What’s The #1 Challenge After $1m-$2m ARR?

Q: What’s the number one challenge for scale-up founders?

In SaaS, it is recruiting your VPs and management team:

  • SaaS products mostly don’t sell themselves. You can hack managing and finding 1–3 reps yourself, but after that, you really need a VP of Sales.  Otherwise, things will almost always stall out a bit around $3m-$5m ARR.  Maybe a little later if demand is crazy, but not too much later.
  • SaaS products get too complex to hack a product roadmap too long. You will need a VP of Product to scale your roadmap. You can wing this in the early days, but you’ll have too many workflows, too many integrations, too many partners, too much of everything to maintain this.
  • Upsell and retention is an art, science, and craft.  You can’t hack it forever. You can smother customers with love alone in the early days, but as you scale, you need a seasoned customer success team and VP that has done this before. Or churn will increase, NPS will stagnate and decline, and upsell and revenue retention will be a fraction of what it could be.
  • You’ll need more than 5–6 core engineers to go big. You will need a VP of Engineering to manage these processes, recruit, and build the team, and make your product more secure and enterprise-ready. 95% of the time, your super-smart hacker co-founder is not that person. She can be your CTO forever. But you won’t scale past $4m-$5m without a true, seasoned VP of Engineering. That’s a different job than CTO, and critical.
  • Marketing is also an art and science. You’ll find a way to be decent at some aspect of marketing in the early days on your own (PR, virality, growth hacking, outbound, cold calling, who knows). But to get past that, and to manage 100s and 1000s of leads — not just a handful — you’ll need a seasoned team and a true VP of Marketing to lead it.

Finding, hiring, and retaining these VPs is challenge #1 for scaling up.

Published on June 23, 2020

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