The Cadence: Building Your SaaS Army with Craft Ventures
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The Cadence: Building Your SaaS Army with Craft Ventures
- 1. The Cadence: How to Build Your SaaS Army David Sacks Co-founder, General Partner Craft Ventures @davidsacks
- 2. The Cadence: How to Build Your SaaS Army
- 3. Let’s Face It Startups are a Shitshow 50 → 500 employees
- 4. Wouldn’t It Be Nice to Turn Them into an Army? From To Startup chaos. The team works in lockstep. Disconnected functional priorities. Everyone in the company knows what to focus on. Erratic release schedule and unpredictable sales performance. Quarter after quarter, the company ships and sells.
- 5. ● First, as COO of PayPal. ● Then as Founder/CEO of Yammer, we adapted it for SaaS -- creating the fastest unicorn SaaS exit. ● Also learned key elements from our main competitor Salesforce. How I Learned the Cadence
- 6. ● There are two key systems in a startup: 1. The Sales / Finance System 2. The Product / Marketing System ● Both run best on a quarterly cycle. ● When snapped together, with an offset, they create a single operating cadence for the company. What Is the Cadence? Sales 📈 Finance 💰 Product 🛠 Marketing 🚀+
- 7. The First System Sales / Finance
- 8. Month 1 Sales Kickoff (SKO) Month 2 Pipeline Inspections Month 3 Closing Set new plans, territories, objectives, spiffs. Retrain sales team on product and best practices. Mid-quarter adjustments to hit quota. Sales can use marketing news to warm up or nurture prospects. Heads-down on closing to hit quota. Sales is best run on a quarterly plan: ● Annual quotas are too slow to judge performance, monthly plans are too volatile. ● Adjusting quotas and territories more than once/quarter will undermine morale. 📈 Sales Calendar
- 9. 💰 Finance Calendar Sales and Finance calendars are one system: ● Sales drives the financial results of the company. ● Finance team is arbiter of quota credit and revenue recognition. Year end December 31 or January 31? ● A January year-end is better for sales-driven startups. Board meetings: ● Schedule 2-3 weeks after close of the quarter when results are fresh. ● Teams gets strategic insights when they can still impact the quarter.
- 10. The Second System Product / Marketing
- 11. Product Management works better on a quarterly calendar: ● Engineering should ship code weekly (or daily). But this is about product management. ● Rocks = major releases; Pebbles = features; Sand = fixes. ● Avoid shipping a lot of sand. ● Salesforce exemplar. Avoid “over scope.” ● Yammer rule: 2-10 engineers, 2-10 weeks ● Nothing kills dev like a v2. 🛠 Product Calendar
- 12. 🚀 Marketing Calendar Marketing and Product calendars are one system: ● Marketing activity feeds off of new products. ● Product releases are the centerpiece of marketing events. ● For marketing purposes, 4 big releases are better than 52 small ones. Use events as the forcing function: ● Combine news with events and live demos to create lightning strikes. ● Setting date forces the team to scope correctly and hit deadlines. ● Better external communication forces better internal communication.
- 14. Sales/Finance Product/Marketing Launch Event 🎉 The Offset Quarter Close 💸 Two major systems of work. Offset them about 45 days: ● Avoid lighting everyone’s hair on fire at the same time. ● The product shouldn’t change when Sales is in the final stretch of closing. ● Use product news in the middle of the quarter to advance deals. Snap it together: ● Decide your Fiscal Year and snap sales plans to the quarters. ● Then snap your event schedule so events occur in the middle of the quarter. ● Then plan your R&D cycle to hit those event deadlines.
- 15. Week 1 ● Sales Kickoff prep ● New sales plans, territories, quotas finalized ● Finance Closes the Quarter Week 2 ● Sales Kickoff ● PMs present at SKO ● Board meeting prep Week 3 ● Board Meeting Week 4 ● Product Roadmap Prioritization for next quarter ● Code freeze / QA begins for this quarter Month 1 - “Plan”
- 16. Week 5 ● Design Review for next quarter ● Company preview of Launch Event ● Closed beta releases Week 6 ● Final Event prep ● Marketing collateral finalized Week 7 ● Launch Event ● Customer Advisory Board meets Week 8 ● Launch event debrief ● Company celebration / recognition ● Sales reps use marketing news to warm up leads ● Bug fixes ● Next quarter’s release finalized Month 2 - “Launch”
- 17. Week 9 ● Coding begins on next release ● Pipeline inspections ● Finance benchmarks against models Week 10 ● Marketing begins planning next launch event Week 11 ● Sales Ops begins planning next SKO Week 12 ● Sales closes the Quarter Month 3 - “Close”
- 18. There’s an old debate about culture: ● Should startups be run as a sprint or a marathon? Which one works best? ● Answer: Neither. They function best as “Ladders.” ○ Sprint, then rest. Sprint, then rest. ○ Let team recover, celebrate accomplishments, reflect on what has happened. Then start next sprint. Culture
- 19. Summary ● 4 calendars, 2 systems, 1 operating cadence. ● The unit is the quarter (seasons). ● System 1 (Sales/Finance) orients around the quarterly close. ● System 2 (Product/Marketing) orients around the launch event. ● Use events to create cross-functional collaboration (eg SKOs, launches). ● The compounding effect of shipping 4 great quarters/year is huge. Most companies barely ship 1. ● It’s not a marathon or a sprint -- think ladders.
