someone on a fractional basis and tap into their massive amount of knowledge (and lessons learned) at a much lower cost?
You might say “Mike, this isn’t an original concept, it’s called consulting.” I disagree and say a consultant is typically an independent contractor that provides advice, guidance, or solutions to a business. Typically, consultants are hired for specific projects and aren’t involved in day-to-day operations.
A fractional leader is a part-time or temporary executive hired to fill a leadership role in a business. Business fractional leaders can work in positions like CEO, CFO, CMO, and CTO, and are responsible for day-to-day operations. Typically, fractional leaders are hired for a set period of time, like six months to two years, and they may work on-site or remotely.
The bottom line is: tech is struggling through a tectonic shift in growth mindset and could take this opportunity to come out of these recent events with more fiscally and morally responsible goals. It’s easier to grow ethically and responsibly with a laser-focused strategy, rather than developing a product that tries to do everything for everyone. Then at the right time, bring in the right leadership.
A growing number of tech executives, from CMOs to CTOs, feel this way and are open to helping you do it across your organization. These are folks who recently exited some impressive tech orgs and see opportunities to help companies learn from their mistakes. Proven operators who are fresh from the battlefield. According to a Gallup poll, only 32% of employees were engaged in 2022. Think about it, maybe if tech firms used the fractional approach more, there wouldn’t be so much churn, apathy, and distrust from employees in the industry.
As a result of this blog, I’m planning on creating a Slack community for fractional leadership in tech. If this sounds like something you’re interested in, or if you’re a founder looking for someone to help your organization grow, I’d love to connect with you!
