11 ms·
Part II: The failure points from $5M to $100M in ARR
- adelia89 4y ago[dead]
- ipaddr 4y ago"And remember that A players can recruit other A players, but B players can only recruit C players" In point one they list this. In point 3 he mentions his biggest mistake was hiring someone with starpower from a public company who didn't work. Unless the founder is an A player in terms of recruiting everyone hired would be a C player or less. And in point 3 we learn he is not an A player. How do B players ever get hired?
- williamstein 4y agoThe assumption is: "And remember that A players can recruit other A players, …”, not “ "And remember that A players can ONLY recruit other A players, …”. (Added: My Ph.D. in mathematics is useful for something.)
- oragnediscussy 4y agoThe point is that B players have a very hard time ever recruiting A players and actually almost always hire people that are worse than themselves (i.e. c players). This is very true and should be something founders watch out for very carefully as they scale.
- sokoloff 4y ago"Yes and..." I think a lot of times this is intentional. A player wants to hire A players so the A player can more effectively beat their rivals in the marketplace. B player wants to hire C players so the B player can more effectively beat their rivals in the company.
- JumpCrisscross 4y ago> B player wants to hire C players so the B player can more effectively beat their rivals in the company I’m sure this is the case at some companies. But in my experience, it’s because the B player is as bad at hiring as they are at their job. This repels A players, who can smell bullshit, leaving a pool of Bs and Cs and guess of which there are more.
- skrebbel 4y agoMeta nitpick, and I’m not certain, but I think the author (named Tracy) is a she. Or a they which lets you avoid the problem altogether.
- sieabahlpark 4y ago[flagged]
- williamstein 4y agoYou are correct. The author's pronoun is "she" and there is a bio page about her here: https://leade.rs/speaker/tracy-young https://leade.rs/speaker/tracy-young
- eadmund 4y ago[flagged]
- molsongolden 4y agoThe A player thing is less about how good they are at hiring and more about how strong of a player they are overall. Founders generally need to be A players to be successful founders. An A player will still make hiring mistakes but they have the skills/ability/aura/whatever to convince other A players to come work with them. Many A players won't want to work for/with a B or C player because they won't see this as a good opportunity. Not sure if they actually meant that B players can't hire B players but maybe. This sort of framing is pretty high level though.
- mlhpdx 4y agoYep, just put people in bins so you can keep them organized. It’s always worked, so why stop now, right? It’s not as easy as A and B and C people (or any other labels). I’ve professionally led a team doing physical labor, and currently a team of teams doing intellectual labor (software development) and several between. They have been excellent, productive and profitable as well as respectful, ethical and honorable. The reasons behind their success are complicated but always start on the same foundation: respect. Genuine, difficult to come by, and more difficult to maintain, respect. For the customer. For the user. For each other. For other departments. For the community. For the competition. From there builds trust, and from trust comes ambition and the ability to focus on the purpose of the job (yes, it’s a job in most cases, not a mission or vision). This is what I see some growth CEOs miss. They lack respect for people outside the “right” mold and don’t hire (or keep) them. Then to their surprise, their teams become dysfunctional. Many tired anecdotes teach us about this (too many chefs, etc.) yet the same mistake is made with relentless repetition.
- georgeecollins 4y agoYour point just illustrates how shallow this analysis is.
- LarsDu88 4y agoThe author is quoting Steve Jobs who would parrot it to his original Macintosh team. The Macintosh was an overpriced black and white appliance that nearly bankrupted Apple. Wozniak's team on the other hand built up the Apple II to be cheaper, faster, more modular. The Apple II saved the company. Ironically Wozniak is the A person and Jobs is the B person
- candybar 4y agoNot sure if anyone doesn't get this but just in case this isn't clear, the entire point of the quote isn't that people can be neatly separated into A/B/C classes, but that lowering the hiring bar can lead to a slippery slope effect that continuously lowers the bar, hence the short-term benefit of hiring someone good enough has to be measured against the long-term cost of this slippery slope effect.
- faangiq 4y agoIt’s a low IQ point of view popularized by VCs. You can hire A/B/C if you pay enough, within some competency band as well.
- HorizonXP 4y agoLove seeing you back in the game Tracy. I'm currently knee-deep in the enterprise world, and trust me, the point about selling into these orgs is very true. My team just spent the last year moving our client off a Salesforce Lightning-based solution onto our custom-built one. No one in the org could tell us why they chose to build it in Lightning, but everyone now says they love our solution. The lessons you learn building a startup are good and always usable, but you need to be ready to learn what it's like to work in and with an enterprise, to figure out how to adapt and sell your product to them. It's an arduous process, but worthwhile.
