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 SAS 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 it has to look perfectly like this, but I find 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, the 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 what you're trying to get to. Most of the companies when we 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 in size over the next, say, six 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. And if you're pre Series A, raise your hand. Ok, a lot. Okay. If you have raised a Series A but not yet a B, raise your hand. And if you've raised a B but not yet a C, and if you're a 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. 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 at IPO, the average SaaS company at IPO has about 1,000 employees and about 100 million employees 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 AR 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 arrangement. That works out to about 20 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 to $50,000 of ARR per employee. Series C, you know, might be at 20 million of ARR, 400 employees. That'd be about 50 to 66,000 of ARR per employee. The 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 gonna 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 GNA, about 40% R&D and 50% sales and marketing. You can see that on either sort of a dollar cost basis or on a headcount basis. Either way, that should roughly work for every five or 10. Somewhere between five and 10 employees, you do need a manager. Like a really lean organization would have, say one manager for every eight to 10 employees. And you know, sort of a less lean organization might have one manager for every five reports. If you're seeing stuff like having one manager for every two reports, you have created way too many lines in your organization. Doesn't make sense. Some other thing racist. 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 two AES. For every 10 AES, you're gonna need a headcount for sales operations. Sales ops does stuff like set up your salesforce instance or work out territories and comp plans. So for every 10 AES, you're gonna need sort of a overhead headcount. You're gonna need 1pm roughly for every five to eight developers, and then about one DevOps head for every 15 developers. One designer for every, I'd say five developers. And then as your organization gets into that series C and you've got teams with large numbers of designers, like 10 designers, you can start getting to super specialized roles. Even 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 and D side you've got the CTO's organization, typically the CTO co founder and you've got the product organization cto. You're going to have some front end engineers, some backend engineers working on the website. You're going to have a couple of mobile engineers doing the client applications. You're going to have at least one engineer doing core services or platforms. This is APIs. You'll probably have at this stage by about 50 employees. You're going to have an engineer working on analytics and also DevOps in 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 one or two PMs like I mentioned before, you want to have 1pm for every five to 10 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 and again that same sort of ratio in that 5 to 10 developer range. You're gonna need a designer. Then we move over to sales and marketing. You're gonna wanna have a head of sales by this point you're gonna have about a dozen people in your sales organization. It's amazing how early segmentation starts. You're gonna 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. 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 S and P 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 there more complicated sales, bigger ACVs, your 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 plans all set up, the territories, those are going to be changing every quarter. You're probably gonna wanna start doing a sales kickoff. You may wanna 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 five 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 and 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 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, 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 a million dollars 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 going to have a CSM who focuses on enterprise, you're going to have a CSM who focuses on mid market for SMB. Typically it doesn't pencil to have to have CSM specifically for super small accounts. So what you're going to do instead is have a pooled model of customer support and you're going to have a couple of customer support reps. And then if your product requires, if it's difficult to implement at all and allow SaaS products, 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 ahead of marketing. We're going to have a couple one or two demand gen marketers. They're focused on 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 mass section of the sat. There's also the verbal section where you'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 fpa, FP and a analyst. They're building the financial model for your business. You've got an accountant, you've got an HR person, there's going to be some miscellaneous ops person. And then recruiting. I'm a big fan if you know you're going to 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 going to 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 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 see 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. 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 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 8 companies we invest in. Maybe they've got one person doing CSM, but they're starting to scramble and realize, wait a second, we've 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 be to, 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 going to start building your exec team. So the founder CEOs now should have real executives, VPs 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 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. 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, 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 and D, we're gonna go from roughly 12 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 going to 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 going to have an infrastructure team, you're going to have a security team, you're going to have analytics, you're going to have it. Generally speaking, all these teams are now going to have managers. Before it was just 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 if you have 14, you know, web engineers, you can certainly afford to have a director there. If you have six 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 you, 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're going 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 five product managers, you're up to five designers. You're definitely going to need a strong VP of product for that. Maybe that person. If you know 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 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 VPO 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 five enterprise AES. That's like a whole team. You're going to have roughly four mid market AES, four 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 eight AES. So you know, you have a lot of flexibility here. But you are going to need 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 six 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 is now blown up to around 19 people. You're going to have half a dozen CSMs for enterprise, five for SMB and mid market. The implementation team has gone from IC to an actual team and you're going to now actually have a customer support org as well. And you're going to be looking for a customer support leader. So again going from one customer support rep to say four 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. 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 gna. This is largely overhead. So you want to keep this pretty lean. I've got it going from about 6 to 13 in 125person.org. So you've got a couple of people doing FP and 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 one IC accountant to actually having a controller for the company. And 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 actually need a director of HR. All right, so now we get to series C, 400 employees. You're getting 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 several times as many people, or you've maybe layered them and that's a decision you're going to 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. And then the other option that you have is at this level of scale, you can think about acquiring companies, mainly Aqua hires, but you actually have the bandwidth, you've got the personnel to be able to absorb sort of a small acquisition in Aqua Hire. 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 R and D Organization. I mean it 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 a 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 100 person organization. You're going to need to supplement this with a more experienced engineering manager. The teams themselves are the same, they've just gotten bigger and you're now going to need a lot more mid level management. Same thing over in the product organization. You're probably going to need a director of product management. You're going to need a director of design. But you can also afford some super specialized roles like people who are doing user research. Even like a dedicated copywriter. You can start to do things like that. Sales and marketing. So this organization's gotten really big, right? Because as you've 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, for SMB. You're gonna need an SDR director. I mean you could easily have 20, 25 SDRs on the team. You're gonna need a very substantial director of VP of sdr. You're gonna need a VP of Sales ops, not just a handful of sales ops. You're actually gonna need someone who can run the sales ops team that functions become pretty large. And then the other thing you're gonna have by now is training. You know, with this many sales reps and the rate at which you're hiring 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 and 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 a couple of 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 gonna need a director. Of Enterprise CSM Director of Mid Market Customer support's gotten a lot bigger. They're gonna need their own trainers and we move over to marketing. You're gonna need a VP of corporate marketing for the first time. That's become a pretty big team. You're gonna have a couple of people doing pr, you're gonna have one or two 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 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 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 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 gave 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 the mothership. So that was another thing that we did. We had about 60 people under RGM in Europe and then GNA by this point you should have a general counsel, you should have a VP of FP and A, not just an analyst, but you actually need pretty high powered VP of FP and 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 four or five real managers or leaders. It's mostly an org of ICs and it's, 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 gonna 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 gonna have real executives. You wanna have C levels or born the CEO and you're gonna wanna have a 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.