Going from a Good VP to a Great One generally increases the output at least 20% in that functional area
VPS: Close rates go up 20%+
VPM: Leads go up 20%+
VPCS: NPS goes up 20%+
Now, compound that over a couple of years
Go make the hire
— Jason ✨Be Kind✨ Lemkin (@jasonlk) June 14, 2021
We’ve written a lot on SaaStr on how to increase the odds your first management team is a success. How to hire a great VP of Sales (tons on that here). What a great VP of sales really does. What a great VP of marketing really does (tons on that here). When to hire her (more here). How to manage customer success. How to hire a great VP of product. All good stuff.
But as I now work with 24+ scaling SaaS companies, all of whom, all of us, who struggle to build a great management team … I’ve learned to distill it all down to one thing.
Yes, VPs are ultimately about building a team. About recruiting and helping you scale. About letting you move from micromanager to manager. About this and that.
And some will be stretch VPs, and some seasoned VPs, and some with start-up experience, and some without, and some generalists, and some specialists.
Sorry to ramble. But it’s all so much to process.
Let’s distill it to this:
- You hire a VP to Own a Functional Area. Sales, Marketing, Product, Engineering, Success, Support. So you don’t have to.
- And Their Job is This: To Inflect The Curve. To materially improve the metrics of her functional area. And it needs to happen in one sales cycle, or one product cycle, or one quarter, etc. Not necessarily tripling sales, or leaders — but more. More in one cycle. That’s inflecting the curve you already have.
If you hire a VP, and they “own” sales, but sales do not increase. That’s a failure. Even if it feels like you now don’t have to manage as much.
So what’s “inflect the curve”?
- For sales, it’s increasing revenue growth in one sales cycle — or less. Because if your new VP of Sales can’t do a better job extracting more dollars from the same leads as you did — what’s the point? It will never work out. She has to be at least >a little< better than you, especially if she spends 100% of her time here. Because you don’t and didn’t.
- For marketing, it’s increasing leads / opportunities / pipeline in one sales cycle. Yes, some demand gen efforts take time, no doubt. But when your VPM joins, like the VPS, she’ll have some raw materials to work with. A broken Hubspot implementation. No one using Intercom. Zero content marketing. No structured communication with the prospects you do have, no matter how few. Maybe she can’t directly impact revenue in one sales cycle. But she sure can increase pipeline, folks.
- For customer success, it’s at least improving NPS and CSAT in one quarter. It may take longer than 3 months to see your VP of CS impact upsells and net negative churn (although even there, you should see results in one quarter). But one thing’s for sure. If you measure NPS and CSAT on Day 1 of your VP of CS. And it’s not improved in 90 days. That’s a total failure.
- For product and engineering, it’s improved throughput in one quarter. One release. Not more. You have 10 engineers with no real leaders, that sort of self-manage? How teal. Hooray. If a true leader can’t direct those 10 engineers to more efficiently produce product in the next full release. They never will.
Now, notice what we didn’t say. How much. How big the tilt should be in one sales cycle, one release, one quarter.
I don’t know how much your new VPS can increase Revenue Per Lead in one sales cycle. How much your VP of CS can improve NPS in one quarter.
I don’t know because the amount of improvement is really situationally dependent.
So what’s actionable here?
- First, fire that VP, or demote her, or top her if you don’t see the curve tilted in one quarter. Because they never will. I don’t care how hard they are trying. How little they had when they came in. You’re not asking for the impossible. You’re asking for improvement. That’s it. In fact, the worse it all was when they came in … the more screwed up it was … the easier it is for a pro to tilt the curve. So easy. Because they know what to do. Add one great rep. Fire the one that is wasting leads. Ask for money faster. Do more drip marketing. Whatever it is, the worse things are in a given functional area, the easier they are to improve.
- Second, learn from that first quarter, that first sales cycle. Because every VP will be weak somewhere. The flipside is don’t expect miracles from your VPs. This is Rookie Error #1. Expect the curve to be tilted. And that VP of Sales that is great at inside sales? They may be mediocre-to-bad at field sales. That doesn’t mean fire them, or be disappointed, or even — judge them. Don’t do that. If they can tilt the curve, then leave them be on what they do best. And go help backfill where they are weak. Help there.
- Third, don’t have insane goals for your VPs, usually. Trace a path from the tilt they add to the curve. Even if you have them for yourself. It’s hard enough to get a true VP. Someone that can not just turn the wheels, and build the dashboards. But one that can truly tilt the curve. If you have one, figure out how well they can possibly do. And challenge them to do 90% of that as their base plan. But don’t give them an insane plan.
- What if it’s tougher times? Do you give them a pass on not seeing any improvement at all? Usually no. Because the thing is, they’ll be coming in from a lower base. If growth has slowed to 20%, a great VP of Sales should you to 30% or more. Maybe it will take a while to get back to 100% growth, but you should see some improvement. From whatever inputs you do have, no matter the macros, for the most past.
Expect the impossible from yourself, your co-founders, and the one or two VPs who basically act at that level. But for the rest. Maybe … once you already have a little bit of an engine going … then expect a material impact coupled with ownership. That’s enough. That lets you focus on the other areas of the company more.
And when the time comes when your VP can’t inflect the curve anymore. When they are out of ideas, when they’ve taken the ball as far as they can. Then you know it’s time to find the next level VP that can.
A great VP: velocity increases in their area
A good VP: velocity stays constant in their area (still hard)
A mediocre VIP: velocity declines
A bad VP: velocity falls off a cliff within a quarter
You’ll know in a quarter which you just hired
— Jason ✨Be Kind✨ Lemkin (@jasonlk) July 9, 2022
(note: an updated SaaStr Classic post)
Published on March 31, 2023