A Technical Founder’s Notes on Sales Team Management
Hi, I’m Kwin, co-founder of Daily.co and two previous startups. This post is part of a series about startups, tech, and startup founder skills. I’m always happy to be helpful to startup founders and people trying to break into tech, if I can be. Feel free to schedule a Daily.co video call with me, here.
If you’re a startup company founder with a technical background (or a design or product management background), building a sales team for the first time comes with a steep learning curve.
It’s pretty common for a startup company’s early, core team to do all sorts of creative, ad-hoc, experimental, “everybody wearing a lot of hats,” non-scalable, heavy lifting in pursuit of initial traction. That’s a great thing. But to go from initial traction to sustainable growth, most companies will need to shift gears and develop a formalized sales process.
It turns out that the gap between the founder-driven, heavy-lifting style of sales, on the one hand, and formalized, repeatable, scalable sales, on the other hand, is pretty big. For a bunch of reasons. The good news is that if you’re at the point where you need to make that shift, you’ve done a lot of things right. Congratulations! You can make this next leap, too. To help you, you definitely want to bring people into your company who are as passionate about sales as you are about engineering (or design, or product development).
Here’s some advice about how to approach building your sales team. These are all lessons that I learned the hard way, by getting lots of things wrong the first couple of times that companies I founded grew beyond our initial, scrappy, seat of the pants, founder-driven sales.
First Things First — Embrace the Cultural Shift
Because there will be a cultural shift. Nothing alters a startup’s culture like bringing salespeople into the company. Having salespeople in the mix changes how a company feels — more even than putting in place real engineering management, more than getting so big that your first hires no longer function as de facto executives, more than the departure of a founder. Salespeople work on commission! They wear suits! They drive Rolexes and wear Mercedes! (Or maybe the other way around).
But, if you’re ready to scale your revenue, this is a good thing. Your company culture will have to change. You’ll need to get continually better at setting company-wide priorities driven by your business metrics, better at shipping on time, better at communication up, down, and sideways across your org chart. Etc. Etc. The new salespeople are just one highly visible, but small, part of this cultural evolution.
So embrace it. Talk about how great it is that the company is succesful enough to need to add experienced, sales-focused people to the roster. (It is great!) Talk about how much the company is going to learn from having sales professionals deeply engaged with new customers every single day. (A whole lot, unless you really blow it managing the sales team!)
Be transparent about the fact that salespeople work on commission, even though that may not feel “fair” to some of your literal-minded engineers. Different jobs have different pay structures and working styles. Engineers can wear t-shirts to work, and don’t have to get on an airplane every week to go to meetings with middle managers from dinosaur companies. Engineers probably don’t get as much variable compensation (commissions and bonuses), but probably get more stock options, than salespeople. Engineers are probably making more money and have more stock options than support staff. It takes a village to raise a startup.
Also, if you’re a technical founder with a C-level title, your job will change a great deal. You’re going to need to carve out time to work for your sales team. A lot of time. They’ll need you to visit customers, and do demos, and spend big chunks of your day with them. As soon as you have salespeople on staff, you have to prioritize transmitting your vision to them, learning from their customer and process expertise, and building the cultural bridge between the sales team and the rest of the company. Embrace that change, too.
Sales is Not Bizdev — Give Your Salespeople a Clean Slate and a New Job
By the time you’re ready to hire salespeople, you probably have a backlog of interest from customers and partners. It’s tempting to hand that backlog over to your new salespeople. But that’s usually a mistake.
If the deals in your backlog were simple, you would probably already have closed them. To the extent that you’ve engaged with the customers in your backlog, you — emerging from your early, heavy lifting, days — probably approached them from the perspective of business development, rather than from the perspective of sales. Business development deals tend to be one offs, ad-hoc, creative. And they can move the needle for a company. But bizdev is not what you want your salespeople doing. You want your salespeople doing deals that are repeatable. You want them running the same playbook with every customer.
Your salespeople will want to take over the deals you’ve been working on. They’ll assume they can close those deals more quickly than you can. (They’re professionals, after all, and you are just moonlighting.) And maybe they can. But maybe they can’t. Take them along on customer visits, definitely. Ask them to tell you what their process would be for closing a customer, okay.
But be sure you’re not accidentally setting your new salespeople up to get bogged down in bizdev conversations. Err on the side of giving your salespeople new prospects to work their magic on.
Sales is Not Marketing — Don’t Expect Salespeople to Generate Their Own Leads.
This one’s really counter-intuitive, because when you interview good salespeople, they’ll spend a lot of time telling you about all the people they’ve sold stuff to before that they will definitely be able to sell your company’s stuff to. (And if they don’t do that, you shouldn’t hire them.)
However, it turns out that good salespeople are wired to close deals, not to prospect for them. No matter how good a job the salesperson did in the job interview selling herself to you, she’ll run out of leads from her own rolodex pretty quickly. Which means that for your sales team to function, you need to have an infrastructure in place to feed leads to your salespeople.
There’s no magic bullet here. Every company is different. Maybe you’re lucky enough to have incoming organic leads that can keep your first couple of salespeople busy. Maybe you need to hire a marketing person at the same time as you hire your first salespeople.
But, whatever you do, don’t expect your salespeople to generate their own leads. That’s a sure-fire recipe for, at best, slow revenue growth until you recognize the bottleneck. Or, at worst, departing salespeople because the top of your funnel isn’t keeping them busy enough to make money.
Before You Hire a VP of Sales, Hire Two Salespeople For the CEO to Manage Directly
There are two assumptions embedded in this piece of advice.
- First, you will have trouble attracting a proven sales leader until you’ve demonstrated that you have the clear potential to create a repeatable, scalable, sales process.
