January 26, 2015
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!