The SaaS Org Chart by Series with David Sacks, Co-founder and General Partner at Craft Ventures

All right, today I'm going to talk to you about the SaaS org chart based on a Substack by that name. And it's really about, you know, what a typical Series A org looks like at the Series A, Series B, and Series C stage. And that's not to say that, you know, it has to look perfectly like this, but I find it, that it's helpful. I get into a lot of conversations with founders right after they've raised their Series A round or a Series B or C round, and the conversation always turns to, well, what, you know, who do we need to hire, what are we missing? And that's what this presentation is about. Typically, a Series A company is around 50 employees. That doesn't mean you're at 50 at the time you raise a Series A round. It's usually what, that's the target, that's where you're trying to get to. Most of the companies when we, you know, write a Series A term sheet, they're in the, I'd say, 10 to 20 employee range, and they're looking to sort of roughly double, you know, in size over the next, say, 6 months. Series B, again, that's more of a target, about 125 employees. Series C, about 400. By the way, how many people here are founders or employees of, I'm trying to understand, like, what stage you're at. If you're pre-Series A, raise your hand. Okay, a lot, okay. If you have raised a Series A, but not yet a B, raise your hand. Okay, and if you've raised a B, but not yet a C? Okay, and if you're Series C or beyond, raise your hand. Okay, so it's mostly people who are in this like pre-Series A or pre-Series B timeframe, so I'll try to focus on those. Just some sort of handy rules of thumb in terms of number of employees. You know, one heuristic to think about is the number of employees per ARR for a company. It's a useful rule of thumb. We know based on publicly available data that, that at IPO, the average sort of SaaS company at IPO has about 1,000 employees and about $100 million $1 million of ARR. So that ends up being about $100,000 of ARR per employee. And we can kind of work backwards from there. So as you go earlier, the amount of ARR per employee shrinks because obviously as a company scales up, it should be becoming more efficient. You should be getting more operating leverage. What you'll typically see is at the Series A, you know, you'll have, like I said, about 40 to 50 employees, around $1 million of ARR. That works out to about $20,000 to $25,000 of AR per employee. Series B, you know, historically Series B stage SaaS companies had about $5 million of ARR. Again, about 100, 125 employees, that'd be $40,000 to $50,000 of AR per employee. Series C, you know, might be at $20 million of ARR, 400 employees, that'd be about $50,000 to $66,000 of ARR per employee. These ratios are always moving around. Right now it's a pretty frothy environment. We're seeing a lot of Series As get done at say, half a million of ARR, and so that's going to imply less ARR per employee. But this gives you some idea of like whether your employee headcount, your total headcount is somewhat sane relative to other SaaS benchmarks. Some other ratios I think are just helpful as a rule of thumb as you scale. About 10% of your organization should be G&A. About 40% R&D and 50% sales and marketing. You can see that on either a sort of a dollar cost basis or on a headcount basis. Either way, that should roughly work. For every 5 or 10, somewhere between 5 and 10 employees, you do need a manager. Like, a really lean organization would have, say, one manager for every 8 to 10 employees, and, you know, uh, a sort of a, a less lean organization might have one manager for every 5 reports. If you're seeing stuff like having one manager for every 2 reports, you have created way too many lines in your organization. Doesn't make sense. Uh, some other thing ratios to keep in mind: we typically see, if you have an SDR team— it doesn't make sense for all SaaS companies, but if it makes sense for you— about one SDR for every 2 AEs. For every 10 AEs, you're going to need a headcount for sales operations. That's— sales ops does stuff like set up your Salesforce instance or work out territories and comp plans. So for every 10 AEs, you're going to need sort of an overhead headcount. You're going to need 1 PM roughly for every 5 to 8 developers. And then, you know, about 1 DevOps head for every 15 developers, 1 designer for every, I'd say, 5 to 8 developers. And then, you know, as your organization gets into that Series C and you've got, you know, teams with large numbers of designers, like 10 designers, you can start getting to super specialized roles, like even like a user research person. You might have that for every 10 designers. So those are some handy rules of thumb to help you scale. And let me just kind of jump into what I think like a typical 40 to 50 person SaaS Series A stage org looks like. And again, you don't have to look exactly like this, but the idea here is just to kind of— if you