How to Scale ARR to $50M

Author: Jacco van der Kooij
Date: December 25, 2015
Read Time: 1 min

Sales is all about growth. For most companies sustainable growth is measured in single digit percentages. Sales for start-ups is about rapid growth and often is measured in double or even triple digit percentages. A typical growth target for a start-up looks something like this:

Conventional sales leaders would be reluctant to commit their future to such a daunting task. In SaaS sales, this growth is commonplace. The goal of this post is to provide a deeper understanding of how to manage such a growth target.

When Does Rapid Growth Occur?

Rapid growth is the result of sales’s ability to address an exploding market demand. We all live in a connected world, and that world offers us unlimited access to over 6 billion people, creating $100M+ markets for niche businesses. The challenge is to capture this growth potential when it occurs.

Capturing Growth Potential

As depicted above, it may take many years for a startup to gain traction. But then as a market catches up, it does so almost overnight. KABOOM!!! suddenly there is an incredible growth potential. The ability to match that potential when it happens is the difference between ringing the bell on NASDAQ and becoming a Walking Dead. During this KABOOM you need to scale your sales organization; unfortunately, most sales organizations are not built to scale.

9 out of 10 companies fail to execute against a market’s growth potential.

Diversify Sales

Early on, most of a startup’s growth comes from selling the exact same service in the exact same way to the exact same target audience. Over time, you just do a lot more of it, and you do it primarily using automated tools (marketing approach) and apply more people (sales approach).

Most companies only have in-house expertise in executing such a one-dimensional sales tactic. Below is an example of multi-threaded ways to achieve market growth potential when it happens. From left to right, they are put in the sequence most commonly pursued.

Design of Conventional Sales Organizations

Having seen hundreds of startup sales organizations I’ve found that almost all follow an upside-down pyramid model. This originates from the lack of a proper sales design, and as a result, when sales grow more blocks are added to the structure.

Rapid Growth Issues

As the market accelerates, the sales organization has to match the pace. With the above model, you find yourself throwing more blocks on the heap: more people, more tools, more and more. Without a proper design, you are simply scaling failure. Worse, as you increase the velocity during rapid growth, the structure becomes more likely to collapse.

Compare it to building a 20-story apartment complex on top of the concrete foundation of a 1-car port garage.

As your business enters rapid growth, your sales structure is unscalable and not agile enough to meet market changes. Organizations become highly dependent on a single person, often the sales leader, and today we see that they look at data as an afterthought.

If you question the impact, I ask you to ask a seasoned startup CEO how long it takes to reboot from a redo on the sales team. See the fear in their eyes. We are talking 6 to 18 months during a time when your market is in rapid growth!

This is NOT the sales leader’s fault! Many companies rely on their sales leaders to design all of this. But sales leaders are ill-equipped for this. After all, there is no school (yet) to become a SaaS sales architect, no certification.

So instead, companies hire experience. In many cases, that experience means the design comes from the previous job (which also lacked design), and perhaps it was at a time when data in sales was at an infancy, where things operated at half speed. Pricing models were different, etc.

Creating a Scalable Sales Organization

In absence of any "sales architecture," I started to structure sales designs along similar elements used by professional sports teams, armed forces, and educational institutions. After all, they help hundreds of thousands of normal people do extraordinary things any given day. Below, the SaaS version.

Architecting the Design

Based on this structure, all that had to be done was to take the blocks encountered across hundreds of SaaS sales organizations, distribute them across the key elements, then put them in the right order, and understand the dependencies across elements.

This provided a first glimpse of how to scale SaaS sales organizations. I’ll spare you the details as they go beyond the scope of this article.

Results of Design Architecture

As you scale, you scale each of the independent functions and dependencies. When it is properly designed, all elements scale accordingly with it. For example, scaling the organization (hiring), you can scale along the process you designed, through onboarding, skill training, and enablement.

A well-designed organization is agile and able to follow market demands. These changes often occur as a startup engages in new vertical market segments and enters the enterprise market, etc.

By separating the sales design from the sales execution, you can build a sales organization that is focused on the client’s and organization’s needs. You can then bring on the right sales leader to execute that design at any given point during the company’s lifecycle, and not have to do a restart with every hire. Data is used as the mortar between the 5 elements, and each block that is part of the design. It acts as a single source of truth, eliminating debates on topics such as lead quality, sales performance, marketing campaign efficiency, etc.

Simplified Action Plan

Comparing what had to be done vs. what is being done via a gap analysis created an action plan, a blueprint to build a scalable sales architecture.

Below is a simplified result of what needs to happen for a company that wants to scale to $50M.

Win by Design. Not by Chance.

For startups who want to scale up revenue to $50M ARR, my advice is this:

Take the same interest in designing your sales approach as you have during the design of your SaaS product.

A product that was designed by a software architect, resides on a highly scalable infrastructure, of which its UI was designed by an artist, and the UX was designed by a designer. Everything you have done till this point was based on design. Don’t stop now!

Want to learn more?

Early 2016, I will offer SaaS Sales Architecture classes in the Bay Area for qualified organizations (>$1M ARR, sales org of 6+ etc). The goal is to develop insights among sales leaders around a scalable SaaS Sales organization. If you are interested to learn more contact me via LinkedIn.

For those of you who want to get started right away, please find detailed insights on how to design, build, and operate scalable SaaS organizations in the book, " Blueprints for a SaaS Sales Organization" available on Amazon.