# The SaaS Founder's Guide to Building the Perfect Team (step-by-step)

Channel: Rob Walling
Video: https://www.youtube.com/watch?v=Q2A2iD_wJOs
Duration: 31 min
Language: English
Words: 6418
Transcript page: https://viewrankai.com/tools/youtube-transcript/Q2A2iD_wJOs

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[0:00] there's some pretty prescriptive slides in here where I'm basically like look 90% of the time if you're a single founder developer in a low touch sales funnel your first hire should be X I'm going to show you what x is and your second higher should be Y and I'm going to show you what that is and I go through like 25 different scenarios those are the ones I'll go through a little fast I typically may have my talks in three sections today's menu first section will be about Job titles and about incentive programs you know Equity stock options and the like but it's for bootstrapped and mostly

[0:30] bootstrapped companies right so that that's where I'm going to give my opinions and caveats second section is about hiring what I'm calling hiring PAAD where I'm just like super prescriptive not 100% of the time but based on what I see across Tiny Seed Investments my own Investments microc comp companies if you're a two- founder company with this and that in high touch like I'm going to tell you I think this should be your first hire unless you have a reason not to and the third part's going to be about firing yourself okay so the hiring paths are just your first two hires it's really trly stage

[1:00] stuff cuz I find a lot of people don't know what to do with the first higher second higher but of course I can't go to third fourth fifth because like the tree gets way too big um firing yourself is about as the founder we have to fire ourselves from a lot of jobs how do I decide what's the next one to let go what's the next one I should hire and how do I put kind of build a job description so those are the three sections all right titles and Equity so I've made almost all these mistakes and if I haven't made them I've have seen

[1:26] companies that I advise make them companies that have been affiliated with it or I've gotten questions like this on the podcast so one common mistake is inventing job titles so I worked for big companies most of us have I hated the corporate bureaucracy so when I got out I said I don't care about Job titles they're a bunch of it's stuff MBA is made up so when I started hiring people I was like I don't know we need to like scale some stuff and with architecture so senior scaling architect right is a is a thing we made up other job titles I've seen code ninja customer

[1:56] success Master right these are like cool and they make a tip there are problems with this as a bootstrapper if you have two three four people not such a problem the moment you get up to 10 2030 you start actually companyb building right there's three stages of what we do first you're building a product then you're building a business it's when you get a few people and then company building is when you start hiring managers and kind of flushing things out we posted a job after drip got acquired we had buckets of venture capital because our acquirer did we posted a job we needed someone to

[2:28] help us scale because Derk Rymer in the audience because we had PTSD from our cues backing up so we said well we want a senior architect who can scale stuff so we're going to do this and our we had a in-house recruiter who was like that's not a real job title and I said yeah don't worry I know what I'm doing so the first thing we she goes and she runs a salary survey and uh which salary surveys like how we're in Minneapolis how much should we pay this person and there is zero data so I was like okay so I guess aren't they maybe maybe it's just a senior AR architect or

[3:00] something maybe we'll just kind of wing it so then we post it and we get very little interest because guess what people looking for jobs do they type in job titles as save searches guess who had senior scaling architect or code ninja typed in exactly three people right so we didn't get very much um uh interest and the last thing is I've seen this happen where that you know they're pretty defined hierarchies we don't think about it or I say I don't think about it cuz I'm a founder and I'm going to do whatever career progression is not a word I have it's I'm going to start

[3:31] the next company most developers most customer success people they want to advance in their career and that means getting more money and a higher title right they usually care about titles more than we do I'm generalizing but if they come out of your org with a title of code ninja customer success Master like it's kind of a disservice to them they have to now explain what they were actually doing and what they're going to say is yeah so as was a code ninja so pretty much I'm you know an equivalent to a software or a senior software engineer right that's how they're going to translate it

[4:02] when they go work for a you know a company with real titles so I quickly learned the of this now not why I was bootstrapping right we got up to 10 people with titles not this bad but you know there were kind of goofy titles and then when we got acquired I was like yeah by the time you get to 15 or 20 this is a problem so to find out what so what are the right titles right go to Google go to chat GPT I pulled this almost directly from Google I just said what is a standard engineering title hierarchy and are we doing this because

