Hey, 👋 Scott from The Sales Mastermind here.

Today’s edition only takes 3 minutes.

**Sorry this is 1 day late, after it didn't send I spotted it was scheduled for 24 hours later than usual and decided to leave it and add this message, apologies!**

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Story Time

A SaaS client of mine has three departments:

• "Product and Dev" where the software is created and maintained. ~5 FTE, including a team lead.
• "Client Services" which is everything client-facing. 4 FTE, including a manager.
• Revenue where everything pre-sales happens. Sub-departments of Marketing with 5+ FTE, including a Fractional "Head of", and a Sales "team" of 1 FTE.

This business is sales-led; 90% of new sign-ups require a seller to assist the buyer.

And this business is solid: double-digit growth, expanding market share, a hyper-defensible product, and a lovely salary for the founder.

But the business is in the second valley of death. It's big enough that every team needs a leader, but small enough that it can't quite afford these leaders.

The standard compromise is to hire in areas the founder understands, i.e., Product and Dev. Then they got lucky when someone stepped up to become the leader of Client Services. And hiring a fractional marketing leader is very possible in today's world.

But as the founder doesn't sell themself (not much at least), it leaves one seller on their own.

In other words, leaders are advocating for everything EXCEPT the one part of the business that drives 90%+ of net new revenue.

You can see why this founder hired me to advise and be the advocate for sales 🙂

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Second Valley of Death

The above business is a classic Second Valley of Death example.

The first valley is when a business doesn't have enough revenue to support the team's salaries. This valley is when you survive by taking any money you can.

A business outgrows the first valley when there are enough individual contributors to keep the business going, all decisions still flow through the founder/s, and there is actual profit at the end.

The second valley of death starts when the business outgrows solo decision-making, and it's time to hire leaders, but the business can't afford the salaries of the collective leaders.

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Source of growth

A founder's job is to make sure they understand where the growth of the business is actually coming from:

• When it's Google Ads, hire a great marketing leader
• If it's expansion, hire a great customer success org, then CS leader
• When it comes to sales, hire a great seller, then a sales leader

When in the second valley of death and hiring leaders in non-growth departments, remember every organisation is resource-constrained.

So your experienced, excellent, and game-changing new hire, such as a CTO, will naturally want to expand their organisation with more people and more support. For example, hiring a Q/A person.

But founders need to keep their eyes on the source of the growth. Always ask, will this new hire actually improve growth?

Then, the natural inclination of a founder is to hold on to the key growth job as long as possible because:

1. No one will ever do it as well as you (this is true, aim for 80% as good, but hire two people so they're 160% as effective as you)
2. Without the systems in place, your first hire will be slower than you (this is true, and scary for small businesses with tight margins)
3. Growth has always been your job, so letting go means you need to grow as an individual (this is true, and it is mentally challenging to do)

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Founder's Job During Second Valley

Firstly, when it comes to growth, the founder will always be the leader of the growth org.

Even when you put in 100 sellers or 100 marketers or 100 customer success people, you're still in charge of growth and will need to be involved in deals to some level.

So when you hire, stay involved. Join a meeting or two each week, talk to new clients, and understand the reporting beyond the numbers.

Secondly, if you can't afford top-tier talent, hire fractional leaders.

It's a good way to dip your toe in and learn how to be a leader without committing to the large salary and accompanying risk.

Lastly, keep an eye on the bottlenecks.

If your customer needs a seller, determine how many leads/meetings/deals they can handle per week/month and be ready to add more sellers when the ratios get too high.

If you are 100% PLG or marketing-led, and the customers never need to speak to a human, watch out for spikes in support or onboarding workflows. They can be a death spiral, as once your team falls behind, it can stay behind for a long time.

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Ultimately, getting through the second valley of death is a slog. But once you're through, you'll have an exponentially more resilient business where you get to be a real leader working on the business, not in the business.

And maybe take a proper holiday :)

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Until next week,
Scott Cowley

Open to learning how to close an unexpected deal in 10 days or less? Reply "10 Days"

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