Sales in an Early Stage Startup — Notes from the INTRO CEO Club Panel
Last week, we had the good fortune of having two Masters of Sales join our meeting to shed some light on best practices in Sales:
- Pete Kazanjy, Founder & CEO of sales performance analytics co. Atrium, and the author of Founding Sales the startup sales handbook.
- Alon Zaibert, Founder of Emotional Relevance and the travel industry’s leading sales coach.
Our beloved lead-generator-in-chief Shani Shoham, Founder and CEO of 21 Labs and advisor to Weka.io moderated.
This post will attempt to summarize the main points from the event…
Initial sales in a startup should be done by a founder.
There’s so many reasons why that’s true. For a detailed “why” and “how-to” — Pete’s excellent presentation “Founder-led Selling” is the go-to resource.
Hire the first sales-person when there is repeatable sales motion.
For instance, when sales are in the $10–100K range, once you’ve seen 50–80 leads that converted to 15–20 sales — you have a pattern, and you can hand it off to sales people.
Sales Ops? Inside Sales? Field Sales? Account Executives?
What kind of person is your first hire depends greatly on your domain and the size of an average sale. The other important question — Where is your bottleneck?
- Lead qualification? Hire an SDR to qualify leads.
- Not enough calls? Hire an SDR to build up the pipeline.
- Lots of opportunities but no conversions? Hire an account exec to close deals.
- Too many deals? Time to hire customer success.
And Alon says… Always hire Sales Ops in the beginning.
How to choose? Do you choose the salesperson with the best rolodex?
A good salesperson is a good salesperson. If they have the right contacts — that’s icing on the cake, but if they aren’t good, you won’t fix them. One interesting way to use a candidate’s rolodex is actually in order to get references for them — from a customer.
When interviewing — dive deep. Take an account they boast and drill down. Why did they pursue that lead, why did they buy, how did they convert them — ask a bunch of questions. You will learn a lot about them.
How to compensate the sales team?
For people actually selling, the rule-of-the-thumb is 50:50 between base and total, i.e. 50% of the target package are commissions, and those are typically 10% of the deal.
There is a whole lot of nuance, especially with regards to the “sales support” team. David Sacks just posted some useful examples here.
And with the world moving virtual and WFH — remember that there is a geographic arbitrage. Some places are cheaper than others.
When to start growing the sales team?
After the initial 2 people can reliably sell — it’s time to start growing — by getting more people onboard.
A bunch of resources
Pete Kazanjy’s writings:
- Founder-led Selling PPT.
- Founding Sales — the book and direct purchase link.
- The Atrium website — if your sales-team is closing on 10 people, you’re ready!
Alon Zaibert’s Website and blog.
Other resources:
- The Challenger Sales by Matthew Dixon
- Duarte’s TED talk on Great Communicators
Nadav Gur is a serial entrepreneur who founded, ran and exited several companies in the AI, automotive and travel space. He is the principal at NG Vanguard Enterprises where he works with founding teams and investors to make them 10% better.