Hiring & Retention

Job #1 Once You Hit Initial Traction — Stop Owning Anything

echojason@gmail.com'

Jason Lemkin

We all screw a lot of things up.  But I think the biggest, #1, mistake successful first-time entrepreneurs in SaaS make time and time again these days is they micromanage too long.

org-chart-templateI see this again and again, and in SaaS, it’s a real lost opportunity.  I think it’s a byproduct, in part, of the fact that founders are just so much better these days.  So an amazing founder CEO often can also be the VP of Sales, VP of Product, hack Marketing, fly across the globe as the VP of Customer Success, and sometimes, even continue to write some code.   That’s great.  But it’s way, way, way too much for one person to do one day longer than necessary.

That can be great in the very early days if it gets you to your first $1m in ARR.  Even better if it helps you skip a round of financing.  But after you hit Initial Traction …  If you’re serving any of these VP-level roles yourself — the business simply won’t grow as fast as it otherwise would.

My #1 recommendation to do even better as a first-time SaaS CEO: make yourself obsolete by the time you hit $2-$3m ARR.  In every single function.  Sales.  Engineering.  Product.  Marketing.  Customer Success and Support.  Finance.

Even best case, you’ll become a bottleneck all over the place.  And beyond that, it will distract you from focusing on the few things that really will get you to the next level.

Post Initial Traction, once you have built your 1.0 management team — your job there is really just to bring in, and where necessary, backfill the team.  Not to be a role player on that team anymore.

There’s just one of  you.  You have to only do High ROI things.  In SaaS, that means not hacking being a VP of Anything as soon as you hit Initial Traction and can afford to hire a full management team.

Or put differently:

  • By 20 employees, you should have 1-2 good managers in place such that at least 50% of the company can run based only on weekly staff meetings, 1-on-1s, and “grab me when you need me-s”.  E.g., a great VP of Sales that can just handle sales.  A great VP of Engineering that can just ship the product from spec with no drama, etc.  So you don’t have to directly manage at least several of the key functional areas in the company at all.  You won’t have it all but you need to not be the Interim VP for at least 50% of the operations.
  • By 40-50 employees, or say $3-$4m in ARR — you must have a complete initial management team.  This means you are no longer the effective VP of any functional area.  You must not be micromanaging anything at this point, if at all possible, and have fully become a “macromanager.”
  • By 200 employees, you don’t need to have a role in hiring any non-managers.  Not only are you no longer the boss of any area, but every functional area needs to hire and manage its own staff and self-propagate.  You should spend all your recruiting time just on VPs and above, and helping screen Directors.
  • By 500 employees, it’s OK if you don’t really know the names of the new folks anymore.  Employees start to simply become resources at this point.  They’ll come and (hopefully at not too high of a rate) go.  Your VPs and managers will deal with this.  You just make the company meetings great.  Inspire the troops.  And hit the plan.

So as soon as you hit Initial Traction — $1-$1.5m in ARR — just STOP.  Take a pause.

Let it go.  Let your VPs do their job as well as they can.  Let them make their mistakes.  Help them, but let it go and trust them to do their job.  Even if some things, in some ways, they do a worse job than you would have.  And if you don’t have real VPs yet — dude.  Go hire them.  Spend 20% or more of your time here.  Stop futzing around on the small stuff.

I know you can do it all, but the whole game in SaaS is getting from $1m to $10m as fast as humanly possible.

That’s the momentum that gets you to $100m and beyond, to the IPO, the Unicorn, and all that.

If you’re the bottleneck, if you’re still taking out the trash at $2m in ARR … you’re going to get there that much more slowly.  It ain’t worth it.

 

 

 ugly org chart from here

 

Published on March 11, 2015
  • Thanks for adding to a very important topic. Re. the diff between 40/50 and 200 if you have VP’s for each department does the CEO still interview the line staff in each of those departments? Seems like that would still be getting involved into the day-day of that group which the VP is supposed to handle?

  • This is a great read. We just hit the 40-50 mark, and it’s this phase of letting go and ‘letting the little bad things happen’. It’s hard to do – so much of what you read is all about how great it is when you bring on people way better than you at everything. But there’s still a learning curve, and the trick is how to enable the ramp without getting in everyone’s way, and how to accept that it’s ok when things aren’t done the way you would have.

    I am really, really good at taking out the trash though, as my end-of-day ritual. I’m sad to let this one go 🙂

  • Jason, this one hit me square between the eyes man.

    My SaaS, started about 19 months ago) just hit the $1mm ARR mark and the past 2 weeks I’ve been in “remove myself as the bottleneck mode”… as I have 3 projects that I put myself in as a checkpoint to getting it done… and all 3 are behind… the team is waiting on me… and I”m not able to focus on growing the company. So I mentally already started to make this shift… but this article came at a great time to help reinforce the need to actually make it happen.

    I’ll have to vary things a bit based on employee #’s as including myself there are 5 full-time people at the company (we’re pulling high profit margins so we have plenty of cashflow to hire new people)… but the only role that would be considered a VP of anything is the CTO. He rocks and can push forward the technology side of things w/ just monthly meetings from me. Customer Success is 1 full-time guy and help from the rest of the team in structured “sprints” (adding another full-time, higher level Customer Success Hero April 1st which would be considered a “VP”)… but other than that… I structured stuff around me being a checkpoint… which sucks.

    So now’s time to use that extra cashflow (we’re pulling nets of 30-40% each month) to invest in beefing up the higher level team members so they can grow the company with less of my involvement and I can focus on the stuff that moves the lever the most.

    Great post. Great timing. Thanks!

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