What Order Should You Hire Your Management Team In?

The other day I was meeting with a great CEO who had raised a modest seed round.  Enough to invest, but not enough to go crazy with.  He’d found several good First VP candidates, in particular, a strong first head of marketing and a strong first head of product.  He asked which to hire first.

The answer was obvious — both!  If you have a few nickels in the bank, and you somehow find a great VP a half stage or even full stage early, just hire her.  Hiring is so hard as it is.  Don’t try to save a few nickels by putting off a VP hire if you actually stumble into a great one earlier than planned.

 

But it’s a good question and I thought it might make sense to set out an Ideal VP Hiring Plan for Most SaaS Companies.  And why.  The chart above illustrates the ideal plan, but let’s dig into the detailed suggestions:

  • You really can and should try to hire your VP of Marketing as Early as $20k in MRR.  This will seem crazy early to many of you. But a great head of demand gen (or maybe growth hacking if you are SMB) should be very accretive at even $20k in MRR.  Imagine you are organically growing 4x, so from say $200k in ARR this year to $800k by the end of the year.  And your first VP of Marketing just increases qualified leads by 25%.  That alone will pay for all her salary.  And set you up for a ton more success, earlier.  Make the hire now.  More on that here and a great video discussion below:

  • You’ll probably be ready for your first VP of Sales by $1m in ARR.  We’ve talked about this a lot on SaaStr, but hiring a true VP of Sales before you have 2 reps hitting quota (and thus a repeatable, if not yet fully repeating process) is too early.  But by $1m in ARR, you should have at least 2 reps hitting quota.  Ideally, have your VP of Sales on board in time to hire reps 3-300.   But asking her to hire the first ones before you’ve proven it out yourself?  Disaster.
  • You’ll probably be ready for your first VP of Customer Success by $2m-$3m in ARR.  The exact timing of this hire is a bit murkier to me than the others, but $2m-$3m ARR is probably a good target.   You can hack customer success in the beginning with an individual contributor or two with some experience and a lot of chutzpah.  Maybe starting with a few individual contributors is even better than a manager, because these days many CS leaders don’t really want to be as hands-on as they used to be.  But you’ll need a manager to scale beyond 2.  You’ll want $500k-$1m in ARR per CSM coverage, and as you come up on $2m-$3m, that’s just not enough coverage with a few CSM you are sort of half-managing yourself.  So try to have your VP in place by then.  And if she’s willing to be super hands-on, sometimes your first VP of CS can even be hire #1 or #2 in CS, too.
  • You probably won’t see it, but you’ll need a VP of Product by $4m-$5m in ARR.  Most first time founders have never worked with a great VP of Product, so they don’t intuitively “get it”.  But trust me.  By the time you havve 20-100 enterprise customers, 50-100+ workflows, 10+ configurations … it’s all just too complicated to do part-time, in your head.  You need someone who spends 50 hours a week planning the roadmap, triaging customer feedback, nudging the engineering team.  You need this, once the product gets complex.  Plan for it.  Once you hire a great one, you’ll see.  It’s a gift.  More on that here.
  • You’ll need a VP of Engineering by $8m-$10m ARR.  Earlier is better.  90% of CTOs and founders struggle to hire engineers 10-100.  They can attract a small, great team under them.  But the burdens of recruiting beyond a pizza box or two, of creating thoughtful deployment processes, of maintaining legacy code, of code reviews, of putting together a DevOps team and a SecOps team and strategy and more … it’s too much.  Someone else should spend half their time hiring, 25% of their time spotting issues, and 25% of their time planning.  And this VPE role often involves zero code commits.  Without a great VP of Engineering, you won’t be able to scale your engineering team.  No matter how great a hacker your CTO is.

Are their exceptions here?  Can you skip some of these VPs? Wait longer?

Well.  I’m going to be more dogmatic here than usual and say No, there aren’t a ton of exceptions.  I’ve worked closely with 26+ SaaS start-ups and founded a few.  I’ve made the same mistakes you have, and I’ve lucked into a few great VPs early (marketing, product and sales).  They changed my life, and they’ll change yours.

And if you wait, and make these hires later, you won’t fail.  It’s not fatal.  But it’ll be harder on you, and you’ll scale more slowly than you could.  That combination is a big missed opportunity.  At least try.

And if you find one or two earlier than this, that are great … well, pounce.  There’s always enough to do.

 

Published on May 24, 2018

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