Getting to Initial Traction

See How Far Your VPs Can Take You. You May Be Surprised.

echojason@gmail.com'

Jason Lemkin

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 Zenefits presentation at the ’15 SaaStr Annual (watch it above).  Sam Blond, VP of Sales at Zenefits scaled Zenefits from $1 – $20m in 12 months in ’14 and hired almost 100 reps in that time. I believed he could do it 100% when I recommended him for the job.  But how could you really know for sure?  Because $1-$20m in 12 months … man that’s a pace of growth none of us had really experienced before, on a MoM basis.  Not quite that fast!  🙂  It’s breathtaking from an organizational perspective in SaaS.

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 role 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 she can go further, even if the empirical proof isn’t all there.
  • 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 no fat, no redundancy … and thus, no room on the org chart.  But wherever you can, promote the great ones as fast as you could.  Our top Director of Engineering (and now VP of Engineering at soon-to-be-red hot eDiscovery company Logikcull) 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.
  • Top someone the moment you need to — but be careful if she’s just killing it.  I see this again and again.  Look, we all need more experience on our teams.  But man, the best ones it turns out not only can run further than you might think — but the best ones recruit help 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 …

but

(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.

Published on April 2, 2015
  • Rob Nelson

    Agree with much of this. However, not sure Zenefits is a good example. The product is free in the sense that their customers don’t pay Zenefits for the service. Therefore, the revenue model, struggles, growth stats, etc. shouldn’t compare to other SaaS companies.

  • When promoting, beware of the Peter Principle. It says: … selection of a candidate for a position is based on the candidate’s performance in their current role rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and “managers rise to the level of their incompetence.”

    I’d suggest you implement training FOR the intended position. I’ve seen over and over again that rock star sales people make for lousy managers.

    Beware of the Peter Principle.

Share This