Scalability trumps profitability

Scaling a B2B SaaS business profitably requires careful strategy and execution. At SaaSiest 2023, Michael Jerlin, COO of Voyado, shared insights from more than a decade of guiding the company’s growth journey. He outlined frameworks and metrics Voyado uses to balance scalability and profitability and stressed the importance of culture in enabling sustainable growth.

Takeaways

• Distill your strategy into a concise one-page document for alignment.
• Build frameworks to measure scalability and profit potential.
• Evolve metrics from broad to focused as you scale.
• Maintain culture and values from early on. 
• Ensure the leadership team embodies the culture.
• Allow for pivots between growth and profitability based on the market.

The triangle of happiness: Defining the cornerstones

The cornerstones you need to have in place during your growth journey are:

• Strategy: Having a clearly defined strategy and plan.
• Performance measurement: Ability to measure progress against goals. 
• Leadership: Rock-solid leadership to execute the strategy.

With these elements in place, companies can achieve the clarity, autonomy, and alignment needed to drive growth. However, these cornerstones remain vague without concrete implementation. 

Crafting a growth strategy one-pager 

To make the strategy tangible, create a one-page growth strategy that covers four key areas:

1. Owners’ agenda: The transparent goals from the owners as to what they want to do with the company. This is critical for alignment.
2. Identity: The cultural values and brand identity. Who are you, and who do you want to be? Make sure these core values are translated into concrete actions in everyday life.
3. Intentions: The objectives and key results (OKRs) define the planned progress of the company.
4. KPIs: The metrics used to track performance.

This one-pager provides a simple way to communicate strategy internally and externally. The discipline of distilling strategy into a one-page document can enhance clarity and alignment.

Measuring scalability and profitability 

Every SaaS company needs a framework for scalability to measure and improve its efficiency and showcase profit potential. 

Voyado uses a framework consisting of four fundamentals:

1. Customer acquisition – Marketing, sales

2. Product improvement – R&D, innovation

3. Business enablement – Supporting business growth

4. Core SaaS operations – Central operations and infrastructure

Each block contains financial KPIs and performance metrics, providing transparency into how investments in acquisition and product translate to bottom-line results.

While similar to a standard P&L, Voyado customized it based on its business model, which includes both subscriptions and professional services. The framework enables them to assess the efficiency and return on investment of each area.

Navigating the growth stages

Voyado’s approach to metrics and culture evolved across three growth stages:

Early stage:

• Focus on customer obsession and selling at all costs. 
• Process automation is not critical.
• Have some metrics, but avoid overly rigid KPIs.
• Embrace the fun and chaos of hypergrowth!

Scaling stage: 

• Automate reporting and analytics.
• Move from broad customer obsession to measuring core KPIs.
• Begin developing infrastructure like career frameworks.

Mature stage: 

• Implement scalability framework and strategy one-pager.
• Obsess over key customer metrics tied to strategy.
• Use scalability metrics to pivot between growth and profitability.

The early stage rightly focuses on product-market fit and selling rather than process. But as companies scale, metrics and infrastructure become critical to maintaining control. The current framework enables both continued scale and profitability.

Enabling growth through culture

Culture is crucial in navigating this journey successfully. Many of Voyado’s early team members remained through the stages, helping maintain the culture and values. This was enabled by bootstrapping for many years before taking outside funding. 

Not having outside owners demanding short-term results allowed Voyado to focus on “doing it right” in the early days and retaining the Voyadoers who embodied the culture. As Jerlin noted, you can’t dictate culture, but you can foster it by ensuring alignment, growth, and inspiration for your team.

Scalability does trump profitability

You must have scalability to achieve profitability. If you are in control of your performance and you are equipped with a framework like this one that enables you with the ability to accelerate and stop when you need to, you will have established a methodology for scalability metrics. Then you can pivot whenever you want to, and that includes a pivot into profitability.

Scaling a profitable B2B SaaS requires strategic discipline paired with cultural cohesion. This framework provides a model for balancing these imperatives on the journey from startup to scale-up. There is no secret sauce; learning from other successful companies is essential.