Complete DIY guide: legal basics for startups, COO responsibilities

Founders Agreement. The right hand. #

In the first article of the complete DIY guide we’ve discussed how to write the Founders Agreement and more particularly the part that describes the CEO’s responsibilities. There I provided some theoretical background and showed the quotes from the Founders Agreement, that we’ve signed at Staply.

Today i will show you how to include COO (Chief Operating Officer) responsibilities in the Founders Agreement. From my point of view, COO responsibilities are different in comparison to those of the CEO. Since many startups have at least 2 founders and both of them can’t be the CEO, i think it will be quite useful for the startup community.

There will be one more article in the sub-series of posts related to the Founders Agreement. There I will share our own (Staply) agreement that was signed by Greg and me. It will be available for you, for free. Furthermore, I will describe this document line by line so you could understand everything what is in it.

COO Responsibilities #

Typically, COO is the 2-nd person in the organisation who manages the operations in the company and later in the group of companies. In some organisations COO reports to the CEO (Chief Executive Office). In others COO reports to the shareholders. Moreover, I’ve seen several companies where COO was a deputy of the CEO. Basically it is up to you to decide, whether CEO feels comfortable to control the COO or not.

It makes sense that the COO should report to the CEO, because CEO generates long-term and short-term strategic goals of the company and, in my opinion, the responsibility of the COO is to develop specific tasks and to assign them to the members of the team.

Also, quite often, due to the lack of resources, founders combine several “positions”: CEO, COO, chief marketing officer, sales director, CTO (Chief Technology Officer), software developer. So, on the seed stage, founders typically both generate tasks, deadlines and assign them to themselves. This is totally fine.

Staply Experience #

In Staply, as you may already know, we have 2 founders, Greg an me. I was chosen to be the CEO with 30% of shares and Greg was chosen to be a COO of Staply with 70% shares. So, as you can see, if one of the founders has more shares it does not necessarily mean that he will be the CEO.

In Staply, we’ve decided, that COO will report directly to the CEO, since I generate the strategy of the company and have management experience in big IT companies.

Here is how COO’s responsibilities looks like in our Founders Agreement:

  • Divide global tasks into SMART (Specific, Measurable, Assignable, Realistic, Time-related) tasks.
  • Management and control of the sales activities, including, but not limited to identification of resources, that can promote Staply efficiently, customers engagement, post-sales activities.
  • Task management of the founders, including CEO, employees (if any), third-party individuals, including freelancers, individual sub-contractors and third party companies.
  • Management of all design activities, including, but not limited to: UI (User interface)/UX(user experience) development and analysis, coordination of external designers work.
  • Administration of product testing.
  • Management of all marketing activities, including, but not limited to marketing strategy development, searching for creative and PR (public relations) agencies, exhibitions preparations.
  • Management of hiring process, including, but not limited to searching candidates, that can be hired to Staply, identification needs of the Staply in new employees, development of hiring strategy.

As you could notice, i use phrase “including, but not limited to…” quite often (almost every lawyer loves it). The main point of using such a phrase is that, if you don’t use it, then it can be considered, that you describe the activity (like Sales activities) in just 2 or 3 tasks. If person performs only mentioned activities, but doesn’t do other staff related to the sales activities, from legal point of view, it can be considered, that such person is right. So, if you don’t want to limit the responsibilities of founders or employees, be sure to use this phrase.

What is next? #

In my next article I’ll share a template of Founders Agreement, that we’ve signed in Staply and then I will describe all the statements there line by line. Of course it will be free and you’ll be able to download it and use it in your own company. If you want, in the comments, you can suggest me to take a look at some other positions in the companies. Then I’ll first focus on the suggested topic.

Feel free to comment or to give feedback on our Subreddit.


Now read this

How to Prepare a Founders Agreement part 2

This is a second part of my article where I explain in simple words how to prepare a Founders Agreement. In the previous part I’ve shared our own Founders Agreement, that we’ve signed in Staply. That agreement is used as an example in... Continue →