[4:31] we want to be mbas with kpis on our GS GPS reports no we aren't but for all the reasons I just said I'd advise not making up job titles there are standal standard tire standard title hierarchies for customer success as well customer support marketing you know this is just engineering just to show you how prescriptive it is and how there are standards for this and it's something again I dismissed because I'm a pirate bootstrapper but like I would you maybe don't other big mistake that I've seen done luckily I have never done this actually but I've seen it done and it's not good it's elevated job titles three

[5:10] person team we need our first person again this sounds we I hired our third hire was a customer success person but I called her the customer success manager which was the right role for it but I saw someone hire their first customer success person and they gave her the title of head of customer success well she's running it cuz she's the only one if you're ahead of customer success if you hire another person they should probably slot under them right they should be a manager and this person had not hired anyone with management experience so why this person that the customer success person knew what they

[5:42] were doing that title was not it didn't match right and again we can say titles don't matter but they do because then okay so now I have this a fit a not a misfit if you will I have a head of customer success who really shouldn't be managing people so now I want to hire someone more senior than than them I guess so now you're the head of customer success and are you managed by the manager of customer the director of like it just starts janking up your your org chart a little a little quick don't want to do this in day one the other one and

[6:12] this is I see this all the time actually more common than I should is uh non-technical founder or two they get two three employees in and then they say I really want someone on the team who's going to run the tech side okay I need a CTO you don't need a CTO what you need is a senior engineer or a head of engineering or a manager of engineering or a uh not a VP that's too high a director of engineering would even be too high it Founders should be the only people on your team with a sea level until you hit 50 employees may maybe 50

[6:47] I like to think 100 somewhere between there when you're 20 25 employees se- level people are 250,000 to half a million a year they get good chunk of stock options they manage teams of 8 15 40 in certain orgs like a CTO at a you know a 200 person SAS company is managing a department of 40 or 50 people so just simmer down with the c titles like don't hand them out to people because they have real meaning in the world and again something I had not necessarily realized um it's pretty common thing so don't mess that up and then last thing I'll say on this I think

[7:25] I get into incentives soon is leads and managers so so this for me is something I didn't have my head around we got to 10 employees I was managing everyone everyone reported to me that sucked because you're doing kind of one-on ones once a month or once a week and you don't necessarily want to get in that boat so here are my rules of thumb leads so here's a lead versus a manager a manager is someone who can hire and fire who can approve vacation who talks about raises manages the money does annual reviews does one-on ones like management okay a lead is someone who is who technically leads a

[8:06] discipline so a development lead software development lead is someone who no one reports to but they are the architect right they are the one who is keeping your codebase sane a customer success lead maybe doesn't manage anyone technically but they are the leader when we say well what should the customer success policy be or what should we do next we look to the lead lead Okay the reason it's important to have leads is because you don't hire managers until you have usually 4ish or five people in a department right when you're early you bootstrapped you can't afford to hire managers so my rule of thumb all right

[8:46] is that appearing yes is have a lead once you have two to three in a group so I was lucky enough that I had a co-founder who was a technical lead so from the very start he was the the development lead um and then our first non-engineering hire was customer success she wasn't head of customer success but she was the customer success lead she was the manager lead and we hired more developers and Derek technically LED them and I managed everyone okay so two to three and then when you get to about four or five that's when you got to think you just can't you can't keep growing um get to

[9:23] 12 15 direct reports it will wreck you or you'll lose people because there's no connection right so yeah um and then just a side note like the your first managers when you hire even at 4 five people your first managers almost inevitably have to be individual contributors just the nature of the Beast because you can't afford to hire someone to manage full-time when you're at 10 15 employees okay so that's my thinking on that oh man I was hoping there was a intermission all right I might need to take a drink of water um all right so we're going to talk about Equity stock options and profit

[10:05] sharing very common question I now have a saved snippet because I one time I forget who asked me it was in I think it was in I was it was either on Indie hackers or in the tiny seat slack and I just started typing and it just you know became a book chapter right or like a big section 1500 words pasted it in it was like this is great so then one of my individual Investments asked me like Hey we're thinking about profing what are the pros and cons and I was like and then when I went to write my book that we keep talking about I was like this is great

