David Sacks, General Partner at Craft Ventures joins the New New in Ventures to discuss The Cadence and how to structure around it while building a start-up.
The Cadence: Transforming Your SaaS Startup from Chaos to Military Precision
4 Unexpected Learnings from the Cadence Methodology
- The Quarterly Offset is Critical – Creating a deliberate half-quarter gap between product launches and sales cycles generates a “lightning strike” effect that maximizes both engineering efficiency and sales productivity.
- Neither Sprint Nor Marathon – Think Ladders – The most sustainable pace isn’t constant sprinting (burnout) or steady marathoning (too slow), but a laddered approach of intense work followed by deliberate recovery periods.
- Two Systems, One Cadence – The most successful SaaS companies synchronize just two critical systems (Sales/Finance and Product/Marketing) into a single operating rhythm that aligns the entire company.
- Events Create Deadlines – Using public launch events as forcing functions establishes unmovable deadlines that drive prioritization, focus teams, and produce the market feedback essential for growth.
The transition from scrappy startup to efficient growth machine is one of the most challenging phases of building a successful SaaS company. As David Sacks, Craft Ventures General Partner and former founding CEO of both PayPal and Yammer, explains, there’s a critical inflection point where the organization reaches about 50-100 employees and functional silos begin to emerge.
“When you get above 50 employees, and certainly above 100, the company starts to get divided into functional areas,” says Sacks. “Not everyone knows what everyone else is doing, and this siloing of the org chart means that there is a general feeling of disorganization or chaos.
This sense of chaos isn’t a sign you’re doing something wrong – it’s actually an inevitable byproduct of growth, particularly rapid growth. But while chaos may be a temporary necessity, it’s not a strategy. Successful companies must find a way to maintain their momentum while bringing order to the apparent randomness.
The Path from Chaos to Cadence
The solution, according to Sacks, is implementing what he calls “The Cadence” – a deliberate operating rhythm that transformed Yammer from zero to $56 million in sales in under four years, culminating in a $1.2 billion acquisition by Microsoft.
“The goal is to turn startup chaos into an army, where every team member works in lockstep,” Sacks explains. “Everyone knows what to work on, rather than having disconnected functional areas and an erratic schedule.”
The Cadence isn’t just theoretical – it’s battle-tested. While building Yammer, Sacks and his team competed directly against Salesforce’s Chatter product. They studied Marc Benioff’s “Behind the Cloud” and adapted key elements of Salesforce’s operating system, which has proven to be perhaps the most successful framework in SaaS history.
Two Systems, One Rhythm
The foundation of the Cadence rests on a simple but powerful insight: there are just two key systems in a SaaS company that need synchronization.
- The Sales/Finance System – Centered around quarterly sales goals and financial reporting
- The Product/Marketing System – Centered around product development and market-facing launches
“These two systems run better on a quarterly cycle and should be planned on a quarterly cycle,” says Sacks. “The goal is to create a single operating cadence for the company.”
The magic happens when you align these systems with a slight offset, creating a predictable rhythm where each function knows exactly what they should be doing at each point in the quarter.
Optimizing the Sales/Finance System
The sales cadence works best with quarterly quotas – annual quotas are too slow to judge performance, while monthly quotas introduce too much volatility. This quarterly structure creates a natural rhythm within each three-month period:
Month 1: Sales kickoff, territory assignments, training on new products Month 2: Pipeline inspections, ensuring teams are on track Month 3: Closing deals with minimal distractions
For the finance calendar, Sacks recommends most SaaS companies adopt a January 31st fiscal year-end rather than December 31st. This simple shift has profound benefits:
“Having a January 31st fiscal year allows sales reps to avoid closing deals during the Christmas to New Year’s period when everyone is on vacation,” explains Sacks. “It also helps to avoid giving discounts to smart prospects who know that vendors are scrambling to close deals to hit their numbers.”
Engineering the Product/Marketing System
On the product side, Sacks advocates for a planned quarterly approach to product management – a lesson learned from his experiences at both PayPal and Yammer.
“Product management is essential for maximizing resource planning and pushing a significant amount of work through the system with a fixed amount of resources,” he notes. “It works best on a quarterly calendar.”
This disciplined approach prevents two common failures: shipping only minor features, or going wildly over schedule on major releases. Sacks recommends a simple but effective rule for scoping projects: assign 2-10 engineers for 2-10 weeks. This constraint forces proper scoping and prioritization.
For marketing, the key insight is that fewer, bigger launches create more impact than frequent small releases. While engineering teams may ship code daily or weekly, marketing efforts should be consolidated around quarterly “seasonal” releases – similar to Salesforce’s winter, spring, summer, and fall approach.
