Addressing the Ugly Side of Growth: Good Problems Are Still Problems | SaaStr Software Community

Hello! Thank you. Wow, what a great event this has been so far, and thank you so much for coming and, and hanging out with me for 30 minutes. I sure appreciate it. Excited to talk to you guys today about something that's not so pretty, so we're gonna call that the ugly side of growth. Sometimes problems, you guys have always heard, are still good problems to have, and so we're gonna talk about some of those and What I really wanna do is give you guys some actionable ways that you can actually deal with them. So I think what happens a lot of times, we can come to these great things, we get great ideas, but there's nothing that's actually executable. So I like to consider myself an execute person. So we're gonna talk about some things along the way that are things you can actually start putting into play right away. So let's get to it. The ugly side of growth is definitely not linear, right? So it's not gonna go right in a certain path and You're not going to have this problem and then this problem and then this problem. You're going to have problem A and then you're going to have problem C and then you go back to A again. So it's very common. I love it when I get to certain parts of a company and, you know, they think they have the whole world is breaking down. And I'm like, well, how many, how many employees do you have and how long you been doing this and how many customers? Oh, you're right on track. This is the exact same problem that you're supposed to be having. So I think that that is almost a little bit like, okay, this is okay. I'm not so far out there. I'm not the only person alone. Because it's very common to have the same sorts of problems. That's what we're gonna talk about. So the number one thing, when you look at your overall budget, and you're, and you're trying to figure out the finances, your number one resource is people. And it's also the number one problem that I've seen multiple times where people get this wrong. Everyone's got their strengths, and everyone's got their 10 or 20% that's always not that great. So what I tell people, if you know that your strength, I don't care if the CEO or the founder or whatever, if you know your strength is not hiring, let someone else handle it. That's the number one thing. The second thing is understand before you start looking what the ideal candidate's gonna look like. And what I mean by that is understand what are the strengths, what are the skill sets, what's the history, what's the track record, What do you want people in your organization for that particular role to have, right? So what's their skills and what's their characteristics? Write 'em down. One of the mistakes that people make with hiring is it's an emotional decision. We can't do it. We can't turn off our subconscious mind. We do it no matter what. You start talking to somebody, you really like 'em, and you hire 'em. Maybe it's someone you go to church with. Maybe it's someone you've worked with before. You like 'em, you got along great. They worked out well in that company, and sure, they're gonna be awesome in this next company. That doesn't always happen that way. And so I think it's really important to really try to take the emotion out of it, write down exactly what you want, write skills, and write characteristics of the person that you think is critical in this role. Put them in two categories, must have and would be nice to have, right? And I think it's equally as important to do that when you're thinking about things you don't want. Okay, so write the things that you absolutely do not want in a person, or in, in for this role and things that are maybe not ideal, but you could work with. Okay. And then what I would say is you build questions around those skills and characteristics and how you're going to actually hire for those. I think it's important to have different, obviously multiple people interviewing those folks, but really making sure that you're, that you're hiring the right people. It's your biggest investment. It's where most of your money is gonna go to, and it is your most critical piece to make sure that you're gonna get to your end goal. So that brings you to productivity. So who's gonna produce, who's gonna help you get to where you're actually trying to go? Those are gonna be important things that you have to consider when you're looking at someone. Do they actually follow through? Do they follow through when, sometimes I'll tell people, great, you know, even if I don't have a million more people to interview, it's like, I've got 5 more people to interview. If you don't hear from me by next Wednesday, call me before 2 o'clock. And then I wait, and I don't call them intentionally. And do they call me by 2 o'clock on Wednesday? Do they have good follow-through, or are they, Are they following up with you? Are they following through with what they said they're gonna do? Those things are critical. Look, at the end of the day, you know, you're gonna have goals, you're gonna have targets, and we have to hit them in every level in every organization, whether you're in product, whether you're in finance, whether you're in sales or marketing, wherever you land in this company, you're gonna have