As a former founder, sales executive and current B2B consultant to several startups, I’ve discovered that founders make the same hiring mistakes, over and over again. There are too few good resources to guide them.
So I decided to highlight some of the common pitfalls, with the hope of saving companies the unnecessary heartache.
They hire salespeople too early
Prior to strong signals of product/market fit, founders cannot avoid heavy involvement in sales. When clients buy from startups, they need to see the whites of your eyes to increase their confidence that you aren’t selling vaporware. They also want to negotiate a lot of specific details, and only a CEO has the power to be so flexible.
Second, your startup has a significant sales learning curve ahead of it. You may not yet know who your buyer is, or understand her very well. You may not know her hierarchy of pains, and what will motivate her to buy. You don’t know how to evoke that motivation with your pitch. And you don’t know which process, pricing and packaging will work with lots of similar buyers. It’s also very hard for a nonfounder to disseminate new insights about these matters across your product, marketing, engineering and executive teams.
They hire the wrong kind of salespeople
When it does come time to hire, founders usually pick the wrong professional profile. Here are the six most frequent mistakes.
The Generically Successful AE
These are high performers, but that doesn’t mean they will do well in an early-stage startup. They are successful because they are disciplined, good at following a playbook, or can close lots of deals when they understand customers and their buying journeys. If you give this person a reliable process, pitch and playbook, they will succeed.
Unfortunately, you have no idea what your process, pitch and playbook should look like yet. You might not even know who your buyers are, or what motivates them.
The Industry Expert AE
These folks look similar, except they are industry insiders. They might generate leads from their network, and may provide some insight into customers. But they are often even worse at early-stage sales. People who are unwilling or unable to cross markets tend to need even more clarity than normal salespeople, and are likely to fail when faced with real ambiguity.
BigCo VPs will dazzle you with stories of success, and can be hard to resist. But they are used to lots of resources, including large teams. And they may have never done the kind of exploratory sales work you need. You often end up with a very expensive person who doesn’t know how to tackle a new market, and spends a ton of money on resources before you realize he has no idea how to help.
Head of Sales
Heads of sales aren’t as senior, so they are used to being a bit closer to the market. In their previous job, they probably managed a small to medium team of AEs or SDRs, and IC life isn’t that far in the rearview mirror. They often feel like a “best of both worlds” pick — recent success with individual contribution, and a capacity for leadership and some scaling. Those are great qualities, but they still bring the same problems as the experienced AEs. Unless they have achieved their success in an early stage or go to market role, they will not have the required skills for helping you scale the sales learning curve.
Serial Startup VP
Although the Serial Startup VP is often a mistake, you could do worse. She is much more likely to have the sales and market discovery skills you need, and is familiar with moving her company through the sales learning curve. She also will have the gravitas you need to constantly update your team’s understanding of the market. But most of her time will still be spent on work lots of people can do, like digging up information for leads. Depending on your stage, you probably need her expertise and leadership only 5-to-20 hours per week.
If you have lots of money and can afford to burn through it pretty fast, this isn’t a terrible hire. But if you are trying to be smart with your money, you can do better.
The final mistake is hiring someone to do lead gen. The CEO figures he can identify prospect types, or buy lists. He then plays some silly games with spreadsheets, imagining how many emails and calls per day a person can make, making assumptions about response and pick up rates, cutting those in half “to be conservative,” and figuring out what kind of revenue that can generate.
This is almost always foolish fantasy. If you haven’t mastered your buyer persona, you are very unlikely to know how to find them and get them into your sales pipeline. A brand new professional is one of the last people you should trust to figure that out.
What does work?
Obviously, it depends on a lot of details, including the founders’ expertise, the market, the buyers, ACV, how far the company has come in terms of product/market fit and pitch/market fit, and of course, resources!
I have seen five kinds of hires that work, depending on the circumstances::
- Hire a renaissance rep and work closely with her to extract market learnings.
- Hire three or four reps who have some renaissance rep qualities, and parallelize their efforts to drive learnings forward, and contextualize their performances.
- Map your sales tasks and hire a sales assistant, and have him do the commoditized parts and better leverage your time.
- If you have a lot of money to burn, you can hire a serial early stage sales VP with a history of success, though as I explained above, this wastes a lot of money.
- Hire a fractional go-to-market leader, to help your startup scale the sales learning curve without overpaying for full-time expertise (full disclosure, this is what I do for a living). You can use the resources you save to hire whatever additional frontline help will maximally leverage you and your fractional executive.
Other key things to keep in mind
Understand that early sales professionals rarely pay for themselves in revenue, and usually won’t until your company has scaled a lot of the sales learning curve I discussed above. SO targets and their compensation should be base-heavy, focused on driving the learning forward, and must avoid the magical thinking associated with early-stage sales quotas.
Finally, make sure that the person running your interview process knows how to spot early-stage sales talent, and knows how to interview salespeople. Remember, even a mediocre salesperson interviews well!
Good luck! And for a more detailed version of this post, see my Substack.