I just landed my dream CRO position. I’ll probably be out of a job in two years.
How’s that for a deliberately provocative statement? But it’s the statistical reality for VP Sales and CROs in growing and rapidly scaling businesses. Often, they just don’t know it. And in truth, neither does the CEO when they’re hiring.
But what if I want to buck that trend and stay the course? In this article we are going to break down some of the good reasons tenure for successful sales leaders is so short (and maybe should be) and then outline the steps we can take to be exceptions to the rule.
People think of growth as a continuum, when in fact the stages and the people who succeed in them are quite distinct. Let’s take a look at the stages of a business, and use Annual Recurring Revenue (ARR) as a proxy for what happens.
$0 - $1 Million: This is all about finding product market fit. Likely a few pivots, and still trying to figure out what clients will buy. Pricing is also still quite flexible. You don’t need a VP or a CRO at this stage. The sales team is likely either business development, junior AEs, or those who love the creativity and constant change this stage requires.
$1 - $3 Million: You have customers and have started to see patterns in selling and buying. You’re better able to package the solution, understand the messaging that resonates and are firming up the pricing to be less ad hoc. There are several sales reps; if PLG you have a sales-assist motion or CS to support. You may have a VP or Director of Sales, and I often see that the job requirement is to get the team to $20-$30 Million. Each deal is likely still its own art form with slightly different requirements.
$3 - $10 Million: Now you’ve proven the solution and can start enforcing the frameworks and processes to allow for repeatability, laying the foundations for scale. You’ve hired more senior salespeople, and likely have a VP Sales to manage the team and also perhaps a CRO as you get closer to $10M. Even if you’re operating in a PLG motion, you will have more senior team members to support the number of clients that this stage likely has. Sales leaders at this stage like that there is still some experimentation and a startup culture and are willing to take the risk on the business.
$10 - $30 Million: Now you’re battle-hardening your processes and expecting lots of repeatability and increasing levels of predictability in forecasting and quota attainment. If you didn’t have Sales leadership before you do now. It may be the same person you brought in in the previous phase: if so they may not have led at this level before. Newly hired sales leadership has more experience, and the job requirements are to get you to $50 Million. They still like the ‘startup’ stage but prefer a bit less risk and don’t want the chaos of a brand-new startup. You might be bringing in a CRO over an existing VP (you can always promote a VP but it’s really hard/almost impossible to hire over a CRO without letting that person go. Which is why you don’t want to give out that CRO title too early.)
$30 - $100 Million: Your processes should be solid, the growth machine is running smoothly, you know exactly how to forecast and your deals for the most part follow a predictable path based on the frameworks you put in. New sales leadership brought in at this stage has proven expertise, knows how to manage a fairly large Revenue organisation and how to manage managers, and may have IPO experience as well. They don’t want ‘startup’ life, they want a bit more security in both proof of the organisation as well as their stock options. You definitely want a strong CRO to make sure the whole revenue organisation is well orchestrated.
$100 Million+: This is where you almost definitely don’t hire new leaders who haven’t operated at this level before. Your CRO understands how to run a very tight ship, is experienced at managing senior leadership (2 or 3 levels deep) and often prefers to work at already established businesses where there may be less risk.
So where does that leave the newly appointed sales leader, anywhere on that continuum?
Let’s go back to the original statement, why is tenure so low?
The CEO is responsible for making sure the right leadership is in place and that risk is minimised that might impact growth. Boards worry about that risk too. As the size and revenue of the organisation increase, the ‘risk’ rises too. So, there often is a preference for leadership who has been there/done that. Your very early stage VP of Sales is likely ‘topped’, ie more senior leadership is hired over them, or a less experienced CRO is replaced by a CRO with the next level of expertise: IPO, public company, very high revenue, etc. (Side note to my bosses and board who might be reading this: I don’t want to go anywhere!)