to produce, right? And so you want people who are actually going to execute on those. So production's really important. The last thing is your culture. I think this is such a, a funny buzzword. We all talk about it all the time. You know, what's our culture? We have these values and we try to, we put them on the wall and we talk about them or we talk about them every week in our weekly meetings, company all-hands meetings, whatever it is. But look, at the end of the day, there's two parts to culture that I look for when I'm interviewing. You're either gonna add to my culture or you're gonna take away. And so when you're interviewing people, try to figure out which bucket they land in because they're not gonna land in the middle. They're either gonna add to your culture or they're going to take away from it. And so I think it's really critical to continue to add people that will enhance your culture. Look, we love diversity. Diversity is awesome. That's why we have it. That's why it's so important. So don't stick with one stereotype that you wanna hire. Just think about culture in the way of, are you going to add to it or are you going to take away from it? Okay, 'cause I think that that is really critical. The other piece as well, that you wanna think about culture is understanding what is it now, but what do I want it to be, right? Sometimes when we're early on, a culture is something, but that's not scalable or it's not gonna always be that way. So I think it's really important to make sure that you look at it like, this is what it is now, but is that what we always want it to be or is that what it always can be? Right around, it's a common thing, right around 300 to 500 employees, culture starts changing. It's a shift. And that's good, that's healthy. Change is good. You want change. You have to grow. You have to evolve. But think about that when you're only 10 people or when you're 3 people, right? Where are you gonna scale that? Because that growth part can get pretty tricky. And the last thing I wanna talk about hiring is hire really well for your core staff. Your core staff, everything starts at that level, okay? Make sure that you're hiring people that are in areas that you know you're not strong in, that's their strength. Don't hire people like you. You wanna hire people that are better than you, that are, you know you're 10 or 20%, that's not that great. Hire that, that somebody has that, that's their 80 or 90%, that's really strong. It's important to hire a really great core staff because those are the people who are gonna push this company forward and they're really gonna help you move through these difficult stages of growth 'cause they're there. They're absolutely there. So that's the piece on hiring. The next piece that we talk about is innovation. You have to have something really cool for people to want to buy it. Innovation is critical, but it's the old adages of what comes first, the chicken or the egg. So what's more important? A product versus a sales lead. What's more important? Well, the answer is you have to have both. If you don't have a chicken, you can't have any more eggs and vice versa. So it's like you need them both. And I don't think that either one of them is less important than the other. So making sure that you are constantly improving your product, that you're constantly staying on top of it, is going to always help your sales and your revenue. But at the end of the day, if you have nothing to sell, you have nothing to sell. So I think that's one really important piece. The second piece that I would talk about, I think is a little bit lost at times, is sometimes we come in and things start moving and you're like, man, I'm selling this stuff without even like a major sales team. I've got a couple people. This is going great. That is, it is great, but it won't scale. Okay. And what also what can happen is that people don't realize is that having a good, really strong sales team on the front end will also help your lifetime value. It also can really help setting the stage, making sure they understand the tools and features and functionalities that you have, making sure that you're really able to move the company forward and keep them as customers just as importantly. And so a lot of that, you know, the first impression and all of those things that we've heard our whole life, We've heard those things for a reason, 'cause they're true. So you really wanna make sure that you keep these things in line. I worked for a company one time who, I actually outsold the product. It was very funny. Only time it's ever happened in my career, but I had the president of the company came to me and said, Tara, like slow sales down. We didn't anticipate that we were gonna be selling this much, and it really happened to me. It's so weird to say it out loud, but, The product didn't anticipate this many people on our platform. So I need you to kind of tell your team to tell the team to, let's crank it down a few levels. I was like, are you crazy? I'm not doing that. Get product to get over there and get it going, right? So I didn't, by the way, I didn't tell them to stop slowing down. I didn't push them as hard. But that taught me a really good lesson. What it taught me is, how did my product team not know my sales goals? And