Dan Martell - November 23, 2020


SaaS Organization & Example SaaS Org Charts (NEW Scalable Model)

Hosted by
Dan Martell
Mentioned
Mark Zuckerberg Sheryl Sandberg
Investing In SaaS Enabled Marketplaces with Christoph @ PointNine.com - Escape Velocity Show #41 How To Increase Your Average Revenue Per User (6 Tips)

Episode Stats


Length

13 minutes

Words per minute

193.3

Word count

2,533

Sentence count

132

Harmful content

Misogyny

1

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, Dan Martell walks you through how to design your org chart for your SaaS business. He breaks down the structure of your organization into six core functions, five levels of management, and 5 levels of leadership at scale.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.080 Hey there, Dan Martell here,
00:00:01.080 serial entrepreneur, investor, and creator of SaaS Academy.
00:00:03.240 In this episode, I'm gonna share with you
00:00:04.800 how to design your org chart.
00:00:07.440 Some people call it an accountability chart.
00:00:09.440 Essentially figure out where do people go on my team,
00:00:12.320 who reports to who, and how do I do this
00:00:14.480 when I'm just three or five people and at 50 people.
00:00:17.760 And be sure to stay at the end
00:00:18.600 where I'm gonna share with you my framework
00:00:20.400 called the High Octane Team Technique,
00:00:22.440 where I walk through the exact strategies,
00:00:25.320 reporting systems, et cetera,
00:00:27.040 that your leadership team needs to be accountable for,
00:00:29.960 to help you perform at a higher level.
00:00:32.280 Let's get into it.
00:00:45.920 So the other day I was talking
00:00:46.920 to one of my private coaching clients
00:00:48.460 and all my clients that I work one-on-one with
00:00:50.900 are at least 10 million, some of them a hundred million,
00:00:53.160 like ClickFunnels or companies like Carrot.com
00:00:56.720 or Proposify, Kyle Proposify,
00:00:59.240 all these amazing founders.
00:01:00.620 And the one thing they all have in common
00:01:02.420 is they've had to scale very quickly.
00:01:04.380 And one thing that I believe in that I try to teach them
00:01:07.320 is it's a who not what question.
00:01:11.200 So as you scale, you're not trying to ask you like,
00:01:13.160 what strategy should I execute?
00:01:14.880 That's true, but at a certain level, it changes to the what.
00:01:17.500 And I believe that if you build the people,
00:01:19.600 the people will build the business.
00:01:21.500 That being said, you need to figure out
00:01:23.200 what does a company that's at, you know,
00:01:25.720 100K a month in reoccurring revenue
00:01:27.620 what their SaaS business look like versus 500K a month?
00:01:30.620 And what's the right strategy
00:01:32.420 to be able to design the foundation
00:01:34.900 so you can reorganize it
00:01:36.140 without hurting anybody's feelings?
00:01:38.040 Because the worst thing is you have somebody in marketing
00:01:40.160 and then you gotta move them over to, you know,
00:01:41.980 maybe not to a leadership position
00:01:43.480 and then they feel deflated,
00:01:44.880 especially if they've been there since day one.
00:01:47.000 So I'm gonna walk you through the structure,
00:01:49.240 the core functions,
00:01:50.260 and exactly how to design this for your SaaS business.
00:01:53.520 Number one, six core functions.
00:01:55.940 If you think of, you know, a business,
00:01:58.480 the way I look at it is like an assembly line.
00:02:00.100 You have information or knowledge
00:02:02.540 or feedback going on this side.
00:02:04.280 And then as your team processes it,
00:02:06.180 on the very right side, you have cash, revenue,
00:02:09.420 ideally in your bank account, okay?
00:02:11.600 And along that journey,
00:02:13.880 there's kind of six core functions
00:02:15.640 that if you line them up in a circle,
00:02:18.120 it creates what I call a growth engine.
00:02:20.520 And all SaaS companies typically have
00:02:23.120 these six core areas of the business
00:02:24.840 that need leadership and understanding
00:02:26.960 and guidance and strategy.
00:02:28.980 So the first one,
00:02:29.960 I'm gonna walk you through them real quick.
00:02:31.220 Number one is product.
00:02:32.900 What are we building?
00:02:33.980 Second is engineering.
00:02:35.320 How are we gonna build it?
00:02:36.600 Third is marketing.
00:02:37.880 Let's tell the world that we built this thing.
00:02:40.020 Fourth is sales.
00:02:41.420 We need help getting people understanding
00:02:44.380 how the value exchanges and et cetera,
00:02:46.300 and get them buying.
00:02:47.440 Then fifth is customer success.
00:02:50.020 Let's get them activated, onboarded, trained, et cetera.
