SaaS Interviews with CEOs, Startups, Founders
We just hit $400m in revenues. Here are 9 org chart, people moves I had to make to scale
23 Apr 2024
Chapter 1: What strategies did Jason Cohen use to scale WPEngine?
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We got to 100 million in a little less than seven years, and we hired a CEO, and it was the second best decision I've ever made. All right. My name is Jason. I started WP Engine 14 years ago. We have hundreds of millions in ARR. I'm going to share with you some lessons that I learned along the way in doing that. You probably know me online, though, as the smart bear, so hence that.
So we got to 1 million ARR in our first 18 months, which is pretty good. I thought maybe already the company could just grow like that. But then in 2012, our growth rate shot up again. We went from 1 million to 5 million in one year. And as you can see, it never ended. We got to 100 million in something like a little less than seven years.
This little flat part at the beginning, that was that previous chart, right? Just to give you a sense of scale of what happens. And so i want to take 20 minutes and talk about stuff that i Learned from this part where the company is growing faster than People can grow. So the first thing is that
You know it's going to be different, but it's dramatically more different, I think, than you would expect if you had never done this before. Because before product market fit, you're exploring. You're trying to figure out, yeah, everyone here knows this. Who's the customer, and how do we get there, and what's our unique thing, and blah, blah, blah.
So this is all experimentation and unknown stuff. So there's all these techniques you should use, like trying crap and pivoting fast and nonsense like that. But after you have product market fit, you know those things. And so the things that you do dramatically change. And so just saying things like, we'll keep experimenting is not how you scale something that's already working.
So for example, you're not just building stuff. You're hiring and managing humans quite different from finding a marketing channel or building software. You have something to lose, like there's growth, there's customers. So defending that becomes a whole thing to do that you not only didn't do before, but you shouldn't have. There was nothing to do.
You built a kind of a crappy product because, of course, So now it's time to fix it, which, again, you didn't do before, nor should you have, and now it's time. That's different, again, different mindset. Before, if you had a bug that affected 1% of your customers, that might be zero or one people, so whatever. But now you have a bug that affects 1% of the customers.
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Chapter 2: How did Jason replace himself as CEO effectively?
It'll take like six, nine months. OK, so you need to know how many people you need in six or nine months. That means your business has to be more predictable, another new thing that didn't exist before. So there's this stupid phrase. It's not stupid. It's a tired phrase. What got you here, right?
in this case it really is apt the stuff the activity that got you here won't get you there because there's these other types of behavior which are now correct and it's a lot of stuff and i guess the point i really want to make is that this changes who you are and what you are even proud of because you were proud of that you experiment and did it you're and you're like that's why we're different that's why we're better and big companies are stupid and we're smart
And here you are having to change that. That is the difficult, not only from a skill set point of view, but from an emotional point of view, that is difficult. And I think we don't appreciate how hard that is enough. So that's the first thing, this fundamental difference. OK, another obvious thing that happens with scale is now there's a bunch of people. We all know that's going to be hard.
There's no way that's good. So fun question. I have a lot of people. So we go faster? You already know. Well, OK, let's say I have 30 people and some competitor has three people. So we should go 10 times faster. We have 10 times as many engineers. We may have 100 times as many customers. We can learn more about customers. That part's true. And we all know this is not true.
We'll go faster, but not like that much faster. So there's no silver bullet to fix this, as you probably know. But there are things to do to be more effective in leveraging the scale, which now should be an advantage of yours, that you have extra people and time. Should be. But of course, it gets pulled down. So what can we do to take more advantage of that?
So observation is when you add people, you tend to add more stuff you can do. We just heard that in the last talk. At first, you're just making features and trying to sell it, of course. But then you start hiring people, and maybe you expand the market or do other fun things. More people, more stuff. Make sense? Maybe creative stuff like micro projects. You created a YouTube channel. Hooray.
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Chapter 3: What lessons did Jason learn about hiring during rapid growth?
YouTube is fun. Everyone goes up market to the enterprise, right? That's what we all do because they have money, don't they? They do. Anyway, so this is what people do. And what I'm going to argue is that this is not what you should do, that you should instead still have only a couple of things that you do and focus everybody, all the scale that you have, on just a few things instead of this.
And the reason is that if you cut up everybody into all these different initiatives, then each initiative is not at scale, doesn't have that many people, doesn't have that many resources in terms of things like money, and so isn't very good. So you've taken what should have been this advantage of people and diluted it.
