👋 Hey, it’s CJ. Welcome back to my newsletter for current and aspiring PE backed CFOs.

So your sales reps are at 140% of quota. Crushing.

Good problem, right? Perchance. But that number is also a warning sign. It means your team is probably tapped out. They’re spent. They're leaving deals on the table not because the market isn't there, but because there aren't enough hours in the day.

So how do you know when it's actually time to add capacity? How do you know when you need more asses in seats?

That's what I want to talk about today. Because putting your foot on the gas too early burns cash. Too late and you're handing market share to the competition. Sequencing matters.

Here’s a three part litmus test.

Before you open a single headcount req, you have to answer two questions honestly.

First: does your product solve a problem that enough companies have? Not "could it theoretically" but is it winning consistently right now?

Second: is there more market to capture? This is a TAM question, but not in the abstract "addressable market is $50 billion" way VCs love. It's more specific. When you look at LTV to CAC in the markets where you're already winning, is the math good? If yes, adding capacity in those same markets should produce similar returns.

If both answers are yes, you have a green light to explore. If either answer is shaky, adding reps won't fix it. You'll just burn more matches finding out the same thing.

Here's the next tell. If your reps are consistently hitting 120%, 130%, 150% of quota, they're clearly crushing it. And there's a good chance they're doing it because the market is handing them more opportunity than they can physically get to.

I don’t want to poo poo the quality of reps you have on board or say that they aren’t talented. They probably are (at least a few of them). But no team has everyone hitting +100% without a tailwind. That’s more a market pull than the team out executing. In fact, I’d venture to guess if that’s the score, they are actually letting a ton slip through the cracks.

Yes, you could raise quotas. But a rep at 150% isn't sandbagging. They're probably already taking every meeting they can fit in a week. The Wiz CRO, when they were growing from $200M to $400M ARR in 18 months, literally looked at sales rep calendars and said, "That person can't take any more meetings." That's the most honest leading indicator you'll find.

When people are tapped out and demand is still coming in, the constraint is less skill, and more headcount.

This is where a lot of CFOs stop short. They build the model, they review it with the CRO, they get a nod, they approve the headcount.

Don't do that.

Call a regional VP. Ask them: "If I gave you three more reps, what would you do with them?"

If the answer is, "Give me everything you've got, I'm losing deals because I'm not even in them," that's the green light. That's a sales leader telling you the opportunity is real, and your financial model has feet on the street confirmation.

Then go a step further. Take three IC reps out to lunch. Hell, grab a coffee with a few BDRs. This is where you get the unfiltered feedback.

The reps know things your CRO doesn't always share. They're on the front lines of every customer conversation and have earned secrets. They can feel the market in ways no triple filtered pipeline report can capture. Talk to them.

There's also a part of this that's just pattern recognition. The best CFOs I know have a spidey sense for when it's time. It's not mystical. It's the product of watching enough cycles, enough capacity additions that worked and some that didn't, to recognize the setup.

There’s confidence and affirmation in the science of your model: quota attainment rates, pipeline coverage, LTV to CAC, sales cycle trends. All of that tells you if the fundamentals are there.

But the art is reading the room. Is the sales team energized or exhausted? Is the demand coming from markets you understand or from something you can’t put your finger on? Does adding feel like responding to opportunity, or are you being pressured to grow just to grow? As I mentioned, the Wiz CRO didn't run a model to figure out when to add reps. He looked at calendars. Every slot full.

This is where companies get burned.

You approve the headcount. You hire 20 new AEs. Then you wait. Like a farmer who just planted, you're expecting crops. But you forgot to water them.

Because nobody scaled the supporting infrastructure with them.

To be eve more specific, here’s what I've seen - when the market is hot, the limiting factor for an AE usually isn't a BDR. It's an SE. Do you have enough hours for technical demos? That's what actually gets deals over the line.

Mostly Talent is actively placing a Director of Strategic Finance, Controller, FP&A Manager, and VP of IR across Series B through Pre-IPO companies. These searches move fast.

If you're hiring, work with us here.

If you're passively open to new roles, get into the ecosystem here.

Thanks for reading, and make sure to check out our sponsor, Abacum.

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