Dear SaaStr: I’m Joining a B2B Startup at $3m ARR as VP of Sales. What Should I Do First?

Dear SaaStr: I’m Joining a B2B Startup at $3m ARR as VP of Sales. What Should I Do First?

Stepping into the VP Sales role at a company with $3M ARR is a pivotal moment.

At this stage, the company has likely found some product-market fit, but scaling efficiently and predictably is the next big challenge.

Here’s how I’d approach it:

1. Assess the Current State. Before You Start

Before making any major moves, you need to understand the lay of the land:

• Pipeline Health: What does the pipeline look like? Is it strong enough to support growth? What’s the win rate, and how much pipeline coverage do you have?
• Sales Team: How many reps are there, and what’s their productivity? Are they hitting quotas? If not, why? Are they the right people for the next stage of growth
• Customer Success: What’s the churn rate? What’s net revenue retention (NRR)? Are customers expanding, or are you losing them after the first year?
• Marketing: Is there a predictable lead generation engine? How many MQLs are being generated monthly, and how many convert to SQLs.
• Processes: Are there anyrepeatable sales and customer success processes in place, or is everything ad hoc?

Make sure you have already listened to 5+ sales calls before you start, and joined at least 2-3. Before you start.

2. Set Clear Goals Together with the CEO. Before You Start.

At $3M ARR, the next logical milestone is $10M ARR. To get there, you need to:

• Triple ARR in X months: This might mean adding $3.5M ARR in Year 1 and $3.5M ARR in Year 2.
• Focus on NRR: Aim for at least 110–120% NRR. Expansion revenue is critical at this stage.
• Build a Predictable Sales Machine: This includes hiring, training, and scaling the team.

3. Build the Team: Bring 1-2 Ringers With You. Ideally, Before You Start 😉

Scaling from $3M to $10M ARR is all about hiring and scaling the right team:

• Sales Reps: You’ll likely need 6–8 strong reps to hit $10M ARR, assuming a $500K annual quota per rep. If you only have 2–3 reps now, hiring is a top priority.
• SDRs: Invest in 2–3 SDRs to generate pipeline for the AEs. They should focus on outbound efforts to complement inbound leads.
• Customer Success: Ensure you have enough CSMs to manage accounts and drive expansion. A good rule of thumb is 1 CSM per $2M ARR.
• Marketing: If marketing isn’t generating enough leads, you’ll need to invest here. A strong demand gen leader can make a huge difference.

4. Focus on Metrics. Know Them Cold, And Pick One or Two to Improve First

At this stage, you need to obsess over the right metrics:

• Pipeline Coverage: Maintain 3x pipeline coverage for your ARR goals.
• Quota Attainment: Ensure at least 70% of reps are hitting quota.
• Churn and NRR: Keep churn below 10% annually and aim for 110–120% NRR.
• CAC Payback: Ensure your customer acquisition cost (CAC) payback period is under 12 months.

5. Refine the Sales Process. But First Learn What’s Working Before You Reboot It.

What got you to $3M ARR won’t get you to $10M ARR. But it is the bones to refine and build on.

You need to:

• Standardize the Sales Playbook: Document what works and train the team on it. Usually, the first few reps have documented … almost nothing.
• Improve Onboarding: New reps should be fully ramped within one sales cycle.
• Focus on ICP: Double down on your ideal customer profile (ICP) and avoid chasing bad-fit customers.

6. Double Down on Expansion revenue

At $3M ARR, expansion revenue can be a game-changer. And the first renewal cycles are likely coming up:

• Land and Expand: Focus on growing existing accounts. Can you upsell or cross-sell?
• Customer Success Alignment: Ensure CSMs are incentivized to drive expansion revenue.

7. Build a Predictable Lead Gen Engine

You can’t scale without a steady flow of leads:

• Inbound Marketing: Invest in content, SEO, and paid ads to drive MQLs. With marketing, or sometimes, on your own.
• Outbound Sales: Build an SDR team to target high-value accounts. Done right, this always works.
• Partnerships: Explore channel partnerships to drive additional pipeline. Build on top of any partnership that’s already working, even a little bit.

8. Align the Team

Finally, ensure alignment across sales, marketing, and customer success. Tighten things up here:

• Weekly Revenue Meetings: Review pipeline, deals, and progress toward goals.
• Shared Metrics: Everyone should be aligned on ARR, NRR, and churn goals.
• Clear Communication: Ensure everyone understands the strategy and their role in achieving it.

8. Own The Number. From Day 1.

As the first VP of Sales or CRO, you didn’t get the company to where it is on your first day. Nor did you create all the issues ;). But you gotta own it. Immediately own the weekly, monthly, quarterly and annual goals. You own the ARR number now. That’s the job. Even if only some of it is in your control.