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Ready for Your First SaaS Sales Hire? Four Simple Rules to Help You Not Screw It Up

January 26, 2015

Brad Svrluga

For an enterprise SaaS startup, hiring the right initial sales talent is a critical step. But that step is almost never the silver bullet that founders hope and expect. The reality is that building a sales organization is messy, takes time, and will forever require a ton of engagement from the founding team.

In my experience, most early-stage companies hire Sales VPs WAY too early, and generally should wait 6-12 months longer than they think. I have four basic rules for how founders should think about building the early sales organization at a SaaS business: 1) Don’t hire too early; 2) Don’t hire too senior; 3) Take raw talent over industry relationships/experience; and 4) Don’t hire just one.

1.  Don’t jump the gun. Salespeople are not miracle workers. You shouldn’t expect a salesperson to look at the product, look at the market, and then instantly start making sales. It’s the responsibility of the founders to the lay the groundwork by getting deeply involved at the customer level, and by intuition, skill, and force of will navigate to product-market fit and beyond. But most importantly, before you hand the reins over to someone else, you need to be sure you’ve achieved some early flavor of product-market fit. Not just one or two free customers, but real fit developed from dozens if not hundreds of conversations with would-be end customers.

That volume of conversations ensures that you actually know what you need. It’s hard to hire a sales team when you don’t have any idea how they need to be selling. Spending adequate time in the market ensures that you optimize your hiring for the right sales skills. Bottom line: Founders must prove the path to true product-market fit; then hire salespeople to optimize, systematize, and scale that process. Never hire a salesperson with the intention that they’ll make your first sales. And when you have made that hire, founders must remain deep, deep in the sales process. For most great software companies, a founder is the best salesperson well into the eight-figure revenue days, if not forever!

2.  Hire closers, not managers. Most founders naturally think that their first sales hire should be a VP Sales. Or an SVP, or God forbid a CRO. That’s almost never the case. What you need in your first hire/s are creative closers. You need to find those resources that are experienced and proven enough that you can trust they’ll be able to do the hard work of constantly tuning, reevaluating, and tweaking the sales messaging based on the data they see from their existing efforts. Really junior folks are rarely good enough to come into a new environment and get this right. But you need to be just as careful not to go too senior. Great sales VPs at scale are terrific because they’re great managers of people, they’re exceptionally metrics-driven, and they’re process fiends. They know how to drive a team and deliver results through the work of their salespeople. The problem is, they’re rarely closing a lot of business themselves.

Your first couple of salespeople don’t need to be process fiends or people managers. You need creative, hustling closers, like a rising star Director of Sales. Someone who is coming from a place where they had an individual quota. As a bonus, that person has some management experience and may be able to help build and lead a team, but I never optimize for that at the earliest stages. This is not the time to optimize for sales leadership. It’s the time for execution and closing.

3.  Prioritize talent over relationships. Most founders very naturally look for people from within the industry they’re selling into when they look for early sales talent. They want that Rolodex of preexisting relationships – it naturally gives the founder confidence that this new hire will leverage her network to make quick sales. Experience is certainly attractive, but it’s far more important that you hire a first-round draft pick than prioritize domain expertise and end up with a seasoned but possibly tired journeyman. If someone has the skills, they will be able to learn the ropes of the industry. Remember that exactly what you’re selling and who you’re selling it to is all but guaranteed to change. Over-optimize for what you think you need early on and you may regret it when that inevitably changes. Raw talent wins in the long term. In these early days you need a five-tool player who can handle everything — including messaging, identification of target personas, lead generation, relationship development, and closing. Creativity, scrappiness and flexibility are critical.

4.  When you do hire, hire at least 2. Finally, don’t hire just one individual. Having only one salesperson leads to too many false positives or negatives. It also means that if the person doesn’t work out, you may need to put your entire sales operation on hold to find and train someone new. Hire two and see what happens. You’ll get the opportunity to observe and learn from what will inevitably be two slightly different models and styles, and natural competitiveness will likely drive them both to perform better. This also acknowledges the reality that one of them probably isn’t going to work out – sales hiring is always a 50/50 bet at this stage, after all. So don’t put yourself in the position of being left with nobody.

 

In the coming weeks, I’ll share some more concrete examples that bring each of these rules to life. Check back for more and good luck with building your first sales process and team. In the meantime, share any questions or experiences in the comments!

Playing Matchmaker

January 13, 2015

Brad Svrluga

A few years ago I had the pleasure of attending the wedding of my good friend Bob, where I sat next to another good friend, Ashley, who had actually introduced Bob to the woman he was now marrying. It’s always a joy to watch good friends consummate the relationship they’ve chosen for the rest of their life, but I was struck in this instance by how powerful the experience was for Ashley and her husband, who had taken matchmaker to the ultimate level of success. Their joy watching this union formed was exponentially greater for the satisfaction of having played a foundational role in it. And now, as Bob and his wife have gone on to start a wonderful family, Ashley will forever feel a sense of pride and satisfaction watching a family that might never have been but for her thoughtful introduction way back when.