[10:35] so this comes almost directly out of that that little snippet Equity is when you give shares in your company right I think we all understand this there's a reason no one it's very very rare to give Equity because there's two problems with it there's a reason Silicon Valley doesn't do it there's a reason bootstrappers usually don't do it um it's because let's just say my company today is a SAS company and it's doing $50,000 a year in um uh in revenue and for simple math let's say it's valid we I would probably value it at a million dollars a forx AR right that's that's probably high but

[11:11] let's just say simple math so let me say all right new employee starts I want to give you 5% Equity of my company so now I've have given you 5% times a million dollar valuation doing math in my head in front of 234 people is amazing $50,000 I've just given you so have fun paying that tax bill at the end of the year that's what Equity is that's why no one uses it because there's tax implications in addition if we have a pass through entity in the US it's called an LLC obviously if you're in Britain it's called something different um at the end of the year if we make

[11:45] profit anyone who has Equity gets a tax bill whether they get the money or not so Equity becomes complicated my general rule of thumb Equity is for Founders that's it I think there's probably an exception here and there Equity grants usually for founders stock options are what Silicon Valley it's what has become traditional with startups frankly a stock option is when I give you an option to buy Equity right it's the same thing but instead of me giving it to you I say here you go and when you want to buy this after you've vested you have to pay a small price called the St strike price for

[12:21] this I'm not going to go deep into what stock options are but um the nice part about this is there's they don't you don't own any of the company so if I kick off at million dollar in profit you don't pay a tax bill at the end of the year in addition when you um you know you go to exercise years later there's no tax the the tax burden is much simpler okay and so when do you stock options if I were a bootstrapper or mostly bootstrapper I would if I had any inclination that I was going to sell or that I was going to have a even if I was

[12:51] going to have a secondary um offering meaning sell a portion of the company even if I just I'm thinking you know on the next years I'm going to sell 20% 25 to give some liquidity I would think about stock options okay if I thought I was never going to sell which if you listen to my podcast I often say everyone sells everyone sells but if you really are convinced that you're going to base camp this thing till you're 80 then stock options are probably not a good idea because you're going to give it to employees and they start working and they get three years and they get 5

[13:24] years and they get 8 years and they get 10 years and they're like what do we this is worthless companies thrown off millions of dollarss they got nothing right so that's where profit sharing comes in so I I personally if I were to start my next I would do it with stock options but I also probably would not plan to run it for 40 years you know profit sharing is what we hear about like py from balic does this some of the bigger bootstrap companies that really are convinced that they're going to hold it for decades and this is where you offer um a percentage of your profits uh

[13:54] the best article I've ever seen about this actually is just type in py balsamic profit sharing and he gives the whole formula of how he does it it's he tried monthly distributions too much annual people would wait around too long for it so he went to quarterly he talked about make this is a really interesting mistake actually he said first employee starts on 1% profit next employee .5% 1% .5 and so suddenly he had all this profit out there and it was like in retrospect now what he has is just a pool that goes to all the employees usually this starts around 10% certain point maybe you move it to 15%

[14:29] of all your profits for that quarter I think he might even have it at 20 at this point but that's the range 10 to 20% I would do that from the start rather than on z2z because those agreements just become Legacy very quickly so profit sharing if you're going to run it forever I wanted to jump in here for a minute to say that if you're enjoying this talk you should consider joining us at our next microcom event in New Orleans we're going to have 250 260 of your closest bootstrapped founder friends in our exclusive hallway track it's the best part of the event and I think it's the best hallway track

[15:04] of any event I've ever been to you'll see a handful of talks that are highly focused on inspiring and motivating folks just like this talk you're watching now and we have our excursions where you can get out and about in New Orleans and meet other Founders and connect with them it's March 16th through 18th in 2025 and at the time I'm recording this we're already 65% sold out this event will sell out so you want to get your ticket at micro c.com us hiring paths so this is when I get pretty prescriptive I don't want to spend too much time on this it can get kind of dry but as I said at the top

