Orchestrating product, marketing, sales, and finance
In a recent post, David Sacks ex-COO of PayPal (in the “PayPal mafia” days) and founder and CEO of Yammer (acquired by MSFT for $1.2B in 2012) laid out an integrated framework for orchestrating the operations of the four major departments of every SaaS startup: product, marketing, sales and finance.
While some design elements can be modified to meet the differing needs of non-SaaS startups, this framework is a fantastic starting point, that can save many startups years of discordant operations and cross-departmental friction and missed hand-offs. I’ve taken a stab at summarizing it below:
- In a SaaS context quarterly goals (and therefore, planning) seems to be ideal time-frame. Yearly is too rigid/unresponsive and monthly is too volatile. This dictates the heartbeat for everything else.
- The quarter begins with a Sales Kick-Off (SKO) where the sales team receives their new quotas, commission plans, and territories. Learnings from the previous quarter are shared, and Product demos the latest version of the product and reviews the roadmap for the current quarter.
- Once the plan is clear and in play, sales leadership focused on pipelines review and support. The sales team is immersed in active sales efforts supported by news, awards, and recognition generated by the marketing team.
- The third month is dedicated to heads-down closing and making the numbers with minimal interruptions.
- Synchronizing the finance calendar with the sales calendar simplifies and clarifies financial reporting since the numbers then reflect a complete quarter’s sales activity.
- A fiscal year ending on Jan 31 rather than Dec 31 avoids the end-of-year holiday crunch and disrupts customer expectations around end-of-year discounts.
- Board meetings occur two to three weeks after the end of the previous quarter allowing for
- The product roadmap gets reviewed and prioritized quarterly with external input from the board meeting and a customer advisory board informing the process.
- The goal is to align on the “major rocks” of each release, giving individual PMs a lot of autonomy in determining the “pebbles” and “sand” that fill up the overall capacity.
- Development projects are scope so that they can be shipped within one quarter. The rule at Yammer (where Sacks was CEO) was that projects would be assigned 2 to 10 engineers for 2 to 10 weeks. This is conceptually very similar to Basecamp’s 6-weeks model and other incremental software delivery approaches.
- The overall marketing approach should be event-based — orienting around a central quarterly event that can combine launch announcements and demos of new features with news about customers, financing, market share, metrics, or other milestones.
- There’s a benefit to tying the product and marketing calendars together so the externally committed deadline can become a motivating factor. A lot has been said about the delicate balance that’s required in order to avoid the downside of this coupling. The product approach outlined above (projects’ scopes + release planning) is one essential component in enabling that coupling.
- Not all four quarterly marketing events have to be big ones. An annual user conference + three smaller webinars/city events can sufficiently drive the desired discipline around product delivery.
Putting it all together
Shifting to this orchestrated heartbeat starts with determining the fiscal year (Dec 31st. vs. Jan 31st, etc.) which derives the fiscal quarters. Sales plans are then lined up with the fiscal quarter, deriving the timing for SKOs and quarterly closing. Scheduling the marketing event in the middle of the quarter offsets the marketing calendar from the finance and sales calendar by 45 days, positioning the surge in marketing activity to best support on-going sales efforts. Lastly, the product cycle is aligned with the marketing calendar to hit the event deadlines.
The coordinated heartbeat creates natural opportunities for internal “all-hands” meetings (not all should be used): after the books are closed, after the board meeting, before/after the launch event.
This is another example where a picture is worth a thousand words, and in this case, the final picture looks something like this: