Episode 724 | Managing Managers, Breaking Through Plateaus, Thoughts on EOS, and More Later-Stage Listener Questions

Rob Walling:
And so when you plateau, you’re not going to know why you plateaued because you got lucky because you threw 10, 6-sided dice against a wall. One landed as a six, you picked that one up and said, “Well, this is my thing,” and you don’t know why it worked. And that is the biggest issue is if you don’t gain the experience and the skill to actually build the business and grind through the hard parts to get to the good parts, then you don’t necessarily have that knowledge on how to fix the things that break. 

Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling, and this is the podcast that is shipped every week since 2010 for 720 something episodes focused on helping folks who want to bootstrap and mostly bootstrap amazing companies. 

If you’re listening to this podcast, you probably want to change your life or the life of those around you, but you are not hell-bent on begging venture capitalists for money and trying to make a dent in the universe or change the world, at least not with your first effort and the effort that you’re probably focused on, if you’re listening to this podcast. 

Do the lessons on this podcast apply to folks building SaaS companies? Absolutely, and that is the main focus. Do they also apply to folks building media companies, content companies, info product, course companies, frankly construction companies, all types of businesses? Yeah, a lot of them do and I have folks who I meet in person or who write in and let me know that they have no plans of ever launching a SaaS startup, and yet, they listen to this podcast to get learnings and the thought process from myself and other successful entrepreneurs. So if you are here, you belong here. Thanks for joining me. 

This week, I am diving into listener questions. I made a request on X/Twitter for more advanced questions, and so I don’t want to call these late stage questions because they’re certainly not all focused on seven or eight-figure businesses, but I wanted to get away from just answering a lot of questions about validation, and how do I find an idea, and how do I pick an idea, and how do I build an MVP, and those are fine questions, but when that’s all that’s coming in, it gets a little tiring and it’s less helpful for folks who are further along. 

I really do want this podcast and all the content that I put out to help folks who are in early stages, but also in the medium and late stages, seven and eight-figure companies and it’s easy to get pulled in the direction of focusing on early stage because that is the majority of the audience in any entrepreneurial audience, 80%, 90% of the people are early stage. It’s just the way the numbers work out, but I want to continue to have this podcast focus across the lifecycle of building your company. 

So today, I’m answering some more, I don’t know, intermediate questions, I don’t know, intermediate, late stage, whatever we want to call them, from a handful of folks who sent in audio, video and then a couple written questions, and I still have a backlog after this of another, I think, 25 more advanced questions. And so, I’m really excited to dig into those in the coming months. 

Before we get into questions, I wanted to let you know that MicroConf Europe is almost sold out. This year, MicroConf Europe is in lovely and amazing Dubrovnik, Croatia, it’s October 6th through the 8th, and our pricing for tickets goes up again on August 15th. So get your ticket today to save $200. And with that, let’s dive into my first question. As a reminder, audio and video questions go to the top of the stack.  

Speaker 2:
Hey Rob, big fan of the show and also the Slack community. My question is about managing managers. I run a software company in Germany and we’re around 25 people now and just hired the first two managers. One person in marketing that has three to four people under her and another leader running a product line with two people under her, and I am no newbie to managing ICs, but managing managers or leadership team is new to me. 

So what’s something that you focus on to A, not undermine their authority, but B, still be on the pulse of what’s going on because especially in marketing and in product, I, of course, don’t want to lose touch with what’s happening and want to make sure that results are still being achieved? Would love your insights and thanks a ton.  

Rob Walling:
I really like this question because we are often taught how to supervise, how to manage people. I even talk a little bit about it in the SaaS playbook. It’s not focused on that, but talking about how to manage managers is a whole other experience, and there’s a couple things that I have kept in mind during my career as I have done this because I did it both at full-time jobs and of course, I do it today where with MicroConf and TinySeed, I manage people who manage other people. 

And the couple things that I like to keep in mind are number one, try to find a couple good go-to resources, even simple things like what are the top two or three books you know about management and leadership? And if you have to ask on X/Twitter or if you know what you read coming up that really set you straight and provided a lot of value and education for you, have those as easy references, A, when you hire someone or B, if you promote someone to start managing people, so that you can give them those resources and you may need to consume them again and talk them through the thought process. So that’s number one. 

