August 8, 2022
I hire a lot of execs for startups and scale-ups and I have probably seen it all in my career.
Usually, when a client comes to me looking for their new exec I typically hear the following:
Client CEO: “Troy, we are excited to be looking for this CRO (Chief Revenue Officer) role and upon talking to our VC we have been instructed to attract a CRO who is currently working for “insert company” - let's use Canva as an example.
Troy: Hmm ok. However, Canva is currently $1b ARR and you are $10m ARR and so not only will you struggle to attract that person, but they also do not have the $10m to $50m growth experience you are looking for.
CEO: Yes, but I have been told by the board and the investor that we need to hire for scale.
Troy: Okay but that person has been in the $500m to $1b level of experience for the last 5 years and so all their recent-relevant experience is at that level of scale.
CEO: Yes but the venture capitalist is very excited by our company growing to a huge company one day and tells us to attract talent for where we want to be in the future, not right now so we can “hire for scale!”
Hire for scale.
I hear this term a lot and I will be honest, when I was new in my career I would listen to people around me like senior internal recruiters, HR or VC people I respected talk about this and I just blindly followed the narrative.
What I found mostly though, was when you fast forward 6 months later the company is wondering why this new amazingly experienced ex-Canva CRO who came in at more salary than everyone else and has the most stock options has not produced anything.
If you have worked with me over the years, you may have heard me talk about this and/or warn you about this method of hiring and will no doubt have heard me quote one of my many idioms: “Successful hiring is horses for courses and you are not in a prestigious 3,200-meter race here yet. You are still in a Trentham sprint over 1,400 meters and not bringing in a sprinter. Let’s focus on the next 18-24 months and not 5 years ahead.”
I am often told that the VC, board, or a lot of the times, the internal team has informed this CEO that they can only hire this person and therefore I find myself looking for a prestigious long-distance thoroughbred anyway.
Now everyone is happy and the person has been in their role some of the things we start to see play out happen very quickly.
The new CRO suggests that she cannot get this company to 500m to 1b without a much bigger revenue team and they will need to increase the size of the team quickly in order to get the results you asked for.
You look at your budgeting and see the headcount go from 5 roles in revenue that quarter to 20 roles.
Until then, the CRO might be waiting for the phone to ring, the e-mails to come in, and for her EA to schedule meetings. She is not used to working as per your framed value on the wall of “getting shit done” and is waiting for most of her previous team at Canva to fill these 20 roles so she can get back to normal.
Running a $10m ARR SaaS company function has very different skills than that of the $500m ARR company and so ultimately, you have hired this person for their skills at leading a revenue team of this ilk.
Now, I am painting a mental picture here that this always happens and in my experience it mostly does, though occasionally you find someone who actually prefers to operate at the level of $10m ARR to $50m ARR.
The funny thing though is that person is probably being managed out of "insert company" successful SaaS company because they have not mastered the skills to be able to operate at $500m+ and is more of a “get shit done” than the person your VC is dreaming about.
So, what am I telling you here I guess you are asking me?
Well, I would say hire for the scale level that you need for the next 18-24 months, and if you are lucky and smart enough at interviewing, you can also hopefully find someone who has the ability to get you to $100m too. They probably won’t get you to $1b though…. And that is ok. If you do find that unicorn who has the experience at the next three levels and can come back to yours and is keen to do it. Hire them and talk about this hire for the rest of your life as you will always be chasing this dragon in the future.
When I am working with clients, I will try to help them build out their interview process equipped with the right assessment criteria to help them identify their next suitable CRO.
We might ask in an interview; talk me through your first 3 months in your role?
If the applicant is talking about needing to spend this whole three months listening, learning, and identifying the problem and really over emphasises this. This could be a flag, so we ask them why are they doing this?
Once they give us their answer, we may ask them what they did in the first 3 months of their current role and they will usually tell us the same.
I might then ask them why they are doing the very same thing for a $10m company that they did with a $500m company. Or I might ask them why they are not looking for another $500m company if they have unlocked the success for this growth?
We might also ask the question: “We are looking for you to get to $50m ARR in 24 months and so what budget would you need and how would you spend that budget?”
After hearing their answer which will probably be very good and have you excited about having someone so strategically minded and astute, we’ll ask them; How would you execute the same plan exactly if you halved or cut the budget to 25%?
Now we are starting to see if this person has the ability to ‘come back' to $10m ARR and lead the strategy and team here again.
We essentially want to understand their drivers for wanting to come back to a smaller company and what their motivators are.
If equity is the major motivator then buyer beware!
What we want to see is that they have ‘unlocked the secret’ of this level of growth and they are excited to do it again knowing what they know now.
They might be particularly passionate about the domain you are in and so armed with the success of their past and their battle scars they are invigorated to do it again.
If they are not giving you words like “invigorated” or “highly motivated” and “excited to do this again” then be careful.
Hiring someone with the experience you need for the next level can be very alluring and I can see why founders fall into the trap of listening to VCs who tell them to swing for the bleachers.
Most of the best hires I have seen are people currently playing in the same level of revenue or the next one up and they loved it so much they want to do it again. The best hire I ever saw fucked up his previous role getting to $10m ARR and got annoyed and so wanted to go back and do it better. While he was swinging for the bleachers the second time, he actually knocked it out of the park.
To summarise this blog I would say that you should definitely include these people in your shortlist. If you can attract, interview, and hire a unicorn from a unicorn who has the ability to do it again, then you are very lucky and grab them with both hands.
The problem here is that this is like Hayley’s comet and might only return to your vicinity every 75 years and so don’t build your business around it.
Instead, get really good at hiring. The best CEOs and execs I know are the absolute best hirers in the game. Talent Army has been helping them with building out assessment criteria with ‘Lominger card’ sorts or breaking down what success looks like in ‘this company on this journey” and we then go out and attract that person.
So what is your racetrack for the next 18-24 months and what job do you need them to do for that period of time?
That person is out there too and will probably cost you a lot less money.
I have used $10m ARR as the rule of thumb for this article, though regardless of what level you are at, you should be thinking this way.