[15:37] like is this 100% no do I think it's probably 90ish yeah I think so I would certainly follow this on my own if I were doing it um and I have focused specifically on one and two founder companies so in we've done you know the state of independent ass survey where we survey like a thousand people a year thousand Founders a year and one and two Founders covers about 90% of the examples if once I went to three again I start stretching out this huge tree and I was like I got to I got to stop this somewhere it's insane interesting too this section actually came out directly

[16:06] from a conversation with a couple microm attendees uh in Minneapolis so it was about a year ago and uh it was J Christian jenko and shy and I started they were saying like a framework for hiring and I was like how would you even do that and then I was like What if I had you know Choose Your Own Adventure type thing and they're like yeah do that so that's what this is someday I'll figure out a really good way to represent it but for now we have a table so what I realized as I started doing this is I started sketching it out like all right single founder developer what

[16:35] am I what pattern am I seeing you know when do I see it work and what I realized is if you're in a low touch funnel and you see it in the upper right low touch low touch funnel is different than high touch High touch means I'm doing sales demos I'm qualifying people I'm bringing them in I'm going to have a lower customer count I'm going to have more sales effort usually kind of lower support effort all right low touch is marketing driven right I get in a bunch of leads I'm putting them through a funnel mostly self- serve if you're doing demos it's only for your higher

[17:03] end customer so let's assume low touch so if I was a single founder engineer usually what the first hire is support and the reason is because low touch is high volume and support is the lowest value task right so we see like Derek Rymer run savy Cal now single founder engineer he his first hire was support now he has to happens to Outsource it to a company but it's still a hire it's someone who's full-time handling support and then second higher depends on the space you're in so if you were to build a marketing automation provider today you probably need two or three Engineers for about a year to hit any type of

[17:41] feature parody with convert kit drip whatever you know MailChimp anything right tremendous amount of engineering effort because that's a very competitive space so in that case your second higher will probably be an engineer because you just need to build build build build um if you're not in a space like that and instead you're in a nice tight Niche where there aren't that many good competitors U marketing is what I would go after again it's low touch so I'm trying to expand my funnel someone you're going to have to manage you can't hand marketing off this early but it is someone to do some of the marketing

[18:13] tasks or help you with it so I'm not going to spend all that time on everyone but I want you to see the kind of the logic of how I get to each and it's not just logic through it's I went through literally every company that I have insight into and I was like what was their and I either knew their first hire or I asked them and I started just mapping of like oh yeah that makes sense that's why right so this is it you also see have Rarity on the right because there are some of these combos that are very rare and I'm going to skim through

[18:37] them quick like a in low touch like a single founder salesperson this is super rare right why would you go in low touch if you're that's what you are right so I'll zip through those later all right so then this one has two Founders we have an engineer developer and we have a subject matter expert so if you're building software for salons then the subject matter expert has run a salon or worked in the salon industry B to run an agency for has a bunch of expertise usually first hire is the same you're going to start seeing a pattern here second hire is engineering if they need

[19:07] to catch up or it's marketing if they need more leads subject matter expert is often times running a lot of marketing but since it's low touch you need to build that flywheel you need more help founder one founder two engineer in sales this is actually very rare because if you have a great salesperson why are you doing low touch sales you should do it with a marketer right so this one's same support marketing or engineering then let's look at two Founders engineer and marketing which is common it's going to be support and it's going to be marketing or engineering and you're going to see that this one Maps out

[19:38] pretty consistent designer and engineer support marketing or engineering so it's all pretty much the same the whole way down some are rarer than others and then these are all the rare ones where it's I'm a single founder marketer with no engineering you know no engineering co-founder it it exists right we funded a few with Tiny Seed but it's definitely more rare in fact when we did the I think it was state of independent SAS survey I think the number is 85 it's somewhere between 85 and 90% of like microcom type SAS companies are have at least one engineering uh at least one engineering co-founder so um yeah you'll see these

