- Hey there, Dan Martell, serial entrepreneur,
investor and creator of SaaS Academy.
In this episode I'm gonna share with you
how to design your org chart.
Some people call it the accountability chart.
Essentially, figure out where do people go on my team?
Who reports to who?
And how do I do this when I'm just three or five people
and not 50 people?
Be sure to stay to the end where I'm
gonna share with you my framework
called the High Octane Team Technique,
where I walk through the exact strategies,
reporting, systems, et cetera, that your
leadership team needs to be accountable
for to help you perform at a higher level.
Let's get into it.
(upbeat music)
The other day I was talking to one
of my private coaching clients
and all my clients that I work one-on-one with are
at least $10 million, some of them $100 million,
like ClickFunnels or companies like Carrot.com
or Proposify, all these amazing founders
and the one thing they all have in common is
they've had to scale very quickly.
One thing that I believe and that I try to teach them
is it's a who not what question.
So, as you scale, you're not tryin' to ask,
like what strategy should I execute?
That's true, but at a certain level
it changes to the what and I believe
that if you build the people
the people will build the business.
That being said, you need to figure out
what does a company that's at $100K a month
in reoccurring revenue for their SaaS business
look like, versus $500K a month?
And what's the right strategy to be able
to design the foundation so you can reorganise
it without hurting anybody's feelings,
because the worst thing is, you have somebody
in Marketing, then you've gotta move them over
to maybe not to a leadership position
and then they feel deflated, especially if they've
been there since day one.
So I'm gonna walk you through the structure,
the core functions and exactly how to design this
for your SaaS business.
Number one, six core functions.
If you think of a business, the way I look
at it, it's like an assembly line.
You have information or knowledge
or feedback going on this side,
and then, as you're team processes it, on the very
right side you have cash, revenue,
ideally in your bank account, okay.
And along that journey there's kinda six core functions
that if you line them up in a circle,
it creates what I call a growth engine
and all SaaS companies typically have
these six core areas of the business
that need leadership and understanding
and guidance and strategy.
So, the first one I'm gonna walk you
through them real quick.
Number one is product.
What are we building?
Second is engineering.
How are we gonna build it?
Third is marketing.
Let's tell the world that we built this thing.
Fourth is sales.
We need help getting people understanding
how the value exchange is an et cetera,
and get them buying.
Then fifth is customer success.
Let's get 'em activated onboard and trained, et cetera,
being successful with their product.
And then, sixth is ops and admin.
Essentially, the finance, the recruiting,
the operational side of the business.
So, those are the six core functions
that you need to understand are happening
in your business, whether you do it deliberately or not,
and over time, need leadership.
Number two, five levels of management.
Now that we've got the six core functions
out of the way, we need to talk about kind of the levels
of leadership at scale.
There is five.
In the early days you're got gonna have these,
but I just wanna walk you through these five
'cause they stack as we grow in head count,
full-time equivalents, FTE.
So, first off you have the Managing Directors.
These are the people that manage the business.
They sit on the board.
These are the founders, typically.
That's your MDs, your Managing Directors.
Then you have your C level.
These are your chiefs of, you know, your CRO,
Chief Revenue Officer, Chief Sales Officer.
You have your Chief Technical Officer.
You have your COO, your Chief Operating Officer,
et cetera, okay.
So, that's your C level.
Then you have your VP levels.
These are the Vice Presidents that report
to the C level, and then underneath that you have
typically team leads or team members.
These are people that are leading teams
and then you have the members of the team,
the team members themselves, right.
So, those are the five core levels of management at scale.
We're talking when you get into 50 plus employees,
you're gonna wanna think about setting them up
in that structure and usually you wanna keep it small
and move up.
So, let me walk you through three
different stages of growth and how you might design
your org chart for your SaaS business.
Number three, startup.
This is when you're just starting your business
up to about 12 employees.
I'm gonna assume you might have kind of a founding team
of three people.
Typically, it's somebody that's more business oriented,
technical and maybe marketing or sales driven.
So, if you think about those core areas,
the six core functions and we group them
into twos, okay, all of a sudden now we have this, okay.
We have, we have product and engineering.
These are the what to build and how to build it.
Then you have sales and marketing,
which is kind of like, get the product
in front of people and sell it.
And then you have kind of customer success and operations.
Make sure people are successful and also make sure
the financing and the receivables
and people are paying and all that stuff is figured out.
So, typically what you do if you have
like three founding team members is
each person will own one area of the business.
Where this falls apart is when people don't have
clear accountability and clear ownership.
I was on a call yesterday with one of my coaching clients.
They're a couple, they're married, and I said,
can you show me your accountability chart
because it's something I teach.
It's called the People Planner.
And when they showed it to me I saw both their names
on three different core functions of the business.
And I said, okay, don't know where you got that,
'cause I don't teach that, that's not my strategy.
And I said, you need to pick.
You need to ask yourself who's gonna own it?
Who's gonna be accountable?
So, the first level, which is under 12 employees,
this is the startup zone, typically less
thank $120K in a MRR.
What you wanna do is you'll have the founding team
each own one of those groupings of functions
and then have just team members report up to them.
If you do that you can have everybody
not have more than four or five direct reports, right.
'Cause you might have the engineering team
and the product team might be four people.
Then you have two people, team members, reporting
to the lead on the marketing and sales side,
or maybe three members, and probably actually
that would be a lot bigger.