But I’m also conscious that when my company crosses the $100M/$150M mark, the board may start thinking about the company’s next phase. I’m very hopeful they’ll invest in me and support me in this journey. But, as we know the average tenure of a CRO is less than two years—which not so coincidentally aligns with the stages above. So, while this might not have been the smartest blog post to write, it is the elephant in the room.
"This is slightly where US and EU attitudes diverge - the US view (as per the Ben Horowitz book The Hard Thing About Hard Things) is to let the incumbent leader go - in EU it's more to let them go build another region (typically the US) or revenue stream (like partners). They have so much company knowledge that they can do that. There are of course exceptions where the sales leadership does stay through e.g. Snowflake, a company whose success is difficult to argue with". - Andy Leaver, Operating Partner, Notion Capital
VPs and CROs do need to acknowledge the revenue stage they enjoy the most and are best at. Which then leads to risk for a CRO and typical compensation packages don’t acknowledge this. The better the CRO in the early stage does, the faster they grow the company and potentially the need for a Revenue leader with different experience. And in truth, after a certain point in your career, you know if you prefer the more slightly frenetic pace of a startup/early scale-up, or if you don’t like/want that and prefer a more mature organisation. When leaving an organisation before an exit event, many leaders haven’t negotiated extended exercise periods and can’t afford to exercise their options (or the tax owed on exercising).
"It's tempting to think of the journey companies go on from $1-$100m in revenue as a continuum. It isn't. Things change dramatically as you grow and the people who will help you succeed, especially in sales and marketing roles are often very different. The idea of a “tour of duty” is intriguing and if done well, it turns the peril Jennifer is articulating so well into a super-power for European founders". - Stephen Millard, Operating Partner, Notion Capital.
Is this something that VCs should start thinking about? How to bring in sales leadership for, as Stephen Millard calls it a “tour of duty” that is less than the typical 4-year vesting, but with incentives for hitting milestones? Should companies start acknowledging that there is different expertise required at different stages of their growth and plan for this upfront?
How the sales leadership changes says a lot about company culture - if it's a brutal goodbye then the people left behind realise that giving their life to a company doesn't cut both ways.
I’d love to hear your thoughts on how these particular roles, VP Sales/CRO might be restructured from a typical 4-year expectation. How do you compensate and motivate these team members, to incentivise them to use their own particular skill set to grow as fast as possible (and as preferable)? How can a business ensure that it has the right talent onboard for the current stage, and proactively create a great handoff for future needs if required? What expectations should be set? Lots of questions I’ll be asking myself in the years to come.
Now–let’s discuss what I can do, and what CROs and VP Sales can do to best buck the trend.
So how do CROs buck the trend and become the statistical anomaly that stays the course?
Amidst the day-to-day challenges of being a CRO, which all sales leaders know is all consuming - see my recent article on Sales Cadence as an example - I’ve been giving a lot of thought to this question and I think it comes down to these three things:
1. Be stage aware
Many people in fast-growing startups recognise the stage of growth that they are most comfortable with and that’s an important first step, but often they only realise after the event, when they’ve left, looking back. But understanding the different stages of growth, which stage you are currently in, what is coming next and what is required to succeed at each is critical.
2. Adopt a growth mindset
No one’s ability or intellect is fixed. I hope that is something we can all agree on. I may be comfortable at one particular stage, but that does not mean that I can’t be successful at a later one. The best CEOs talk about becoming comfortable with being uncomfortable. Taking a broad brush, the early stages are all about problem-solving and discovery, the middle stages are all about capability and process building while the latter stages are about systems, data and mechanisation. With a growth mindset, we can anticipate and learn what is required at each stage.
3. Surround yourself with exceptional people who complement your strengths.
We could go on and on here. The key message is to understand your stage, hire for your weaknesses and the capabilities you need to build and prepare for the changes you need to make to be successful in the next stage. And of course, ensure your CEO knows you want to be in for the long haul and are adapting and taking steps to provide value throughout the company’s journey. It might not be enough but you’ve done what you can.