Number two is I try to model how I manage and communicate that to my managers. We tend to hire nice people who get along with others. I tell them the hardest part you’re going to experience as a manager is you really have to give negative feedback at a certain point or constructive feedback, however we want to talk about it, and now is the hardest thing for a lot of folks that I know. It’s easy to tell everyone they’re doing a good job. It’s easy to post the confetti emoji in Slack and thank everybody for their hard work. It’s hard to give someone pointed constructive feedback and not feel bad about it. 

Some people do this really well, some people are jerks and do it all the time, and those are the folks you probably tend to not hire, right? They take it too far. They “tell it like it is,” which usually means they’re an asshole, but folks who are nice and get along and view harmony as a positive thing and they want to get it done and they love working with their teammates, can often find it hard to give negative feedback. 

So that is one thing that I try to really address early on about you are going to want to get into the habit of giving constructive feedback because if you don’t, it’ll come as this huge surprise six months down the line. If you have five direct reports and you just never do it and then all of a sudden you do, it’s a big deal, but look at it as something that your team members, your direct reports really want. You’re actually helping them improve. 

That’s the thing that I started learning about myself was that that’s how I learned to couch it in my own head of I’m helping someone improve by telling them, “Hey, I think you could do better on this,” or “Hey, I think we messed up on this. How can we do better next time?” Usually, the best people, already know they messed up on things and you barely need to tell them, but that’s the second thing that I think about. 

The third thing that I think about is I do implement some light key performance indicators, KPIs. I hate the acronym stuff and the rocks and that I’m just not a big process person, but I do find it helpful to define pretty concretely some numbers that should move in a direction and sometimes this is as lame as NPS. Other times, you can just make up your own satisfaction score. How satisfied are X users? Oftentimes, it’s if they’re in charge of marketing, how many leads are coming through, how fast is growth. If they’re in charge of sales, how many deals are closing, their, customer success, how low is churn? 

There’s some other things you can add in there, customer support, how fast are we responding and what are the ratings, do we have high ratings of our responses. So getting something in place that’s pretty concrete so that your managers know what they’re managing too can be helpful and it doesn’t have to be super complicated. 

You can have one, two, three numbers that you agree with, that you collaborate with to decide which are the priorities for the business, and having that means you can talk about those week to week, month to month, and you may need to change them. What you may do is set two or three key performance indicators that you want to go up into [inaudible 00:08:38] and realize, “You know what, these aren’t quite right and we need to adjust them.” 

But the last thing that I’ll touch on is I do what’s called skip level meetings, and this is where you do maybe a quarterly meeting with the folks who report to your managers to have a conversation, ask them how it’s going, try to suss out, “Hey, is everything good? How are you feeling about things? How is it working with so-and-so?” You may not be able to ask them directly, but you’re just trying to get a sense of how things are going. 

And I often will ask about what do you want to do next? Where are you headed in terms of self-improvement, professional development? What things excite you about this job? What things do you like the least? What do you want to get better at? What do you want to do next year that you aren’t doing now? What will make you better? And I will ask them, “Have you talked to your manager about this?” I won’t say your manager. I’ll name him by name, but obviously, I would say, “Have you talked to Tracy about this at TinySeed?” 

And if they haven’t, then I will make it a point. I’ll either say, “Well, do you feel comfortable talking to her about it,” or “I will have a conversation with Tracy and let’s make sure we get you what you need. So it’s obviously more to be said on this topic, but that hopefully gives you a few recommendations for how I would approach it. My next question comes from Sean about attending conferences without overselling.  

Sean Matthews:
Hey, Sean Matthews from Left Hook here. We currently work as a services company trying to bootstrap our way into a software product. We also have built a open source framework to help develop and deliver user-facing B2B software integrations, so that would be anything you find inside your integrations page. We’ve built a framework that helps build those quickly and has all the infrastructure in place, so leverages a lot of the best of breeded or new packages and concepts architecturally out there. 

Long story short, our target market, our ideal customer profile are typically partner leaders, product people, sometimes the developers that are being asked to go build those things, CEOs, C-suite, oftentimes startup, but sometimes all the way up to enterprise SaaS. We find ourselves often going to events and thinking about attending events where we, as our own aspiring B2B SaaS founders, attend and actually be part of the conference because we have questions about how do you set up your marketing and what’s the right pricing strategy, et cetera. 

