Hiring: Early Roles and Experience Levels, Part I
The three most common approaches are usually a mistake
Three Blind Plans
Founding teams with little sales experience often struggle with what kind of sales talent they want to hire. They tend toward three approaches:
Hire an experienced sales VP
Hire frontline sales people
Split the difference; hire “Head” of sales to sell and grow into a VP role
All of the above approaches have serious problems. Watching founders flail through this is part of the reason I decided to consult. To help you avoid a lot of pain, I will explore the shortcomings of all three. In a subsequent post, I will present a framework for figuring out the right roles for your startup. But first, it’s important to understand why the three most common routes represent a serious risk to your company.
The Dangerous Allure of the Experienced VP
Some CEOs look for an experienced sales executive to help them get started. After all, it’s axiomatic that you should bring in the best talent you can, especially to augment your weaker areas. Many entrepreneurs recognize that to get their product into customers’ hands, they need help figuring out how to approach the right people and convince them to write checks. Founders tend also to be future-minded; this draws them to someone with more senior experience who can scale with the company. To top it off, technical founders often find pricing, business models, and selling into corporations to be an inscrutable, intimidating, or just plain uninteresting way to spend their time, and so would rather offload it to someone they respect. And VCs reinforce these instincts by pushing teams with little customer-facing experience to bring in a steady hand to help out.
All of these factors drive CEOs to hire someone with real executive experience, often at the VP level. But until the company is approaching its Series-B round, this is almost always a mistake. Here are a few things to keep in mind:
Experienced executives are expensive and startups are resource constrained. Given that a large percentage of sales executives fail to be a good fit, even in mature sales environments, this is a huge risk.
When they aren’t expensive, they are almost always terrible at their jobs. Beware flattery. Run from people who say things like: “I don’t mind this small salary, because I believe in you and this company and this idea, so my 1% stock grant is going to make me rich.” Unless your valuation is stratospheric and you’re growing like gangbusters, this just means he couldn’t get a job elsewhere.
Unless your transactions are tiny, you almost certainly have to be involved in closing sales and can’t fully outsource this to a VP. You have to show up and talk to early customers to bolster their confidence that you can follow through on contracts or protect consumer data. And anyway this is your best opportunity to understand the market. Either way, you will be stuck with some of the “higher level” sales work, making a VP somewhat redundant.
Many experienced VPs come from mature companies and are one-trick ponies. They have been following a playbook, probably written by someone else, and their job has merely been to motivate others or tinker around the edges. Most folks with this background wither in the ambiguous, resource-constrained and infrastructure-light environment of a startup.
Most VPs are used to relying on individual contributors to do the actual sales labor. It’s a classic startup struggle: hire an expensive VP and then he wants to hire other salespeople to do the selling. Many VPs don’t like to be individual contributors (IC’s). Some were promoted because they were smart or organized, but weren’t especially good at selling. Don’t assume that a good VP is a good IC.
Much of the early work is genuinely entry-level. A classic example is lead-gen. In a few hours, a good executive can teach a new college grad how to use a couple tools to mine the team’s extended networks. The follow on work is easy, but time-intensive. A VP is way too expensive to dedicate to this kind of entry-level work. So you will either overpay for lead gen by having your VP do it, or have to hire someone else to do the grunt work and spend more overall.
The Opposite Mistake: Hiring only Frontline Folks
Other entrepreneurs have the inverse instinct and want to hire more junior sales employees. These founders believe there isn’t a playbook to build just yet, just some figuring out to do. They also recognize that their own involvement in the sales process is unavoidable. In fact, many are happy to talk to customers, as they should be, because they know this is needed if they want to get the product right. Finally, many turn to this strategy because it is less expensive. Still, it brings its own baggage.
If something doesn’t go well, you have no idea if the problem is the salesperson, the approach she is taking, or the product you have built. If you remember our sales learning curve series, the key to revenue is sales learning. The risk here is that you learn nothing on top of gaining little revenue, the most devastating combined sales setback you can have.
