SaaS Strategy: Balancing and Managing Short- and Long-Term Tradeoffs

Growing a SaaS company at >50% YOY (at scale) is hard. If it was easy, everyone would do it. One of the big reasons it’s so hard is that you’re constantly trading off between short-term results and long-term scalability. This is true in technology, where there’s constant angst around amassing tech debt in the name of feature pace. But it’s also true in sales, marketing, customer success, operations, support, and product. Short- and long-term tradeoffs complicate the best-laid plans.

Long-Term Slow Down

I fell into this trap for a few years back in the day. Leaning too far to the long-term side slows down short-term performance. And that can turn into slogging rather than flying. When you think long-term first, and focus on processes more than performance, you lose agility and urgency.

For me, urgency is a critical success factor in driving outsized growth. I seldom see one without the other.

Short-Term Mayhem

The other trap is speed at all costs. The common misnomer here is that the debt you amass in short-term prioritization takes a long time to come back and bite you. Wrong. It comes back faster than you think. And it can bite very, very hard. The irony here is that when that debt does bite you it impedes short-term performance. And, if you’re sprinting like a bat out of hell, you may very well grow so fast that you attract premature liquidity interest. Guess what? When the wheels are flying off the car flying down the road at 180mph isn’t the best time to go through diligence.

The cost of only focusing on short-term growth is that you accrue debt everywhere — people, processes, systems, technology — you name it. Do that for longer than short bursts with recovery between them and you burn the company and its people out. That’s neither sustainable nor healthy.

Dividing & Conquering Short- and Long-Term Tradeoffs

My preferred solution to the short/long-term conundrum was to have people divided into two camps. The floor-it-at-all-costs camp just answered to urgency. And the long-term, process/systems camp wove a sustainable net in parallel. The important cultural thing here was that neither group could resent the other. Most of the time that worked out, as long as we maintained transparency to the why and cross-built appreciation between the divergent missions. The yin and yang of that relationship became a rallying cry for conquering short- and long-term tradeoffs.

The long-term groups end up taking great pride in stabilizing and creating sustainability. The short-term groups stay urgent and almost reckless but know they have a net to catch them. Both are driving growth. This is a critical understanding and appreciation. The short-termers are driving this month and this quarter. The long-termers are driving this year and next. Both are driving valuation.

So if you want to give the sales and marketing teams the freedom to get a little bit reckless, charge the ops team with making that possible. And if you want to give a skunkworks engineering group carte blanche to launch MVPs, create a group that tidies up behind them to ensure that everything still works and complies with standards. And if you need to experiment with divergent pricing and packaging, do it — fast — but then have some folks come behind and translate that into systemic reality. It’s the separation of church and state that makes the short- and long-term tradeoffs work.

You’re Charging on a Credit Card — When Do You Pay?

Short-term actions lead to debt. The only real question is when do you pay it down? If you charge stuff on a credit card and don’t pay it down or off each month, you accrue interest. If that goes on for even just a few months, the interest can outpace your ability to pay. And the TV you just bought for $499 ends up costing you $2,000 over years of minimum payments. SaaS debt is no different. If you pay it down each month or quarter, you can stay out of the debilitating cycle of debt eating up your innovation capital.

If you let short-term debt accrue unchecked, sooner or later, it will eat you alive. You will eventually be forced to stop innovating, which can lead to a not insignificant momentum kill. That’s far more costly than focusing a group of longer-term thinkers on paying it down each month.

Obviously, I don’t believe that short-term and long-term are mutually exclusive. I don’t even believe that short- and long-term tradeoffs are at odds with one another. But I do believe they’re different people, incentivized equally but differently to serve very different masters that both contribute to growth and valuation. Either without the other makes >50% growth way harder than it needs to be. And it’s already pretty damn hard.