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Performance reviews tax organizations, managers and employees to such an extent that some companies have abolished them outright. Reviews are emotionally complex conversations. Positive and negative feedback are intertwined with conversations about career progression, raises and equity grants. These meetings are emotional powder kegs; and it’s no wonder they stress us.

In Work Rules, Google’s Chief People Officer Laszlo Bock, argues for a different type of performance review: a split review. At Google, “annual reviews happen in November, and pay discussions happen a month later.”

In a post earlier this week, Josh Kopelman coined the term Private IPO to describe patterns in the runaway late stage financing market. In addition to the points Josh makes about the dangers of stale valuations, there is another important and related implication for founders.

When entrepreneurs pursue a Private IPO as the ultimate round before they go public, they make an implicit bet about the growth rate of their businesses: company revenues will more than double before a public IPO. If the bet doesn’t pan out, then the IPO is a down round - a fund raise at a lower share price than the last private round.

See also: Innovator’s Solution for SaaS Startups

There’s a familiar path now to SaaS companies that start in the SMB (small-to-medium business) part of the market. Over time, they seem to inevitably begin serving larger customers. Box, Hubspot, Zendesk and among many others have exhibited this pattern. Why does this happen?

I believe we’re seeing Clay Christensen’s Innovator’s Dilemma at play. In short, new startups leverage a distribution advantage to acquire SMB customers at scale. These distribution advantages take many forms: a simpler product (Box vs Sharepoint); mobile app store distribution (Expensify vs Concur); content marketing (Zendesk vs Oracle/Peoplesoft). Early on, the SMB customers finance a startup’s growth and enable the startup to build a broader product over time that eventually becomes more attractive to enterprises. Because of the nature of SMBs, the startup must battle the higher churn rates of smaller customers which slow growth, creating the S curve above. At some point, the startup pursues the enterprise market to continue to achieve high growth rates with decreased customer churn.

In the Runaway Train of Late Stage Fundraising, I analyzed the growing disparity of the public and private markets. Ten years ago, we saw 2-10x as many IPOs as $40M+ rounds. Today, we see 16x as many $40M+ growth rounds as IPOs. There’s no question that companies are waiting longer to go public, fueled by late stage private investment. I was wondering if as a consequence, we might see bigger IPOs.

In 2013 with 40 employees, Stripe adopted email transparency, a policy that makes most emails public to everyone in the company. They posted an update in late 2014 about the success of email transparency with 164 employees. At first blush, it may seem radical to funnel emails of 164 other people to everyone’s already overflowing inbox. But it works brilliantly because it creates a policy around Institutional Memory, something very few companies do well.

Every morning, it seems like a startup raises a massive growth round. In fact, the data proves the point. In 2014, there were 251 working days and 211 $40M+ growth rounds - just about one per day.

In contrast to the frenetic private market, there were 15 US IT venture-backed IPOs with offerings greater than $40M last year, slightly more one IPO per month in 2014. Private market rounds were 14x as common as IPOs in 2014, compared to the 2004-2007 era, when IPOs were about as equally common as large private financings. As Bill Gurley wrote, “These large, high-priced private financings are the defining characteristic of this particular technology cycle.”

Like most things in a startup, a sales commission plan should evolve as the company scales. For example, as Mark Roberge, CRO of Hubspot, wrote in The Sales Acceleration Formula, Hubspot adopted three different sales compensation plans throughout its early evolution which embody the three key ingredients of a sales compensation plan.

Hubspot’s first sales plan paid $2 of commission for every $1 of MRR an account executive booked. When the company decided to focus on revenue retention, the sales team adopted a new sales model. Account executives were divided into quartiles by customer retention. The top quartile received $4 of commission for $1 of MRR; the next quartile received $3, and so on. Hubspot’s third sales model paid $2 for every $1 of MRR, but not immediately. 50% of the commission was paid in the first month, 25% in the sixth month, 25% in the twelfth month - provided of course, the customer was still subscribed.

Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people:

The Proponent of the Sale champions the sales. The Salesperson must equip this champion with all the tools to convince the other stakeholders to pursue the transaction.

If you want to understand how to build a great SaaS sales organization, you should read Mark Roberge’s The Sales Acceleration Formula. It’s the single best book on the topic.

Mark is the Chief Revenue Office at Hubspot, a company which has created tremendous success by perfecting the inbound marketing plus sales model. The book is invaluable for every founder, CEO and member of the management team because it not only explains how the Hubspot sales team is structured, but why the structure came to be.

In 2.5 years, Adobe has transformed its business from a software license business into a SaaS business. It’s been a remarkable transition, and one not talked about very much in the SaaS world. Transitions from licensed software to SaaS are rare. The travel and expense management behemoth, Concur, recently acquired by SAP for $8.3B, is another great example that made the transition first from CD-ROM packaged software, then to enterprise license software and then to SaaS.