don't have one of these functions, you might want to kind of ask yourself why. Is that deliberate? Are we different than any other SaaS company, or have we just not thought to hire this role yet? So, you know, on the R&D side, you've got the CTO's organization, typically the CTO co-founder, and you've got the product organization. CTO, you're gonna have some front-end engineers, some back-end engineers working on the website. You're gonna have some, a couple of mobile engineers doing the client applications. You're gonna have, you know, at least one engineer doing core services or platforms. This is kind of APIs. You'll probably have at this stage by about 50 employees, you're gonna have an engineer working on analytics and also DevOps and your infrastructure. Product, I'm a big fan of having a head of product who reports directly to the, founder CEO. I think it's an important way. Typically, you know, most SaaS founders these days are product founders, and I think it's important for them to stay involved in the product. And the way I always saw it was that the product managers were kind of like my hands when I was, you know, CEO running these companies. So I think it's important for the product organization, even though it's very small, to report directly to the founder CEO. I sometimes I see it tucked under the CTO And obviously that can work too, but I feel like it's a better way for the founder to stay involved in the product and get leverage to have this report directly to them. Head of product, you'll have 1 or 2 PMs. Like, like I mentioned before, you want to have, you know, 1 PM for every 5 to 10, you know, developers. And you're going to have by this point, by about a 50-person org, you're going to have a couple of designers. Again, that same sort of ratio in that 5 to 10 developer range, you're going to need a designer. Then we move over to sales and marketing. You're going to want to have a head of sales. By this point, you're going to have about a dozen people in your sales organization. It's amazing how early segmentation starts. You're going to have AEs for enterprise, AE for mid-market, AE is for SMB. This is for most SaaS companies. What SMB, mid-market, or enterprise means in your market might be different, but typically it just means small, medium, and large size. Customers. The reason why you're going to want to have that segmentation is because, you know, the SMB sales are going to be high velocity, fewer, fewer calls. The— it's going to be typically a lower, lower commission, lower quota, less experienced sales rep. On the other extreme, enterprise are the more complicated sales, bigger ACVs. You're going to need a more experienced AE to typically work them. And if you have the same AEs working everywhere from super small to super large deals, the gear switching becomes very difficult. So you'll end up segmenting very quickly and having AEs who focus on either sort of small, medium, and large. You'll have SDRs. The job of the SDR is to essentially filter the leads. You can have either inbound or outbound SDRs. Inbound, they're filtering leads that come inbound to the sales team. Outbound means that they themselves are creating the leads. That doesn't work in every SaaS company, so you want to be careful about that. Sales ops, like I mentioned, you now have a large enough team that the head of sales is going to need some support just to basically maintain your Salesforce instance, to get the, the plans all set up, the territories. Those are going to be changing every quarter. You're probably going to want to start doing a sales kickoff You may want to start doing training. You're starting to develop the need for some real, I'd say, like overhead and infrastructure in order to make these AEs successful. You can't just hire like 5 new AEs and expect them to become successful without having any support whatsoever. And you might need a sales engineer as well. So what a sales engineer does is they're a resource that gets pulled into a sales conversation by an AE to deal with highly technical parts of the conversation. So if you have a SaaS product that's a highly technical product, or let's say there's security concerns, what you want to do is have the AE pull in that sales engineer at a critical moment in the conversation so that the AE doesn't have to be an expert on every technical aspect of your— on every technical aspect of your product. And, you know, one of the things that comes up all the time with founders when they're first building their sales team is they ask, should I be hiring for a salesperson who has proven sales skills but doesn't know my market, doesn't know what we're building specifically, or do I hire the person who's got incredible domain expertise, incredible domain knowledge, but has never done sales before? They always make the mistake of choosing the domain expert. I would say you should almost always choose the sales expert. A good salesperson, a good AE, will learn your product, will learn your market. That's