Dear SaaStr: What’s The Number One Challenge for Scale-Up Stage Founders?
In SaaS, once you have even a few million in ARR, the #1 challenge is recruiting top-tier VPs and building a truly top-tier 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.
- 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 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 5–10 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, and critical, job than CTO.
- 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, virtality, 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. It’s the people. With the best people, you beat the competition. With nice but mediocre VPs, the competition beats you. WIth the best people, you get ahead of changes in the markets. With no VPs or medicore ones, changes in the market get the best of you.
Once you have even a few million in ARR, stop doing it all yourself, and stop looking for bandaids. And go out and hire at least one truly great, truly great VP. Most likely a stretch VP, but one that will change the game. Or at a minimum, immediately level things up.
Once you have true product-market fit, for real (say 100+ happy, high-NPS customers) … it really is a formula in SaaS.
The better and faster you execute that formula, the better and easier you will scale. Your app is special and distinct. As are you. So you’ll get your first 5, 10 even 50 customers your own way. But the way to get from 100 to 100,000+ customers isn’t unique. It all converges to a well-understood process here. Get folks on the senior team who already know it.
More here: What Order Should You Hire Your Management Team In? | SaaStr and What Your First 100 Hires Will Look Like | SaaStr