“For marketing purposes, it is better to have a few big releases, such as four big releases per year, rather than many small ones,” says Sacks. “This allows for a focus on significant milestones and cross-functional collaboration.”
Creating the Magic Offset
The most powerful aspect of the Cadence is the deliberate offset between the two systems – positioning major product/marketing events in the middle of sales quarters.
“To create an offset, it is recommended to have a gap of about half a quarter between major events, such as product launches, and the sales quarter,” Sacks advises.
This timing accomplishes multiple goals:
- Sales teams can leverage press coverage from events to warm up prospects
- The product has time to stabilize before sales depend on it
- Engineering cycles align naturally with launch deadlines
- The entire company operates with a predictable rhythm
The Quarterly Pattern
When properly implemented, the Cadence creates a predictable quarterly pattern:
Month 1 (PLAN):
- Sales kickoff with new territories and quotas
- Training on latest products and roadmap
- Board meeting to review previous quarter
- Beginning planning for next quarter’s launch
Month 2 (LAUNCH):
- Code freeze and QA for launch event
- Launch event (conference, webinar, or city event)
- Post-launch celebration and recognition
- Sales leverages marketing momentum
Month 3 (EXECUTE):
- Sales focuses on closing deals
- Engineering begins next quarter’s development
- Minimal distractions across the organization
The Cultural Benefits of Cadence
Beyond operational efficiency, the Cadence creates significant cultural benefits.
“There is an ongoing debate about whether startups should be run like a sprint or a marathon,” Sacks notes. “But both approaches have drawbacks.”
Instead, Sacks recommends thinking in terms of “ladders” – periods of intense work followed by recovery and reflection. This approach maps perfectly to the quarterly Cadence:
- Sprint to hit quarterly goals and launch deadlines
- Recover during kickoffs and post-launch periods
- Celebrate accomplishments before beginning the next cycle
The result is a sustainable pace that can be maintained for years, rather than burning out the team or moving too slowly to compete.
The Compounding Power of Consistency
Perhaps the most powerful benefit of the Cadence is the compounding effect of consistently shipping great quarters.
“The compounding effect of shipping great quarters, with four major launch events per year, can be enormous,” says Sacks. “It is more effective than having 52 smaller events.”
Over 20 years, Salesforce has released 80 seasonal updates, creating an unstoppable momentum that competitors struggle to match. This consistency enables companies to both execute today’s plan while building toward tomorrow’s vision.
4 Top Mistakes Founders Make with Operating Cadence
- The V2 Fallacy – Taking 1-2 years off to completely redo the platform architecture. These massive replatforming efforts kill momentum and often the startup itself.
- Misaligning Board Meetings – Scheduling board meetings too soon after quarter-close prevents proper analysis, or too late misses the opportunity to incorporate feedback into the next quarter’s plan.
- Building Features in Isolation – Developing the product roadmap without involving sales and customer feedback leads to building features nobody wants or needs.
- Failing to Create Recovery Periods – Driving teams constantly without deliberately scheduled recovery periods leads to burnout and declining quality over time.
The Cadence isn’t just an operating philosophy – it’s a battle-tested framework that transformed Yammer from startup to unicorn. By implementing these principles, SaaS founders can dramatically increase their odds of building a company that operates with military precision while maintaining the agility to dominate their market.
And some great Q+A with David:
All right, let’s keep going. Okay, what’s your perspective on how to best structure the sales comp plan?
Number one, annual target with quarterly objectives. Two, semi-annual with quarterly targets, or three, quarterly? I think I would just go with quarterly, so I think it’s simplest. Here’s the problem with having an annual plan with quarterly targets is you’re going to be learning all sorts of things throughout the year, and you’re going to be wanting to make adjustments, and you may even want to be making adjustments more frequently than quarterly.
I’m going to urge you not to because it undermines the confidence of the sales team. But, at a minimum, you’re going to be making quarterly adjustments, and if you’ve got somebody on an annual plan, and all of a sudden you’re changing the rules on them quarterly and it involves their salary or their compensation, you’re going to have a big dispute on your hands.
So, I really like the idea of the sales plans being quarterly, so that you can essentially have carte blanche to rewrite those plans every quarter. Not more than once a quarter, but every quarter you can rewrite them.
Okay, this is really insightful, what tips do you have when the cadence gets broken, the product doesn’t hit, or hits blocker, or a crisis like COVID?
It’s interesting, what I found is if you’re implementing the cadence, okay let’s talk about what a miss would entail, okay? So, there are two kinds of misses, there’s a miss in the product marketing system, or there’s a miss in the sales system.
So, the miss on the product marketing system would be more embarrassing in a sense, because you’ve got this scheduled event, you can’t miss it, you don’t let anyone ever change the time or date of the event, that is a fixed point, once you set it, you’ve got to hit it.