how did I not know that they didn't match up? And so that's the third key thing that I would think is really important, is making sure that everybody is aligned. Alignment is critical in the framework that everyone's building cross-functionally, right? So whether it's marketing or product or sales or finance, you have to make sure that everyone's scaling to the same level, that you're really making sure that everyone knows what your responsibility is and what your responsibility is. It's critical. It's absolutely critical. So I would say the last piece for the actionable advice that I would give is I use the analogy for war, not that I'm a war component 'cause I'm not, but I always talk about leaders. We're kind of back there like in the air-conditioned tent, you know, and we're telling the troops of what we should do and here's your weapons and here's what you should wear and here's what it's gonna be like, but we're not really out there. I don't really know what it's like. I'm not on the front lines, right? Our troopers are the ones on the front lines They know, you know, the terrain. They know what, they know what they need and what they want. And so one of the things I've done that's been very successful is having the salespeople be empowered to be heard. Let them know what they're hearing. Let them know what customers are saying. Let them know what the prospects want and what they don't want. So what I recommend doing is creating a shareable document, where your salespeople can put in deals that either they lost because you didn't have a feature and functionality or because something was missing. Or, or reasons why they got a really good deal, right? So put your wins in there as well. And I would highly recommend, you know, basically bucketing into certain buckets if you can, so that it's dropdown instead of, you know, free writing, because then it can get kind of difficult to run analysts on it. But really try to understand, okay, what are the reasons why we're losing deals and what are the reasons why we're getting deals? So, you know, put the gas on the reasons why we're getting deals. And let's take a look at if we need to make some adjustments and some pivot tables on the product. And then every month I would have your head of sales, your head of product review the list together. One of the things I always put on this sheet is revenue, the revenue that was gained or the revenue that was lost, because this is how you're gonna really understand where you wanna put your focus on, right? So if there's parts of your tool and parts of your, um, of features that you're not getting, and it's the same thing all the time, I've looked back and said, hey guys, we could have had an additional $2 million of revenue this year. Had we had this one feature, right? So probably should probably move that up in the roadmap or even just maybe add it, would be good. So I think that those pieces are really important to look back and again, you're taking the emotion out of it, but it's just the raw data, it's the true facts, and you're really empowering your sales team, let them feel like they're collaborative and they're part of the decisions, they're part of the true growth of the company. The next piece that I would recommend about is your revenue model. So this part can get pretty tricky. It's a little bit challenging. Hopefully you've got some good folks that have done it before. Again, this is where I would talk about you've got to have people with a proven track record, right? Building a revenue model can be really tricky, and if you haven't done it before, and if you're making good guesses, you probably are gonna— are not gonna exactly hit where exactly where you want it to be. So is there such thing as bad revenue? The answer is yes, absolutely there is. Seen it a million times, right? This is your regular hockey stick of a SaaS company. You come up and you come down. Okay. I've been at companies where this is where we buy people right here. Right. That's not a good place to be. No one wants to be there. So what happens is you get this great product, you got this great idea, you're making some sales, you're making some sales that maybe you shouldn't. Maybe if you look at it, you know, annually they're gonna give you $100,000, but it's gonna take you $200,000 to actually serve this customer and to implement whatever it is that they need, whatever you're selling. That's good, that's bad revenue. Sometimes that bad revenue is okay, right? Sometimes it is okay. Here's where I think is a good actionable way to look at this. Talk about your end state. Don't worry about where you're at right now. Where do you wanna be, right? Do you wanna be in the enterprise space? Do you wanna be the king or the queen of SMB? Like where do you and your company, is it a number? Is it an evaluation? Wherever it is, think of one thing of where you want your company to be. And then what I'd say is, now what are some key pivot things that we need to do to get there? What types of customers do we need to get there? Okay, so let's say for instance you're saying, I wanna go, I wanna be in the enterprise space, and I really wanna be able to sell this stuff. Well, when you're first starting off, it's a really hard thing to do, because GE is not gonna really come and