[20:15] the first higher and all of them has to be an engineer in essence because you can't do anything right you need to write code the second higher is usually support so that's the that's the low touch the high touch is is similar but different right if you're an engineer You're Building in high touch usually you are doing sales and you are onboarding people and uh and you're doing support and you're writing the code first tryer I most often see here is customer success because this is something you can hand like um who I was John and I have the same rule of thumb he said as a Founder don't hand off

[20:49] sales until you're about a million ARR jives half a million to a million is my rule with them also as a Founder don't hand off product till about halfon million or a million because finding someone good to do that to and you know it me requires a lot of money so um anyways engineering usually the first hire is Success second is sales or marketing depending on where you need the most engineer subject matter expert we have marketing engineering or success and yeah these ones VAR a lot I like this so put yourself in you know for your first or second hire if you're in this room this is what I recommend

[21:27] unless you have a let's see have an extenda circumstance and then these are the rare ones again it's like I'm in a high touch Market I need sales but I'm a single founder marketer like that's it just doesn't make a ton of sense so all right last section here is about so let's say you don't want to follow the hiring path or let's say you're on your third hire then you know you don't have a path anymore right so how do you fire yourself from all the roles that you do today this is one of my most popular tweets of all time of all the Deep like

[21:57] tweet threads I've done the things this this is it really one sentence but it's gotten a ton of retweets um your job as a Founder is fire yourself from one role after another and that's really it it's you start off doing 10 things and then you hire someone to do one and you do nine and you know it's things like this right that you most of the things you don't want to be doing unless you're like a masochist support taxes accounting and so the question is you know which job do you fire yourself from next and get this question a lot actually um a lot of my advising is is helping

[22:34] Founders they either know they need to hire and I'm helping them pick helping them figure out the role or they don't know they need to hire and they come to me and they're like my hair's on fire everything's all crazy I'm like oh well you need to hire then and then the next question is what do I hire so this is the process that I go through and that we've gone through I went through a drip we do it at Tiny Seed we do it at microc comp and it's basically asking yourself a few questions and taking notes and loging time over a couple weeks so the

[22:59] first question is what am I doing on a daily or a weekly basis usually I will track my time for about I'll really just track tasks not even Time Track every task I do for about two weeks so case in point when we first started Tiny Seed we're running an accelerator and it's just me and I really didn't want to do the day-to-day of an accelerator right it's just not my gifting and so Anar and I got together and what are we doing well we're scheduling Founders we're getting mentors we're doing perks you know whatever it is that happens in an accelerator and then we followed this

[23:31] whole process and hired Tracy and then about eight months ago anr and I realized we were doing a ton of internal Ops stuff legal and taxes and just all the stuff that goes along with funds and like having a fund and so we did this again and then we hired an Ops person so it's worked really well for us it doesn't just tell you who you need to hire but it helps you you almost you have bullets now for a job description you know and I'm going to tell you how to not make it stupid because you can put a bunch of crap in here across five

[23:58] rolls you have a software engineer who's supposed to do sales and also uh you know be customer success it's like well that's not going to work it doesn't exist but anyways track of your task for two weeks you start getting a bunch of bullets then you have to also ask yourself what should be getting done that isn't and that was where we start filling in the gaps of like what's the stuff I haven't been publishing a blog post every week like we should have right or there's stuff that just wasn't getting done because we didn't have the help so we also sat down put those on

[24:24] the list and then we asked ourselves helps if it's in the first person then I ask myself of the things that I am doing that are on this list which am I bad at that someone else could do better and there's a lot usually for me um which am I good at but I really don't enjoy because that intersection is of course burnout you can do it but if you don't enjoy it you do it for a long time that ven diagram is burn out and of the which of these if leveled up like if someone could do substantially better would be likely to grow the company so the big

[24:55] mistake I referenced earlier is exactly this tweet as founder since you fulfill three or eight or 10 roles it's really easy and it's a big mistake to think you can hire someone to do the same so most people Excel when they focus on one maybe two roles so if you hire a marketer plus is an same individual right marketer plus support plus operations you're going to get someone mediocre at all three I made the mistake my very first non-engineering hire was actually it's Anna Jacobson a lot of you know her and she's phenomenal at customer success when I hired her I had her doing marketing customer success and

