By Lak Ananth, Global Managing Partner and Will Smith, Venture Partner — Next47
As a startup scales, it will reach a point where the founders need to bring in a sales hire — they just can’t continue to do it all, nor should they. The problem is that many founders make the mistake of hiring the wrong kind of salesperson — they overhire, overtitle, and overcompensate, and then they’re surprised when that person doesn’t perform at the level they expected.
So, what kind of person should you be looking for in your first sales hire, what should their goals be, and how can you ensure that you get their best efforts? Here are some ways to avoid the mistakes founders often make in their first sales hire, while ensuring you get the best person for the job and that they’re set up for success from the very beginning.
The right salesperson at the right time. We suggest that the first serious sales hire alongside your founding team should be an individual contributor who can hunt for customers — not a VP or a CRO or someone who is used to leading a large team. The ideal candidate will be one who will be hands on in landing your first customers, establishing what works and what doesn’t in the market segment, and writing the playbook that gives you confidence to make further sales hires. But it is not a person who starts with what their title is the day they join. Over titling your first sales hire into VP or CRO or some similar title will put you in a bind when you want to bring in a scale player later — which you inevitably will.
In the beginning, you want someone who’s focused on the problem of growing from zero revenue to low-digit-millions revenue. This is a very different skill set than going from $20 million to $100 million. The latter persona is very impressive as well, but many such scale players may find it hard to be successful in the early days. So, finding someone who is stage appropriate is key.
The goal for your first sales hire. As a founder, your goal for a first sales hire is to amplify your outreach efforts to customers that may not necessarily be in your network. You should look for patterns and then task the salesperson to explore them. You might say, for example, “I’ve self-sold to a law firm that has these characteristics — go find 10 more law firms like this that I don’t have a relationship with.”
In addition, you want someone with a hunter mentality and not just someone who says, “Hey, hand me the leads and I’ll pursue them.” You want a salesperson who says, “I’m going to go out and find the customers who are most likely to have the pain point our product solves.” They also need to be someone who can close deals because you can get caught in a trap — especially when the product’s not fully baked — where a prospect says, “Well, if it had this feature I would buy it.” Those deals never seem to happen even though there’s a lot of activity and engagement. The first salesperson closes deals with the product you have in the cart today.
Incentives matter. Managing a salesperson is very different from managing an engineer or a product person. And incentivizing a salesperson is very different from incentivizing an engineer or a product person. Ensure that you’ve given serious thought to how you’re going to incent the behavior you want at this early stage.
A common mistake is to have a bonus structure that is 100% to the seed stage company’s growth plan. It’s really hard to predict growth trajectories, so you can very quickly get sideways with your first sales hire. Give yourself wiggle room so you don’t have to hit a plan exactly for that person to be successful.
Recruiting the best. When you’re ready to make your first sales hire, look at their history. Were they in the top 10 percent of their selling group? Did they overachieve on their bonus? Did they make the President’s Club? There’s a little bit of Moneyball involved in understanding how your sales candidates performed in the past because that’s going to be very indicative of how they’ll perform in the future, after you hire them. Word of caution, both top performing and failing sales people know how to sell themselves. It’s on you to look past the glib selling and get to the data that gives you the confidence that they are a top performer.
A key takeaway for product-oriented founders who may or may not have ever had sales reporting to them in their prior role, or who may not know how to run a sales organization, is to make a sales hire and set up a methodical selling motion. As the Brits would say, “Keep calm, don’t panic.” That’s the first step.
The second step is to have confidence that although there’s a lot of mystique to it, selling is a solvable problem. It’s a problem that can be solved methodically by going through decision trees and experiencing it for yourself.
