Mark Roberge explains why companies scale sales too fast and how to use product-market fit and go-to-market fit metrics as a speedometer for growth. He distinguishes between "Renaissance" salespeople who gather feedback and "coin-operated" reps who execute playbooks, arguing the right hire changes as you scale. Retention and unit economics matter more than revenue targets when deciding hiring pace.
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That is why I saw half the people fail. They scaled too early. The other half, maybe more than half, scaled too fast. How fast do you scale? So great, you read this work, you used it, you got your board involved, you show them your product-market fit, you show them your go-to-market fit. Took 6 months to do, and you raise a Series A, you got $10 million on a $40 million valuation, maybe these days. And the investor's like, how? So you're doing $1 million in revenue now. How much are you going to do next year? Or like, how much? I just gave you a bunch of money. How much are you going to do? I'll tell you what pretty much every company I see does at that point. They sign up to like a 4 or 5x number, $4 million, $5 million, because that's what like Snowflake did. So they want to copy that and they hire like 15 reps in the next month. And that kills companies. Absolutely zero regard of like how many leads it takes to feed those reps, who's going to manage those reps, how to onboard those reps. Totally, it totally fails. But that's what everyone does. And actually the investors tell them to do that. So anyway, just don't think about the scale, the pace of scale as a, like scale is like a one-time thing. Like, okay, it's time to scale. We're going to go to $4 million. And according to my math, like every rep is going to do $500,000 in ARR. So if I add $4 million, I need 8 reps. So let's hire 8 reps right now. I mean, it sounds kind of intuitive, but when you understand the mechanics of go-to-market, like, that's just not going to work. You're not going to make 8 good hires this month when you only hired 2 in the last year. You're not going to be able to feed those reps. You're not going to be able to manage those reps. You're not going to onboard them. So think about it as a pace. Like, let's do 2 reps every other month. For 6 months. Now, how do we know if we're going too fast or too slow? We watch the speedometer. The product-market fit and go-to-market fit dashboards becomes our speedometer. It's going to break at some point. I just don't know when. It could break in the first month. It could break 2 years later. But let's just watch it. Let's hire 2 reps every month for 6 months and watch it. If it stays green, we'll hire 2 reps every month for 6 months. And if it stays green, we'll hire 4 reps a month for 6 months. And if it stays green, we'll hire 8 reps a month. For 6 months. Congrats, you're a unicorn, and you did it in a very predictive way. Okay, so it helps us to understand when to scale, but also on how fast. And the final thing that the model does is it gives us an appreciation of how the decisions we make on our go-to-market system design— that's what I call our sales system, our sales playbook— changes With each phase, for example, like the first sales hire is way different than the hire you're going to make at the growth stage. This work was done back in trying to remember the exact study. It'll come to me. But like basically, they call it a Renaissance salesperson versus a coin-operated salesperson. It's called the sales learning curve. This work done in Harvard Business Review in 2005 is like you know the growth salesperson is like. Give me the playbook, give me the commission plan, give me my territory, and let me go make you and I a lot of money. Terrible first hire during the product market fit phase. Terrible. That person is going to go pitch your product to 30 people and they're going to say no, they're not going to learn anything, and they're going to say your product doesn't work. You need someone who's out there understanding what the customer wants, aligning it with bringing that feedback back to the team. Because you don't have it, right? You're in pivot learn mode during product market fit phase. You need someone who's curious, probably doesn't even want a commission plan, can communicate to engineers, but also move a sales process along. So it's like a product manager plus account executive, right? You have that win-at-all-costs playbook. There's no playbook. There's no— don't talk to me about a cold calling program or a content marketing program with demand gen. We just get referrals from our network. We just need 30 at-bats. That's what we need. Don't talk to me about optimized pricing. Free is not good, but just price for commitment. We don't need a sales comp plan. I don't want to be talking about those things at product-market fit phase. I'm just trying to get 70% of our customers to succeed at all costs. But that changes at go-to-market fit. We need the playbook. We need someone to build the playbook. We need the pricing model and the comp plan perfect. We need at least one demand gen program to scale, like cold calling or content marketing, before I start adding salespeople. And a whole new set of issues come up that we can do on another podcast that's not about product-market fit when you get on the growth stage. Like running different marketing channels and having alignment between sales and marketing and introducing a sales management layer and making sure that you have a promotion path to do retention. There's a whole new set that crop up during the growth and moat phase. Hopefully, that gives you all a model for you to think about answering these 2 critical questions with my experience in the 0 to 1 to 5 journey. causes way more failure in the ecosystem than it does, than it should. And not basing when you should scale and how fast on anecdotes from another entrepreneur or another investor who had success in a different company, or by the roadmap of what Snowflake did in 0, 1, 3, year 5, et cetera, but what you are ready for. Because your peers are deciding if they're scaling too fast based on the quarterly board results. The P&L, and most of us know that those results are the— that's what happened to your business 6 months ago. Your peers are using old data to dictate this decision. If you use the lead indicators of retention and unit economics, you're getting a good feel for your business today. So just to close out, there is one thing if you want to learn more about it. We write a lot about this stuff on this Stage 2 Capital website. If you haven't heard of Stage 2 Capital, It's the first VC firm that's run and backed by sales, marketing, customer success, RevOps leaders from the most successful software companies in the world. We have those C-level executives from Atlassian, from Zoom, from Okta, from Snowflake, from Asana, from Twilio, et cetera. If you just look at the leaders page on our website, you'll see them. Our whole goal is to create a formal platform to bridge those people with the next generation of entrepreneurs and their ventures to make sure that they don't make those mistakes on the go-to-market side. Very specifically, um, for this month, we have opened our next class of our go-to-market accelerator. So we go through a 10-week class this summer where we teach this stuff, like how do you hire your first salesperson, how do you comp them, how do you build your first cold calling program, et cetera. We have it from, you know, people that taught last class was like the founding CRO of Zoom, the board member at Box, the president of Atlassian and Salesforce, so just rockstar folks that know these topics. We are accepting applications. If you go to our website and just click on the Accelerator tab, you can apply there. Every company— we're going to choose 15 companies to get $100,000 each, and they'll be invited to go through the program this summer. So With 11 seconds to go, um, sorry I couldn't find my slides in the beginning, but hopefully you took something interesting and tactical away from that.
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