If you are reading this because of the above title, you already need to adjust your thinking. My first sales hire was a total bust. I was 26 years old and came from a civil engineering firm. I hired someone on commission only — a terrible move. Would you work for someone with no base salary, no equity, and zero proof points? It was likely the only opportunity that he had. On his first day, I literally gave him a copy of the yellow pages and told him to start at the “A”s. Why? Because every business needed internet access and a website. It was 1996. I wasn’t wrong: just a little early to market. The salesperson started calling, sold nothing, didn’t help us define our process, and sucked up our time. So while he was zero risk, he cost me and my partner a lot more than a base salary; he cost our time and frustration.
If you’re a startup founder and would like to avoid a similar disaster, here are some tips for making a successful first sales hire:
Make sure it’s time.
How do you know when you’re ready to make your first sales hire? When you have so many qualified leads that your prospects are complaining. A qualified lead is a) a decision maker who b) has a budget and c) likes your product.
This assumes you’ve already done your first $1m in sales yourself, of course. If you haven’t — go read my previous post so you understand why this is necessary. But if you’ve done that, and you’re overwhelmed with qualified leads: you are now ready to hire a stranger to sell strangers.
Every startup thinks they are one magical hire away from experiencing hockey-stick growth. You need to realize that sales is just like any other functional role: it’s work. The work that your first sales hire should be focused on is simply to take a qualified lead, turn it into a sales opportunity, and then work that sales opportunity to close. Oh, and closing means win/loss, not just win.
Know what you have. Know what you’re looking for.
The best salespeople will due diligence your startup more thoroughly than any venture capitalist will. Why? To a VC, it’s just money. To a killer salesperson, it’s money and the next 5–10 years of their life. The opportunity cost is huge.
Here are some of the top questions a great sales hire will ask you:
- How do you generate leads? How many leads are generated per week?
- What is the average sales cycle from qualified lead to close?
- What is the win ratio at close?
- What is my target compensation? When do I get paid?
- What are the stages of the sales process? What marketing/pre-sales support do I have through this process?
- What is the average deal size?
Any more that I left out? Comment below. If you can’t answer these basic questions and the salesperson is still interested in the job, then they’re probably not very good.
Great salespeople are pessimistic; they have bills to pay and have heard all the sales pitches from other potential employers. They will also want a higher base salary at first until you can prove that they can make commissions. Great salespeople are also very competitive. If you can, try to hire in pairs. If you’re making the right moves, you should have a significant sales talent pipeline. And if you have a great qualified lead pipeline, there should be plenty of work to go around.
Evaluate the fit.
So let’s say that you’ve heeded all my wonderful free advice. You have two highly qualified candidates. Now what?
Get some help. Lean on your advisors to help interview and vet these folks. Explain to the hire that this is a huge personal investment and that you want to be patient. You want to take the time to determine whether or not there’s a mutual fit.
When the salesperson says, “I am crushing at my current job,” ask for a W-2 to prove it. Don’t be shy. Talk about money during the first interview. When the salesperson says “I need to make a base of $100K and total compensation of $250K,” create a spreadsheet and see if you think they can reasonably meet that objective. Be brutally honest with yourself. If someone needs to make $500K per year and your product is $19/month, the math probably won’t support it. Don’t fall victim to the psychosis of an entrepreneur. End your call and move on.
Use these interviews to refine your process and job description. I find that I learn a lot from the people I am interviewing, especially in an area where I don’t have deep experience.
Be willing to make changes.
The business can start to change. It is important to be willing to make corresponding staff changes quickly. Salespeople come with very specific experience. If you first think that your sales process will involve face to face meetings, then you hire an enterprise salesperson. If six months later you decide that a phone-based sales process would be more efficient, then let go of that salesperson and hire a salesperson skilled in phone-based sales. Your existing salesperson will say that they are willing and able to do phone-sales. However, they are likely hedging their bets and will start looking for a new job. It is always about “fit,” not good or bad. The business model changed, and the salesperson is not a fit.
If you follow all these tips, you have a decent chance of finding a good match. And remember: sales is just work. Nothing more, and nothing less. It’s a process with a set of activities. These activities have timelines. The activities lead to opportunities, and opportunities lead to sales.
And one final tip: I have never had a salesperson with a “book of business” ever work out.