what they've done their whole careers. Trying to teach somebody who's never done sales before, who just happens to understand your market, how to do sales, that is a much harder lift. I mean, sales talent is very much wired into people's personalities. It's not something that can necessarily be, be taught at some late stage of their career. So back to the point of having a sales engineer, one of the ways that you compensate for the fact that your AEs are not necessarily technical masters about every aspect of what you're building is you actually do have some highly technical people on the sales team who get pulled into those conversations. Shifting gears, you know, once you have enough customers to generate $1 million of ARR, you're gonna wanna make sure those customers are successful. You're gonna wanna retain them. That's where the customer success management team comes in. And once again, you're gonna wanna, if your sales team is segmented, your CSM team should be segmented as well. You're gonna have a CSM who focuses on enterprise. You're gonna have a CSM who focuses on mid-market. For SMB, typically it doesn't pencil to have, um, to have, uh, to CSM specifically for super small accounts. So what you're gonna do instead is have a pooled model of customer support, and you're gonna have a couple of customer support reps. And then if your product requires, if, if it's difficult to implement at all, and a lot of SaaS products are not completely self-explanatory and self-implementing, you're probably going to want to start building an implementation team. And we might call those people solutions engineers. And again, they're an important part of getting a newly signed customer to be correctly onboarded, and then they're going to hand off the relationship to a CSM. Shifting over to marketing, we've got a head of marketing. We're going to have a couple, one or two demand gen marketers. They're focused typically on paid campaigns. They're running a lot of experiments. I tend to think of these people as being highly quantitative because they're running a lot of tests. And that's sort of like what I call the math section of the SAT. There's, there's also the verbal section. We've got product marketing posting release notes, blogs, customer case studies. You're going to have a sales enablement marketer whose job is to create all the collateral to make the sales team effective. And that person could live under sales, but I tend to think of it as a marketing role. And then finally, I'm a big fan of doing events and building your community as early as possible, even having a head at the Series A stage. And then finally, we've got the pure overhead, which is, you know, which I tend to lump under finance. You've got sort of an FP&A analyst. They're building the financial model for your business. You've got an accountant. You've got an HR person. There's gonna be some miscellaneous ops person, and then recruiting, I'm a big fan. If you know you're gonna be hiring a lot of roles, I'm a big fan of bringing recruiting in-house. It's fine to also use outside agencies, especially for retained searches, but you know, if you bring recruiting in-house, you get a dedicated resource who understands your culture, and if you know you're gonna be, you know, you're at, 40 employees on your way to a Series B with 125, why not bring them in-house so that, you know, they're building your company culture in the way that you want? One thing you'll notice here is that I've called the heads of a lot of these departments head of sales as opposed to VP of sales or, or chief revenue officer. The reason for that, I find this works with a lot of my Series A companies, is they're not sure if that person is their long-term CRO, for example. And so by calling somebody head of, you actually give yourself a little bit of wiggle room, as we'll see with Series B and Series C. Series B, you know, you're, you're building an exec team. You are— these people will be VPs. And by the time you get to Series C, these people are going to be C-level officers. But at this point, they could be VPs, they could be C-levels. You're not quite sure yet. That's the reason for the ambiguity. So this is what your typical 50-person SaaS org would look like. You know, what I find at the time that we make a Series A investment is that the technology organization looks pretty much like this, because in order to get off the ground, they've had to have, you know, a dozen people building the product. They are starting to have one or two AEs. Hiring a VP of sales or the head of sales is an almost universal need in the Series A companies we invest in. Maybe they've got one person doing CSM, but they're starting to scramble and realize, wait a second, we signed all these customers and we don't have any— we don't really have a team of people to make them successful. There might be like one person doing the marketing, but they haven't subdivided those roles yet. And then, you know, like HR and recruiting are almost like