Dear SaaStr: When should a bootstrapped startup hire a (CFO, COO, CMO)? How can a CEO hire those C-level positions for the first time as a CEO and entrepreneur? What skills should he or she look for?
Here are some rough rules:
- You want a VP of Everything (Sales, Marketing, Product, Eng) by about $5m ARR, and ideally, Sales and Marketing well before that. Not all at once, but you can benefit from all of them by then. A bit more here.
- You want to start adding CXOs around $15m-$20m ARR. The CFO is often the last, the CMO often the first “C” level officer.
Now how does bootstrapping change this? Importantly: not that much in the end, although a lot at first. Certainly, bootstrapping slows down how many VPs you can hire until and after $1m-$2m ARR. You probably have to hire them one at a time, a bit slowly. You may only be able to afford one VP at first, even at $2m ARR or so. But after that, you’ve built an engine. Even if you don’t have quite as much fuel as if you’d raised venture capital.
IME, rough order to make hires in:
VPM: $0.2m ARR
VPS: $1-$1.5m ARR
VPCS: $2m ARR
VPP: $3m-$4m ARR
VPE: $5m-$6m ARR
CFO: $10m ARR
COO: $20m ARR
More here: https://t.co/dYgFU0H1pp
— Jason ✨Happy✨ Lemkin (@jasonlk) July 21, 2019
And by $10m ARR, bootstrapped SaaS companies generally generate enough cash to fund all these hires at almost the same pace as venture-backed ones. $10m ARR bootstrapped companies start to converge and look a lot like $10m ARR venture-backed SaaS companies.
So the C-level hiring process ends up being about the same. It’s just, you start off hiring the first, often stretch VPs a little more slowly. And one at a time.