As SaaS CEO are you Bottleneck, Maradona or Scaleup Challenger?

SaaS · Luigi Mallardo · June 2, 2020

I’ve learned the beauty and power of tales thanks to my son. I was thinking the other day to this little interesting book used in many business schools, “Who Moved My Cheese”.

The story is about a few mice; the mouse that does well is the one who (1) realizes the early signs that the “cheese” is going to finish soon and (2) finds the courage and common sense to identify the right things to do, then finally (3) she can make it happen.

In B2B SaaS in mainland Europe an interesting tale could be about 3 CEOs that share the same ambitions (grow the company, work hard, enjoy the journey, become millionaires), but they are 3 different characters and they act differently.

BOTTLENECK

The Bottleneck CEO tends to micromanage too much.

In B2B SaaS, with a good and early-mover solution, scaleups with Bottleneck Founders, who can be good salespeople as well, can grow 30-100% yr on yr, but at some point, by 5 or 10 million in ARR at the latest, the revenue growth start to decline sharply and in 1-2 years it can go to zero.

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An “enlightened” Bottleneck CEO recognizes no later than 50-100K in MRR that the company go-to-market approach needs to be professionalized and starts to build teams with the appropriate experience and focus.

Many Bottleneck CEOs unfortunately delay too much the needed transformation and then it becomes a real issue or, worst case scenario, they mutate in a MARADONA CEO once they get close to a stress related collapse or even a divorce in some cases  for accumulating too much stuff on their shoulders.

MARADONA          

Why Maradona? Because she’s looking all the time for that superstar VP of Sales that will sort things out so she can focus on the things she likes the most: the product, speaking at events, raising money, whatever.

As soon as the company raises a decent round, MARADONA recruits the VP Sales and most of the times it’s a failure. After one year nothing has happened, the VP vanished, got fired or resigned and things are again on the shoulders of Maradona.

What is the cost of this? Founder dilution on the next round plus hundreds of thousands € in management, operational and opportunity costs.

From what I’ve seen in the industry and from direct experience, there are various reasons why, as Jason Lemkin says “in SaaS the number one most common mistake is the VP Sales”:

  • wrong profile
  • wrong timing
  • wrong onboarding
  • wrong expectations

A typical case is the Maradona CEO who gives one or two shots of VP Sales. If none works then the Bottleneck soul takes the lead again and the CEO may lose faith in the VP formula.

A CEO who can learn from her own or others’ mistakes, before or after the first shot asks herself a key question:

Am I “ready” for hiring a good and experienced VP Sales? 

Being ready means:

  • having at least 2-3 sales reps fully working and on-quota, plus an SDR team ramped up. The team may be adding between 70 and 150K in new MRR per year.
  • You have a basic Playbook and sales process in place.
  • The team already has a small floor of SDRs executing cadences (emails and cold calls) and booking good meetings for the sales reps.
  • An essential Salesforce process and dashboards are in place.

What I just described is an attractive scenario for a “right” VP Sales with relevant experience to move the revenue engine to the next level.

In Europe the shortage of a modern generation of Sales leaders in B2B SaaS is a major challenge.

SCALEUP CHALLENGER

The Scaleup Challenger CEO does not want to reinvent the wheel on sales scaling best practices.

She knows that to scale healthily she needs:

  • Strict strategic focus and a solid value proposition and product marketing
  • Obsession for sales process and funnel KPI’s
  • The right sales people with the appropriate experience, in the right roles, at the right time.
  • An experienced VP when the team has already a few high performers.
  • To act herself as a VP Sales for a while until the engine is ready for the “right VP”.

The Scaleup Challenger knows that the biggest threat to scalability is not executing on time a set of Go-To-Market Fundamentals for a healthy and sustainable revenue growth.

Delaying the correct execution of the correct “postures” and Fundamentals can kill the high-growth ambitions for the following one or two years. That’s B2B!

The Scaleup Challenger knows that there are bad implications if you delay the build up of a solid Demand Generation, Sales and Customer Success engine. There would most likely be slow down of revenue growth for one or a combination of the following reasons:

  • Raw sales process and Playbook (eg every deal is different and new sales reps struggle to learn)
  • Value proposition and Outbound sales struggling on bigger deals and only the Founders are able to sell
  • Biggest mistake – the VP Sales

#1 A clear Go-To-Market vision for B2B SaaS

 

 

#2 She’s perfectly aware that the biggest driver of customer loyalty is the Sales Experience she’s able to build into the organization, more than the Product, the Price or the Brand.

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#3 The Scaleup Challenger won’t hire an experienced VP Sales unless the team has already a few Account Executives on quota and a small SDR team booking good appointments.

I’ve seen many CEOs living their Bottleneck “childhood” too long, I mean up to 5-10 million in annual revenues, and then moving all of a sudden into a Maradona mood, looking for the great VP Sales.

It doesn’t work 90% of the times, especially when they have high revenue expectation not backed up by a working engine and they need to start from scratch a sales team or have an existing team with specific issues and wrong “postures”.

I’ve seen other CEOs, on the contrary, as soon as they decide to professionalize the sales engine, they become too perfectionists about sales process, CRM, tracking or other techie stuff. Wrong focus.

The Scaleup Challenger CEO knows that the Process is just one of the 4 Pillars needed for a healthy go-to-market execution, it’s just one leg in a long journey.

To scale healthily you need two legs and two arms, well harmonized.

Can you imagine someone running a race with only one leg, without the other leg, and with no arms?

CONCLUSIONS

Many B2B SaaS Scaleups are injured and at risk of huge devaluation or even extinction for a combination of inappropriate go-to-market execution and for the impact of the storm we have experienced in 2020.

VCs have invested a lot of money and there is a general concern about the exits. This is becoming a big issue.

Many of these companies can be recuperated.

Is it just hiring a better VP Sales the solution?

Why the average tenure of a Revenue Leader (VP Sales and CRO) is just less than a year and a half, everywhere? (Source: Revenue Collective).

Are we sure the solution is just hiring a better VP when:

  • Revenues are flat or declining because you have not developed the appropriate revenue engine and “postures” yet.
  • Every deal is different.
  • You need always the founders to close big deals.

Even if you hire a good VP under the above circumstances, are you sure your expectations towards the VP should be only ambitious revenue targets?

Yes?

Hmmm … what a signal that the VP may be out of the job soon.

How much would it be your actual + opportunity cost in such a scenario?

If you do the math it’s huge.

Isn’t it so?

 

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