[25:29] sales it's absolutely bananas like no one does that right and within a month I was like all right I need to take something off your plate because you don't have the expertise and she didn't she didn't have enough time right so I took marketing back she did customer success in sales so that's the mistake is you seek a unicorn which is just someone who does three or four roles Founders are unicorns meaning they're very hard to find in the wild and they do a lot of roles but and once you hit 10 20 employees everyone starts being very special ized in your first 10 you have people do two things at once the

[26:02] nice part is I alluded to this earlier there's only 10 departments in SAS that's it until you get to 5 million 10 million you have bi teams you know you can you can make up somebody revops whatever this is it you kind of figure out how to build a product you figure out how it's going to look in design you write the code in engineering you mark it you sell it you support it you success it and then HR legal and finance frankly are opts for me they're just all the same thing but I put them in there cuz if if you're a if you're doing 100

[26:29] million a year like HR is separate from like your legal separate from Finance right but the good news is I have all these bullets right put bullets bullets bullets holy well who do I hire well you want to try to fit it into one of these departments because these are the Departments of sass like it or not so you start to kind of say well this is either one role or two roles that I'm going to combine but rules of thumb for me are you don't hand off product until mlion 500,000 probably a million AR almost no early stage bootstop founder hires a full-time designer if someone's

[27:02] not already a Founder you just do freelance uh let's see that's two of them and then HR legal in finance you either hire an Ops person when you hit about 8 to 12 or you do it yourself for now those go away Ops is very obvious when you need to hire it so realistically it's only five right it's like you have these bullets it's all this random crap how do you fit it into one of these five in a perfect world or maybe two and I'm going to talk about the only combinations I've seen work all right um so if you can fit it into one

[27:36] great and then it's like well I know I need a customer success manager um quick side manager at the end of a title means they manage a process not humans manager at the beginning of a title means they have direct reports just another rule of themb so customer success manager or if it's a bunch of support stuff I make them a you know a support rep in the early days you will often have to combine roles and I think this might be my last slide actually um and these are the combined roles this was kind of the when I started writing the book chapter on hiring or on team building um I had a

[28:10] bunch of basic stuff that I think we hear all the time but like this is the one that I was like oh this is gold um is the times when I've seen combined roles work at early stages again if you're at 50 employees you're no longer combining roles because you have revenue or funding or something to just hire subject matter you know individual contributors that do the one thing you can't do that in an early stage but don't H you know don't cross sales and Engineering no individual that's not a Founder does that okay so that's what this is so I have seen customer success and sales in one person Anna Jacobson

[28:41] our first customer success hire did it was great works best when they're warm inbound leads rather than if it's cold outbound you're paying on commission it's a different personality type but customer success in sales can work customer success and support usually the customer success person is overqualified for the email and live chat but it is something they do and when you're at four people it's just what you do the other one the sales crossovers of course are a salesperson AE account executive who also is doing bdr SDR work which is qualifying prospects this is relatively common legal finance and HR as I said Ops person at a certain point you're

[29:17] just going to combine them into one uh in terms of engineering crossover have I seen software developers or have we hired software Engineers who have design shops we have hard to find but they exist have we seen Engineers who also have a product sense of what should be built how it should be built I have not the easiest to find but take them if you can get them and then uh product manager plus a designer is not super uncommon right so those are kind of the engineering product things I've seen Crest over and then the last two really are just marketing marketing departments are the most complex in a SAS company

[29:52] engineering it's you're kind of one of these you're a senior you're a junior you're whatever marketing it's like there's strategy what should we do there's actual implementation what button should I push in AdWords and there's project management making sure shit's getting shipped out and there's just all the mix right and if there's 10 marketing approaches you usually have five or 10 people doing them so it's complicated but marketing strategy plus implementing one or two is not uncommon usually then you hire out the rest to Freelancers or marketing strategy plus the project management of it um and that's what a lot of Founders wind up doing right is

[30:27] they kind of figure out what to do they stay on top of it and you have four or five Freelancers reporting to you if you enjoyed that talk you might enjoy this other talk that I gave at microcomp Atlanta go check it out thanks for watching

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