Much of this post is excerpted from an extensive interview InsightSquared recently had with Jason Lemkin. You can get the full interview here.
Talking to Jason Lemkin, it’s easy to tell that he’s made a mistake or two in his life.
This isn’t a knock on the SaaS expert. After all, who hasn’t made mistakes? In fact, it’s just the opposite: it’s an indication that he actually learns from his mistakes, and (even rarer) is eager to pass along those learnings to people he talks to.
The realization that Jason has made mistakes came to me recently when I was re-reading an interview he had done with InsightSquared.
The topic of imparting advice came up when we asked Jason what he would tell founders of young SaaS companies.
“It may sound counterintuitive, but the secret to rapid SaaS growth is taking your time,” he told us. “In a lot of ways, rapid SaaS growth is actually about the decisions you don’t make that give your company the best chance to grow.”
As soon as he started elaborating, it became clear that Jason had to learn this lesson the hard way. He talked passionately about the cost of a bad hire, and how important it is to slow down and take the time you need when making a decision (like hiring a VP or executive) that could affect the success of your company for years down the line.
Seeing how seriously Jason took this topic, it got me thinking a lot about why, in many cases, moving slowly and deliberately is the surest way to achieve growth.
In this post, we hear more from Jason about the benefits of moving slow, as well as look at what research has to tell us about the dangers of moving fast.
“Make Haste, Slowly.”
A recent article from Huffington Post gives the perfect story to exemplify Jason’s advice.
The story begins when a couple of consultants (who authored the article) were called in by a CEO who needed help focusing her team, which she thought was moving too slowly.
“Our suggestion was to facilitate a half day assessment workshop for members of her team,” the consultants wrote. They knew that getting everyone on the same page, and setting them up to work more efficiently, required some real organizational change.
The CEO was having none of it.
“Seriously, we need to increase efficiency and ramp up execution,” she told them. “We cannot spend half a day on an assessment workshop now. That will slow us down even further.”
It’s not clear how the story ended for this CEO, but the message of the consultants’ story is clear: Moving quickly is less important than moving thoughtfully, and to focus on one without the other is a recipe for failure.
This lesson is especially important for SaaS startup founders.
The Consequence of Speed
I can’t put it more simply than this: Don’t make a bad key hire.”
Young companies are often pulled in two directions at once: the quest to achieve rapid growth and to put themselves in the best position for future success. Pulled between these two poles, it’s no wonder that so many startup founders split the baby and end up doing both, poorly.
What does this look like for startup founders?
It can take many guises (a misguided campaign, a premature product) but one of the most common is a bad hire.
Back to Jason Lemkin:
“I can’t put it more simply than this: Don’t make a bad key hire,” he told InsightSquared. “A bad senior hire can kill you. It can set you back so far…that even though you could make it in theory…the goal line gets moved out another 6-9 months.”
This quote exemplifies something about young companies: they are so eager to keep moving forward that they sometimes get caught moving in the wrong direction. Cleaning up the mess they made by moving too fast takes time and resources and, of course, counteracts whatever progress they were hoping to make by moving quickly in the first place.
The Speed Gap
This point ‒ that moving fast often has the exact opposite effect ‒ is especially important. And it’s not just a theory; it’s been borne out by extensive research.
A much-cited article from the Harvard Business Review demonstrates this. The article, “Need Speed, Slow Down?”, presents the findings of a study showing that companies that believe speed is vital to their competitive strategy end up moving more slowly.
“In our study of 343 businesses (conducted with the Economist Intelligence Unit), the companies that embraced initiatives and chose to go, go, go to try to gain an edge ended up with lower sales and operating profits than those that paused at key moments to make sure they were on the right track. What’s more, the firms that ‘slowed down to speed up’ improved their top and bottom lines, averaging 40% higher sales and 52% higher operating profits over a three-year period.”
What’s the cause of this huge (and counterintuitive) discrepancy? According to the HBR article, the answer lies in the key distinctions between operational speed and strategic speed.
Operational Speed vs. Strategic Speed
Moving quickly is in itself not a virtue. Getting to the right outcome quickly is the goal. This means you have to know where you’re going and the best way to get there ‒ not just how to move quickly.
At its core, this is the key distinction between operational and strategic speed, a critical concept in business management.
As the HBR article puts it: “Firms sometimes confuse operational speed (moving quickly) with strategic speed (reducing the time it takes to deliver value) ‒ and the two concepts are quite different.”
What does this mean for growing SaaS startups? In short it means understanding the difference between moving fast (and perhaps recklessly) and moving as efficiently as possible in the right direction. After all, moving quickly in the wrong direction is far worse than standing still.
While this is especially true when making senior hires, it’s not limited to recruitment. Shipping a product before it’s ready, pivoting your sales process without scoping out the effects, or buying an expensive tool before doing your research are all examples of high operational speed that’s not rooted in the right strategy.
More Unexpected SaaS Lessons
Jason gets very animated when he talks about the secrets to building a successful SaaS company (or, in this case, an unsuccessful one). He’s one of the few SaaS thought leaders who seems to genuinely love sharing his knowledge, especially the knowledge he’s gained the hard way.
We just released an extensive interview with Jason on all matters SaaS. Download it for FREE here.