00:02:52.740 Be successful with our product.
00:02:54.040 And then six is ops and admin.
00:02:57.240 Essentially, the finance, the recruiting,
00:02:59.960 the operational side of the business.
00:03:02.200 Those are the six core functions
00:03:03.720 that you need to understand are happening in your business,
00:03:06.760 whether you do it deliberately or not,
00:03:09.400 and over time need leadership.
00:03:11.900 Number two, five levels of management.
00:03:14.280 Now that we've got the six core functions out of the way,
00:03:16.720 we need to talk about kind of the levels of leadership
00:03:19.500 at scale, there's five.
00:03:21.500 In the early days, you're not gonna have these,
00:03:22.900 but I just wanna walk you through these five
00:03:24.300 because they stack as we grow in headcount,
00:03:27.000 full-time equivalents, FTE.
00:03:28.760 So first off, you have the managing directors.
00:03:30.920 These are the people that manage the business.
00:03:33.400 They sit on the board.
00:03:34.440 These are the founders, typically.
00:03:35.940 That's your MDs, your managing directors.
00:03:37.640 Then you have your C-level.
00:03:39.240 These are your chiefs of, you know, your CRO,
00:03:42.760 chief revenue officer, chief sales officer.
00:03:46.300 You have your chief technical officer.
00:03:48.900 You have your COO, your chief operating officer, et cetera, okay?
00:03:52.300 So that's your C level.
00:03:53.400 Then you have your VP level.
00:03:54.820 These are the vice presidents that report to the C level.
00:03:57.800 And then underneath that,
00:03:58.820 you have typically team leads or team members.
00:04:02.340 These are people that are leading teams.
00:04:04.560 And then you have the members of the team,
00:04:06.220 the team members themselves, right?
00:04:07.680 So those are the five core levels of management at scale.
00:04:12.340 We're talking when you get into 50 plus employees,
00:04:15.340 you're gonna wanna think about
00:04:16.440 setting them up in that structure.
00:04:18.520 And usually you wanna keep it small and move up.
00:04:21.420 So let me walk you through three different stages of growth
00:04:24.740 and how you might design your org chart
00:04:26.900 for your SaaS business.
00:04:27.940 So number three, startup.
00:04:29.660 This is when you're just starting your business
00:04:31.800 up to about 12 employees.
00:04:34.040 I'm gonna assume you might have kind of a founding team
00:04:37.240 of three people.
00:04:38.380 Typically it's somebody that's more business oriented,
00:04:40.700 technical, and maybe marketing or sales driven.
00:04:44.340 So if you think about those core areas,
00:04:47.960 the six core functions, and we group them into twos, okay?
00:04:51.100 All of a sudden now we have this, okay?
00:04:53.220 We have product and engineering.
00:04:56.680 These are the what to build and how to build it.
00:04:58.800 Then you have sales and marketing,
00:05:00.100 which is kind of like get the product
00:05:01.620 in front of people and sell it.
00:05:02.820 And then you have kind of customer success and operations.
00:05:05.920 Make sure people are successful
00:05:07.480 and also make sure the financing and the receivables
00:05:10.540 and people are paying and all that stuff is figured out.
00:05:13.240 So typically what you do
00:05:14.680 if you have like three founding team members
00:05:16.600 is each person will own one area of the business.
00:05:20.600 Where this falls apart is when people don't have
00:05:22.620 clear accountability and clear ownership.
00:05:24.340 I was on a call yesterday with one of my coaching clients.
00:05:27.160 They're a couple, they're married.
00:05:28.820 And I said, can you show me your accountability chart?
00:05:31.280 Because it's something I teach.
00:05:32.420 It's called the People Planner.
00:05:33.800 And when they showed it to me,
00:05:34.760 I saw both their names on three different core functions
00:05:38.540 of the business.
00:05:39.300 And I said, okay, don't know where you got that
00:05:42.500 because I don't teach that.
00:05:43.600 That's not my strategy.
00:05:45.080 And I said, you need to pick.
00:05:46.620 You need to ask yourself who's gonna own it,
00:05:48.740 who's gonna be accountable.
00:05:49.620 So the first level, which is under 12 employees,
00:05:53.360 this is the startup zone,
00:05:54.700 typically less than 120K in MRR.
00:05:57.840 What you wanna do is you'll have the founding team
00:06:00.660 each own one of those groupings of functions
00:06:03.840 and then have just team members report up to them.
00:06:07.720 If you do that, you can have everybody
00:06:10.000 not have more than four or five direct reports, right?
00:06:12.340 Because you might have the engineering team