I’ve never had the pleasure of playing that role in a marriage, but I’ve been enjoying a comparable feeling of satisfaction recently as we’ve celebrated a very successful new financing milestone last week for one of our portfolio companies, Reonomy. My friend and fellow board member Josh Guttman wrote a nice piece about the financing last week, and the RealDeal also profiled the company and deal.

For me and High Peaks, though, the Reonomy story goes back 15 years to the summer of 2000, when Reonomy co-founder Rich Sarkis was a rising senior at Williams College, my alma mater, and I was a newbie VC. As I continue to do today, I try to meet with any Williams students who are starting companies or pursuing otherwise entrepreneurial endeavors. I met Rich then as he was a senior, working with a few friends on a very innovative, perhaps a bit ahead-of-its-time company called Bookbundle.com. Bookbundle was something of a Chegg predecessor, aiming at helping offset the outrageously escalating cost of textbooks for college students. While I didn’t think the business was quite investment-worthy at the time, I was taken by Rich’s precociousness as an entrepreneur and his raw horsepower as a thinker and strategist. And we hit it off pretty well personally, too. The business ended up doing fairly well, and more importantly, over the course of a 3+ year run it gave Rich a heck of an education in entrepreneurship.

We stayed very loosely in touch but reconnected more substantively in 2008 when I was working on High Peaks’ foray into the educational content world via our investment in Flat World Knowledge. Rich was at the time a rapidly rising consultant at McKinsey in NYC, and we met for breakfast so that I might run some of our thinking about the textbook industry past him. Not surprisingly, Rich impressed the heck out of me again, and we mutually committed to staying in better touch. While he was having tremendous success at McKinsey, it was clear that eventually Rich was going to return to his entrepreneurial roots, and when he did, I wanted to make sure I had the chance to work with him on whatever he pursued.

Fast forward to 2012. I had spent a fair bit of time with Charlie Oshman, a brilliant young founder who had been rattling about the commercial real estate tech space for awhile, working on a variety of ideas. I had always been impressed with Charlie and his knowledge of the marketplace, and he was a guy I knew I’d enjoy working with. At the time, though, it was clear to both of us that he hadn’t quite yet found the right product or market opportunity. But I was enough of a believer in Charlie and the macro-themes he was most focused on – the extreme opacity of data and information in the commercial real estate investment market – that I wanted to stick around and try to help him. So we had a months long dialogue through which Charlie’s thinking continued to evolve and my respect for him grew.

And then one morning Rich and I were having breakfast at our usual spot, Norma’s, near the McKinsey office (home of the world’s best bagel & lox presentation, btw), and he said he had decided it was time to leave McKinsey. He wasn’t sure yet what he wanted to do, but he wanted to start something or join something very early stage and he wanted to get my advice on how he was thinking about things. Rich had been doing a bunch of work at McKinsey with large companies in the finance and financial information space, and by the end of the breakfast I had told him I was going to introduce him to this brilliant young entrepreneur who is close to hitting on something, but just needs a bit more help. It was a long shot, but I knew that at the very least Rich would enjoy thinking about Charlie’s business ideas, and that both of them would likely learn something from the discussions.

Amazingly, sparks flew, and four months later High Peaks co-led a seed financing in Reonomy, the company that Rich and Charlie co-founded. A year ago Softbank joined us when Josh led a Series A, and last week, on the heels of truly exceptional 2014 product development work and early sales successes, Bain Capital decided to join us.

People sometimes chuckle at the non-stop string of breakfasts, lunches and drink meetings that comprise much of the life of a VC. In some cases, that chuckling is very much warranted. But we do it for just this sort of reason – putting yourself in the flow of people and ideas so that once in awhile you can be there when sparks fly. Or better yet, be a catalyst for those sparks. We spend so much of our lives as VCs responding to inbound opportunities and deal flow…it’s a unique pleasure to actually have a hand in that creation, and it often leads to relationships that are deeper, more unique, and more powerful. That’s certainly true in this case.

Reonomy is today the clear leader in its market and one of the best-funded commercial real estate tech startups on the planet. As I sit and watch Rich and Charlie build this special thing that they’re building, I can’t help but think back to that wedding and enjoy knowing that in a different context, I now understand just what Ashley was feeling. As Reonomy continues to grow, to employ more people, and to impact the CRE market in ever-expanding ways, it will be forever gratifying to know that we initiated the connection that made it all possible.

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