At the same time, we are around a target rich environment. Everyone is potential customer for us. Aside from, and we’ve done this before is sponsoring, so we’ve sponsored some conferences and that kind of fits fairly nicely, but when we’re not sponsoring, if we go to MicroConf, how do we approach people and just show up while actually being able to sell to them and not feel like we’re selling? 

And that’s maybe a question of just be yourself, but figured I would ask that because you probably get people that lurk around conferences that really they’re just there to sell as opposed to be a part of the conference. So just curious as your thoughts on that.  

Rob Walling:
Thanks for that question, Sean. I appreciate it. Yeah, so with MicroConf, some folks attend MicroConf where their audience or their customer, their ICP, ideal customer profile, are the attendees, and usually, it’s pretty obvious the ones that are selling and overselling and they’re annoying. People don’t like them, people avoid them, they pretty quickly find themselves not in the good graces of most of the people there. 

I think that if you are mindful of this, it’s easy not to oversell. Does that make sense? It’s easy to just be cool, just be cool. Like Samuel Jackson said in Pulp Fiction, “Just hang out.” Wow, quite the reference there, but the idea is people are going to ask you what you do, what company you’re with. You’re going to say, “Oh, I’m with Left Hook and we build software that helps B2B software integrations,” and see if they ask more. They might say, “I don’t have any interest,” and they change the subject or they might say, “Oh, so are you like Zapier?” And you’re like, “Well no, we allow you,” da-da-da-da. 

It’s a question and you play the conversation, but you don’t go around pitching. You don’t hand people business cards for crying out loud, not at a MicroConf especially, unless I ask for it, right? But the idea is you’re just having a conversation with another founder and you’re a founder and that’s it, and at a certain point, if they show enough interest, you might ask, “Hey, do you want something,” whatever it is. Do you want to try out the software? You have interest in it. You can ask them, but don’t make it high pressure, because it’s not a sales demo that they opted into. 

The other thing to think about, obviously sponsoring is a great one because if you’re sponsoring, you have a little sponsor tag on your badge, then of course, people are coming up to you because they know what you do and they want to hear that. So it’s kind of an open door for you to communicate that and for you to talk about what you’re doing. 

The other thing to think about is to apply for attendee talks or lightning talks. A lot of conferences have the opportunity that if you’re already an attendee with a ticket, you can name a topic that you want to talk about that gets you up on stage like at a MicroConf, say it’s 10 or 12 minutes and you don’t want to sell your product, but you might say things we’ve learned integrating with 100 different APIs. And then you say, “I’m the founder of this and this is what we’ve learned and [inaudible 00:14:02] if you’re interested in what we’re doing, it’s very light on sales and very heavy on actionable tactical advice. 

If you do come to MicroConf for another conference and you are not a sponsor and you start selling pretty heavily, it will get back to the organizers and they will remember your name because we have had folks do that. So I think you’re asking yourself the right question here, how do I do this well. 

The other thing is to gauge. If you go to SaaStr, everyone’s there to sell their stuff to everyone else. It just is. Everyone’s trying to put deals together, everyone’s trying to put meetings together. That is kind of the point of SaaStr. A lot of people ignore the content because trying to sell. If you go to MicroConf, it’s not like that. 

And so, you also want to know the audience and know the type of event that it is, and if you don’t know, ask a prior attendee and ask them what the vibe is or you can frankly ask on X/Twitter, I’m really going to struggle to call it X because when I say X, I know that you kind of know what I mean, but it’s tough. So thanks for that question, Sean. Hope it was helpful. 

My next question comes from the post I made on X and Bankster Life asks, “There are a lot of SaaS companies stuck in the 20 to 30 KMRR range. How do you break out or is it not possible due to market size?” So here’s the thing, I don’t necessarily disagree with there are a lot of SaaS companies stuck in the 20 to 30K market size. I know. I don’t disagree with that, but it’s not as if that’s some magical place where a bunch of SaaS plateaus. 