If will be difficult to experiment with different models and approaches, since neither of you will have experienced much variety. This will lower your chance of finding a successful way to sell, and further hamper your learning.
You won’t know how to manage them. Managing salespeople, especially in an ambiguous startup environment, is its own skill. How will you maximize the benefit you get out of these frontline folks if you don’t know how to do it? Very few of them are used to doing everything on their own.
Related to the first point, it will be difficult to judge performance. If she is bringing in clients, great! But would a better professional bring in twice as much? If she isn’t closing many deals, do you really want to fire her or withhold her commissions when the problem might be the product or your market strategy or bad management?
Splitting the Difference and Risking the Worst of Both Worlds.
Lately, I’ve seen more founders aiming for a third approach. They realize that they need boots on the ground, so they have to hire an individual contributor. But they also need someone who can help them strategize, build a plan and a playbook, and experiment with different models. They want someone whose judgment they can trust. So they look for a kind of hybrid.
Just last week a founder said to me, “This guy said he was looking for a VP position. But he’d be happy to take an IC role for now and we could call him ‘Head of Sales,’ with the understanding that he would grow into the VP as we grow as a company.” The problem is, that in doing this, this CEO runs the very high risk of getting the worst of both worlds.
Most people who say, “I want to be a VP, but I’m willing to be an individual contributor for now” cannot get a VP job. If your candidate hasn’t been an executive yet, that means he could not get people who knew him to promote him. If he has held an executive position, and can’t get one now, he may be ineffective.
A person who says he would “rather be a VP than an individual contributor” is looking to avoid being an individual contributor. If you think hiring someone on the premise that he will tolerate his IC work so he can eventually get the real job he wants is a going to produce good results in an already challenging situation, you may be sorely disappointed.
You will still overpay this employee for much of his labor, like lead gen or running email sequences. This is the same problem that comes from hiring a real VP, although the pay gap may not be quite as high. You either waste a bunch of his salary on mundane tasks, or you hire someone else for these, and spend more overall. Neither of these are an effective use of resources.
While I do not recommend this model, I should confess that I have seen it work. As an example, I personally pulled it off, in a senior-IC-moving-to-an-executive role. But this was because I personally love selling when it is part of how I investigate a market, I’m really good at IC work, and I’m a renaissance sales person. I take Sherlock Holmes as my inspiration here. He was professorial, but he did more than sit and think in his study. He spent time in the field digging for information. Selling is a way to do this. In five months, I closed more than a half million in deals, built up a ten million dollar pipeline, got that promotion and built out a hiring plan.1
When I was interviewing, I told the founder that I would be happy to be an IC while hacking my way through the jungle, finding the best trail, and then building a map for others to follow. I told him I enjoy doing this, and it’s part of why I like being a founder myself. But, I let him know, that after serious progress closing deals, I wanted to hire people to help me amplify my efforts, delegating my least favorite parts first. The goal was to work my way toward putting my machete away and running the team in the field, and expanding from there.
I should add that this was an extremely well-funded startup. They were able to offer a surprisingly high compensation package, and if they had not, I wouldn’t have taken the job. Most startups would balk at spending that kind of money. I also knew that I’d likely be able to hire help fairly quickly.
That’s a lot of stars that have to align. I’d avoid this strategy except in rare circumstances.
What Should You Do?
There is, of course, no single right answer to the question of the how experienced your early hires should be. The correct response, as with so many hard problems, is that “it depends.” The nature of the market you are selling into, the deal sizes, the lead sources, your maturity stage, your funds raised, and the specific skills of your founding team are among the factors that impact the answer.
However, there are some tools for figuring out who to hire and how to divvy up the work, and I will explore these in a subsequent post.
Granted, I also decided to leave a month and a half later. It was a good decision, and why I left is an interesting story. It may be a great post someday, but not today!