SaaS series: The cadence (operating a SaaS startup)

If things start feeling a little out of control in your startup – mismatched calendars, undefined roles, and lots of lost-looking newcomers popping up everywhere – you might feel like you need a whip-cracking middle manager to bring order to the chaos. But what if an operating philosophy could do it for you for free?

To counter what he called “organisational chaos” (and, less flatteringly, the “shitshow”) rapidly scaling startups often are, CEO David Sacks created an operating philosophy when founding and growing the business social network Yammer. 

This philosophy is called The Cadence. 

Its aim is to synchronise the operations of an SaaS startup so that even after compartmentalization is put into effect, the members of each team still feel connected to the company and to each other.

It’s kind of a response to the tyranny of the org chart. 

Every scaling startup needs one, but creating them can erode that “all in it together” camaraderie of startup culture, resulting in silos, missed communication, and tension between departments.

The foundation of the Cadence is based on cycles and calendars. To sum it up:

  • The four main sections of any digital startup – sales, finance, product, and marketing – tend to be run on a quarterly cycle.
  • However, these four don’t run on the same calendar. Sacks groups them into two: the sales-finance system and the product-marketing System.
  • Combining these two calendars creates “a single operating cadence”.
  • Members across the sections have to communicate and collaborate at certain key points throughout the calendars, keeping them united rather than causing them to clash. 

Sacks says that The Cadence is best deployed within startups growing from 50 to 500 full-time employees (FTE). 

But arguably, post-20 FTEs is where founders can no longer be hands-on with every employee, and delegating leadership becomes necessary. The point at which roles and departments stop becoming flexible and interchangeable will depend on each unique startup. 

The sales-finance system

New hires can be anxious to deliver. Growing teams can be skittish. Startups are generally no-guarantee, no-day-is-the-same environments. 

Predictability helps.

As two of the four pillars of business, and as they both deal with profits, budget, and reporting, sales and finance can be combined into the same quarterly calendar. 

Monthly sales quotas can pile on the pressure, but a yearly sales quota would be too long, and wouldn’t allow for agile adjustment. Quarterly is your optimal cadence here.

Having the monetary pillars match the default fiscal quarter and fiscal year allows you to make quarterly budget decisions and adjustments without too much chopping and changing. 

Also, sales strategy, analysis, and forecasting makes sense when presented to leaderships and boardrooms alongside tangible fiscal results. 

The product-marketing system

To stay competitive when developing software, many major SaaS players have a rule: all projects undertaken should be completed and ready to ship within a quarter. If you don’t get that new feature launched as soon as technology can support it, someone else will.

Also, less time means decreased likelihood of hitting minimum viability. Any longer and projects may get too big or complex for MVP status. 

A natural pairing for product management is marketing. 

When you know what’s being released and when, you can start to build campaigns. Completing the circle, when the product team knows launch dates have been confirmed and unveiling events booked, they know the deadlines they have to work to (and that they’re immovable).   

Sacks advises off-centring this system from the Sales-Finance calendar, as this will allow for each project to complete between fiscal quarterly meetings. 

The overlap means the product-marketing teams know how much money they have to spend on the next project, and the sales-finance teams know what to account for in their next quarterly meeting.

Bringing it all together

The final factor in calibrating your calendars is those launch events. 

Start with your key event dates, and have your product-marketing system culminate with them. The sales-finance system should be cantilevered over it, culminating with the quarterly close. 

The point is to create harmony, not pressure-cooker situations where everyone’s scrambling to get ready for a new product demo whilst sales teams are trying to close deals following the last one. 

It’s also to get people working together, not against each other in a battle of priorities. 

The Cadence aims to give you four strong quarters, instead of a cycle of weak quarters followed by high pressure ones to make up lost ground.

The benefits are not just profit and productivity, but a connected workforce who can build self-esteem by meeting realistic expectations. The Cadence gives them reasons to hit deadlines and work together, rather than random, punitive quotas or constraints. 

With employee burn-out rising, appetite for the all-hours “grind” of startup life declining, and talent ever more difficult to find and retain, it’s much better than palliative wellbeing initiatives or enforced meditation sessions. 

Cadence is better than cure.  

B2B: An exciting investment, or just a safe bet? 

B2B: An exciting investment, or just a safe bet? 

SaaS series: Sales school for SaaS

SaaS series: Sales school for SaaS

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