If you look at the State of Independent SaaS report, which stateofindiesaas.com, you can download the 2024 report. It just came out a couple of weeks ago. You’ll see we asked what’s your MRR? We surveyed almost 700 B2B SaaS companies. And you’ll see, if you imagine on the left-hand side, it’s like one KMRR and on the right-hand side, it’s, I don’t know, more than 5 million or more than 10 million or whatever, and the left-hand side is the tallest and it’s almost, it’s just a curve down and to the right. 

It’s just the way these funnels work. It’s the 80/20 rule. It’s like a sales funnel. If you think about, well, 100 people come to my website and 80 people stay longer than five seconds and 50 people click this button and get to the pricing page, it just decreases and decrease. It’s the same thing with MRR. The fact that a bunch of people churn at 20 to 30K is like, “Yeah, but a bunch of people churn at 1K as well and 5K and 10K, and it’s just fewer and fewer make it further and further.” 

So I want to kind of dispel the notion that there’s some magical 20 to 30K plateau point that is any more magical than any of the other revenue markers, but what I will say is I was going to write a talk about plateaus and it turns out, it just wasn’t going to be a very good talk, but I have this, it’s not even an outline, it’s just a list. I’ve tried to think of every possible reason that a SaaS company would plateau and I came up with 10 of them, okay? 

So there’s three that are weak product market fit. I don’t like to say pre-product market fit, that implies you suddenly cross this finish line and you have product market fit, but let’s say early or weak product market fit and there’s three of them. Cause number one is churn is too high because you haven’t built something people want. Cause number two is churn is decent so far, but you’re not driving enough traffic. Cause number three is you’ve built a one-time use product rather than building something people want to subscribe to, which is not a recurring product. 

And then, there are seven when you have stronger product market fit later plateaus. So there are reasons like number one, top of funnel is too small. Cause number two, subpar funnel conversion rates. Cause number three, your churn is too high. Cause number four, a competitor starts eating your lunch, whether on the product or on the marketing front. Cause number five, you’ve tapped out the market, et cetera, et cetera. 

So you get the idea that you can’t just ask, how do I break through a plateau if you don’t know why you’re in that plateau and someday, obviously, I’m going to put these in something, I don’t know if I’ll do a podcast episode about all of them and talk them through or if I’ll put them in a talk or what have you, but that’s not really the point of this. 

The idea is, like Bankster Life said in the tweet, how do you work out or is it not possible due to market size? Well, it just depends on your market. If you built an ESP and the market is tens of billions of dollars for sure, it might be larger than that, then no, it’s not due to market size, but if you have targeted an incredibly small niche, then yeah, that’s the reason. And then, you have to decide, do I expand into other verticals? Do I build a second product? That’s the thing, the thinking. 

This is why general advice when you ask on Twitter, someone will say, “I plateaued and people are telling me that you need to do this or that.” It’s like, well, if they don’t understand or you don’t understand why you’ve plateaued, then how are you going to fix it? And this is my biggest issue, I think, with the whole launch one thing a month and see what sticks because you are not going to know why you’re growing. 

And so, when you plateau, you’re not going to know why you plateaued because you kind of got lucky because you threw 10, six-sided dice against a wall, one landed as a six, you picked that one up and said, “Well, this is my thing,” and you don’t know why it worked, and that is the biggest issue is if you don’t gain the experience and the skill to actually build the business and grind through the hard parts to get to the good parts, then you don’t necessarily have that knowledge on how to fix the things that break. 

So thanks for that question, Bankster. I hope my answer was helpful. I know it wasn’t a direct, I mean, it wasn’t a direct answer. The answer is it depends, but hopefully, I’ve given you the full framework of what it depends on or at least a taste of the full list, which again, at some point, I will publish in some form or fashion. It’s just not there yet. It’s not publication ready. Trust me. 

I know someone’s going to email me and ask me for it, and it’s just a bunch of bullets and then it’s like how to fix it and it’s things like the causes, you don’t have enough top of funnel traffic and it says how to fix, drive more traffic. It’s not. It’s not a tactic of how to do it, it’s just the obvious answer to these things. So I’m just not sure how helpful it actually is in the form that it currently is. 

My next question is from Adam Denver Co is the username, but it’s Adam Wright on X, “What happens when you’re building a SaaS machine, which is what you want, but it becomes an agency or a more hands-on business?” And so, I responded to Adam and said, “Is your question exactly as you’ve asked it or is it more of a question of how do you not let it become that?” And he responded, “It’s more of a whoops, this happened. What now? I started a job board, jschimp.com, but it’s turning into a hands-on recruiting agency for immediate money. How do I balance the lucrative agency work with my original self-serve vision?” 