So, the question is, what are you even presenting on stage? What a miss would mean, frankly, is just that you’ve got less stuff to show. I still think you’d do it because you don’t want the goalposts to change, I think it’s really important to set goalposts for the team.
But, if something doesn’t get done in time for the big launch event, it’s going to drop, it’s going to push to the next quarter, and unfortunately, you’re just not going to be able to include it.
But again, if you’re doing rocks, pebbles, and sand, you’re going to be getting some things done, you’re going to have something to show for it. If you don’t, it’ll be a painful lesson that lets you reset for the next quarter.
Sales, again it’s not all or nothing. You do have this quarter-end, you should not let sales change the quarter end, just because they’re going to miss.
Take that miss and learn from it. It just means that you didn’t close as many deals as you wanted to. Take that learning into the board meeting and have that conversation about why it was is a miss. Is that a product-market fit problem? Is it a competitive problem? Is it a sales training issue? What is the reason you missed?
One of the reasons why it’s so important to operate on the cadence is because it’s not saying that you can’t miss, but it doesn’t let you change the goalposts, and so it forces you to deal with misses the way that you should.
Okay, there’s a question here, this advice seems more relevant for later stage, post clear product-market fit creates whether the recommendations for CSVs is before clear product-market fit to ensure you drive towards product-market fit.
Okay, I think that is a good point and it’s accurate. I mean I’ve really said that the cadence is for the phase of a company’s life where you have product managers, you have functional areas, you’ve got a sales leader, a marketing leader, a product leader, and you need to take this ragtag band of forces and turn them into an army. The cadence doesn’t apply to a 10 person start-up.
What I think I would recommend for the 10 person seed-stage startup is, it really is more like a guerrilla force, it’s not an army yet. Maybe it is like the Navy SEALs or something, which should be very experimental, there should not be a lot of overhead.
The founder, you may not even have any product managers, you don’t necessarily need them, it’s really about the founders working with the engineers and the designers and sales, making sales themselves, to figure out what does the customer need? And then, immediately feeding that back into the dev cycle.
I guess my big piece of advice for companies, seed-stage startups, I call this the wilderness period, you may want to check out my blog, it’s called The Wilderness Period where it talks about how to cross the penny gap. The thing you really got to do for those startups, is you’ve got to find the immediate need.
What is the one thing that somebody is willing to buy right now? You’ve got to find that buyer and that immediate need. Then, that gives you the wedge, or the initial product-market fit, the initial wedge into the market, and then you go raise a series A, and then you go and do the cadence.
So next question, how do you prioritize features to build for your SaaS product?
That’s something where you’ve got to listen to customers. That’s a tricky thing, that is where founder judgment is required. You obviously want to listen to customers, you want to listen to prospects, but you can’t just do that, or you’ll have the faster horses problem.
So, figuring out what you’re going to prioritize, it very much has to do with some combination of founder vision, and what the market is telling you.
Next question, are successful SaaS companies sales led, or engineering, or product-led?
I think that’s another great question. I think that if I had to choose one, I would choose … First of all, they can all be successful. You obviously need all three functional areas to make a SaaS company work, you’re going to need engineering, you’re going to need sales, you’re going to need the product.
I would say that at Yammer, we were product-driven, my expertise before Yammer was a product and we were very focused on this idea of consumerization of the enterprise, so we were product-driven and then learned how to do sales.
I think now that model, this consumerized, enterprise model is the dominant model, and so I like to see founders coming up with a lot of product vision. But, you’re absolutely going to have to learn to do sales if you want to be successful. And, if you don’t want to know how to do sales, you will not be successful, it’s just that simple.
Okay, how do you think about re-platforming scenarios where the whole product needs to transition to a new architecture design, it could take one to two years. How would you recommend the process or scheduling it?
Okay, so this is what I call, this is a good one to end on, this is what I call the V2 problem, and maybe it should be called the V2 fallacy. I’m very much against taking one to two years off to go re-platform.
It almost never needs to be done, you should find a way not to do it, it will kill your startup. One of the reasons why we insisted on this two to 10 engineers for two to 10 weeks rule at Yammer, is because what we found is, whatever the unit of time is that you’ve got, that you’re measuring how long a feature is going to take, you’ll be off by at least that amount.
So, if you’re measuring how long it will take you to do a feature in days, you’ll be late by days. If you’re measuring how long it’s going to take you to do a feature in weeks, you’ll be off by weeks. If it’s taking you months, you’ll probably be off by a month. If you think it’s going to take you years to get a feature done, you’ll be off by years.
So, it’s very important, when I was operating, I just would reject the idea that any feature that was going to take quarters was a necessity. Big companies have the luxury of doing that, small startups don’t.
