Last week we hosted an SVB dinner partnering with friends at Building the Sales Machine. The idea was to bring together some of the top founders and heads of sales in the NYC tech community for discussion and debate focused on B2B enterprise business. Fortunately we ended up with a talented room of sales leaders from early stage startups to successful veterans in tech. I wanted to share some of the best takeaways from the evening…

I. Sales as a Consultant
Your primary sales role is to build a pipeline and close, but it’s also to demonstrate ongoing value to customers. The same function applies to both trials and renewals: if a customer doesn’t want to buy because they didn’t use the product or couldn’t find the value, that’s a failure on the salesperson. It costs 5x to acquire vs retain a customer. Half the battle is getting the product in front of a prospect, but the onus is on you to make sure they continue to see value.

II. Right Hire for the Right Time
There’s a fundamental difference between your 1st sales hire vs your 100th hire. The first hire is entrepreneurial and experimental. They’re not afraid to test pricing structures and should always be thinking about customer success. Bear in mind that as the business grows this person expects to slot into management. A great executor doesn’t always translate into a manager. It’s wise to have open communication with any early hire about their personal goals within the company.
Meanwhile, your 100th hire doesn’t mind repetition. By this time you’ll have clear goals and objectives. This usually isn’t an entrepreneurial hire, but someone who has demonstrated success, likes structure, and prefers a clear path to winning and growing.

III. The Athlete vs. The Rolodex
The general consensus was that for early sales hires, the ‘athlete’ (hard working competitor, gunning for the prize) is preferable to the ‘rolodex’ (someone deeply networked and connected); consider this from a room of people who have built and scaled enterprise sales teams. The logic centers around creating a repeatable process. If you’re relying on someone’s network, that list is quickly exhausted and then you’re asking someone who hasn’t been cold prospecting to start from scratch. While a network helps in early sales, it’s advantageous to build a repeatable process early with someone who’s hungry and adaptable. You’ll establish momentum, culture fit, and precedent for the next hires.

IV. Founders: Do It Yourself
Before you build a sales team, get out there yourself as a founder or CEO and sell (and learn)! How long is the sales cycle? Who are the right and wrong prospects? Who are the stakeholders? Understanding the process yourself will help define what you need out of your sales team: knowledge, network, personality, flexibility, tenacity, etc.

V. Clear KPIs for Both Sides
Don’t let yourself succumb to the pitfall of mismanaged expectations. You didn’t “crush it” because you got a prospect on a trial — what are the real signals that denote success?
Has the prospect spent X hours on the platform? Populated fields? Used the product to collaborate with a colleague?
What are the best indicators that you’ll acquire or retain a customer?

VI. Back Into a Comp Plan
What do you pay an early sales hire? If you’ve already done #4 and been thoughtful about #5, you’re halfway there. The room seemed divided on this and there isn’t an obvious answer. Some believe in a commission driven plan, while others think there’s so much early stage iteration that it’s easier to start with a healthy base and not let comp discussions distract from finding the path to revenue. The takeaway is to back into it logically. How much business do you need to break-even with the hire? How long until a sale converts? How many prospects can they manage at once? Answer these questions and the solution becomes data-driven vs subjective.

Thank you to everyone who joined and excited for our next dinner. Stay tuned as the next event will center around B2B startups selling into SMB.

Update: For more detail on when to hire your first VP of sales, Tom Tunguz at Redpoint gives his thoughts here.