Getting timing right: when to hire your first vp of sales
A couple of weeks ago a fellow PeopleTech Partners Advisor, Anthony Onesto, shared a post written by Kieran Snyder (Founder of Nerd Processor) that really resonated with me. Kieran and I could not be more aligned in our thinking about when to bring on a VP Sales and when to bring on a VP People. For me, the bonus was seeing actual data that supported the advice that I’ve been giving Founders for years—thank you Kieran!–and in this post I’ll focus on hiring your first VP of Sales.
Hiring a sales leader too early absolutely comes from a good place and the assumptions that lead to this hire are very understandable (I am by no means throwing anyone under the bus), but in most cases it’s a mistake, and an expensive one. I thought I’d break down my perspective (supported by Kieran’s data) based on my first-hand experience partnering with Founders over the years.
For this example, let’s say that you’re a founder with an incredible product that is really starting to gain traction. Perhaps you’ve started to see some solid revenue (let’s say right around $550K) and the signals you are getting from the market scream “it’s GO-TIME.”
You meet a killer sales leader with tons of experience who has worked for some of the best software/tech companies (think Google, Nvidia, AWS) out there. Your first thought is that a VP of Sales = a very experienced seller, a swath of connections across industries and proven success closing large enterprise deals. Let’s say that all of these assumptions (which are not wrong!) are supported by data and strong reviews from your network. You close the candidate and are off to the races!
The sales leader starts and you can already tell that they are an absolute pro. They understand the market, are excited about your product and the enterprise that they come from has been profitable for many years. You have a small team (let’s say four developers and yourself), and you are over the moon about your first executive hire.
By the end of their second week, the sales leader has signed a contract with Salesforce (your first CRM!) and they’ve even gone so far as to project sales numbers for the quarter ahead. LFG LFG LFG, right?! Not so fast.
The leader asks for a weekly one-on-one, and you are fired up to jump in and crush it together. The meeting starts and you are so aligned on outcomes that you can see the writing on the wall: big wins ahead! The sales leader shows you the projections and figured into the plan is the need for three enterprise sellers and an BDR. According to the sales leader, their team is going to absolutely kill it, and they even know the senior talent that they’re ready to poach! But wait, you have less than $1.5M in runway and per the leader you are now looking at adding four additional heads to your team. This comes as a surprise because you had only budgeted for one revenue hire this year, and the sales leader was not cheap. And when I say “not cheap” I mean $120,000 went to the Exec. Search firm to close the candidate, their signing bonus was $50,000 and you are paying them a base salary of $275,000 annually. . .oh yeah, and they have a sweet severance package built into their offer should they get terminated. So now you’re stuck between a rock and a hard place and don’t understand why the sales leader isn’t attributing their sales projections to themself alone. Uh oh.
This scenario is all too common in young startups and actually makes complete sense if you step back and really look at the situation. A primo sales leader brings strong leadership skills, relationships with enterprises and strong experience with sales processes among many other things. And this is precisely where things break down. In many cases sales leaders–especially those at large, well-funded and well-resourced companies–haven’t necessarily had to close their own deals since their individual contributor days, and why should they? They’ve been doing their jobs: running teams of quota-carrying Account Executives (AE’s) who are singularly focused on closing deals, for many years.
Top sales leaders at large, established enterprises are almost always elevated to a place where they own high-level strategy and manage a team of salespeople. They seamlessly play the role of executive sponsor on deals and build incredible, data-driven sales processes. Oftentimes execution on the ground (and carrying their own individual bag) isn’t something they’ve been required to do in years, and besides that, many of these leaders aren’t excited about pounding the pavement like they used to “back in the day.”
If you are popping xanax because this realization has put you on the verge of an anxiety attack, you are not alone. And if you are currently in this situation, please understand that this happens regularly and as mentioned, you are not the first to make this mistake.
The problem lies in the scope of ownership and role of a revenue leader. While this position is crucial, you aren’t setting them up for success until you have what you believe is a close-to-proven sales motion and you’ve achieved (or are close to achieving) product-market fit. Additionally, you’ve closed founder-led deals–congrats, you are the company’s first VP of Sales!--and have one-to-two early-stage AE’s who know how to experiment and have successfully sold products that are brand new to the market.
You’ll know you’re ready to hire your sales leader when you are positioned to cement a repeatable sales process based on messaging that you and your AE’s have been testing, and that’s resonating. Your VP of Sales will come in to hone that messaging, amplify your brand and product, drive process and drum up interest through thought leadership and events. Assuming that they’ll be cold calling and opening all of your initial doors is simply not aligned with the role of a top tier sales leader.
As mentioned, in the early days, you're ideally investing in one-to-two AE’s who are very experienced in introducing and selling products that are new to the market and that have very little (or zero) brand recognition. To be clear, this is a particular type of DNA and experience that not all senior enterprise AE’s have. Moreover, the expectation that AE’s (and VP’s of Sales) from known entities earning hundreds of millions in annual revenue (and that have 10,000, 5,000 or even 1,000 employees) will be successful in an early-stage organization with five employees, tiny budgets and very little funding, is totally unrealistic.
To be clear, you will absolutely need to hire a sales leader in your company’s journey, the tricky part is when and where from. Nailing the timing of this hire is by no means easy, but being clear on the role of your first VP of Sales and what experience to look for, is make or break.
In my next post, I’ll outline what to look for in your early sales hires, and why “stage-appropriateness” (per above) really matters.
Thank you for reading, and please reach out if you are looking for People Operations leadership, advisory services and expertise in scaling software organizations!