an afterthought. So those are the areas that we tend to see that the hiring needs to happen ASAP. Okay, so now we get to, you know, more of a Series B. You're at, you know, say $5 million of ARR. You're not necessarily at 125 employees yet, maybe you're at like 50 or 60 like the previous chart. What are you hiring to now? And you're, you're gonna start building your exec team. So the founder CEO is now gonna— should have real executives, VPs, or or higher reporting to them. You're going to have a CTO, you're going to have a VP of Product, you're going to have a VP of Sales, a VP of Marketing, and a VP of Finance. Maybe some of these people are C-levels. Maybe instead of a VP of Finance, you have a CFO. Maybe in a VP of Sales, you have a CRO. But I wouldn't necessarily guarantee those titles yet unless you know that that person really can scale to a 400-person org like we'll see next. The other big theme in building for the Series B is that all of those IC roles I showed you on the previous slide now become teams. And this is really the big change. And just going from 50 to 125 employees, it's remarkable how in order to do that, every single function that used to just be one IC now becomes a team of people. And that means that one of the big things you're doing at this sort of Series B stage is building out your mid-level management, which simply didn't exist at the Series A stage. So let me give you some examples. So in R&D, we're gonna go from roughly 12, uh, headcount to about 40. And if you look under the CTO, we're now gonna have a web team, we're gonna have a team of client apps, we're gonna have a team for platform or core services. We're gonna introduce a new QA function. You might not have had— maybe all the developers were doing their own QA before. Now We're actually gonna have a dedicated QA function. I think that can be— again, you get to a higher level of scale, you can afford that. And you're gonna have an infrastructure team, you're gonna have a security team, you're gonna have analytics, you're gonna have IT. Generally speaking, all these teams are now gonna have managers. So before, it was just some, you know, you had web engineers, you had engineers working on the mobile apps, you had some engineers working on the APIs. But now you actually have teams of those people. And certainly with like, if you have 14, you know, engineers, you can certainly afford to have a director there. If you have 6 mobile engineers, you should have someone leading that team. So all of a sudden you have a lot more mid-level management. And this is where I think the rubber kind of meets the road in scaling is how are you going to now fill those roles? You can either promote from within or you can hire from the outside. You want to do both is the answer. I am a big fan of promoting from within whenever possible. You probably want at least 50% of these management roles to be promotions when they can be. But if they can't because you simply don't have someone who can manage the team, then you got to look outside. That actually is— that's a lot of recruiting that you have to do. Product organization, you're now up to something like 5 product managers, you're up to 5 designers. You're definitely going to need, you know, a strong VP of product for that, maybe. That person, if you know they're, they're the long-term head of product, maybe you give them the Chief Product Officer title. But you're now going to need a strong product leader who the CEO can delegate to. Before, even at the Series A stage, the founder CEO is probably running product in a very hands-on way. Now it's a little different. Now they've got too much to do. They're going to need a VP of Product. And the most important thing about this head of product is that they see eye to eye with the founder, they have the same product instincts as the founder, and they also have to be good at project management, because a lot of what a VP of product does is just make the trains run on time. It's hard to find somebody who is creatively aligned with the founder, but also is just very good executionally at making everything run. Sales and marketing, you're gonna see a big increase in the size of these organizations. You're going from roughly, say, 27 to 60, Once again, the big theme is that you're going from a handful of ICs to a team. So for example, you're now going to have 5 enterprise AEs. That's like a whole team. You're going to have roughly 4 mid-market AEs, 4 SMB AEs. And by the way, it doesn't have to look exactly like this, okay? I got these numbers out of— I actually went back and looked at my org chart for Yammer, and that's where I got these numbers. And then I sort of Like, I then adjusted the numbers based on what I'm seeing at our portfolio companies to kind of take off the idiosyncratic rough edges. So this is roughly what I would see at a company that sells to all three segments, but doesn't have to look exactly like this. For example, you know, you probably— it's probably a little too