- kolbe 4y agoI got the impression that the 2022 late stage funding implosion was also the death of ARR as a be-all growth metric. It got Goodhart's Law'd to death after all the companies that went public at huge valuations based on ARR turned out to not be as "recurring" as investors would have liked.
- Ataraxic 4y agoI wonder if you have more context or numbers. What companies are you thinking of. I remember companies like WeWork and Coinbase dropping in valuation but what more traditional Saas companies have run into this sort of hurdle? I'd argue that ARR is still a good measure just not the growth at all costs, w/e it takes to get toe 100M ARR/Unicorn status anymore. After all, sales is sales and if you don't have repeatable sales you probably don't have much of anything.
- kolbe 4y agoThere are many shenanigans that startups can play to juice ARR to render it meaningless. The idea isn't terrible, but that's why I invoked Goodhart's Law. > After all, sales is sales and if you don't have repeatable sales you probably don't have much of anything. That's right, but you're missing the key that it's a necessary, but not sufficient requirement. When the pool of investments is 90% with ARR are honest and straightforward, then it's good to use ARR as a metric. But when the pool changes to 50% or less who are honest (as Goodhart would predict), the metric loses value.
- jrockway 4y agoWhat are some of the shenanigans to juice ARR? I can think of a few; 1) make 2 year contracts cost the same as 1 year contracts (so you're lowering the price by 50% but get the number you want for your report today); 2) give incentives equal to the value of the contract (our software costs $30k but we'll give you $30k of AWS credits). Anything else to watch out for?
- kolbe 4y ago
- lbriner 4y agoA common theme seems to be founders who want to keep all the cool stuff about being a small business while they scale to the ARR of a corporate. It can't happen. 1000 people don't all care about some new feature shipped by someone over in the payments team so don't subject them to it. Most of us have been there in the painfull all-hands meeting falling asleep because the more people you have, the less they will care about the business. In a a team of 5, I have a lot of skin in the game and also a lot of influence. In a company with 100K employees, most of us are just a cog and some cogs don't even move anything!
- dilyevsky 4y agoI could see it happening in b2c just not your regular b2b saas
- JumpCrisscross 4y ago> could see it happening in b2c just not your regular b2b saas PlanGrid is B2B SaaS.
- deleted 4y ago[deleted]
- triceratops 4y agoAny articles about the failure points from $0 to $5M ARR?
- moneywoes 4y agoThis please, I think 99% of businesses don’t even get to $5M
- jrudolph 4y agoalso on the same blog -> https://tracy.posthaven.com/part-i-founder-led-enterprise-sales-zero-to-$5m-in-arr https://tracy.posthaven.com/part-i-founder-led-enterprise-sa...
- jvanderbot 4y agoIt's right on the same site. It is called "part 2" after all. https://tracy.posthaven.com/part-i-founder-led-enterprise-sales-zero-to-$5m-in-arr https://tracy.posthaven.com/part-i-founder-led-enterprise-sa...
- riku_iki 4y agopart 1 assumes you built strong product with strong market fit already. Author could consider writing part 0 about missing most critical part.
- deleted 4y ago[deleted]
- mariambarouma 4y agoHa! one of the slam-your-own-dick-in-the-door moves that startups seem destined to repeat Seen it SO many times when startups decide they need "grownups" in big positions to be credible externally
- dilyevsky 4y agoHey it worked for google (eric) and facebook (sheryl) so it will work for us!
- georgeecollins 4y agoI hate this BS about A managers hire A people, B people hire C etc. This is total MBA thinking (I think it comes form GE, or at least they espoused it) on a forum where people routinely mock MBAs. I have been lucky to work in a field where teams frequently work in parallel and success or failure is pretty clear cut. And teams are often stratified based on the priority of project. Many times-- not always -- the "B" team crushes the "A" team. Why? Some reasons include: the A team is performative and focused on the things that burnish the careers and reputation of its members. B teams have more of a sense of the wolf being at the door and that if they don't perform their task they will feel the consequence. Being underdogs promotes teamwork. Obviously people have profound differences in their strengths and weaknesses and some people are completely inappropriate. But calling people stars or A player covers up a lot of lazy thinking that includes a lot of bias. I have worked at smaller startups that say "we only hire A players". Obviously that is delusional but worse it covered up the more profound questions. Why did you hire the wrong person? Why did that person or team fail?
- Swizec 4y agoAn A player from Google will fail at a 10 person startup. An A player from a 10 person startup will choke on FAANG bureaucracy and fail. Fit matters. You wouldn't hire Jim Carey for a DiCaprio role.
