Anna and I are about a year into our SaaSX and Beacon9 stories and about 15 months removed from the acquisition of our SaaS company. We worked with some amazing recurring revenue SaaS companies in 2018. Our journey, our clients, and the new year have caused me to reflect on our mission to help SaaS founders and leaders build better companies.

What does “better” mean?

My first reflection was around what makes one recurring revenue company better than another. Early last year I wrote an eBook on SaaS Growth Metrics that identified 11 KPIs that I felt were the most critical for evaluating and managing a growing technology company. Those metrics are a good starting point, but executional excellence — which is what makes one SaaS company more valuable than another — goes a lot deeper than that. And if I’m 100% honest with myself, these are not SaaS-specific problems or solutions. They’re business fundamentals that are far too commonly messed up. So here are a few of my reflections on what can be so right and so wrong in a growth-stage technology company.

The Importance of Early Hires

At ion interactive, our people were amazing. We had all the confidence in the world that we could delegate anything to our teams and have them execute better than we could execute ourselves. That’s often missing in fast-growing companies and it strikes me as a shortcoming of the founding team that gets baked in very early on. First hires become the backbone of the organization and culture. If they’re not right, the foundation is shaky and the evolution into a highly-valued company is less likely or at least stunted.

Drop the Dead Weight

I’ve seen a couple of course corrections from weak early hiring practices. The first is that those folks end up in leadership positions and fail. The course correction — after lost momentum and turmoil — is to replace those weak leaders with stronger hired guns from outside. There are many downsides to this path. Often, the folks who get replaced leave the company. And take with them a great deal of high-value institutional knowledge. Next, it reflects poorly on the founders — undermining confidence in their ability to hire, manage, and lead.

Lift the Dead Weight

The other common path forward from a batch of weak early key hires is to keep them by either moving them elsewhere in the organization or by hiring a mentor as either a coach or higher-level leader. The advantage with this solution is that the institutional knowledge is preserved. The organization is also likely to view senior leadership as more trustworthy and caring. This likely engenders more loyalty and less employee turnover — both incredibly important to future recruiting. The downside here is obvious — you may be just moving a problem around or punting it down the road. If your weak early hires are valuable — but just not in a leadership capacity — then it makes sense to preserve them. If not, the organization will have more respect for you if you just let them go. It’s definitely a case-by-case and far from black and white.

Both of these course corrections are costly. The greatest cost, in my opinion,