Transcript:
Let me ask you something. Have you ever made what felt like a strong operations hire? Someone experienced, organized, impressive on paper, only to realize six months later that you were still carrying the business. You were still the escalation point when something broke. You were still finalizing priorities. You were still the person people on your team looked to when accountability slipped or when decisions became uncomfortable. On paper, you had help. In practice, nothing structurally changed. I see this constantly among founders and CEOs with businesses and revenue between $3 and $10 million. Growth is real.
01:22
Derek Fredrickson
The team is growing. Revenue is climbing, but complexity is growing even faster. And at some point you start asking the question almost every scaling founder asks. Do I need a COO? A Chief Operating Officer. Maybe you have searched directly, “When should I hire a COO? Do I need a COO at $5million? What does a COO actually do? And maybe what is the difference between a COO and an EOS integrator?” Here is the uncomfortable truth. Most founders hire the wrong second-in-command the first time. Not because they lack judgment, not because they are careless, but because they are trying to solve the wrong problem. And today I want to unpack when it is actually time to hire a COO..
02:14
Derek Fredrickson
How to think about this decision at $3m, $5m or $10 million in revenue and the difference between a COO and an EOS integrator, the biggest mistakes founders make and how to get this right the first time. Because this is not about adding headcount. It is about redesigning execution inside your company. (long pause) Welcome back to the COO Solution podcast. I’m your host Derek Fredrickson and this shows redo. And this show is for CEOs and founders building real businesses. Businesses with teams, operational pressure, client delivery, payroll expectations in real stakes. From the outside, everything can look strong. But from the inside, you can feel the weight. At the COO Solution, we work with founders who are capable, driven and deeply committed. They are not disorganized. They are not avoiding responsibility. Most of them care so much that they continue caring more than they actually should.
03:18
Derek Fredrickson
And at a certain stage of growth, the question becomes whether is it time for redo? And at a certain stage of redo and at a certain stage of growth, the question becomes whether is it time redo? And at a certain stage of growth. The question becomes whether it is time for a true second-in-command.when growth outpaces structure.
In the early years of your business, everything flowed through you because it had to. You made the sales, handled delivery, resolved issues, hired the team and made every move meaningful decision. That intensity created traction. It built momentum. It likely got you to your first million and beyond. But somewhere between $3m and $7 million revenue, the game changes. What used to feel manageable now feels layered. There are more clients, more employees, more cross-functional friction.
04:32
Derek Fredrickson
You notice that projects stall unless you personally push them through. You realize that strong team members still look to you when priorities conflict. You find yourself bouncing between long-term strategy and daily problem solving in the same afternoon. Revenue is increasing, but your mental load is increasing even faster. This is usually when founders begin asking whether they need a chief operating officer, a COO. Not because they want to fully step away from the business, but because they can feel that the current structure does not scale.
Most founders believe they need relief. What they actually need is a redistribution of ownership. Listen, if you are still the person who owns execution across departments, you do not have an execution structure. You have a delegation structure. And those are not the same thing.
05:29
Derek Fredrickson
Revenue alone is not the trigger. I have seen $3 million dollar companies that urgently needed operational leadership because complexity outpaced structure. I’ve also seen $10 million companies still running on founder heroics. And it showed in the cracks of the day-to-day. The real signal is this. Has complexity surpassed your ability to personally manage execution? As revenue reaches around $3m to $5 million, cross functional friction often increases. Marketing is doing one thing, sales is doing another. Delivery is under pressure, everyone is busy. But results feel uneven. You are still the one stitching it altogether. At $5m to $10 million, the stakes are even higher. Payroll is larger, clients are larger. One week, quarter or month matters more and more. If priorities are not clearly defined. Performance drifts until it shows up in the numbers.
06:34
Derek Fredrickson
And at $10 million and beyond, the founder bottleneck becomes expensive. Delayed decisions, slow revenue, lack of accountability erodes margin. Team morale starts to reflect ambiguity at the top leadership level. The question is not whether you can afford a COO. It’s what it costs you to remain the execution owner.
This is where confusion leads to poor hires. An operations manager typically manages processes within a function such as operations. They coordinate projects, manage tools and ensure tasks are completed. That role is important, but it usually does not own cross company execution. An integrator within the EOS framework, harmonizes the leadership team, drives quarterly priorities, and ensures accountability at the leadership team level.