So if you have a YouTube channel, and you have two people working on it, and some little startup is good at YouTube and also has two people on it, you're not better at them than at YouTube. So that's not so good. Whereas if you put 10 people on that and lots of investment, maybe you could dominate YouTube in your area. That actually sounds pretty good.
So instead of splitting it up, you want to not dilute your scale across a bunch of projects, but still have just a few things. That way you're using your leverage to win. Now, of course, this begs the question, if I'm only going to do a few things, what do I pick? How do I pick just a few things since I have so many options?
Here's what I actually do with teams at WP Engine and sometimes groups of teams at WP Engine. The first thing is we sit down, we do this once a quarter, and we say, OK, if we weren't encumbered by problems, challenges, constraints, how would we advance our strategy right now? So it could be anything. Maybe there's a feature you know, we all know, would be great because customers talk about it.
We've invented it. Competitors don't have it. We know it's good. It would be so strategic. It's how we're going to win, you guys. So maybe it's that. This is just some ideas. There could be all kinds of things. It's time to open a new sales channel.
Whatever would be the best way for you to win now, this is obviously something where you can brainstorm lots of things and then come together on a few things. It's good to get as many people in the room for that kind of brainstorming as possible, because it means everyone's contributing to the answer, which ultimately means they'll be more on board with the final answer.
OK, I know objectives is a crappy word, so pick a different one. Anyway, but then what's stopping us from doing that? By the way, this is not revelation, right? Duh. You have goals, and then what's that? But going through this, I'm telling you, is great. So again, there could be anything. Yeah, we'd love to do that, except our churn rate is 5% per month.
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Chapter 4: How does product-market fit change the approach to scaling?
People are just fleeing. And not only is that bad from a financial point of view, it means the customers don't want our crap. That's probably more important than opening up a new geography, that they don't want it. Oops. to fix that. So OK, so there could be all kinds of things. We lost a key person, and so some team is screwed. They need to go work on that first.
OK, so it could be all kinds of things. And once again, where are they? Let's find the top couple of things that are holding us back the most from doing the first things. OK, then finally, of course, what are we going to do? And this takes creativity. There's no magic answer to this. But at least we know what we're trying to get to here. And for the obstacles, we're either trying to attack it
or we're having to solve the first thing by avoiding it. For example, let's say one of the obstacles is we don't have enough money. Well, attacking it would be like, so we're going to raise money, so we're going to get debt from, I don't know, Nathan. So we're going to do customer-based financing by charging an annual fee and getting people to switch to annual, and the customers will fund us.
There are lots of ways that you could solve that obstacle of not enough money, or you could work around it. You could say... OK, look, it's a constraint. We don't have that much money. So we're going to have to get creative about how we make some progress, maybe not all the progress we want, but some on those top ones without money. That just becomes an enabling constraint.
That's another way to do it. So anyway, as simplistic as this might sound, it's a very easy narrative. Remember, everyone, because of our strategy, we want to do this, but this is happening. And so here's what we're going to do. It's such a simple story. And so if you do this every quarter, and it takes no longer than a page to say it, everyone knows at a high level exactly what to do.
So again, I do this on the team level. And you can even do this on a larger level. And then I think doing it more often than this is not necessary. It's a lot of overhead. But about every 100 days, this kind of stuff falls out of people's heads. Just like if you're a distributed team, about every 100 days, all the social fabric starts getting weaker.
And you've got to come together to recharge those batteries. Same kind of thing, right? This helps you identify what that is and gets everyone aligned to it. The final thing about focusing everyone is if the whole company is working on just a few things, that means projects will cross over teams, and that's another problem. And you already know what this problem is.
People have to talk, and that's meetings and all this crap. And then marketing says, I think we should redo the design of the product to match the website. And they're not wrong. And the engineers are like, we have to refactor the code, because that's what engineers always want to do. Did you write that code? Yeah, but we've got to refactor it. OK, whatever. They're probably right also.
And then if they can't resolve it, which often is the case, case, it moves around. I mean, meetings and the CEOs deciding. And this is, of course, a huge, not only is it inefficient, not only is this, again, diluting our power of scale, it also sucks. It's also bad for morale. And I mean, who wants to live like this? So there's two kind of main ways to deal with this.
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Chapter 5: What challenges arise when scaling a team?
