At Even Just $1m ARR — You Need to Stop Doing Low ROI Things

In SaaS, I think one of the biggest traps you can get yourself into as a founder is doing Low ROI things for one minute longer than you have to.

Of course, this is true in all start-ups.  But quickly in SaaS it becomes worse.  Why?  Because they are more functional areas to handle, earlier.  You need engineering, product in all start-ups — but in SaaS, even in the very early days, you also need sales, client success, true support, demand gen marketing, etc.  Boy, that’s a lot of functional areas for just a few hands.

So for a while, unless you are well-funded, you may have no choice.  You’ll wear a ton of hats, and do a lot of lower ROI things.

Looking back, let me make a list of Low/Medium ROI Things I Did Even at $1m ARR that Clearly I Shouldn’t Have:

  • Office Cr*p.  I was still setting up desks, ordering snacks, and all that.  Fun. And dumb.
  • Functional QA.  I’m torn on this one.  I am incredibly glad that for years, literally, I had more bugs logged than anyone else.  And it was reflective of the very deep knowledge I had of the product.  And yet … wasn’t this really a sign?  Of too much low ROI work here?
  • Tech Ops.  I remained on Pager Duty 24x7x365 for 5+ years.  Too much stress.  Still haven’t recovered from that one, really.   Dude, why didn’t we just hire another 3 guys in TechOps much, much.  Much.  Earlier.

And Things I Successfully (More or Less) Offloaded By/At $1m ARR:

  • Client/Customer Success.  I was lucky to have a great hire who handled our first few large customers.  I did it myself at first, and did a pretty bad job of it.  But by $1m in ARR I was only parachuting into larger customers, but well out of day-to-day issues.
  • Routine Sales.  You gotta hire 2 great sales reps as soon as you can.  If you are still doing sales yourself after 10-20 paying customers, I highly doubt you can scale.  This didn’t work well until I had a Great VP of Sales.  But within 60 days of that hire, I was 100% out of routine sales.  100%.
  • Hired a Great VP of Marketing Early(ish).  I did a lot of things late, but I hired Loretta Jones, our VP of Marketing around $30k in MRR.  Relatively early.  As CEO, you’re always part of marketing, maybe even, always the CMO sometimes.  But it got me completely out of managing the funnel, webinars, any of that stuff.  Bless her.

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Things I Think You Should Always Do, You, Forever as CEO, no matter how big a team you have:

  • Visiting Key Customers.  You need to always do this, always.  At the SaaStr Annual, Aaron Levie of Box at $250m in ARR, Bob Tinker of MobileIron at $150m+ ARR, David Ulevitch of OpenDNS, and everyone else selling into True Enterprise … is spending just as much time with customers, really more, than before.   This never goes away if you want to win.
  • Recruiting >=20% of Your Time.  This never ends, and really, should go up as a % of your time.  You’re always building a team once you hit Initial Traction.  Doing episodic recruiting means you won’t scale as fast as you could.
  • Being Spiritual CPO.  Not always, but most CEOs have to remain at least the spiritual Chief Product Officer forever.  You know that, and probably don’t mind.  BUT — get out of the VP of Product role as soon as possible once you hit Initial Traction.  At the SaaStr Annual, David Sacks said the first thing he did upon joining Zenefits as COO (at $20m+ ARR) was put in place a full VP of Product and product team.  Parker Conrad, the CEO, had been the VP of Product for far too long 🙂

Anyhow my only real point is if you’ve hit Initial Traction — Take a Pause.  Spend 20%+ of your time hiring a real Management Team.  And whatever you can stop doing, and let someone else on your team do … stop doing it yourself.

It’s time to get out of scrappy more, and into How Quickly Can I Get to $10m ARR mode.

Published on February 11, 2015

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