Linguistics

Why Startups Won't Stop Rampant Job-Title Inflation


With entrepreneurship education exploding, encouragement abounds for business founders. Fair enough. But why do self-aware people who launch their own businesses so frequently award themselves strings of fancy titles—“co-founder, CEO, president, chairman, and chief innovation officer”—right out of the gate, when the business is run by a handful of people still trying to land those first clients? Isn’t it obvious to prospective customers, investors, and employees that those involved in a startup wear many hats? Aren’t the entrepreneurs worried about undermining their credibility with puffery at a time when credibility is helpful?

For seasoned founders, title inflation is a necessary evil: Internally, it helps massage egos (and maybe save loot if the new title isn’t accompanied by a raise); externally, it helps open doors. If you’re trying to meet with someone at Goldman Sachs (GS), for example, and “you don’t have a CEO, president, or VP for sales title, you don’t get in the door—you’re not taken seriously. You don’t get that meeting,” says Amy Millman, president of Springboard Enterprises, a nonprofit that helps female entrepreneurs raise equity funding. “And if you don’t get that meeting, the business doesn’t scale, it doesn’t work.”

Not that Millman is pleased with the practice: “Titles are stupid—names are stupid,” she says. “You should stick to executing. Titles shouldn’t ever be important.” But corporate America hasn’t “evolved yet” for startups to avoid playing the title game. “Most [entrepreneurs] now need strategic partnerships” with big companies and government agencies that emphasize hierarchies.

Playing the title game poorly will backfire. Millman, who has evaluated about 5,000 businesses and admitted just under 540 applicants into Springboard’s accelerator programs, recalls an applicant who didn’t make the cut because she had multiple titles and couldn’t concisely articulate what her business did. (Millman: “What is your title? You have chairman, CEO, president, and chief marketing officer. Are you the only person in the company?” Applicant: “Well no, we have seven people.” Millman: “Well, there’s no titles left for them. Make it simple.”)

SXSW Acclerator event producer Chris Valentine is another gatekeeper who has reviewed roughly 5,000 startups and selected a couple hundred to participate in his events. He gets frustrated by opaque titles that are intended to be clever. Rather than use “chief poop officer,” which Valentine has stumbled across more than once, “the CEO of a company just needs to say, ‘I’m the CEO,’” he suggests. “There is some value in creating credibility from the very beginning.”

Besides, Valentine notes, many startups don’t make it, and their founders might find themselves hunting for jobs. Having been president instead of poop officer will do more to improve their odds at an established company: “You can go from a c-level position at a small firm to maybe a director spot in a large corporation.”

Nick-leiber_75x75
Leiber is Small Business editor for Businessweek.com, Entrepreneurs editor for Bloomberg.com, and covers small business for Bloomberg Businessweek.

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