I’d rather not hire new people.
Recruiting is a necessary pain for us.
We only do it when we really, really have to.
Because communication is hard, and that shows when scaling headcount.
We’ve never run Modular Finance from the standpoint of maximising margins or efficiencies. We just think growing the team is a real headache.
Scaling fast creates inefficiencies
As a leader, I’m used to running small businesses - and I love it. You know exactly who to talk to and when to do it without getting yourself tangled up in bureaucracy.
That’s also why I have a great deal of respect for communication paths.
5 people in the team = 25 communication paths (5x5)
40 people in the team = 1.600 communication paths (40x40)
150 people in the team = 22.500 communication paths (150x150)
It sure gets complex fast.
To achieve efficient growth, it’s crucial to have internal communication processes that work. Keeping everyone aligned is a full-time job, and it only becomes more important as you grow.
Our hesitant approach to recruiting is definitely one reason we’re so efficient today. I don’t think it’s possible to scale fast without building inefficiencies in the organisation. We’ve been able to grow our internal structures slowly - making them more durable than most.
Maximising the potential of every person
Today, we’re around 40 people at Modular Finance and have around €10M in annual recurring revenue.
We have an almost extreme belief in what one person can accomplish. We work with every inch we got, and that’s usually a lot more than you could imagine.
Up to this point, we haven’t worked with the standard SaaS split up of SDRs, account executives, customer success and customer support. We bundled all these roles into one, which helped us achieve great things.
(We’re actually just about to break out customer success from that equation; let me get back to you on how that goes)
For us, bundling roles has attracted talent who want to learn many different aspects of sales and customer service. Since we work with high-involvement sales towards a smaller population of clients, that has been a huge benefit along the way.
There are always two sides to the penny
Our careful approach to recruiting hasn’t always been to our advantage.
A couple of years ago, our developers were working on a new product to launch on the market. Our competitor, however, beat us to it. In hindsight, they needed three more developers to have been given a fair chance of getting it out first.
The biggest challenge in restrictive recruiting is finding a balance.
You don’t want to miss opportunities, but you also don’t want to scale problems to an unmanageable state.
Double ARR by changing working methods
To sum up, I’m confident most entrepreneurs could double their annual recurring revenue without hiring another soul. It’s all about changing working methods and utilising the people you already have to their fullest potential.
/ Petter Hedborg
CEO & Founder of Modular Finance