- Second, you don’t really know enough to hire the sales leader you need. You’re almost certainly still trying to figure out how to give your salespeople the knives they should have, and learning how to separate the whys from the whats.
Both of these are classic startup chicken-and-egg problems, and there’s no way to solve them but to push straight through. The best way to push through is for you, as the founder (or for the CEO you’ve hired), to recruit and work closely with two sales reps. Why two? So that you can compare and contrast.
Your goal working with your first two sales reps is to make new sales, of course, but also to learn what kind of selling process will work for your company so that you can recruit the right sales leader.
To be clear, you should be looking for your great sales executive from the beginning. Tap your network early on and ask for advice about hiring a VP of Sales. Talk to the CEOs of other startups that are a farther along than you are. Talk to all the VCs you know. (Whether they are investors in your company or not. When we were recruiting a VP of Sales at Oblong, I reached out to the incredible Mark Cranney, of A16Z — not one of our investors — and Mark made the introduction to the guy we eventually hired.)
But don’t expect you’ll actually find the right person to run sales for your company until you have accumulated a little bit of experience managing the sales process yourself, can talk intelligently about what kind of selling your company does, and have gotten a feel for evaluating the performance of a couple of salespeople.
Before You Hire Your Third Salesperson, Find a VP of Sales You Love
Unless you have a background in sales yourself, you should hire someone to grow and manage the team as soon as you know enough to find the right person for the job, and as soon as you can attract that person.
A great sales leader will be way, way better than you are at recruiting salespeople, at developing a repeatable sales process, constructing a compensation plan, getting the most productivity out of the sales team, communicating with your company’s board about sales, and firing salespeople when they don’t perform well enough. They may also be better than you are at closing deals (though if you’ve gotten your company to the point where you’re ready to build a sales team, you’ve probably done pretty well at this, in your own way).
All of which is to say that hiring a great sales executive is essential to scaling revenues. But — and this is really important — you have to love the person you hire. To succeed in the role of “first sales VP” at a startup, a sales leader needs to be given latitude and institutional trust. You should know pretty fast whether your new VP is going to work out, if you give that person everything she needs, from the beginning. But if you don’t trust her and let her work her way, you won’t know whether missing sales targets is her fault or yours.
Plus, you’ll be spending a huge amount of time with your VP of Sales. It helps if you like and respect each other!
One additional note: the sales reps you hired yourself will probably tell you they can take over the VP job. That’s almost certainly a bad idea. If the plan is to grow the size of your sales team, you absolutely have to hire someone who has grown and managed a team before. Your initial reps haven’t done that, or they wouldn’t have been willing to take the rep job in the first place. Experienced sales executives are always in high demand.
Optimize for Sales/Marketing Tension Rather than Sales/Product or Sales/Finance Tension
Growing a startup is a complicated, stressful undertaking. Human beings are competitive, political creatures. Management and strategic planning are inexact sciences.
All of this adds up to natural, structural tensions across (and sometimes within) a startup company’s functional divisions. If you’re an engineer or a product person, you’ve probably experienced the natural tension between product management and QA. Product managers spend most of their time thinking about how to translate business requirements into features, with deadlines as a primary constraint. QA leads spend most of their time thinking about how to test for all the bugs customers are likely to encounter, with person-hours as a primary constraint. That’s a natural division of concerns, but can also lead to very strong differences of opinion about product decisions, development schedules, and resource allocation.
There are three natural structural tensions that touch the Sales org:
- tension with Marketing around lead volume and quality,
- tension with Product around features and “sellability”, and
- tension with Finance around accounting issues (which impact customer contract terms and structure, making deals easier or harder to close), and cash flow (which impacts the size and timing of commissions, making sales reps happier or unhappier).
I’m a firm believer in managing for local optima rather than trying to solve all problems at once. Time is finite. Energy is finite. Patience is finite. High-pressure systems always leak, at least a little, somewhere. My approach to managing the structural tensions that are natural in an organization with a strong sales team (and, therefore, an experienced and opinionated VP of Sales) is to be — relatively — ok with Sales/Marketing conflict. But, at the same time, to spend as much time and energy as it takes to eliminate any and all Sales/Product and Sales/Finance mis-alignment.
In short, a certain amount of Sales/Marketing tension is okay, and sometimes even productive, because if Sales and Marketing are having a “heated conversation”, that conversation is going to be about lead generation. And there should be an ongoing conversation about lead generation. Marketing should be continually accountable for increasing lead velocity, and Sales should be continually accountable for making the most of those leads.
On the other hand, arguments about whether your product is “sellable” are a quick road to nowhere. Sales and Product need to be on the same page, all the time. If your sales lead and your product lead can’t work together, one of them has to go. Today.
And Sales and Finance need to be on the same page, too. Sales/Finance tension isn’t as big a fundamental problem as Sales/Product tension. But it’s still a big problem. A great VP of Finance can be a huge asset to a sales org by removing impediments to sales productivity. A great VP of Sales knows that, and should be investing a lot of energy in her relationship with her counterpart in Finance.
— end notes —
The observations above are very much colored by my experience as a startup founder with a technical background. For broader-based advice on managing salespeople and sales processes, I recommend Jason Lemkin’s posts and quora answers, Brad Feld’s blog, and Ben Horowitz’s book The Hard Thing About Hard Things.
Here’s a list of the inline links from the text above:
- Brad Feld on giving your salespeople “all the knives they should have” to make sales.
- Brad Feld on how to focus on learning why sales is working or not working in the early stages of building a sales org.
- Jason Lemkin on hiring the right kind of sales executive.
- Jason Lemkin on hiring two reps, not one, initially.
- Ben Horowitz on Mark Cranney, and hiring salespeople.