I think for me the answer is if you really don’t want to do the consulting, just don’t do it in the first place or if you’re doing it now and you don’t want to do it, just stop. The downside of that is, oh no, I have this very lucrative agency work that is actually funding the self-serve vision. 

Then, you need to balance the two, and this is the classic agency trying to turn into a SaaS conundrum and frankly, most agencies don’t make that pivot, because they are so addicted to the amazing money to the 150, $250 an hour that they can bill versus how do I justify building this thing that’s doing a few hundred dollars a month and may never make more than a few hundred dollars a month? It’s risk versus reward, right? 

You have to think about it as asymmetric upside. If JS Chimp actually succeeds wildly, what is the upside of that versus continuing to do the agency work? I think funding your SaaS, or in this case, it’s a job board, with agency work or freelance work is a great way to do it. I mean, I did that. I did it on the side where Craig Hewitt had a productized service. We have seen some folks do it, but the adjustment to productizing or to getting the product built, can be a difficult one. 

The way I think about it is either do the lucrative agency work 40 hours a week and then focus on the job board nights and weekends, a self-serve aspect, or set aside one day a week where you do not, or two days or three days, whatever makes sense, set aside a certain amount of time where you absolutely do not let agency work interfere. Maybe that’s two hours a day, maybe it’s one day a week, but be super disciplined about it. 

The other thing you can do is depending on what has to happen to push JS Chimp forward, can you hire that out to someone who is less expensive than you with the money you get from the lucrative agency work? I used to do this where I was billing 100 to $150 an hour as a software engineer. 

I was a freelancer contractor and I was billing 40 to 50 hours a week doing that, so I was banking the extra money that I could because we didn’t need all that to live on, and then, I would hire folks at the time, it was in the Philippines, sometimes in India, but these days, depending on your time zone, you can, I don’t necessarily want to recommend those countries at this point, but the idea is that you can hire someone, whether it’s a developer, whether it’s a marketer, whether it’s a whatever needs to get done and do this geo arbitrage, you’ve been hearing about this for years, so then you’re kind of managing one or two individuals to get stuff done and push it forward while you do the more lucrative work. 

It’s a hard road and most aren’t able to make the shift, and I do think, I mean, I hate to say it’s a lack of discipline, but I kind of think that’s what it is. It’s that you have this thing that is just so much a bird in the hand and it’s hard. It takes real fortitude to not just do more and more and more of that and look, maybe you should just do more and more and more of that. It’s really making you a ton of money and maybe the long-term, self-serve vision isn’t worth it if you can make boatloads of money and hire a team and build a small agency to do the recruiting. 

We’ve seen remote first recruiting do an amazing job and build incredible seven-figure business on that, and they still have the job board, but I don’t think they regret building the agency around that job board. So I appreciate this question, Adam. I hope my thoughts were helpful. 

My last question for today is from podcast guest and longtime listener and MicroConf speaker Christopher Gimmer. He’s @cgimmer on Twitter. Give him a follow, “While you are running Drip, I’m curious as to how you structured team meetings and whether you followed any sort of management framework like Traction or EOS,” and he doesn’t say it here, but there’s scaling up, which I think is for later stage folks, “Specifically, I’d love to hear what things looked like when it was just you, Derrick, and a handful of employees versus how you ran things at the point Drip was acquired?” 

This is a good question and what I will say is I lead and manage a certain way and other folks have different opinions. If you go back and listen to old episodes of Craig Hewitt and Andy Baldacci’s podcast called Seeking Scale, you’ll hear a lot of talk about frameworks and management, and that’s probably if you want to go down that road, I would start there. Craig is very knowledgeable about this stuff. 

I am not. I know a bit about it. I know the basics, the rocks and the KPIs and this and that, and that’s about all I use. I’m a pretty light framework or light process person in general, and that includes, that extends to when I’m managing people and managing a team. So I did not use any sort of management framework and really have never done that aside from having numbers that we’re shooting for these. 

