Craft Ventures
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The Cadence: How to Operate a SaaS Startup

You think you need a COO. What you really need is an operating philosophy.

Ironically, the better the startup is doing, the more chaos there is. This is one of the few startup problems that growth doesn’t solve — in fact, it’s caused by growth.

The Cadence is designed to synchronize the major functions of a SaaS startup so that the team works together in lockstep. It brings order to the chaos; it turns the shitshow into an army. It brings together disconnected areas so everyone understands what is happening and what they should work on. It replaces erratic release dates and sales targets with concrete milestones for shipping and selling. The impact of hitting those milestones, quarter after quarter, has a huge compounding effect on the performance of the business and its culture.

  1. However, it’s not the same cycle. Sales and Finance are on one calendar; Product and Marketing are on another calendar. I call these the Sales-Finance System and the Product-Marketing System.
  2. If you snap these two calendars together, it will create a single operating cadence for the company.
  3. The key milestones and events in these systems create opportunities for company-wide communication and collaboration — a kind of superstructure for the organization.
The two key systems in a SaaS startup are the Sales-Finance System and the Product-Marketing System. Synchronizing them creates an operating cadence.

The Sales-Finance System

Sales and Finance are the first two functions that work together on a calendar.

The Sales Calendar

For the early-stage startup that is still doing everything ad hoc, moving to a written quarterly sales plan instantly makes the sales team feel better. Constant changes to quotas and territories undermine morale. Putting the team on a predictable quarterly cycle instills confidence that the goalposts won’t change.

The Finance Calendar (Fiscal Year)

Every company runs on a fiscal year as an accounting requirement. This finance calendar should be synchronized with the sales calendar for reporting reasons. When the books close on a fiscal quarter, the numbers should reflect a complete quarter’s sales activity, not an incomplete mid-quarter picture. The leadership and board will have a much better sense of what’s happening in the business if sales plans are snapped to fiscal quarters.

Board Meetings

Board meetings should also be snapped to the Sales-Finance calendar to ensure that the Board reviews sales results while the data is fresh. Ideally, board meetings occur two to three weeks after the end of the previous quarter. So on a January 31 fiscal year, Board meetings will occur in February, May, August, and November. Preparing for those meetings will preoccupy the finance team during this time. More pieces of the SaaS calendar are falling into place.

The Product-Marketing System

In the same way that Sales and Finance work together on one calendar, Product and Marketing work together on another calendar.

The Product Calendar

In order to scale software development, startups create multiple independent dev teams working in parallel, with a product manager assigned to each major product area or strategic priority. Ideally the PMs own and manage their own product roadmaps in a decentralized way. However, the overall product roadmap should get reprioritized and resourced quarterly as part of a formal PM and design review process.

The Marketing Calendar

Now that you know there will be a major quarterly product release, you can plan marketing around that. This is why marketing and product are on the same calendar. Startups are product driven, and most news that the company puts out will feed off of new product releases.

Using a launch event to focus the world’s attention is a simple trick that has been foundational to the success of Elon Musk, Steve Jobs, and Marc Benioff. If event-based marketing has been effective for the most successful founder/CEOs in the history of our industry, why aren’t you doing it?

Launch events are a critical part of the Cadence. It’s not just about the external marketing value: There’s a huge internal benefit from setting dates and deadlines in order to hit a public launch. If the team at Tesla knows that Elon is going on stage to present the Model 3, they have to hit those deadlines. The same is true with Marc Benioff at Dreamforce. Sending your CEO onstage to showcase a new product is tremendously motivating for the team inside the company. The date has been set, the invites have gone out, the world is waiting, and there’s no choice but to hit the goal.

If you have product-market fit sufficient to raise a series A or B and are scaling from 50 to 500 employees, you have a fan base. You can engage this community. It may start small. It may only be a few dozen people at the first event, but it will grow.

A common objection I get from founders is that they think no one is going to come to their event. That was my fear at Yammer when we did our first annual user conference called YamJam. But even in our second year as a startup, enough customers, prospects, and industry observers showed up to fill a hotel ballroom. If you have product-market fit sufficient to raise a series A or B and are scaling from 50 to 500 employees, you have a fan base. You can engage this community. It may start small. It may only be a few dozen people at the first event, but it will grow. Just look at Dreamforce: starting from modest beginnings, it is now the largest tech conference.

Snapping the Systems Together

Now it’s time to snap these two systems together. In bringing the two calendars together, it’s important to offset the peaks. The Sales-Finance System culminates with the quarterly close, and the Product-Marketing System is oriented around the launch event. You want to space out these key events by about half a quarter apart to avoid lighting everyone’s hair on fire at the same time. It creates too much chaos in the organization, and it’s not good change management. Product demos shouldn’t change right when sales is trying to close the quarter. By the same token, when lightning strikes occur in the middle of the quarter, the positive press coverage helps to drive leads and advance deals.

Step by Step

Snapping the calendars together with an offset creates a single operating cadence for the company. Here’s how to do it:

  1. Second, snap your sales plans to the fiscal quarters. This will determine when quarterly closings, SKOs, and Board meetings occur.
  2. Third, schedule a marketing event in the middle (second month) of each fiscal quarter.
  3. Fourth, plan your product cycle to hit those event deadlines.

All-Hands

Knowing the big milestones inside the quarter makes it easier to plan all-hands meetings. For example:

  • After the board meeting, review strategy.
  • Before the big launch event, preview the new release.
  • After the launch event, debrief on how it went, what was learned, and where the product roadmap is headed.

Summary

The Cadence puts the four key functions in a SaaS company (Sales, Finance, Product, Marketing) on a quarterly calendar. Human beings are wired for seasons so this is a natural way to work. The Sales-Finance System is oriented around a quarterly close as its central event, while the Product-Marketing System orients around a launch event. Synchronizing these calendars creates a single operating cadence for the company.

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Craft Ventures is an early-stage fund dedicated to the craft of building great companies.

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David Sacks

General Partner and Co-Founder of Craft Ventures. Previously: Founder/CEO of Yammer. Original COO of PayPal.