early to hire a director of mid-market and a director of SMB. You could have one director for those 8 AEs. So, you know, you have a lot of flexibility here. But you are going to need it by this point. A director of enterprise sales, you're going to need a director of probably mid-market SMB. It might be time to hire a specialist who just focuses on renewals. You're going to have an SDR team. If there's like 6 of those people, they're going to need some sort of manager. And now you're going to have, you know, sales ops. Given the size of the sales team, there's not just going to be one sort of overhead role. There's going to be a few CSM similarly. That organization's now blown up to around 19 people. You're gonna have half a dozen CSMs for enterprise, 5 for SMB and mid-market. The, the implementation team has gone from an IC to an actual team, and you're gonna now actually have a customer support org as well, and you're gonna be looking for a customer support leader. So again, going from, you know, one customer support rep to, to say 4, and you're now looking for someone who's actually run a customer support department before. That's the big change going from Series A to Series B. Similarly, the marketing organization, you might have now a CMO. You've got a product marketing team, you've got a lead gen team, you've got a sales enablement team, and you got a brand marketing team. These are all very different kinds of marketing. You know, back at the seed or Series A stage, again, you may have just had one or two marketing people who kind of wore a lot of hats and did everything. Now you're getting into some specialization. And then G&A, it should, this is largely overhead, so you want to keep this pretty lean. I've got it going from about 6 to 13 in a 125-person org. So you've got a couple of people doing FP&A, financial planning and analysis. That is becoming a much more important function because your payroll has gone up a lot, you're burning a lot more money, you need to make sure you're planning that correctly. You now have a controller. A controller is a fancy term for head accountant. So you've gone from, you know, one IC accountant to actually having a controller for the company. They have a couple of accountants under them. They're doing stuff like invoicing and billing, making sure that they're actually collecting on your customer contracts. You now have a recruiting team, and you now have, you actually need a director of HR. All right, so now we get to Series C. 400 employees, you're getting pretty, pretty big company at this point. Again, you're at about $20 to $30 million of ARR. And by this point, the big themes of building the Series C team are that by this point, you should be settling in on your long-term C-level organization. So hopefully you've still got your CTO co-founder, but now your VP of product has graduated to a Chief Product Officer, your VP of Sales has graduated to a Chief Revenue Officer, or we call this Chief Customer Officer, same thing. You now have a CMO, you have a CFO, and so your VPs from the Series A or Series B either need to level up into the C-level skill set, which really requires them to manage, you know, several times as many people, or you've maybe layered them, you know, and that's a choice, that's a decision you're gonna have to make as a CEO. These are the types of decisions that come up all the time as you move from Series B to Series C. You now have, in the company, you now have a whole category of executive that didn't exist before, which is a VP who's managing a pretty large team, but doesn't report directly to the CEO. They're reporting to one of these C-levels. You can now afford a lot more specialized roles. You may be thinking about international expansion. In fact, you probably have gone international by this point. Uh, and then the other option that you have is at this level of scale, you can think about acquiring companies, mainly acquihires, but you actually have the, the bandwidth, you've got the personnel to be able to absorb sort of, uh, a small acquisition and acquihire. And so it's something, certainly not something you have to do, but if you thought it was strategic for you, it's now an option. So looking at the, the, the R&D organization, I mean, it's scaled pretty substantially from 51 to 137. By this point, you're absolutely going to need a VP of engineering. This is somebody who helps the CTO with the actual managing of the organization. You know, it's pretty commonly the case that the co-founder or CTO is chosen because of their technical chops and vision. They may not have the management experience to run a 100-person organization. You're going to need to supplement this with a more experienced engineering manager. Um, the, the teams themselves are the same. They've just gotten bigger and you're now gonna need a lot more mid-level management. Uh, same thing over in the product organization. You're probably gonna need a director of product management. You're gonna need a director