SCALING MADE SIMPLE

The BurnRate Blog

Scaling Sales Organizations for First-Time Founders

Robert McLaws
February 15, 2020

If you're a first-time founder with little or no Go-To-Market experience, or a serial founder that never quite found Product-Market-Fit in your previous ventures, then strap in and pay attention. I'm about to share some insights on things that founders don't often get right the first time around… but are critically important to your startup success.

Nailing Your ICP

Understanding your Ideal Customer Profile can be a significant challenge to overcome. Of course, everyone’s “ideal” customer is a giant company with oodles of cash, 10,000 seats, and a two-call close. But Whitney Sales, selling phenom and creator of The Sales Method, says you must go small to go big.

"You need to focus on a core segment of the market that hits your sweet spot right now. The way I think about this is:

  1. They have the problem right now that I solve for, and they are actively feeling that pain.
  2. They have the money to spend on solving it.
  3. I can get in front of these buyers. - That's kind of a critical component, most people miss that part.
  4. There is something going on right now at the company or in the industry that is going currently to get the people in my ICP that is making the problem painful enough that they need to solve it.

If you’re targeting SMBs, there should be roughly 1000 companies in your ICP range. If you’re going after mid-market, you should have about 250 companies on your list. And if you’re going after Enterprises, you should be targeting about 50 companies.”

Now all investors want a huge Total Addressable Market (or TAM), and you may think this advice flies in the face of what sells investors. It doesn’t. “At this stage, you need to carve out a segment of the market that you can own with boots on the ground,” Sales says, “and then leverage those logos to find the company everyone is afraid of, and take them down. That will help get you the momentum to move yourself upmarket.”

The key takeaway here is this: don’t spread your messaging or product development too thin by trying to be the solution for everyone. Be the best solution for your ICP… then expand your ICP as your product and positioning expand. If you can’t rigorously reduce your customer profile to a small segment of the market that you can totally dominate, you’ll face a significant uphill battle with both customers and investors in the months ahead. “Know who you are today, where you’re going tomorrow and the steps needed to create the future.” says Sales.

Delegating

At this stage, recognizing that you can't do everything is essential. Your biggest challenge is the self-awareness to know the things you need to hand off to other people, and the things you need more coaching for to do yourself.

SaaS demigod and founder of SaaStr.com Jason Lemkin has some suggestions for building out your management team as you scale to $10M ARR. One stood out to me as being critically important:

"You shouldn't be the VP of Sales anymore. But you still need to be The Chief Customer (and MRR) Officer. You need to get out of most deals, and 100% of the routine ones … and just focus on the biggest ones. And importantly, you need to spend more time with your existing customers (instead of new prospects)."

You may have already hired a VP of Sales… great! As a founder, you now must do what will probably be one of the hardest things you'll ever have to do: get the hell out of their way and let them do their job.

No, really.

Look, I get it. You've probably been burned in the past by people who didn't execute as well as you could. They might have even made you look bad in the process or cost you business.

But you already made the hire, and presumably you hired someone smarter than you who is going to look at things in new ways and help you get where you're going faster. They're going to make a few mistakes along the way. It's ok. As a founder, the inability to let go will kill your unicorn aspirations. Full stop.

"But even if you've hired the world's best VP of Sales … you can't opt out of sales entirely," Lemkin continues. "You can't just walk away. You will still need to spend 15–20% of your time in sales. At least you need to drop into key deals, as 'The CEO', as the Chief Customer Officer. You don't get to stop doing that ever."

So you need to think about how you're going to let your VP of Sales own her end of the business, and help you be the secret weapon that gets dropped into the deal at just the right time to get the signature.

Capacity Planning

As a product-focused founder in my last startup, I thought building a tech company meant the majority of the team would be tech people. Then I stumbled on Christoph Janz’s Hiring Plan model (which later became the basis for BurnRate’s initial prototypes) and discovered that, as a percentage, the single largest team in any company would be sales, not engineering. This stark realization totally flipped my worldview about startups, and directly led me down the path to building BurnRate.

Emergence Capital's Doug Landis, who spends his days helping portfolio companies build their growth strategies, says "the hardest part of building a Go-To-Market org in the early days is doing capacity planning. Why is that? Well, typically you don't have enough data to build your model. You still aren't exactly sure what your ACV is going to be moving forward, nor do you know what your sales cycles are since you likely only have a few customers. With so little data available, how do you build a model and have a discussion around how many salespeople you need, what quota they should carry, and how to pay them?"

Like everything else in the early startup days, the key to success here is not about having the right data, it's about having the right framework to quickly create realistic assumptions and rigorously test them.

Spreadsheets are great for modeling, but there is no standard way to build them. Spreadsheets have no context of what you're trying to accomplish, so they can't tell you when you're wrong. In addition, these models require significant investments to maintain as you grow, which means in most organizations, planning happens once a year… if you're lucky.

Scaling Responsibly with BurnRate

Our thesis is that creating a culture of continuous planning is the key to a more successful startup ecosystem. That's why we designed BurnRate to be a framework to help you scale responsibly. BurnRate puts your team on rails, so you can build revenue growth plans that are actually achievable and understand how those plans affect your need to hire. Instead of fighting with spreadsheets, you can play with different assumptions and watch how they affect the model in real time, and drive conversations about how changes in your ICP or ACV will affect your targets.

BurnRate helps you delegate with confidence by putting the power of planning in the hands of your department heads, so they can come up with the trajectories that work for their teams and let them see how those plans affect the rest of the company. Then our algorithms can tell you down to the day exactly when you need to put a job on the market in order to reach your goals three quarters from now, and how long it will take before your reps become profitable.

"What they're building is super powerful." said Rachel Renock, CEO of Wethos, an early customer. "We think it will be really helpful as we gear up to raise our next round." Emergence's Doug Landis agrees. "I love BurnRate!" says Landis. "Why build your own internal tooling when this exists already?"

Making Your Own Luck

Being a founder is hard, and as you grow, these problems get ever more complicated. For a VP of Sales or Director of Revenue, knowing when to make the next hire is a problem she will constantly struggle with her entire career. As a founder, you can make that significantly easier on your team by focusing on nailing your ICP, delegating those sales tasks to your team, and building a culture of continuous planning. With the right systems in place, you'll be ready for the challenges that lie ahead.

Onward! 👊

Robert McLaws
CEO, BurnRate

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.

This is an H5 Heading
Heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.

Block Quote

This is an H4 Heading

This is an H3 Heading

This is an H2 Heading

This is an H2 Heading

H2 Scaling Sales Organizations for First Time Founders