Scaling the SaaS CEO

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For decades, I’ve expressed the idea that if you want to scale revenue, you need to scale your skills as a CEO.

Intuitively, it’s unrealistic to grow your sales by 50% to 100% per year while your own CEO skills grow 0% per year.

All of the great CEOs I’ve worked with over the decades have grown as professionals. Every stage of a business is different. The skills that get you to today are not the ones that get you to tomorrow.

The skillset needed to get to a minimum viable product that actually solves the customer’s problem is a completely different skillset than the one needed for marketing and selling that product to one’s target customer.

The skillset needed to generate your first $1 million in ARR is different from the skillset needed to grow to $10 million, which is different from getting to $100 million.

You don’t just do what you did to get to $1 million ten or one hundred times more.

It doesn’t work.

You can hustle your way to $1 million. You have to build a team to get to $10 million. You have to build standardized processes, an executive leadership team, a middle management team, all tied together with an accountability process to get to $100 million.

(And just for kicks, to get to $1 billion in sales, a CEO’s responsibilities start getting more into portfolio management of teams and opportunities than running any one business. At this scale, it feels more like being a mutual fund manager that picks the right opportunities and teams to bet on as much as managing the fundamentals of running a business.)

Today, unicorns with $1 billion+ valuations are all the rage. I think that is misplaced. When the cost of capital is dirt cheap — or in some capital markets, negative — you get inflated valuations.

You know what impresses me? $1 billion or $10 billion in revenue. You know what impresses me even more? When a founder CEO grows a business to $10 billion in revenue.

It’s not the revenue that impresses me.

Do you have any idea what kind of personal skill growth a founder CEO has to have to go from $1 million to $10 million to $100 million to $1 billion to $10 billion in revenue?

It is an exceptionally rare breed of individuals who can scale their own skills from minimum viable product to an enduring institution, from one employee to 100,000 employees.

Most founder CEOs have ambitions of scaling ARR. The better ones have a plan to do so. The ones that are most likely to make it are the ones who have a plan to scale their own skills too.

You can’t scale one without the other for long. Eventually, limitations in CEO skills will constrain sales.

The underlying principle to scaling a company is to anticipate the single greatest constraint in the business and remove it before you hit a growth ceiling.

Sometimes, that constraint is achieving the minimum viable product.

Sometimes, it’s getting the right message-to-market match.

Sometimes, it’s being able to scale your employee recruiting and onboarding process to ramp up a go-to-market approach that works extremely well at a small scale.

With every constraint proactively addressed in the business, there is a parallel constraint in your own skillset. The key is to keep upping the ceiling on all of your constraints before your business hits one and plateaus.

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