talk to you if you have zero customers. Zero customers or 10 or even 100. They're not interested in that. So it's hard to move into an enterprise space when you're first starting out. So what I would recommend is, if you get a GE or if you go into NBC, then you're gonna probably have to make what I would consider a bad revenue deal. You're gonna have to get creative, you're gonna have to maybe lose a little bit of money on the deal, but what it's doing is it's helping you get to that end result that you first realize that you wanna do. Now, we can't do every deal like that, 'cause then you're not gonna be profitable. Maybe you can handle 10%, and I would quarterly look at the deals and review them. Are they at the right CAC? Are they at the right revenue dollar? The right unit economics? Are we playing this correctly? Or do we have all of these deals that are not revenue sound, and then you're gonna hit that crash and burn? So I do think that there's such a bad thing as bad revenue, and I do think that you need to be concerned about profitability, and you need to realize what that number is right away, and every quarter, you need to review with your finance team and understand where are we at, what are these, which deals are profitable, which percentage of our revenue is not profitable, or which percentage of our customers is not profitable. Right? And I would highly recommend doing that on a regular basis, but you can take deals that may not necessarily be the best deal for the company, but because it's gonna get you that end result, it can definitely help you get there. It's very similar and the same thing with hiring. I like to tell people, you know, do you hire within or do you hire outside? And what I tell you is when you're hiring within, that means that you've probably, you're gonna hire someone and promote them into a role that they've never done before. I think that's great. We've all had that. I mean, every single one of us has had to have a role for the first time that we've never done before, right? We all have, every single person. And we need those. You need the fresh eyes, you need the curiosity, you need someone who's always kind of questioning and wanting to wanting to expand or try something new. I think that's great, but you also need people who have been there and done that. Okay, and so it's the same thing with revenue. You've got to have a mixture of it. What I like to say is 10 to 15%, I call the folks who maybe never had that role before a project, right? And that's good, but you can't have 50% projects. You can't have 50% of your staff who hasn't done that role before, it's their first time. You could have 10 or 20%, at the highest I'd say 20. I usually like to keep between 10 and 15, same thing with bad revenue. You only wanna keep a certain percentage of what your company can sustain that's not gonna hurt your company long-term of what you can handle with bad revenue. The next one is international growth, and this is one of the pieces that Pipedrive has done an amazing job at. So Pipedrive started, that I had the opportunity of heading up sales there, they started in a small country called Estonia. If you hadn't heard of it, it's okay, don't worry, you're not geographically challenged. It's a very small company, but it's quite lovely. And the people there are super, super warm and kind. But there's some great companies actually came out of Estonia. I didn't know this. Skype. I mean, there's some really big companies that came from this small country. But if you think about it, if they were only selling in Estonia, Estonia's got, I don't know, about the same, probably the same amount of people as this city has, right, in the whole country. So you're a little bit of a deficit there. One of the things I like to say about sales, and it'll tie to this, is sales is really easy. I mean, it's a math, it's just a simple math equation, right? You've all heard sales is numbers, is a numbers game. It is a numbers game, and it's really easy. The more people you talk to, the more people you have meetings with, the more people you have demos with, the more you're gonna sell. It's that simple, guys. It's a mathematic equation. I used to sit down, one of my first sales jobs, I just would pound the phones every Monday. and I remember I had a little Post-it note next to my desk, and every single no, this is a long time ago, there was not a lot of marketing automation, okay, so I was hammering the phones, and every no I got or hung up on or screw off, whatever they would tell me, I would just mark a little check mark, and I loved it. You know why I loved it? 