of design. Uh, but you can also afford some super specialized roles like people who are doing user research, even like a dedicated copywriter. Uh, you can start to do things like that. Sales and marketing. So this organization's gotten really big, right? Because as you scaled from, say, $5 million to $20 million of ARR, and next year you probably want to do $50 million plus of ARR, your sales and marketing organization, especially sales, has gotten really big. And so you're now going to need not just a CRO who manages all of it, you're going to need a VP of enterprise sales, you're going to need a VP for mid-market sales, VP for SMB. You're going to need an SDR director. I mean, you could easily have 20, 25 SDRs on the team. You're going to need a very substantial director or VP of SDR. You're going to need a VP of sales ops, not just a handful of sales. You're actually going to need someone who can run the sales ops team. That, that function's become pretty large. And then the other thing you're going to have by now is training, you know, with this many sales reps and the rate at which you're hiring, uh, and the need to do a sales kickoff at the beginning of every quarter, you're gonna need an entire training organization just to keep these people up to speed on all the changes happening in the product, um, and, uh, acculturating all the new hires. You also probably by now have hired a VP of Biz Dev, someone to do partnerships. That doesn't need to be a big team. You just want someone pretty high power doing it with, with a couple of, um, assistants. And then we move over to CSM. I mean, similarly, this has become a very big team. We have the same segmentation, but you're definitely going to need a director of enterprise CSM, director of mid-market. Customer support's gotten a lot bigger. They're going to need their own trainers. And we move over to marketing. You're going to need a VP of corporate marketing for the first time. That's become a pretty big team. You're going to have a couple of people doing PR. You're going to have 1 or 2 people doing AR, which is analyst relationships. I think this is actually kind of an underappreciated role for— if you're at $20 million of ARR, if you're at the Series C stage, you really want to be trying to convince the market that you're the category leader. And so having, you know, a couple of specialized heads who do nothing but interact with analysts can be helpful. You're going to be doing events, you're going to be doing community, you're probably going to have an entire creative team. And then you've still got those other— you know, the old marketing functions, product marketing, demand gen, sales enablement. but they're all going to have directors now. And then finally, you can see this last box on the right that's in yellow is international. So one of the things that we did around this time at, at, at my company is we actually opened an office in London. It was for our EMEA team, and we decided to go cross-functional there. So we actually had a GM for EMEA, and within that organization we had enterprise, sales, SMB and mid-market sales. We had SDRs, we had CSMs, we had sales and solutions engineers. We let them have their own recruiting team and give them their own ops headcount so they could manage pretty self-sufficiently. And this allowed— we didn't do a ton of development out there. Product remained centralized back home, but this was a great way to enable the international team just to go out and sort of conquer Europe. Have all the roles they needed, so they didn't have to be dependent back on, on the mothership. So that was another thing that we did. We had about 60 people under our GM in Europe. And then G&A, by this point you should have a general counsel, you should have a VP of FP&A, not just an analyst, but you actually need pretty high-powered VP of FP&A. And then you want to have a VP of people. Again, somebody pretty high-powered in the HR role. So that's pretty much it. I mean, I think the overall frame here, as you think about it, is if you're raising money for a Series A, what you're really doing is building an org of ICs. You kind of want to make sure that you've got an IC covering all the major functions. You're probably going to, in addition to the founders, you're probably going to have 4 or 5 real managers or leaders. It's mostly an org of ICs, and it's an organization of a lot of generalists. You're really just trying to cover all the bases. By the time you get to the Series B, it's really an organization of teams. All of those IC roles have now become teams, and the big challenge is going to be staffing up mid-level management. And by the time you get to the Series C, it's really an organization of functional areas where you're going to have real executives. You want to have C-levels reporting to the CEO. And you're going to want to have VPs under them. So it's— you're really going to be focused on building up an organization of executives. So with that, thank you very much.