      SaaStr · 2021-01-12
      · 1968d
    

Building Your First Sales & Marketing Team: The $3M Investment Required at $1.5M ARR

Jason Lemkin argues that SaaS companies reaching $1.5M-$2M ARR with 100%+ YoY growth need to invest $2.5M-$3M annually to build a proper revenue team (VP of Sales, VP of Marketing, Account Executives, Customer Success). While this investment won't be immediately accretive, delaying these hires past $4M ARR risks slower growth and inability to scale efficiently to $10M+ ARR.

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Metrics in this report

Critical Decision ARR Threshold

4.0$M

maximum

ARR by which VP of Sales + Marketing should be hired to avoid deceleration

Initial Traction ARR

1.0-1.5$M

range

Target ARR when founder-led sales model becomes insufficient

Minimum YoY Growth Rate

100%

minimum

Growth rate threshold indicating readiness for professional revenue team investment

Planning Horizon ARR

1.0-1.25$M

range

ARR milestone when to start planning for revenue team investment

Revenue Team Investment Requirement

2.5-3.0$M annually

range

Annual burn required to build first professional sales and marketing team

Revenue Team Payback Period

3-4months

range

Time for great VPs of Sales, Marketing, and AEs to become accretive