- 20. Thank You
Notas do Editor
- In the early days, it’s pretty easy to keep organized. Then you start growing. Functional areas develop An org chart is born - along with silos Information gets trapped The shit show happens along the path from 50-500 Founders / leaders continue to manage like they did during seed stage But then they realize things are breaking How do you fix the chaos and elegantly scale? Create an army that tears through the market PayPal, Yammer Good ideas paired with great execution Cadence is that philosophy that enabled it
- SaaS Sales teams are naturally oriented around quarters. The economics driving this behavior are built into comp packages and performance metrics. Aligning product and marketing efforts to quarterly sales flows makes them phenomenally more productive. Salespeople are desperate to create a sense of urgency with their prospects. Quarterly releases create a variety of time-bound “gives” that sellers can use as tools to lock down a deal. Quarterly releases, timed with sales quarters, turn the chaos of EOQ hail marys and desperation discounts into a tightly coordinated boon. Once you know when your Sales quarters begin and end, you can nail down everything else - from Sales Kickoffs and marketing events to code freezes and product releases. Carefully planned from a fixed date and working backwards, this unites the company behind the Sales team’s goals.
- Fiscal Year is also quarterly: Big decision is whether to end on December 31 or January 31. A January year-end is better for sales-driven startups, avoiding mad rush to close out the year during Christmas break. Customers know about year-end closes and can try to extort discounts. With a January 31 close, the sales quarters end in January, April, July, October. Sales and Finance calendars are one system: Sales drives the financial results of the company. Good for reporting purposes to be on the same quarters. Finance team should also be the arbiter of quota credit and revenue recognition.. Incorporate Board meetings into the Sales / Finance system: Schedule 2-3 weeks after close of the quarter when results are fresh. Teams gets strategic insights when they can still impact the quarter.
- Product Management works better on a quarterly calendar. This is controversial because engineering wants to ship code weekly (or daily). You can and still should do that, but this is about product management. Planning is different than releases. Think about it as filling a jar with wiffle balls, marbles, and sand. How do you fit them all in? The jar is the quarter’s release capacity. Start with the wiffle balls (major releases, tent pole products). Then add marbles (features). End with sand (fixes). Product orgs that don’t plan quarterly either ship a lot of sand -- or their wiffle balls take forever. Avoid “over scope.” Yammer rule: 2-10 engineers, 2-10 weeks. If 10 engineers can’t ship it in 10 weeks, it needs to be re-scoped. Otherwise, it’s a quagmire. Nothing kills dev like a v2. A lot of founders resist this system because they like to run around on fire telling devs what to do. That doesn’t scale. Remember this is for 50 → 500 transition. Salesforce successfully implemented seasonal releases early (Winter, Spring, Summer, Fall). The compounding effect has been huge.
- Marketing and PM operate within the same system: Marketing activity feeds off of new products. Product releases are the centerpiece of marketing events. For marketing purposes, 4 big releases are better than 52 small ones. Use events as the forcing function: Press releases are easily lost in the clutter. Combine news with events and live demos to create lightning strikes. Webinars are fine in the new era. Showcasing the new produce on a specific date that is set in advance and cannot be moved forces the team to scope correctly and hit deadlines. Leadership must go on stage every quarter and justify why it matters. They have to lead from the front. It forces correct prioritization and “outside in” thinking like Sales. The need to communicate it externally will lead to better communication internally. It works for Marc Benioff and Elon Musk -- why aren’t you doing it?
- Two major systems of work going on at all times. Both revolve around customers: The Sales/Finance system revolves around customer closes. The Product/Marketing system revolves around customer launch events.
- If you use the Cadence, I can tell you what your major milestones in a quarter are going to be. Before i even know the specifics of what kind of SaaS you’re selling. Those milestones provide the structure.
- When people talk about company culture, there is much debate about whether employees function better with marathons or sprints. Really, they function better with “Ladders:” Sprint, then rest. Sprint, then rest.