SaaS Interviews with CEOs, Startups, Founders
$6m ARR CEO Shares When to Hire First AE, CSM, and VP
02 Jul 2024
Chapter 1: What is the main topic discussed in this episode?
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Let me just go over. I'm going to try to talk a little bit more interesting topics than just that. But how many of you are right now trying to hire your next executive right now, like your VP or anybody like that? OK. And how many have tried to or had to fire or let go of their underperformers? Okay, great. So we'll talk a little bit about that as well in this.
So essentially, for the next 20 minutes, we're going to first talk about what kind of hires you really need at 1 million, because they're your ultimate fulcrum for you to get to the next 5 to 10 million. So the first key hire is extremely important, so we'll talk about that. We'll talk about how we need to hire for hunger and things like that.
Then from three to five, the hires typically change the type of hires you want and what does that look like. And then hiring for scale, which is where I am right now. So I'll talk a little bit about where we are. So I'll be a little bit transparent about where we are as well in the process. So our growth, this is our chart. These are real numbers. So we were started in end of 2015.
2016 is when we launched. We were, you know, like, I don't know, 20,000 in revenue or something like that in 2016. 2017, 2018, we started growing. We didn't really hire. I was doing all the sales. I was doing marketing. I was doing implementation of the product. I was doing a lot of those things until we got to about 1.5 million or thereabout in revenue.
That's when we hired our first csm to help implement so that i Could focus a little bit of my time and sales and marketing and Things like that. We also hired our first ae, which Is our salesperson who didn't have prior sales experience. Actually, this AE should have been here. Anyway, so 2019 is when we first hired AE. First VP in 2020 is when you first hire VP.
And I'll tell you about some of the mistakes we did in the process. And we hired a second VP. The first VP was the VP of sales. Second VP was the VP of marketing. Typically, what you hear is that you should hire your head of marketing first before you hire your VP of sales second. But I did the opposite here. And then since then, we really haven't hired any new executives, if you will.
So we are here right now, roughly 7.5, 7.6 million ARR. We'll hope to finish the year a little over eight. And part of this was also an acquisition we did last year as well. So let's start with section one.
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Chapter 2: When should you hire your first Account Executive (AE)?
You know, the first hire of your one million at the Fulcrum, you hire for hunger. And that's one of the things that I'll talk about and the lessons I learned from my first hires. The typical hiring times, engineers typically will take anywhere from month to month and a half, depending on what type of engineers you're looking for.
If you're really looking for some high-end AI engineers, it might be longer. Marketers are fairly easy to find, but the good ones are really hard to find. So that's a big lesson I learned about marketing.
Sales execs, depending on the market conditions, you know, last few months and last year has been extremely good from a hiring perspective because a lot of companies are laying off and letting go of people, and there's a lot of uncertainty that we saw in the last year, so we were pretty...
We were in a good state to hire AEs, but if you're in a hot market, it's really hard to find the good ones in a reasonable amount of time. Finding a good VP of sales and marketing are really the hard ones, which can take anywhere from 80 to 90 days, sometimes even longer. And it's worth waiting for it, because this is not something you want to change every few months.
So hiring for, this is a data looked at, one of the, you know, resurveys they did of why people don't succeed in their roles. And that's why I talk about hiring for attitude. Because technology changes, environment changes, you can teach new skills, especially if there's a hunger for learning with the person you are trying to hire. But what I saw here is that 46% of the time,
people fail in 18 months, any higher you do. 19% of the time, they're not a long-term success. And actually, only 90% of the time, they're a long-term success in your role. So essentially, at some point, they fall out of the role that they were hired for or the role that you want them to get into.
90% of the time, if they lose their job, whether they lose it voluntarily or you let them go, it's because of some attitude-related issue, either personality or because they have an attitude issue or they can't work within the team or there's a culture fit issue or they're unwilling to learn and grow, things of this nature. It's only 10% of the time there's a skill gap issue.
So 9 out of 10 times, you're letting a person go not because there's a skill gap. It's because it's one of these other aspects here. So that's an important thing to hire. So what that means is hiring for attitude. So I use this 2A model, attitude and aptitude. So I look for attitude and aptitude. Aptitude tells me what is the potential to learn and grow.
Attitude tells me whether they have what they need from a mindset perspective to do that. This is another graph I found from one of the investors. Graham Weaver is a famous investor in Silicon Valley, if you've heard of him. And the candidate performance over time, I'll take a minute to look at this. So the black line is high attribute, less experienced candidate.
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Chapter 3: What factors should you consider when hiring your first Customer Success Manager (CSM)?
It's too early. I haven't really figured it out. But you kind of know. If you've done this enough times, you'll know. So acknowledge. your early hire gaps and mistakes, which is one of the things is everybody makes mistakes. I've made mistakes and I still continue to make mistakes. But the thing is to not make them twice.
And that's the most important thing in hiring and keeping people and growing them. Timing and time to hire your leadership hires matters. And we'll talk about some of the mistakes I made. So if you're a startup founder starting from ground zero, this is basically what the curve looks like at how much you are doing versus how much your team is doing. So in year one, this dark green line is you.