07:45
Derek Fredrickson
A true COO in a scaling company often goes to further they own execution across the outcomes in the organization. They clarify decision rights. They ensure what is agreed upon actually happens. They are accountable for results, not just activity. Founders often hire someone strong in coordination but weak in accountability. Someone excellent with systems and dashboards but uncomfortable confronting underperformance. Someone hardworking and perhaps loyal but not positioned to challenge peers or drive alignment across departments. I’ve worked with the founder at around $7 million in revenue who hired a head of operations. She was intelligent and organized, but six months later the founder was still finalizing priorities and stepping in when delivery slipped. The head of operations was managing the activity, but no one was owning outcomes. If you are hiring a second-in-command, you are not hiring a task manager.
08:51
Derek Fredrickson
You are hiring an execution owner. The first mistake is hiring to relieve pressure instead of redesigning the structure. When you are tired, any help feels like progress, but without clear authority, you simply add another layer of coordination. The second mistake is promoting loyalty instead of leadership maturity. Internal promotions can work, but only if that person is the right person for the right seat and can hold peers accountable and think cross functionally. The third mistake is failing to define what the COO actually owns before hiring. If you cannot articulate which decisions move off your desk, they will eventually route back to you. And the fourth mistake is assuming delegation equals scale. It doesn’t. Delegation distributes tasks. Leadership redistributes ownership. And finally, the fifth mistake is waiting until burnout forces urgency. Strategic hiring requires clarity, not desperation.
10:06
Derek Fredrickson
Most failed COO hires are not intelligence failures. They are structural failures.
14:21
Many founders assume hiring a COO means committing to a salary in the range of $150,000 to $250,000 salary a year. That feels pretty significant between $3m and 10 million in revenue.
14:26
Derek Fredrickson
Fractional leadership offers a different path. Fractional does not mean temporary or diluted. t means focused and experience. For companies between $3m and $10 million, fractional leadership often installs structure faster because the person stepping in has already seen multiple scaling environments. Some $10 million companies intentionally remain fractional by design. They want high-level operational leadership without adding another permanent executive seat. The real question is not whether it’s full time or fractional. It is the level of execution that ownership your company needs right now. This is the part that no one prepares you for. Hiring a second-in-command is not just an organizational decision. It is a psychological one.
15:41
Derek Fredrickson
Listen, if you built your company from scratch, control feels responsible. Being the final decision maker feels safe. Letting someone else own execution can feel risky even if you logically know it is necessary. You may think you want a COO, but often what you really want is help, not replacement as execution owner. That tension shows up quickly. You approve decisions just to be sure. You override priorities when something feels urgent and you step back in when progress slows down. Not because you do not trust them, but because you are used to be the one carrying it. So the hardest part of hiring a second-in-command is not finding the person. That’s what we do here at The COO solution. It is releasing control. You cannot scale yourself. You can scale structure. And structure only works when authority is real.
16:42
Derek Fredrickson
Before you hire, answer a few critical questions. What decisions will no longer route through you? What outcomes will this person own across departments? How will success be measured in the first 30, 60 and 90 days? What weekly cadence will reinforce accountability across the organization. If you cannot answer those questions clearly, you are not ready to hire. You are ready to clarify. And a true second-in-command protects your strategic focus. They do not simply lighten your to do list. They build alignment, rhythm and ownership. So the company no longer depends on your daily involvement. That is the difference between hiring support and installing operational leadership.
17:47
Derek Fredrickson
If you are asking when should I hire a COO? Or do I need a COO at $5 million in revenue, start with this question. Are you still the owner of execution across your company? If the answer is yes, your structure has not evolved to keep pace with your growth. At the COO Solution, this is the exact work that we do. We help founders and CEOs determine what level of leadership they need, whether fractional or full time. Makes sense. And we design the structure before the hire actually happens.
Listen, if this episode resonated with you, go to www.coosolution.com and book a call with me. We will have an open and honest conversation that will help map out what your business actually needs so you can make this decision with confidence.
18:45
Derek Fredrickson
Hiring your second-in-command is one of the most important leadership decisions you will ever make in your business. Get it right and your company gains stability, focus and scale. Get it wrong and you stay the bottleneck, but with just a higher payroll. I’m Derek Fredrickson and this is the COO Solution podcast. I’ll see you next.