'Cause I never got 100 check marks without getting a yes. It's a numbers game. Never got 100. Without getting a yes. So every time someone told me no, I was like, sweet, I'm just one more checkbox closer to my yes. So I appreciate that, right? And so what I would say is this is very similar when you look at international growth. Okay. It's a numbers game. Right. So if you can grow internationally, do it quickly and do it right. And what I mean by that is understand the culture differences, understand the currency. That's one of your biggest growth in international plays is people don't understand. Do we do the currency? What's the trade? What's the exchange? I mean, there's all— it can get confusing. I would highly recommend talking to some sort of consultant or someone who's actually grown this thing globally because there are some nuances to it, but it's critical in your success. It's absolutely critical. Again, it being a numbers game, why would you not want to talk to more people about your product? Why would you not want to grow your customer base? By just geographically restricting yourself, right? So again, sales is about numbers and so is selling your product, right? So what I like to say is sales is a mathematic number. Like I said, it's a simple equation, but it's hard to do it every day, right? It's hard to come in and get rejected every day and talk to somebody every day that hangs up on you or doesn't return your email or whatever it is, right? Well, think of international. It's critical to your success. It's one of the things that Pipedrive did early on. And we're in— we're all over the world. You know, we have offices in London, the Czech Republic, Estonia, Portugal, obviously here in the States. I mean, they did this really, really well, and they were able to get to, you know, over 80,000-85,000 customers in a very short amount of time because of this global scale and because they understood the culture differences. You had someone from Estonia and the founders who moved here to Silicon Valley. They wanted to learn what was going on here. What was so cool? You know, how and why is this the hub of all of these entrepreneurs and tech companies? But they learned the culture. They were really truly there to understand it. I think that's a big piece of it. So growing your company and growing the span of it is always gonna be key and always gonna help you on that, on what can be, if you will, the uglier side of growth. The last piece that I'll talk about in these last few minutes is really understanding how are you going to get from point A to point B and understanding some of those hiccups that are going to happen. Here's what's going to happen, okay? You're going to have people who very first started with you who are not able to grow with you. They were able to really be there when you, when the company needed them in that right spot. Spot. Okay. Maybe it's an inventor, maybe it's a co-founder, maybe it's your next-door neighbor, but as you grow, it just kind of doesn't grow with them. They're not able to expand themselves. They're unable to grow with it, and if you have people like that, that's okay. There's nothing wrong with it. We've all got our stuff. Everybody has a certain niche, right? So what I would say is, when you see those, when you identify them, identify them quickly. Because if that is a core person, you will be running in place. That person will be swamped. Anybody who's not really successful or like really being able to, to hit their metrics or their targets or being able to achieve what they consider to be greatness is never going to be happy. Right? And so when you have a lot of people who are unable to achieve what they're trying to achieve, then you're not going to have a happy, happy core staff. And I think that piece is really critical because the core staff that obviously will drift down to your entire organization. And so that is one key area that I see all the time that is very common. Like, yep, you're right on track. That's exactly where you should be. This person's been here for 5 years. They're having a hard time resisting some of these changes, the way you're supposed to scale. And it's just not going to work anymore. And that's OK. Some people can make the pivot. Some people can embrace the change, they can make the pivot, and that's great. And some people don't realize that they can't make the change. And as a leader, you have to be able to recognize that, and you have to be able to make some really tough decisions sometimes. Sometimes these are people, if you're a founder, that were with you in the trenches in the very beginning, that were staying up all day and all night. But it doesn't always work that way, right? So that's a common thing of an ugly side of growth, 'cause it's not fun. The other piece of it is make sure you just don't fall into that SaaS trap, I call it, right? You're making good deals, you're selling good money, and all of a sudden, you start, you know, you're getting up here, you're hitting, you hit, you hit, you hit your hockey stick. You've got Series A, Series B, things are rocking and rolling, and then you realize that some of these deals you made back here are starting to hurt you now. And so you do wanna be careful not to have too much of those bad revenue deals that can really hurt your business. And I just think it's so important to make sure that you stay true to the original piece of why you started this company. Hopefully it, came from some organic or some reason that you were trying to solve, some problem that we were trying to solve. Those are always the best companies. But when you have them, understand that this will be a bumpy road. But one day you'll look back and you'll understand this was great. We learned a lot and we were able to really overcome this ugly side of growth. And now our growth is quite lovely. So I hope that helps you guys. Thank you so much for coming and enjoy the rest of the conference. Thanks, guys.