The other day, I met with a great founder who talked with me about how he was about to top his VP of Sales. This VP had gotten him from $0 to $1.5m in ARR in pretty short order, recruiting a great small team of reps under her, and had really nailed the formula. But she hadn’t been a true VP before.
I completely get the intellectual side of the move. While this company isn’t yet a rocketship … it has the making of it. Time to get the management team in order. Prepare for the growth, not scramble to keep up with it. Get the cavalry in place now, not at $10m ARR.
And yet …
I’d say one of my Top 100 mistakes as a SaaS CEO has been not really understanding just how far folks could go. For example, while things weren’t all roses after our acquisition, that same team that was killing it at $1m a month in MRR was far better at $2m and $3m MRR than they were at $1m. With basically no turnover. And not all that much help from the mothership. I’m not sure I would have predicted that — it’s just, I just didn’t know.
Or for another example, let’s look back at the Algolia’s CSO presentation at SaaStr Europa. Gaetan Gachet ended up taking Algolia from $0 to $50m in ARR, and still serves as its Chief Strategy Officer today. That’s from being the first salesperson.
My learnings are just that I think our default thinking is often logical, but too conservative.
Let me challenge you instead to do the following:
- First, consider overhiring a half stage (in experience) if you believe it can work. Or at a minimum, be careful about underhiring. As founders, we often get obsessed with “right timing” hires. You definitely don’t want to hire some SVP of Sales at Salesforce to come be your VP of Sales at $1m in ARR — that we can all agree on. More on that here. But … don’t underhire. Sometimes, great ones are willing to really roll up their sleeves, to really do it again. Not all, but some. But at least — try not to underhire. This never seems to work out well. Ideally, hire someone you believe can carry you 24+ months in a given position. And take the risk they can go further, even if the empirical proof isn’t all there. Put differently, maybe hire someone with a lot of experience at the stage you’ll be at in about … 12 months.
- Promote as fast as you can, if you’re growing quickly. Just do it. It’s hard to promote in start-ups until you are at $5-$10m in ARR, just because there’s just not a lot of room on the org chart. But wherever you can, promote the great ones as fast as you could. Our top Director of Engineering was just an A+ from Day 1. The entire team rallied around him organically. I should have promoted him in Year 1, even though we were too small, even if I had to create the position for him. This “under promoting” challenge is especially true in your sales team. You’re going to need a whole series of sales managers. You can’t promote them all from within. That creates issues on many levels. But you do want to breed as many internally as you can. Promote fast where the evidence is that to support it, at least 1 or 2. Even if it’s a touch risky.
- Folks can often scale further when they sell to SMBs. Because the sales cycles are so much faster with SMBs, you just learn faster. A lot faster. I can think of several CROs and SVPs of Sales at top SaaS companies that were there almost from the beginning. They almost always came up through SMB / corporate sales. You can get a decade of experience in a year there. Vs. in bigger deals, there just isn’t enough time to learn on the job.
- Make sure all your VPs, but especially your stretch VPs, have a mentor budget. And use it. Find a VP a few stages ahead that is great to mentor each of your VPs. And set aside some options (and cash if they want) for doing so. More on that here.
- Encourage your VPs to hire folks better and more experienced than them — to work for them. Most stretch VPs can’t or won’t do this. But the best ones do. If they can hire VPs and Directors under them that are even more experienced, then they can scale almost indefinitely.
- Top someone the moment you need to — but be careful if they are hitting their number. I see this again and again. We all need more experience on our teams. But the best ones it turns out not only can run further than you might think — they also recruit folks to make themselves better. They hire great managers under them with the missing pieces. The great ones do. If you have a “head of X” that is blowing out all your expectations, maybe see if you can backfill her or him as long as you can.
A lot of this may not work for you. But what I’ve learned over the years in SaaS to:
(x) top more people faster when they don’t scale — don’t let it fester, don’t hope they can scale for even one minute after they prove to you they really can’t …
(y) on the flip side, we often underestimate just how far the great ones can really run. The really great ones can just go so far. And if you do top them too early, you may clip one of your best assets just when it’s getting good.
All I’m really saying is see how far your VPs can really take you. Focus on what they’re doing well, and help them backfill their weakness. Everyone needs help.
And see how far they really can go.
(note: an updated SaaStr Classic post)