As a former founder, sales manager, 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, in hopes of saving companies unnecessary heartache.
They hire salespeople too soon
Prior to strong product/market fit signals, founders cannot avoid strong involvement in sales. When customers buy from startups, they need to see the whites of your eyes to increase their confidence that you’re not selling vaporware. They also want to negotiate many 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 don’t quite understand it. You may not know her pain hierarchy and what will motivate her to buy. You do not know how to evoke this motivation with your argument. And you don’t know what process, price and packaging will work with many similar buyers. It’s also very difficult for a non-founder to spread new information about these issues within your product, marketing, engineering, and leadership teams.
They hire the wrong kind of salespeople
When it comes time to hire, founders typically pick the wrong job profile. Here are the six most common mistakes.
The generically successful AE
They’re high-performing companies, but that doesn’t mean they’ll do well in an early-stage startup. They succeed because they’re disciplined, good at following a playbook, or can close a lot of deals when they understand customers and their buying journeys. If you give that person a reliable process, pitch, and playbook, they will succeed.
Unfortunately, you still have no idea what your process, pitch, and playbook should look like. You may not even know who your buyers are or what motivates them.
The AE Industry Expert
These people look alike, except they’re industry insiders. They can generate leads from their network and provide customer insights. But they are often even worse during the first sales. People who are unwilling or unable to cross markets tend to need even more clarity than normal sellers and are likely to fail when faced with real ambiguity.
Vice President BigCO
BigCo VPs will dazzle you with success stories and it can be hard to resist. But they’re used to a lot of resources, including big teams. And they may never have done the kind of exploratory sales work you need. You often end up with a very dear person who doesn’t know how to tackle a new market and spends a ton of money on resources before realizing they have no idea how to help you.
Head of sales
Sales managers aren’t as experienced, so they’re used to being a bit closer to the market. In their previous job, they’ve probably managed a small to medium AE or SDR team, and IC life isn’t that far in the rear view mirror. They often feel like a “best of both worlds” choice – recent success with individual contribution, leadership ability and some scaling. These are great qualities, but they still have the same problems as experienced AEs. Unless they achieved early-stage success or are getting into the market, they won’t have the skills to help you scale the sales learning curve.
Vice President of Serial Startup
Although Serial Startup VP is often a mistake, you could do worse. She is many more likely to have the sales and market discovery skills you need, and is used to moving their business up the sales learning curve. She will also have the seriousness you need to constantly update your team’s understanding of the market. But most of his time will still be spent doing work that a lot of people can do, like researching information for leads. Depending on your stage, you probably only need their expertise and leadership for 5-20 hours per week.
If you have plenty of cash and can afford to spend it fairly quickly, it’s not a bad hire. But if you try to be smart with your money, you can do better.
The last mistake is to hire someone to do lead generation. The CEO thinks he can identify types of leads or buying lists. He then plays silly games with spreadsheets, imagining how many emails and calls a day a person might make, making assumptions about response and response rates, halving them. “to be careful” and determining the type of income that can produce.
It’s almost always a crazy fantasy. If you do not master your buyer persona, you are very unlikely to know how to find them and integrate them into your sales pipeline. A brand new professional is one of the last people you should trust to figure this out.
Obviously, it depends on a lot of details, including the expertise of the founders, the market, the buyers, the LCA, how far the company has come in terms of product/market and pitch/market fit, and of course , the resources !
I’ve seen five types of hires that work, depending on the circumstances:
- Hire a Renaissance representative and work closely with them to learn from the market.
- Hire three or four reps who have renaissance rep qualities and parallel their efforts to advance learnings and contextualize their performance.
- Map out your sales tasks and hire a sales assistant, and have them do the mundane parts and make better use of your time.
- If you have a lot of money to spend, you can hire a VP of serial sales with a track record of success, although as I explained above, that wastes a lot of money.
- Hire a split go-to-market leader, to help your startup scale the sales learning curve without overpaying for full-time expertise (full disclosure, that’s what I do for a living). You can use the resources you save to hire any additional frontline help that will get the most out of you and your split executive.
Other key things to keep in mind
Understand that early sales professionals rarely break even in revenue, and usually won’t until your business scales much of the sales learning curve I’ve talked about here. -above. SO goals and their compensation should be heavy-duty, focused on advancing learning, and should avoid the wishful thinking associated with early-stage sales quotas.
Finally, make sure the person leading your interview process knows how to spot early-stage sales talent and knows how to interview salespeople. Remember that even a mediocre salesperson interviews well!
Good luck! And for a more detailed version of this post, see my Substack.