What you do is you call and say, What is the perfect scenario where this person is an absolute superstar, that they're so happy and so effective, and they just get 10 times more done than you would expect? What does that, if you were to construct that for them, what would that be? Like, for example, some people say, tell me exactly what to do, and I will crush it. And they will.
And there's other people that are like, if you tell me what to do, I will leave. Show me where we're going. I want to figure that out. Then I'm super happy. Who's right? Nobody. That's just different modes is all. So that's what you're trying to suss out.
What are the modes, whether that's company culture or skill sets or what their team composition is like or whether they have to hire a team or fix a team or build something big? What is it that makes them amazing? You're asking the other person. That's actually pretty easy. It's actually easy to think of, oh, yeah. Yeah, if you do this, they're mad. And if you do this, they're great.
It's actually easy for people who know them to answer that. And then I ask the same question in the negative. Construct a scenario where you will crush their spirit. They'll be worse than neutral. They'll be destructive. Again, it's easy. Oh, my god, yeah. If you try to tell them what to do every day, they will just quit. Or they will take it out on other people. Oh, OK.
You've never told them what your company's like. So this is a completely unbiased view of this because we're all like this. We all have scenarios where we'd be very happy and scenarios where we would not. So we're all like this. You're just trying to find out what it is.
So then, of course, you're going to take that and think about the slot in your company, the culture your company has in the specific slot and conditions that they have that you're going to be asking them to do and just trying to think, is that a fit? So once again, this is the way, even though you don't really know anything about their specialty, you can see if they're a fit. That's how I do it.
That's actually literally what I do. The final thing I'll say about the executive level is it's nice to have somebody who's done it before. Sometimes people are like, oh, you've got to stack the executive team with people who've done it before. Maybe. That could be a good idea. It could be. But there's a really big difference between zero people who have done it before and one.
And so it can be any role. At WP Engine, it was actually the CEO. I became the CTO, and we hired a CEO, and it was the second best decision I've ever made. You want to guess what my first best decision ever? No, my wife. My wife was the first best decision ever. We've been married over 20 years, by the way. Anyway, my second best decision, though, was hiring Heather Bruner to be our CEO.
She's been here for over 11 years now and fantastic. But it doesn't, I mean, I've seen other companies where it was the COO or the CFO, often in some kind of operational role where the human scale is part of the challenge and then they tackle it. That just makes sense, right?
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Chapter 6: How does Jason define success in hiring executives?
There's different kind of standard ways of doing that. But subsequent times, it becomes really fast. We just did one with our corporate data team, and it took two days. I think the first time it took three weeks. Because we were like, look, most of this is the same as last quarter. A little bit changed, a little bit of that. Nothing new has cropped up here.
So it was just like, tweak, tweak, tweak. We're good. So it took almost no time. And yet we're 100% aligned, and so is the rest of the company about what they're doing and why. Another good reason just to throw it out there is when somebody is, oh, I have the top priority thing I have to have. You're like, well, here's our priorities. Is it really? And all of a sudden, it's not.
Or if it is, again, we have a narrative to understand that. So it can get really fast and efficient.
And the second follow-up is, when trying to recruit or interview a CEO, what were the most important aspects to determine that you're making the right decision?
ALEX KOMOROSKE- Good questions. The first one is, how did I know and come to the decision to hire a CEO? And the second one is, how do you interview for that? What are you looking for? I did a whole talk at a different conference on this topic. And I have an article, not to push everything, but on my I've been writing for a long time at asmartbear.com. And you can read.
I show you exactly what I do. But the bottom line is a lot of these things of what makes you fulfilled, these kind of thoughts about that, they're very similar. Dan Pink with the mastery, autonomy, and purpose. There's Ikigai, which is like four things. I had a way that I did it.
And it's that when you do stuff that you love mostly and stuff that you're good at and that the company needs done, then you're in a good place. Again, not revelation. But what I was able to see with this simple thing is, oh, the company needs various things that save 70, 80 people that we were and growing fast.
We need to hire an executive team that can manage this stuff, a global sales team, for example. We're going to be raising more money And that's the whole thing. We're going to have a more serious board. And we have a culture we're trying to maintain. What does that mean at scale? That's a whole other difficult topic, right? So these are some of the things needed.
And for me, it was like, these things are either things I'm not skilled at. Or don't like or both. There's one thing if you aren't skilled at it but you like it, then maybe it's a growth path. But if you don't even like it, you're just going to hate it and not do a good job. And we just said the company needed it. So what's happening here? So that was the intellectual part.
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