So I was doing most of the work. at least for my section of them. And I had a co-founder who was doing technology work, so I'm not talking about that. In terms of, I was running sales, marketing, finance, customer success, and what else? I think that was primarily it. And so I was doing, basically, that's like four departments. But it's a department of one, right? So I'm doing all that.
I'm creating brochures.
Chapter 4: How do you determine the right time to hire a Vice President (VP)?
I'm also, you know, helping them answer support tickets. I had a straight line phone number to my cell phone from my customers who could call me and ask me about, hey, I can't log in. Can you help me?
Chapter 5: What mistakes should you avoid when hiring executives?
Okay, I can get on the phone. I'll help you log in. You know, stuff like that, right? So that's you in the first year. Second year, hopefully you'll get some good people, like some salespeople, maybe somebody to run your demand gen, somebody to do your creators for your marketing team, so on and so forth. But here's the most important thing. Your first hires can break your skills.
So think about your one hire can take you from here to here. And this is valuable time you can use for building and working on your company versus working in the company. But a wrong hire will set you back a year. So if you hire the wrong person, you'll end up doing their job. And then you'll have to get back here. And then you'll have to find the next person.
And then you'll be gun-shy about hiring the next person quick enough. So you'll spend a full year trying to figure out who to hire to do that. So this is another one, hiring. There's a lot of data-driven approach to hiring and stuff like that, which is fine. I think some of it works.
But what I really realized is if your answer is not a hell yeah when you hire somebody, when you're looking at somebody, especially for a critical role, then it's a no. All right, I'm going to skip through this, which we've already talked about that. But the most important thing is the timing of these hires I was talking about.
So you obviously need an engineer right off the bat if you're building a SaaS software. So your time is zero. At that point, one to two years is when you first start hiring marketers, and then you hire sales execs in two years. And I'm a firm believer that the founder should be doing sales. and doing some of the marketing for the first two years.
They should be the one closing the first 10 accounts. I closed the first 40 accounts because we were bootstrapped and we had a long run. But I do believe if your founder is not selling, and at least one of the two founders or one of the three founders, depending on how many founders you have,
then you're not set up to succeed because the founder has to intimately understand the market, understand the customer, the buying patterns, the ICP, all of those things, extremely important. So I hired unnecessarily. In 2020, when the COVID hit, all my competitors were cutting staff. I was hiring staff. And I was like, I'm going to go against the grain.
I'm going to keep hiring because I'm finding good talent right now. And I did. And it didn't help. I should have been more careful. And we were bootstrapped at that point. But we had some extra cash that I had put into the company from a last exit that I had, which increased cash burn. And we really got into trouble in 2021. It didn't show rear as ugly hurt until 2021.
I did not follow my own rule of hiring slow and firing fast. Like I said multiple times, I still do it. I need to remind myself not to do it because sometimes you feel so bad about letting people go because you feel like it's your fault, but ultimately your organization needs to come first. And scaling sales before we were ready. And this is an important one.
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Chapter 6: How important is hiring for attitude versus skills?
This is one of the things I really like is you want to find people who want an adventure. They don't necessarily want a job where they get paid well. They want an adventure. And I think that's what I think about. Do they have an adventurer mindset, or do they have I want a big paycheck mindset?
they might they will hopefully it does well they'll get a good paycheck because you're probably going to share some of the equity with them um and one of the things i read and i've actually did this once before where find a company that you really admire that scaled really well and find a second in command of that company who's now because that person can do that right now because there's already above somebody above them so that's a good way to find those people uh but
This is another one. This is my personal view. I don't want people who will say yes to everything I say, because then you have no idea when you're wrong. You want people who will challenge you, but ultimately will be team players. So they can agree to disagree, but commit, which is one of the Jeff Bezos things he talks about. You can agree to disagree, but you commit.
So even if they disagree with you, they still need to commit. But sometimes they will challenge your thinking, and you're like, OK, I was wrong, and I need to do better. Like I said, this is a mistake I did. Skilling the sales team before the pipeline was ready. So understaffed is better than overstaffed all the time. You know, I absolutely believe it.
And I really think that's the way especially startups should be functioning. So what to do about bad hires, if you're repeatedly asking the question and the person is in the right role, then the person is not in the right role. If you're going to ask that question more than three times and you keep a counter, and if you had three different times the same question on three different days,
Probably not the right person. Have a frank discussion on what Might be driving under performance. That's a really good one to have. And you need to be really honest. Don't try to hide behind a veil. Have an honest discussion. I've had many discussions with my team members. Some of them don't end up well. The other person will hang up. But you need to have them.
It's your job as a founder to do that. This is an important one. There is no reason to do like what a lot of companies you saw on YouTube where they were firing people over email or over the message and unsympathetically. You're taking their job back, but don't take their dignity back. That's very, very important. I strongly believe that every person we let go still remains friends to the day.
Well, at least 9 out of 10 people. There are one or two out there. And I give them a good recommendation. I will refer them to other people. So this is very important. All right. So that's my talk. So like I said, the key items I would say, the first types are extremely important. So be very careful there. Otherwise, it'll set you back.
And hiring for attitude, those are two big ones, I will say. And then the last thing I will highlight is rather be understaffed than overstaffed with the wrong people. Thank you.
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