- mooreds 4y agoThis is an underappreciated truth. The corollary is: find out where you thrive and go there. Don't beat yourself up if you get spun out of a FAANG, or a startup or a smallco or a bootstrap or a founding role or a mid-tier enterprise. Don't contort to a role or company that isn't a fit. If you have solid skills, you can find a place.
- albertgoeswoof 4y agoYou obviously haven’t seen eternal sunshine of the spotless mind
- 4y ago
- thexumaker 4y agoSo 3/4 of the main points here are in regards to hiring the right people... Almost makes me wonder if hr teams/operations shouldn't be measured on just headcount but rather getting the right people in
- Ataraxic 4y agoHiring speed, hire quality, compensation (including things like work/life balance, healthcare, flexibility). I think you can try for two. Once you get large enough your ability to really selectively recruit gets a lot harder when natural attrition means you need to replace X amount of people just to continue operating as before. Of course earlier on, the fewer the people the larger the impact each one will have so just like the article says about transitioning to enterprise, the focus and requirements of the HR team change as well.
- a_c 4y agoHiring is like a code base, you have to have the right abstraction at the right time. Starting out, better everything be a concrete implementation, that is everyone is directly responsible for making things work. Next is what I found most people doing differently from my ideal - abstract and refactor base on your existing implementation, not because of some framework doing it, nor because the previous project did it this way. Do you need a data access layer, a library, a folder, to talk to database where the first implementation was just storing things as a variable? You probably need a database and plain SQL. Do you need site reliability engineer to keep your site online while your traffic all comes from friends? Do you need a QA for testing? Or do you need a product manager where, as a founder, the value proposition has yet to be proven? How often do you see a code base spinning up all the folders/empty files because "we may need it". And how often when you hire someone, they spin up various incarnation people * time like teams, sprints, squad, function, BEFORE understanding the current implementation. This is why you hire the wrong people. And you know it only 1 year down the road. Wrong abstraction. Using framework has its appeal, where a cookie cutter solution mostly work. But it also has its limitation, bloat. Once a wrong abstraction is in place, the more code/people depends on it, the more effort it takes to refactor
- a_c 4y agoBtw, the most important point from OP's is the last one. Life is fragile, treat people well. That's more important than all the three letter acronyms in the world.
- xenadu02 4y agoAs employee #36 I lived through some of these things first hand and definitely agree with them (I think we were over 200 people when I left). It was painful going through the enterprise focus transition along with a nonsensical reorg imposed by the aforementioned Big Tech VP. One day we had focused platform-specific teams working on satisfying customers, the next we were moved to cross-functional feature teams and focused on enterprise features that (from our perspective) no one ever asked for. I also felt the sting from mediocre engineering managers. I remember sitting down with Tracy and Ralph at Uptown Bar and giving them both barrels on what I thought of several managers. To their credit those managers weren't working there very long after that conversation. IIRC Ralph asked if I wanted to move to being a manager and I declined but in hindsight I think that was a mistake - we needed good management in engineering more than we needed my code. Another thing that hurt us was hiring a bunch of PMs. Most of them were condescending, ignorant, or both... but suddenly they were telling the engineers who had built everything what to do? IIRC we could have cut that department down to two people with no loss. The leader of this product team was a manager that just didn't seem to be doing his job, only pushing paperwork and giving scatterbrained presentations. I never did find out why he was kept on so long. I think I very cheekily asked Tracy one time which of his relatives worked at Y2K or Sequoia such that he couldn't be fired because it was clear everyone in engineering was fed up with his nonsense. I'm pretty sure at least several top engineers quit due to that guy specifically. Either way I don't regret my time at PlanGrid. It was a great team and I'm proud of what the team did and what I did.
- fakedang 4y agoAs an outsider to the tech industry, it seems to me that the Product Manager/Product Owner role seems to be not only the most BS role, but also the most damaging role? Considering that I saw a post a few weeks back, I saw a similar post (I think on HN itself) where PMs were being fired en masse, I wonder if there is any real utility with the product team, or if it's just a holdover from Google doing its thing back in the days that everyone decided to copy.
- pixiemaster 4y agoI wouldn‘t agree with the BS label, as a good PM/PO can really help along. but with that kind of role, contribution quality is rarely assed correctly, and at the same time, the sandwhich role between contributors, management, and customers, combined with a usually communication-savvy skillset can be extremely dangerous. even worse in impact than a highly visible „bad“ EVP/SVP.
