Inc - When The Team Revolts

After the recent events this weekend at OpenAI, I thought it might be a good time to update this classic SaaStr post on “revolts”.

My lesson learned: when the full team revolts (or a big part of it), you have to act.  You may not be wrong — but hey are “right.” 

Start-ups aren’t democracies, no matter what some employees may think.  The CEO is the CEO, and the founders are the founders. And the board — well as quirky as boards sometimes can be — is the board.

But start-ups also aren’t IBM or Cisco. Or even, anything like DropBox or Slack or Box orS, not organizationally at least.

From 1-10 employees, it’s a family. After 150 or so, somewhere in there, it starts to become a traditional hierarchical structure.

In between … from 10ish employees to 1X0ish … a start-up is something unique.

 Something organic. A couple of platoons. An organization that has come together voluntarily to take on a mission, at least in part.  Later, it’s just a job.  Maybe a cool job, but just a job. But from 10-150, it’s no longer a (squabbling?) family, but for many of your team, it’s more than just the best way to pay the rent.

And in this phase, most likely, at least once — the troops will revolt.

Non-founder CEOs get fired all the time — and these days, are quitting more often than ever.

Founder-CEOs getting fired seems rarer these days, though.  OpenAIs, Ubers and WeWorks aside.

Two that would be hard to imagine happening today:

• Pushing Steve Jobs out of Apple.
• Pushing Sergey Brin + Larry Page “down” to bring in an Outside CEO.

A few that we don’t hear about too much:

• Elon Musk pushing out the first CEO of Tesla. A necessity for funding. All the money was gone and the Roadster was hopelessly behind schedule and cost targets.
• Reed Hastings taking over as CEO of Netflix when he lost confidence in his co-founder.

Today, tech is so much bigger. And we believe in the cult of the CEO much more.  And more importantly, we’ve seen how so many of the very biggest, very best in tech in general and SaaS in particular are still run by founders. Founder-CEOs being ousted is rarer outside of bad conduct these days. Especially, with control provisions, founders get now.

SaaS products and services like Pilot track the finances of 1,000s of SaaS and other startup so they’re an interesting source of hard data.

What does Pilot’s latest data say? Something that’s both not surprising but also pretty impactful: 57% of venture-backed startups will have to go “back to market” in 2024 to raise more capital.

And 38% have 12 or less months of runway left. Many have already raised a bridge round. And realistically, most won’t have the metrics to pull off another round.

It’s crazy, but … you’re not alone. And sometimes it almost never ends.

• Dave Duffield made $10 billion when Oracle took over Peoplesoft … but he still had to go and co-found Workday.
• David Sacks made tens of millions at PayPal but had to do more. So he founded Yammer and sold it for $1B+ cash.  And he made millions as an angel investor.  But he still wanted to go bigger.  Now, he now manages $3 Billion+ at Craft Ventures.
• Elon Musk made nine figures and still plowed it all into Tesla, SpaceX, and SolarCity.

And those are among the Top 100 Entrepreneurs of All Time.

Up Next: Wednesday, November 22nd @ 10AM

Topic: The Top 10 Mistakes I See In The VP of Sales Hiring Process These Days

Speaker: Jason Lemkin, CEO and Founder, SaaStr

Workshop Wednesdays is new series where we’ll be bringing some of the best SaaStr speakers to you LIVE, every Wednesday. 

Each workshop will be hosted in a live, interactive 30-minute format at 10am Pacific each and every Wednesday. This workshop will be 100% LIVE, not pre-recorded, and will be hosted in an, interactive 30-minute format, including Q&A.

I’ll tell you the trick.

It’s going to sound simple, but it isn’t, because almost everyone gets it wrong.

For at least your first few reps: hire someone you would buy your product from.

Period. I.e.,

• Do not hire someone just because they worked at Facebook or Salesforce or even Datadog or Shopify in “sales”.
• Do not hire someone that Talks the Talk because you think you “don’t know how to sell” and they do. You do know how to sell if you have even 1 paying customer. You just aren’t great at it.
• Do not hire someone because of their “experience in sales”, per se. Experience is good, but 95% of that experience will not be on point.

Instead … realize sales in the early days is different, especially for one reason: Every Lead is Precious. Every single one.

“My App Stack” is a new series where we dig in with top CMOs, CROs, CTOs and CEOs on just what apps they’re really using to run their business.  I always learn a lot from these — they are in essence a best practices list from each leader.  Last week we had a great one with Sarah Kiefer, CMO at Pitch, check it out here.

This week we have Meagen Eisenberg, CMO at Lacework!

Here’s the bottom line: if your NPS is say > 40 or so, a significant portion of your customers love you. If your NPS is say > 60 or so, a ton of your customers love you.

Businesses are looking for solutions to their problems.

If a business’ very favorite vendor has another solution to another of their problems — they’ll want to take a look. You’ll actually be doing them a favor:

• They’ll take the call.
• They’ll attend the webinar.
• They’ll read the email.

But if your NPS is low, they won’t.

So my #1 best practice is get your NPS up. Then, basically any approach will work. Call. Email. Blog. Tweet. Have customer success do a soft sell. Have sales do a hard sale. It will all work — to the segment of your customers that truly love you.

And if your NPS is low, segment it. And reach out not to the customers you think are happy — but the ones that have told you they are. The ones that say they’ll recommend you to others.

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