“Growth Pains” — Three Universal Truths of Scaling Up Your Go-to-Market Engine
Observations from a workshop with forty cross-functional startup leaders
At Abacus & Pencil Consulting I focus on helping SaaS startups define their Growth Strategy, align their Operating Priorities, and Raise Their Next Round as they scale from $10M to $100M in ARR. Whether you’re simply looking for a quick gut-check or are interested in exploring a project together you’re welcome to grab time on my calendar.
If you’re subscribing to a blog, attending a networking event, picking up a business management book, or hiring a consultant — chances are the offering is targeted towards you based on your function + your company’s stage and business model.
More often than not, this kind of narrow focus makes sense.
If you have identified a specific problem and are looking for a way to solve it, you want to know that you are going to get the right solution for your context.
But, as a result, there are very few places where start up operators can look across functions, company maturity stages, and business models.
If you are not sure whether you have prioritized the right problems in the first place, or wonder if the off-the-shelf frameworks actually fit your needs — there is no good way to figure that out.
Furthermore, if you’re looking to grow as an individual not get put into a box (e.g. “He is third-time Series B finance leader”, “She is good first head of sales, but company outgrows him eventually”) you must look beyond your stage and function.
This is why I particularly enjoyed leading the Operators Guild Master Class on the CRO — CFO partnership. We were able to create a forum that cut across startup stages, functional disciplines, and business models.
Below are my own 3 key takeaways from leading this master class for 40 startup operators. (For a quick recap of the class content, check out my previous post.)
Todays’ cover image is Mark Rothko’s No. 14. Most art is contextual: requiring you to read the text plaque next to it to fully understand it. Rothko is unique in that he captures the universal spiritual truth of being human. Go check it on the 2nd floor of SF MoMA.
[1] Both sales and finance often think they own result. But they rarely collaborate effectively to achieve it.
🤯 What surprised me?
Even experienced leaders often view ownership as not just a zero-sum and binary outcome: either sales or finance owns the result. In my view, this is a limiting belief and, despite the best intentions, often leads to an antagonistic culture with no cross-team collaboration.
📈 What can go-to-market leaders do to change this?
As uncomfortable as it may seem, invite your finance leaders to join forecast calls with your AEs. Help educate on them on what really happens behind that X% close rate number. Encourage your RevOps/SalesOps leaders to work iteratively with the FP&A team to figure out headcount needs, set quotas, and refine drivers. Last but not least, do not be afraid to let your front-line sales managers have a direct line of communication with the finance team. Front-line sales managers are often the single point that carries the downstream consequences of everyone else’s decisions — enlist their help in educating the rest of the company.
💰 What can finance leaders do to change this?
Don’t ask for inputs into a financial model and simply ask your peers to sign up for KPIs. Being able to say “We missed ARR goals because ACV was 10% lower than expected and MQLs came in at 83% to plan” is not a good explanation because it doesn’t tell how to forecast better next time. Instead, develop strategic scenarios around discrete hypothesis rooted in customer value, then quantify them using KPIs that are customer-centric vs. based on your org. chart.
⚙️ Is there a framework to help with this?
Absolutely! I encourage all leaders that I work with to run a 3-legged forecasting (and goal setting) process. GTM leadership brings in a deal-by-deal view and line-of-sight; Operational leadership focuses on sales metrics and conversion rates; Finance leadership focuses on multi-quarter trends and identifying momentum behind them.
Your focus here should be on unlocking iterative learnings. Every time you update the forecast, as yourself these four questions:
To what extent do we believe the future will not be like the past?
Regardless of this Q’s final result, do we believe our underlying business health is improving or deteriorating?
How can we become less dependent on a single large deal / top rep etc.?
Are the metrics we track all moving together or independently? Does this represent risk or upside to the plan?
✏️ For more on this problem read:
Most CFOs think they own annual planning — but behave as if they don’t (link)
Your CFO is failing and might not even know it (link)
[2] It is not the CEO’s/Founder’s job to align GTM, Product, and Finance priorities.
🤯 What surprised me?
The traditional view (think: 100-year Fortune 500 company) of a leadership team is something like this: the CEO sells the vision, CFO sets the target, CRO hits the number. Unsurprisingly, 100% of startup operators agree that this isn’t their reality. And, furthermore, most also agreed that this traditional setup of roles & responsibilities is not just unhelpful but actually harmful for a fast-growing startup. Yet, surprisingly, the bad habits and mental shortcuts that have been drilled into generations of sales, marketing, and finance leaders (less so for product leaders) are still driving how decisions get made at most startups.
👑 What can founders do to change this?
From Pre-Seed all the way until you raise your Series B the company’s ability to achieve product-market fit and execute on the initial growth opportunities is 90% dependent on the founder’s ability to drive prioritization for their teams. At these early stages founder can, through sheer force of will, get the company onto the other side of a critical fundraise, product launch, or sales cycle.
When the company crosses 100 employees this ability to drive prioritization and alignment often breaks down. It is very difficult, if not impossible, to know and actively manage what 100 people are all doing every week. A key vestige of the early days that often continues well past the Series B is a leadership team that is only accountable to the Founder/CEO.
This does not scale. In my experience, startups that succeed have leadership teams who feel accountable to their peers (not just at the C & VP-level) without having to escalate up the org chart to align the teams.
🤝 What can functional leaders do to change this?
The culture of collaboration between the teams needs to go down all the way to the IC level. A great way to kick-start this is by thinking through everyone’s job description and ability to operate outside of traditional responsibilities.
For example:
RevOps needs to take the lead on “translating” between departments.
Deal Desk needs to help get the best outcome for the customer, not just enforce back office rules.
Product managers should understand how AEs run discovery.
⚙️ Is there a framework to help with this?
Yes, but it’s a little trickier to implement. To do it well and effectively, you need to make a handful of judgement calls and have strong cross-industry pattern recognition (it may even makes sense to bring someone outside-in for a “diagnostic”).
The key is to analyze your company's Growth Motions while moving away from the default view of the world that’s based on your org chart (e.g. Field vs Inside Sales, Marketing vs. Sales generated). Instead, you need to identify a set of growth motions that balances a bottoms up view that can be mapped to your cost drivers, yet still speaks to your customers’ experience of buying your product.
It is a 5-step process:
Identify all the possible permutations of your growth motions: inbound vs. outbound, partner vs. direct, new vs. expansion, PLG vs. SLG etc. — and customer segments based on geo, industry, company size, persona etc.
Figure out if certain permutations correlate with others e.g. is field sales usually closing outbound deals? are most of your SMB clients self-serve?
Decide which “cuts” of data are material and which ones can be downstream decisions (e.g. because they’re easy to adjust mid-quarter and don’t require a different type of headcount.) ← this is the key “simplification” step to keep this analysis action-oriented and rooted in customer stories.
Map these growth motions to costs, keeping in mind this may require you to split the cost of a single FTE across multiple motions. Don’t forget to include all the costs you’re trying to align — not just sales or marketing.
Set revenue targets for each growth motion/theme, not for individual teams. To do this effectively think backwards from the vision and the story you need to be telling in your next fundraise.
✏️ For more on this problem read:
[3] Last but not least: Pricing is an incredibly powerful forcing function to surface and resolve misalignments at all stages of growth.
More on this in a few weeks — when I’ll be kicking off a series on pricing.
If you’re curious to go deeper on one of the three key GTM + Finance collaboration areas — feel free to setup time to chat 1:1 about:
Aligning your Financial Planning & Go-to-market Execution
Harnessing the full power of you Pricing & Packaging
Debating and deciding on your Growth vs. Profitability trade offs