00:06:13.780 and the product team might be four people.
00:06:16.340 Then you have two people,
00:06:17.820 the team members reporting to the lead
00:06:19.800 on the marketing and sales side, or maybe three members.
00:06:22.280 And probably actually that'll be a lot bigger.
00:06:24.560 And then the ops and admin one might be a part-time person
00:06:28.080 recruiting and office manager,
00:06:29.760 administrative assistant, et cetera.
00:06:31.360 So that's the way to think, it's just two levels.
00:06:33.440 You have the team members reporting directly
00:06:36.100 to the founding team, and you have three people owning
00:06:39.940 those kind of two functions per role.
00:06:42.560 Number four is the ramp up stage.
00:06:44.760 Now this is where you need to add some leadership
00:06:47.240 between the founders and each core function of the business.
00:06:51.700 Typically, you could call this a director level person,
00:06:54.860 like the director of marketing or the director of sales
00:06:56.860 or the director of whatever, HR,
00:06:59.400 well, no, you wouldn't do HR at this stage,
00:07:01.020 but, you know, director of operations,
00:07:04.060 but those people have their full teams
00:07:06.960 reporting to that person, okay?
00:07:08.960 And then you have the founding team members at the top, okay?
00:07:12.020 And they might sit or be responsible for different areas.
00:07:15.440 So that might be, let's say you have three,
00:07:17.260 you keep the three groups of people,
00:07:19.140 but underneath those leaders,
00:07:21.200 they have their bigger teams, right?
00:07:22.700 So you have your founders, the managing director level,
00:07:26.660 you have the team leads,
00:07:29.140 and then you have the members that report to the team leads.
00:07:31.840 And we don't have to make this complicated.
00:07:33.940 If you have six engineers and there's one engineer
00:07:35.980 that you feel is, you know, really has leadership skills
00:07:39.920 and shows up and they're driven
00:07:41.540 and you feel like they always make the right decision
00:07:43.260 you would make, uh, when you're not around, then just nominate them to lead the team and just ask
00:07:48.840 them. You got to ask though, cause some people actually like to be sole contributors and not
00:07:53.000 lead teams. And this is where, you know, one of my clients was, was had a real issue with his
00:07:57.220 co-founder because the co-founder didn't, um, didn't want to run a big team. And all of a sudden
00:08:05.300 now they're leading this whole technical side of the business and it's not growing and they're,
00:08:09.760 and the people underneath are quitting,
00:08:11.600 and it just creates a lot of drag
00:08:14.800 and slows down the opportunity and growth.
00:08:17.360 So you gotta make sure you ask the person
00:08:18.640 if they wanna be promoted into that position,
00:08:21.000 and then essentially they can be
00:08:22.200 what's called a player coach.
00:08:23.240 They can still write code,
00:08:25.240 and they can manage the team, right?
00:08:27.200 A sales person, you might have five salespeople right now
00:08:29.400 and you need a sales manager.
00:08:30.680 You might evaluate one of the salespeople and say,
00:08:32.880 hey, I really think they could be a great sales coach.
00:08:35.560 You say, hey, I wanna put you into a management role.
00:08:38.240 And essentially now they are responsible
00:08:41.040 for the rest of the salespeople and they report up to them.
00:08:43.100 And then that person will report up to the founder
00:08:45.080 or the founding team member that is responsible for sales.
00:08:48.520 So that all of a sudden now we have three levels of layer
00:08:51.740 and that'll really get you from 120K a month
00:08:54.540 up to about 500K in MRR, okay?
00:08:57.420 And you still wanna keep it per,
00:08:59.820 so the three core areas grouped together, right?
00:09:02.940 If you think about it, it's product,
00:09:05.120 It's, so you'd wanna do like the product side,
00:09:09.780 you've got revenue,
00:09:10.880 and then you have ops and admin and finance.
00:09:12.800 And those are the kind of the three pillars
00:09:14.200 that you wanna essentially work the founding team into,
00:09:17.000 then the team leader,
00:09:18.560 and then the team members report up into that person.
00:09:21.120 Number five, scale up.
00:09:22.500 This is when you go from 500K a month in MRR all the way up.
00:09:27.000 And for the most part, this org chart can scale,
00:09:31.940 but there are always nuances.
00:09:33.840 If you're a venture backed,
00:09:34.740 you might have somebody dedicated to public relations.
00:09:37.280 So there might be other functions in your business