Again, I’ll say KPIs, because everyone knows what that means. It just kind of pains me, but it’s just goals for certain things. It’s like I want MRR to go up by this. We need this many leads to do it. This many, we should have a sales conversion rate to demo to close of X, Y, Z percent or above. And so, team meetings were a lot of me leading them and saying, “This is where we’re going. How does everyone feel about it? What are the status updates? What’s working and what’s not? Here are the new things we’re going to try. Here’s a new person we’re going to hire and what’s breaking where so we can figure out how to not let it break?” 

After we got acquired, we expanded pretty significantly. So the Drip team itself, by the time I left, was 125 people. I was no longer CEO though. I wasn’t running all of that. I was running maybe it was about 20 people between engineering and product that were under me and it was two teams plus products. It was kind of like three different teams. We had two different engineering teams for infrastructure and more like app features and stuff, and then, product folks. 

I still ran those without rigorous frameworks, although product meetings, once I hired a product manager, he used some, I don’t know, it wasn’t Traction or EOS because it wasn’t about rocks, but there were definitely prioritization frameworks that he brought into it as a more academic and experienced product person, but for better or worse, I do tend to go about this stuff pretty intuitively. 

I have found that some folks who lean so far into the frameworks do so to their detriment, that the frameworks are a bit like having exact detailed instructions on how to cook a hamburger or a steak that don’t always take into account all the details or all the nuances of cooking a hamburger or a steak, and I feel like if you have some natural inclination of how to borrow just some really minor pieces of Traction, EOS, Scaling Up whatever you want to borrow, but that it fits with your personality to manage in a more intuitive way, I guess what I’ll say is it works for me. 

It worked at Drip, it was 10. It worked once I was managing 20 and it works at TinySeed MicroConf today. No one could argue that I don’t manage a huge org. I wasn’t running or I don’t run an org that’s say 125 people where I have managers who manage managers, who manage individual contributors. And so, maybe at that point I would need more of a framework. 

I do know that the CEO who took over, so Clay Collins was CEO when they bought us, and then, another CEO who’s very much more kind of an MBA spreadsheet thinker, and I don’t mean that in a detrimental way. He’s a great operator. He had frameworks, but they were not Traction or EOS. It was kind of his stuff. He learned it in business school and he had seen it in other SaaS companies he’d been involved in and the venture capitalist kind of lean on stuff. 

So he had his own just self homebrew framework that I think works well for him. It’s a certain style of pushing things forward. It’s a very operational focused versus I tend to be more creative and product focus, so less operational, but all that said, I think there’s a lot of different approaches that can work, and I think as long as you’re not strapped to the dogma, and you don’t get hung up too much on the details of a framework, and be really careful about taking one of these frameworks and just implementing it too early. 

I like to have the absolute minimum amount of process as long as possible until we need more process, and then I don’t go from 1 to 10, I go from 1 to 2, add a little bit more just sprinkle a little bit on, and then you sprinkle a little bit on as things start to break or as you’re like, “Yeah, we do need more process.” Things are getting complicated, communications, breaking down and we’re not getting stuff done. People don’t know what they should be doing. 

Then, I’m ratcheted up from two to two and a half, two to three. You get the idea? That is my personality, that’s how I work, and it works for me, and I think the idea is it’s best for you to know yourself and develop your skills that lean into your personal giftings. And so, if frameworks, and I’ll say just more left brain thinking about it works for you, then think about how can I adapt this framework to the size of my team because again, I don’t think EOS is great at five people. 

I think there’s too much process and I don’t know exactly the number where it’s a perfect fit, but I personally would be concerned. I would really strip it down and I guess these days, I kind of do run an extremely stripped down version of one of these. It’s basically just, “Here are the goals. Let’s go. Let’s update and work great as a team.” And there’s a bit more to it than that, but you get the idea. I feel like I’ve covered this point. I really do appreciate your question on this, Christopher. I hope that was helpful. 

If you have a question for this show, I’m going to be moving even text questions as you heard in this episode, that are a bit more advanced, intermediate to advanced. Later stage text questions are going to go to the top of the stack along with audio and video questions. I hope you enjoy this focus of thinking more about what do folks who are already managing managers think about and other topics that’ll be more applicable to that stage. Thanks for joining me this week and every week. This is Rob Walling, signing off from episode 724.