Dear SaaStr: Should SaaS Startups Really Have CROs or COOs? Is That Too Many Management Layers?

Dear SaaStr: Should SaaS Startups Really Have CROs or COOs? Is That Too Many Management Layers?

A few years ago, I would have said No. There’s no way a SaaS startup needs a “CRO” or “COO” or other C-level Officers Without a Clear, Single Functional Area to Own Until $40m-50m+ in ARR.

But … like many things … my views have evolved 🙂

Three trends have fueled the rise of hiring COOs and CROs closer to $10m ARR than $50M ARR:

• Faster Growth. If you are growing 40% at $10m in ARR, a COO may be a luxury. If you are growing 150%, it may be a necessity to get help in ASAP to run a material part of the business.
• Specialization. As we’ve all gotten more experienced in SaaS, we’ve specialized more. If your VP of Sales is your closer, you have a VP of Accounts, and a VP of CS … who is going to manage them all? CRO. You want each revenue leader doing what they do best. Not trying to manage departments they have less passion for and/or that distract from their core goals.
• Veterans. We now have a lot, lot more veterans in SaaS than we did 5–10 years ago. A great VP of Sales who took a company from $1m to $50m may want to try CRO now. Similarly, a VP of Product might want to own more as COO. If you get a great veteran that really has passion for a startup, and you are at $5m-$10m+ ARR … maybe carve out a portion of the company for her to run. COO or CRO are two good ways to do this.
• Title Inflation.  So many folks that would have been fine being a VP of Sales a few years back just want to be a CRO today.  You can fight this, or you can acquiesce.  Sometimes it’s easier to not fight it.

Nowadays, I like to see the conversation start as you approach $10m ARR, especially if you are growing quickly (>100% YoY). Is there a great #2 you could bring in? If so — let’s go find them!

(image from here)