00:09:40.040 that might be incorporated,
00:09:41.120 but the high level we're still doing the three buckets
00:09:44.100 of focus in regards to revenue and product
00:09:48.940 and kind of operations.
00:09:51.920 But what we wanna do now is we wanna add a C level.
00:09:54.420 The C level is usually chief revenue officer
00:09:56.740 and they'll have sales, marketing
00:09:58.520 and customer success report up.
00:10:00.560 Then you'll have CTO, so the technical officer.
00:10:03.700 they'll have engineering or product
00:10:06.380 and engineering report up.
00:10:07.940 And then you'll have your COO. 0.58
00:10:10.160 And just so you know, like a lot of people are like,
00:10:12.580 how did Mark Zuckerberg scale Facebook?
00:10:14.980 He hired Sheryl Sandberg, who's the COO
00:10:17.380 and they and she pretty much runs the business, right?
00:10:21.020 And that'll be like HR manager, HR finance,
00:10:24.460 or finance manager.
00:10:25.540 You want, operations for me is about people,
00:10:28.980 it's about finance, it's about projects,
00:10:31.260 it's about the operating system of the business,
00:10:33.340 what I call the company OS, right?
00:10:35.320 So it's the meetings, the rhythms, the cadence,
00:10:37.900 the reporting, it's that aspect of it.
00:10:40.160 So all of a sudden now you have C-level people
00:10:42.600 that are accountable for those areas of the business.
00:10:44.780 Then you put vice presidents underneath them.
00:10:47.240 So they might have multiple teams reporting to them,
00:10:49.660 team leads, then you'll have the team leads
00:10:52.000 and then you'll have the team members.
00:10:53.520 And that structure should allow you to grow
00:10:56.620 to at least 250 people.
00:10:58.880 And, you know, within product,
00:11:00.480 you might have different general managers per product line,
00:11:04.900 but the idea of having a CTO with a VP of product
00:11:11.280 and the VP of product creating those kind of structures
00:11:14.080 underneath them where they might have essentially
00:11:16.920 managing directors for each product line
00:11:19.080 and then team leads and then team members,
00:11:21.320 that's gonna allow you to scale revenue.
00:11:23.220 And it takes this idea of those six core functions,
00:11:26.640 it makes it so that everybody understand
00:11:28.660 who's accountable to drive the business, right?
00:11:31.500 Driving revenue, driving product,
00:11:33.660 driving operational excellence and efficiency.
00:11:37.700 And then you just stack it up.
00:11:38.860 So the big idea behind growing your org chart
00:11:42.620 is always try to have the least amount of management,
00:11:45.420 start at the bottom, add a layer, it gets more complexity.
00:11:49.080 Sometimes you'll move those people up,
00:11:50.380 you'll put another layer,
00:11:51.740 because you really don't want to have anybody
00:11:53.540 to have more than five to seven direct reports.
00:11:55.440 And that's true for you.
00:11:56.280 If you have a team of 12 right now,
00:11:57.560 and you have more, if all those people report directly
00:12:00.360 to you, you're gonna wanna tweak this.
00:12:02.660 So quick recap on how to build a world-class SaaS org
00:12:06.440 or accountability chart for your business at your stage.
00:12:09.080 First off, you need to know the six core functions,
00:12:11.740 then you need to understand the five levels of management.
00:12:15.020 And then number three is the startup phase.
00:12:17.920 Then we go to ramp up phase, and then we go to scale up.
00:12:21.240 As I mentioned at the beginning of this episode,
00:12:22.680 I wanna share with you an exclusive resource
00:12:24.720 called the High Octane Team Technique.
00:12:27.020 It is a full worksheet that you can use
00:12:29.960 to outline your key players for each one of those roles
00:12:32.700 and understand the four key areas of responsibility,
00:12:35.680 things like reporting, systems, strategy, et cetera,
00:12:39.340 that they need to execute on to lead your team.
00:12:42.080 That's what's called the executive leadership team.
00:12:45.000 Those are the people that are managing
00:12:46.580 and growing the business.
00:12:47.860 You can click the link below to download your copy
00:12:50.540 and get access to that.
00:12:51.540 And be sure if you like this video to subscribe to my channel,
00:12:54.300 if there's anybody that you care about
00:12:55.840 that you think this could serve,
00:12:56.840 feel free to share it with them directly.
00:12:58.520 And as per usual, I wanna challenge you
00:13:00.180 to live a bigger life and a bigger business,
00:13:02.100 and I'll see you next Monday.
00:13:04.220 Did you want a chair or something?
00:13:05.300 No, you can't sit down.