- manv1 4y agoA lot of the enterprise requirements he talked about add no actual value to the product; they're just checkboxes on an RFP that are required. Theoretically applying all of those requirements to your product might make your product more secure, scalable, or reliable. It'll also make your product harder to maintain, harder to test, and harder to improve. Many of those requirements are there because vendors put them there. If you're part of the RFP process (and you should be if you're actually selling to that sort of customer) you should be actively pushing back on requirements that you feel are pointless...making them optional instead of required, or at the very least providing a delivery date instead of delivering day 1. In the enterprise space there's no guarantee you'll get the contract; to an extent the decision more political than technical. You should do a brutal assessment of your actual chances before engaging in any work implementing their requirements before the contract is signed. And since the sales cycle will be at least 6-9 months you'll have plenty of time to figure things out. Lastly, if your product is highly desired the "requirements" can be bent or delayed. They're guidelines and can be overridden, if you have the right relationships.
- donnythecroc 4y agoInteresting you assumed the female CEO writing this was male.
- deleted 4y ago[deleted]
- candybar 4y agoOn the whole, this is a fairly good write-up but this is just not right: > Being at a startup is hard in a way that is almost indescribable to anyone who hasn’t experienced it. Being at a startup as an employee isn't necessarily hard. You hear this type of "startup is so hard" because running companies well is hard and successful startups will often grow faster than their founders are able to grow their own ability to run companies, which makes their own job challenging. And a lot of startups are poorly run in ways that are entirely avoidable (often as a result of their CEOs not being able to grow as quickly as their company) which can make life hard for the employees as well. But this isn't a necessary part of the startup experience.
- metadat 4y agoMost non-startup jobs tend to be well-defined and come with a pre-existing business strategy and existing resources, such as a project codebase and existing at least semi-working solution to which one can inspect and add to. Contrast this with startup companies, where it's often required to explore and build completely new things from the thin air of the ether. I'm not saying other jobs don't also have elements of this, as new projects and opportunities do emerge, but being at a startup is definitely an extreme situation and arguably a different game. In the meta lens, it can be viewed as the act of mining the veins of market realities for golden ideas. It's for the risk takers and adventurers. I've witnessed many a great engineer learn it's too undefined which can be uncomfortable, and is not a good fit for them. It's nothing personal, along the exact same lines as some folks who can't stand working for a large company. Different strokes and all that. This form of diversity is one of the beautiful things about the spectrum of humanity. In aggregate, it works!
- candybar 4y agoA lot of startups jobs are well-defined and have a pre-existing business strategy. In fact, in my experience, startups can even be much less fluid in this sense than big companies, because startups are funded for a much narrower mission based on a very specific vision, whereas big company often has a huge scope within which there's tons of ambiguity as to what to pursue. A lot of these types of statements generally are made by founders whose relative role at the startup (C-level) is much senior than their past or would-be role at larger companies (entry-level or close). Or early employees who got to be much more senior within a startup than they had been at a larger company. This just isn't an accurate statement for the rank & file or when you compare people at similar levels across companies.
- reasonabl_human 4y agoThanks so much for sharing these insights! Especially the humanizing points around life still unfolding around you regardless of how much success you achieve.
- raincom 4y agoThis while A/B/C are just code words for the right pedigree. Say, Mr. X worked for a no-name company, got a degree from some state college. Such a person can't recruit candidates whose pedigree is Ivy league credentials, and top tier companies. You can see this often in terms of successful exits for many start ups: people with right pedigree (that is, right network) can bring more multiples for their startups, than others do.
- steve76 4y ago[dead]
- wittedhaddock 4y agoLove this article. Thank you for sharing. Read it and felt seen and less isolated as I reflect on some of my own similar mistakes. My colleagues loved it too!
- forgingahead 4y agoGreat article and lots of salient advice in this post. It's so interesting to me that a company can get to $50 million ARR, and then feel strained because "there's enterprise competition". So what? I get that the pressure of VC-backed companies is go big or go home, but if the market that got them to 50 mill still loves and enjoys the product (which seems like it did), and churn is manageable, then one can probably truck along as a nice profitable business with some operational adjustments. Again, I get that the VC-backed status doesn't allow this, but that's such an interesting distinction - this would be a successful $50mill ARR business if not VC-backed, but since it is, the panic button is pressed and that thus leads to decisions and scrambling that upend a lot of what was working. Guess we all (as usual) need to make decisions about capital sources early and how we want to grow, as well as the real trade-offs between those choices.
- rfrey 4y agoParroting the A player, B player cliche means that anybody you've hired has a choice of thinking either YOU are an A player, or they are a C player.