And the ops and admin one might be
a part-time person recruiting an office manager,
administrative assistant, et cetera.
So, that's the way to think.
It's just two levels.
You have the team members reporting directly
to the founding team and you have three people owning
those kind of two functions per role.
Number four is the ramp up stage.
Now, this is where you need to add some leadership
between the founders and each core function
of the business.
Typically, you could call this a Director level person,
like the Director of Marketing
or the Director of Sales or the Director of whatever,
HR, well no, you wouldn't do HR at this stage.
But, Director of Operations, but those people
have their full teams reporting to that person, okay.
And then, you have the founding team members at the top
and they might sit or be responsible
for different areas.
So, that might be, let's say you have three,
you keep the three groups of people,
but underneath those leaders they have
their bigger teams, right.
So, you have your founders, the managing director level,
you have the team leads and then you have
the members that report to the team leads.
And, we don't have to make this complicated.
If you have six engineers and there's one engineer
that you feel is really has leadership skills
and shows up and they're driven and you feel
like they always make the right decision
that you would make when you're not around,
then just nominate them to lead the team.
And just ask them, you gotta ask though
'cause some people actually like to be
sole contributors and not lead teams
and this is where, you know, one of my clients
had a real issue with his co-founder
because the co-founder didn't,
didn't want to run a big team
and all of a sudden now they're leading
this whole technical side of the business
and it's not growing and the people
underneath are quitting and it just creates
a lot of drag and slows down the opportunity and growth.
So, you gotta make sure you ask the person
if they wanna be promoted into that position
and then, essentially they can be what's called
a player coach and they can still write code
and they can manage the team, right.
A sales person, you might have five sales people
right now and you need a Sales Manager,
you might evaluate one of the sales people
and say, hey, I really think they could be
a great sales coach.
You say, hey, I wanna put you into a management role
and essentially now they are responsible
for the rest of the sales people
and they report up to them and then that person
will report up to the founder and the founding
team member that is responsible for sales.
So that, all of a sudden, now we have three levels
of layer and that'll really get you
from $120K a month up to about $500K in MRR, okay.
And you still wanna keep it per,
so the three core areas grouped together, right.
If you think about is, it's product,
it's, so you'd wanna do like the product side.
You've got revenue and then you have
ops and admin and finance.
Those are kinda the three pillars
that you wanna essentially work the founding team into.
Then, the team leader and the team members
report up to that person.
Number five, scale up.
This is when you go from $500K a month in MRR
all the way up.
And for the most part this org chart can scale,
but there are always nuances.
If you're a venture backed you might have somebody
dedicated to Public Relations.
So, there might be other functions in your business
that might can be incorporated, but the high level
we're still doin' the three buckets
of focus in regards to revenue and product
and kind of operations, but what we wanna do now
is we wanna add a C level.
The sea C is usually Chief Revenue Officer
and they'll have sales, marketing
and customer success report up.
Then you'll have CTO, so the technical officer.
They'll have engineering or product
and engineering report up.
And then you'll have your COO.
And just so you know, like a lotta people
are like, how did Mark Zuckerberg scale Facebook?
He hired Sheryl Sandberg, who is the COO
and they, she, pretty much runs the business, right.
And that'll be like HR Manager, HR Finance
or Finance Manager.
You want, operations for me is about people,
it's about finance,
it's about projects.
It's about the operating system of the business,
what I call the company OS, right.
So, it's the meetings, the rhythms, the cadence,
the reporting, it's that aspect of it.
So all of a sudden, now you have C level people
that are accountable for those areas of the business.
Then you put vice presidents underneath them
so they might have multiple teams reporting
to that team leads.
Then you'll have the team leads
and they you'll have the team members.
And that structure should allow you
to grow to at least 250 people
and within product you might have
different general managers per product line.
But, the idea of having a CTO with a VP of Product
and the VP of Product creating those
kind of structures underneath them or they might have,
you know, essentially Managing Directors
for each product line and then team leads
and them team members.
That's gonna allow you to scale revenue
and it just, it takes this idea of those six
core functions, it makes it so that everybody
understands who's accountable to drive the business, right,
driving revenue, driving product,
driving operational excellence and efficiency.
And then, you just stack it up.
So, the big idea behind growing your org chart
is always try to have the least amount of management.
Start at the bottom.
Add a layer.
It gets more complexity.
Sometimes we'll move those people up,
you'll put another layer 'cause you really don't
wanna have anybody have more than five
to seven direct reports
And that's true for you.
If you have a team of 12 right now
and you have more, if all those people
report directly to you, you're gonna wanna tweak this.
So, quick recap on how to build a world class
SaaS org or for accountability chart
for your business at your stage.
First off you need to know the six core functions.
Then you need to understand the five levels
of management and then number three is
the startup phase.
Then we go to ramp up phase
and then we go to scale up.
As I mentioned at the beginning of this episode,
I wanna share with you an exclusive resource
called the High Octane Team Technique.
It is a full worksheet that you can use
to outline your key players
for each one of those rolls
and understand the four key areas of responsibility.
Things like reporting, systems, strategy, et cetera,
that they need to execute on to lead your team.
That's what's called the Executive Leadership Team.
Those are the people that are managing
and growing the business.
Click the link below to download your copy
and get access to that.
If you like this video be sure to smash the like button,
leave a comment and let me know what was your
biggest takeaway from this episode.
And as per usual I wanna challenge you to live
a bigger life and a bigger business
and I'll see you next Monday.