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Minor unsupported claims can be removed or rephrased in an edit; the core evidence and logic are sound and the memo is actionable.
Output
To: CEO From: VP Product Re: Next-year strategy
Bottom line: I think you're wrong. We are a mid-market company, and the enterprise plan would spend our scarcest resources, engineering time and hiring budget, on the segment with the weakest economics. Enterprise can be a real option later. It shouldn't be the strategy for next year.
Diagnosis
Annualized from the unit economics file (my calculations, not reported figures):
| SMB self-serve | Mid-market | Enterprise | |
|---|---|---|---|
| Customers | 6,200 | 890 | 34 |
| ARR (share) | ~$6.8M (30%) | ~$12.9M (56%) | ~$3.3M (14%) |
| Gross margin | 78% | 81% | 64% |
| Support cost / customer / yr | $610 | $1,900 | $21,000 |
| Gross profit less support / customer | ~$250 | ~$9,850 | ~$40,400 |
| CAC | $740 | $9,800 | $118,000 |
| Payback (months) | 31 | 9 | 26 |
| NRR | 88% | 118% | 104% |
| Logo churn | 34% | 7% | 9% |
Mid-market is our engine. It produces most of our ARR, expands at 118% NRR, pays back in 9 months, and churns at 7%. We win 61% of head-to-head deals against our main competitor. Customers are asking for multi-location reporting, payroll integrations, and shift templates, which are the features that drive expansion.
SMB is a support sink. SMB accounts generate 62% of support tickets. Support costs about $3.8M a year against roughly $6.8M of SMB ARR, so over half of SMB revenue goes to support. Most SMB customers are on a $79/month plan with unlimited phone support. Churn is 34%, trial conversion is 4%, and lifetime contribution barely covers CAC.
Enterprise is a real market but a poor fit for us today. We have 34 logos. Sales cycles run nine months. Gross margin is 64%, and payback is 26 months before custom work is counted. Five of our last eight enterprise deals needed custom features built by the core team at about 14 engineer-weeks each. That is roughly 70 engineer-weeks, or about 1.5 engineer-years, in eight deals. The plan doesn't account for that cost.
Root cause: We've let the loudest requests set the roadmap and support model. Enterprise asks for custom builds, SMB asks for phone support, and neither request is what drives our best economics.
Guiding policy
Where we play: Mid-market multi-location employers with hourly workforces. This is the customer we win, keep, and expand, and where our product is strongest.
What we stop: 1. Custom builds for individual deals. No bespoke engineering without a paid statement of work that covers full cost and passes a "does this generalize?" test. 2. Unlimited phone support for SMB. SMB moves to self-serve, chat, and knowledge-base support, with paid priority support as an option. 3. Dedicated enterprise hiring and outbound. Enterprise becomes inbound-only, served by the mid-market product. We don't build a headcount plan around it. 4. Single-segment edge-case features that don't help mid-market or the platform.
What we don't stop: The 34 enterprise customers keep full service. We don't reprice or abandon them. SMB remains our top-of-funnel, but it stops being a support-heavy product.
Coherent actions for next year
- Build the mid-market expansion product. Ship multi-location reporting first, then shift templates, then the two payroll integrations that come up most in mid-market accounts. This gets roughly 70% of core product capacity.
- Move the enterprise hiring budget to mid-market. Use it for mid-market AEs (where a 61% win rate and 9-month payback make each dollar work faster) and for expansion coverage on multi-location accounts.
- Restructure SMB support. Remove unlimited phone support. Create a clear upgrade path to mid-market plans when an SMB account adds a second location. Use product changes to deflect the most common tickets. The goal is to halve support cost per SMB customer.
- Productize enterprise table stakes, nothing more. Build SSO and audit logs once as standard features. Some mid-market buyers need them too, and building them once is cheaper than building them repeatedly for deals. Don't build custom workflows. Keep the 34 enterprise accounts well served through CS.
- Govern the roadmap. A product council with exec sign-off reviews any request that isn't on the mid-market or platform roadmap. Every custom request must pass the segment-fit test.
Capacity split (proposed): ~70% mid-market roadmap, ~15% platform (SSO, audit logs, reliability), ~15% SMB self-serve and ticket deflection.
How we'll know it's working
Mid-market (primary): - NRR ≥ 120% (from 118%) - Logo churn ≤ 7% - Win rate vs. main competitor ≥ 61% - Payback ≤ 9 months on new mid-market CAC - Share of expansion ARR from added locations and seats, tracked quarterly
SMB: - Support cost per SMB customer down from $610 to ≤ $300 - SMB tickets per customer down year over year - Gross profit after support positive per customer on the new support model - SMB churn trending down; we accept some SMB logo loss as the price of the change
Enterprise: - Zero unplanned custom engineering weeks outside approved SOWs - Enterprise gross margin trending up toward 70%+ - No loss in renewals among the 34 existing accounts
Company: - Blended gross margin up, driven by the mix shift - Total ARR growth on the mid-market base
Revisit enterprise in 12 months if mid-market hits its targets and we see a steady flow of inbound enterprise deals (for example, three per quarter) that fit the standard product without custom work.
Risks
- We'll lose some SMB and enterprise revenue. The bet is that mid-market growth and margin improvement outweigh it. We should show the exec team the expected net effect before we commit.
- Mid-market buyers may demand SSO and audit logs sooner. Building them as standard features in the platform bucket covers this.
- The enterprise story matters to investors and some of the team. We should explain it as focus with a defined path back, not as retreat.
I'm glad to walk through the model and the capacity assumptions with you before the exec session. My recommendation is to take this to the team as the choice between being a strong mid-market company now and a weak enterprise company later.
Claims the judge couldn’t find in the brief
- Root cause: 'We've let the loudest requests set the roadmap and support model. Enterprise asks for custom builds, SMB asks for phone support, and neither request is what drives our best economics.'
- SMB remains our top-of-funnel.
Grades and run details
Decision model 83 · LLM judge 77
Decision model checks
- passUses the supplied evidence correctly35%
- passAddresses the actual decision100%
- passRespects explicit constraints48%
- passIdentifies material uncertainty51%
- partialAvoids unsupported claims52%
- passProduces the required deliverable89%
- passReads the segment economics98%
- passTells the CEO plainly100%
- passDiagnosis before prescription100%
- partialProposes tests that could fail79%
- failNames an advantage that's hard to copy46%
- passSays what it gives up100%
Run
- Run
- #1
- API response time
- 36 s
- Submitted
- 8 Oct 2026