Hiring and gaining efficiency through "scale roles" with Andy Mowat
Unlocking efficient, steady growth for SaaS companies
This is a continuation of my conversation with Andy Mowat about “scale roles,” key positions in SaaS companies that enable greater efficiency and productivity for startup teams while still managing headcount costs. Part 1 is available here. Andy speaks from firsthand experience about the right way to hire for scale roles and how startup boards/advisors can help.
Many of us in the private company investing world live by the LinkedIn employee growth chart. Without public financials available to reveal which companies are growing most quickly, headcount growth helps identify which software companies may have rapidly increasing ARR (annual recurring revenue).
However, it’s not always right and some of the most successful companies scaled quickly while growing headcount slowly and finding ways to be efficient. Think Atlassian in the initial 8 years of its founding, where they automated marketing & selling their product instead of growing a large team to do so.
The result? Steadily increasing sales and profitability. Hard to do, but extremely valuable in the long run.
Adding and thinking strategically about scale roles as Andy describes is another way to achieve durable, steady growth while staying efficient.
Hiring for scale roles
Lyndsay How should a founder think about skill sets and seniority levels for scale role hires?
Andy I think a lot of the junior scale roles you can hire from within, we did a lot of that. If you need a person that can define the function and the strategy, you’ve got to go hire externally. Somebody that's done it before. There’s certain roles that are so highly specialized that you need experienced people and others do not require that.
At the same time, if you have high-performing, director+ talent you can challenge them. I've been twice in my career tagged by CEOs to go figure something out that I knew nothing about and was able to be successful.
We always had this term “HiPO” at Box for high potential mid-level team members. These were early career director-level folks that we would constantly challenge by pushing out of their comfort zone. I'd say if you're going to put a HiPO on building a new function, that's a little tough. But if you're going to put them in as the number two, that's really good.
Lyndsay To get a little deeper on that, why is the senior leader with specialized skills better positioned than the high potential person in some cases?
Andy There's so much pattern recognition in so many of these skill sets.
Let's just take customer marketing for example. Customer marketing is this function that you add at some point. You often see individual CSMs taking stuff from product marketing and sending it out. At some point you want to be able to scale that to large groups of customers.
There are a lot of problems that you see in that function that just become pure pattern recognition. I've seen too many times people spend too much time on the content but don't understand the systems and the technology needed to send it.
You have to work with the product and marketing ops to be able to scalably deliver content to the right customers. It's a highly collaborative function and to be able to win the confidence of all the different stakeholders that you're working with, I think somebody that's done it before versus somebody that's making it up on the fly is really important.
The right way to think about KPIs for scale roles
Lyndsay That makes sense. How does a founder know if they've made the right scale role hire? Any KPIs they can track?
Andy First and foremost, the way to ensure you make the right hire is to interview well for it. If you don't have the skill set within your company to interview for it, go out and find that skillset.
If I'm interviewing marketing people or ops people or marketing leaders, I feel qualified. But, if I'm interviewing for a frontline sales manager, I'm going to go find somebody that has deeper experience there.
I'm not a fan of KPIs for ops roles because I think ops needs to own the KPIs of the business itself. I think a lot of times I tend to judge people by how they are pulling things forward and enabling change in the business rather than KPIs.
In the end, the role of these jobs is to amplify other people. You shouldn't give them KPIs that are ‘make work’ or ‘check the box’. You should give them KPIs that are truly around the functions that they're designed to amplify.
How boards & advisors can help
Lyndsay How can I be helpful with this as a board member?
Andy I would be asking the hard question of are you effectively scaling your team or are you just throwing more manpower in? Companies are saying, great, I can do the math of how much a salesperson’s salary is and their return.
As a board member, I'd want to know what scale roles a company has. What are the ratios (of scale and non-scale hires)? How do you benchmark that against other companies like you?
In the end you really are probably asking more of the questions around why is this metric not working and how are you addressing it? The right answer is generally not throwing more people at it, it is understanding the root problem and how we’re going to solve it. That solve is probably a scale role.
Board members can also be supportive of scale roles. I think many times I've watched headcount plans go to the board and operations is always underfunded. I guess I don't believe that boards should be micromanaging headcount planning. If they are, there's probably a bigger problem. I think a board member can however be understanding and supportive of scale roles.
Often you'll see the non-scale headcount people in at the executive level. On the go to market side, you got a chief marketing officer, you got a chief revenue officer. But those people do not think in terms of scale roles.
If I could really advocate for it, a senior ops person is at the table helping make the right decisions across both of those things. I always viewed our job as the glue between the functions.
Lyndsay Is there a way that I can ask questions that help shine light on those things?
Andy It's just drilling down into the numbers. Keep asking, it’s the power of why. We are missing our number? Because we don't have enough pipeline. Why don’t you have enough pipeline? Well we don't have enough opportunities. Why don't you have enough opportunities? You just keep asking that question until you get to the right answer.
It's annoying as a board member, but it's the best type of board member. Ask and give them the space to explain - you will learn a lot.
Sometimes board members will rush with their opinions and their ideas, but I think if you just keep asking why you can get to the true root cause.
Lyndsay Anything else we haven't covered that we should talk about?
Andy Scale roles. They're good. I'm a deep believer in it.
The other thing to talk about is how the world's changed. You're not hiring as many people, you're not hiring crazy amounts of people and just throwing bodies at the problem anymore. So I hope that people are thinking a little bit more proactively about scale roles.
Lyndsay From what you said, I think of this role as the, instead of hiring 10 new sales reps, enable all of your sales reps to sell better. These should be gems for the bootstrapped entrepreneur or the capital efficient entrepreneur. Would you agree with that?
Andy Yes, they should. If I build our company, a lot more ops and processes and systems and data prevalent, which are just cheaper than salaries.
Lyndsay Awesome. Well thank you so much, Andy!