A little while back, I gave a great SaaS Founder CEO a Gift.
A real gift.
This founder CEO was at about $1m in ARR, doing well, but with only a smidge of angel funding and limited resources.
And I gave him an insanely great VP of Sales candidate. An amazing fit for his company, his target ACV, his lead velocity, and structure.
And let’s be clear: the CEO was incredibly lucky to get this candidate. Not because the company wasn’t a great, cool company. But because the company wasn’t really big enough, funded enough, with enough going on to really attract a candidate of his caliber (at that time).
But like any candidate, this VP of Sales wasn’t perfect. He was an up-and-coming candidate and had the full package, but it was his first time to really own it all.
The CEO saw it … almost. He hemmed and hawed. And ultimately, he let the gift go. He said he’d hire him … with a great package … but only as “Head of Sales”. Not VP.
Fast forward 60 days. And this VP Sales candidate met with another CEO I know well. A really kick-arse CEO. One whose start-up was growing even faster than the first, with much more funding, a bigger base, and much more velocity. Objectively speaking, a better opportunity. And the Second CEO hired this VP of Sales on the spot. That Day. As the VP. And they’ve just killed it together.
Fast forward another few days, and I saw the first CEO at drinks. I asked him what happened. He said it was just too much, to make the VP hire at that time. He agreed it was a Gift, getting connected to this candidate. But at the time, he just wasn’t 100% sure the candidate would be the right VP of Sales at $10m ARR or $20m ARR, let alone $100m ARR. He didn’t want to have to make a change later. He wanted to leave the titular room instead, to top him later if necessary. Make him “Head of Sales”.
I nodded. I get it.
And it was a big mistake.
In B2C, it may make sense to have a lot of “Heads of This” and “Heads of That”. If you have matrix-type teams, and a lot of individual contributors who are hyper-productive. And really early on, say < 10-15 employees, none of it may matter much.
But in SaaS, I say it’s generally a mistake. Or at least rethink it, for the following reasons:
- People get topped anyway in SaaS. Sorry. But it’s true. Not everyone scales from $0-$100m. It’s just a fact. As we know, Great Teams Win. But the players on the team do change as the years go by. So using “Head of” to avoid issues later if you have to top someone isn’t really necessary in the end.
- “Head of” is confusing to outsiders. This probably doesn’t matter at Clubhouse. But in SaaS, you are dealing with a lot of corporate types. Fortune 1000 customers, partners, etc. They want to know: Who am I meeting with? What level of responsibility does he or she really have? Is this company for real, or just some little start-up that might go out of business in a year or a month?
- “Head of” is confusing to insiders. Are they the VP-equivalent? Or not?
- It’s demotivating, after a point. Bringing in someone as “Head of Biz Dev” and then promoting them in 120 days when they prove themselves may be motivating for some stretch candidates. If everyone’s OK with it, and there is a clear path to VP, that can work. But leaving someone who is putting their heart and soul into owning a functional area, without the clear indicator that that’s really what their job is … for too long … is a recipe for underperformance, ultimately.
If you are going to make someone "Head of" instead of VP
You often have about 6 months after that to decide which way to go
— Jason ✨BeKind✨ Lemkin ⚫️ (@jasonlk) January 23, 2021
I know all this squishy stuff may feel like the right way to go in the early days. Especially if you care, and want to make sure all your great team members have career advancement opportunities.
But let me step back one level, and tell you one more personal story here. That I learned. At Adobe Sign / EchoSign, we basically had the same management team at $2m ARR as $20m-$30m in ARR. I wasn’t sure they could all scale. I wasn’t even sure I could scale. The skills we needed at $2m in ARR were just so different from $20m in ARR.
What I did learn is the great ones, more times than not, find a way to scale to the next level. So be thoughtful. But if you’ve got a Gift on your hands, a really game-changing great hire … I say just give ’em the title. Even if it’s a slight stretch. Just Get it Done.
They may exceed your expectations. My team did. And if they don’t … the great ones will know. And will be OK being topped.
After all, that’s what they invented Senior Vice Presidents for.
(note: an updated SaaStr Classic post)