This may come as a surprise, But I know who your first sales rep is. I’ll introduce you shortly. You already know him/her. You see them every day.
Silicon Valley lore would let you believe there are only two startup stories – billion-dollar unicorns and bombs.
I’ve survived both those outcomes, but also lived through many other flavours of outcome – the good, the bad, and “depends who you ask” – in several decades of startups. Starting way back in the days of real garage startups, my patchy startup track record goes something like this:
2. Flamed out
3. NASDAQ IPO
4. Acquired for $1Bn+
6. White Dwarf
7. Currently growing at 3.5x YoY
Meet your first Sales Rep
Recently, a fresh startup in Auckland asked me to listen to their initial launch plan. It included an intention to hire a sales rep immediately, freeing the founders to focus on “the technical side”. They wanted my advice on where they should look for a good sales rep. I had to give them an answer they didn’t want to hear:
“You already have one. He’s over there – take a look in that mirror and say Hi.”
Look, I’m an engineer. As a technical founder, I know you don’t feel like a sales rep. You don’t think you have the skills, experience or aptitude, and you feel no burning desire for a sales career. I hear you. But please don’t try hire a sales rep to “do Sales” for you.
Until you have made some sales by yourself, you don’t know for sure whether you have something anyone wants to buy, how to find people who may want to, what kind of role you’re hiring for, or how to figure out if they’re doing a good job.
So here it is: You want to have your own business? Congrats, you’re a salesman.
In the first 1-3 years, the founders must sell the product, because:
- It’s a marathon, not a sprint: Although you don’t want to hear this either: Making your first sales will be hard. Really hard. And while you may lack refined technique, you have skin in the game, so you will work harder and dig deeper than any sales rep you hire. A sales rep will often quickly become disillusioned by the unavailability of low-hanging fruit and disengage. (But they may not voluntarily leave, thus presenting you with another problem instead of the solution you wanted.)
- Customer Perceptions: Buyers like to buy from a founder, owner or CEO, and not only because it makes them feel important and respected. They know they are getting commitments from the person who controls the resources, and that they can go straight to the top if there are any delivery issues that need resolving.
- Finding Product/Market fit: You will need A LOT of first-hand discussions with both buyers and users to optimize your product and your value proposition and to get a clear understanding of the market expectations. You can’t get this from second-hand feedback from sales reps. You know this is true.
- Developing your business model: identifying your target customers, developing processes to acquire new customers and retaining and upselling to existing customers — it all happens in the first one to three years of your business. You can change your model after that too, but if your sales trajectory is not trending up strongly after this initial period, chances are it never will. And finally,
- Top sales talent is chasing the top job opportunities: Your pre-revenue startup, with an unproven demand, is not going to attract the sort of sales professional you think is going to change your fortunes.
Still don’t want to do sales? Then go get a job. Being a founder means being a salesman. #basta.
Focus or Drown
Because you are going to be wearing several hats, you will need to watch the risk of spreading yourself and your team too thinly. To avoid that trap, you will need to focus.
Focusing is a term often flippantly used to mean working hard. For an engineer it reflects the common preference for working on one thing exclusively and forgetting about literally everything else – other tasks, colleagues, deadlines, health, relationships… But the sustainable focus that builds successful businesses seems to require more deliberation than that. It results from making tough choices, backed up by facts and numbers.
The first tool you will use in Sales to help you focus is called Lead Qualification.
As you develop your value proposition and market definition, you should be building a short list of key ‘qualification criteria’. What are the quantifiable characteristics of a typical customer who will (or won’t) buy my product? Where’s my ‘sweet spot’? The criteria typically include the size of organization, location, industry, seniority of your contact person, technology environment, and other factors specific to the value they will gain from using your product.
To keep your criteria rooted in reality, go back and revise your qualification criteria each time a customer purchases from you, to reflect this new customer’s profile. Each time you lose a deal, consider whether you could have figured out from the initial contact that they wouldn’t buy?
Now, armed with your qualification criteria, you are equipped to make a reasoned choice when you first engage with any sales lead. If its a fit – you go all in. If not, you need to let it go and move on.
This is one of the toughest lessons in sales, if not in business generally – Success comes from focus, and focus really means choosing NOT to do some things.
“This lead doesn’t fit my criteria, but how do I know he won’t buy from us anyway?” You don’t. But I guarantee if you qualify every opportunity in, you will only have time to address each in a superficial way, and your chance of closing any sales will plummet. It’s a common phenomenon. Be stronger. Be ruthless. Focus or drown. Focus or die. Kia kaha e hoa.
Relieving pressure while Laying some Foundations
Instead of hiring someone to hand sales responsibility over to, you could hire someone to support you in your sales role. The problem, however, is that person will need to be told what to do, and those assigned tasks and their deadlines need to be managed and monitored. All by you. You’ll find this is may save you some time with any detail work, but it won’t relieve you of the responsibility for the whole end-to-end process.
Instead, consider this approach: Break your sales process into stages, which you should do anyway. Now hire someone to take on responsibility for one phase of the process. The sub-process that lends itself most neatly to this approach is Outbound Lead Generation, a.k.a Outbound Sales Development.
This is a well-defined responsibility within the overall sales process.
You can supply your Sales Development Rep (SDR) with a list of leads, and a simple, repeatable process to follow. The SDR can then try to contact each lead in turn, by email and phone, with the aim of securing a demo or sales meeting for you with a buyer.
You will find that hiring someone you can delegate a responsibility to like this will provide you more relief than hiring someone to support you. Set your SDR a simple goal – lately I’ve set a goal of 5-6 Marketing Qualified Leads (MQLs) a week from an SDR – and give them all the training, email templates, call scripts, contact lists, and support they need to help them achieve it.
Building your Sales Team
The transition from founder selling to salaried sales rep selling is one of The Key Milestones for any startup.
Pull the trigger once sales are growing strongly and you feel that in order to focus, you have started to disqualify opportunities that actually meet your qualification criteria. That means you are missing out on valid opportunities.
Take care here – the first part of that sentence was “sales are growing strongly..”. Sales means closed deals. Bookings. Purchase orders. Paid subscriptions. Not sales activity. Avoid any temptation to hire sales reps just because you are chasing too many opportunities and you don’t want to disqualify any.
When you do feel its time to make this move, make sure you prepare and plan for it. Train the sales reps, including role-plays. Give the sales team a whole heap of support, direct the qualification reviews, and be ready to jump in and grab the wheel if you see sales drifting off route, losing focus, or a misalignment with goals.
At LHS we got it right, bringing in an experienced Sales professional to support the Founder CEO once we had strongly growing demand, and eventually handing over responsibility to build out his team. And that led to a NASDAQ IPO.
At a more recent startup I joined as a co-founder, we totally blew this. We’d made a great start, and had some strong founder-led sales under our belt. We’d built up sales momentum worldwide, even made a Deloitte’s list of Fastest-growing Companies in Asia-Pac. Then we made the call to bring in an overseas-based sales team to take over and scale up. The first mistake was letting the new VP hire a team before leading a sale through to close alone. Mistake No.2 was granting the independence, the space, they insisted on due to their experience and seniority. Almost from Day 1, we left them alone on the other side of a big ocean to qualify leads, hire and train sales reps, and pitch to C-level customers.
12 disappointing months later we were looking back at a lost year of anaemic sales and flat revenue. Almost unbelievably, embarrassingly, we learned the wrong lesson from this, and immediately repeated the same mistake. I’ll maybe write something sometime on these cognitive biases that really fuck with your ability to make the best choices as you grow. Your brain is buggy. Lesson re-learned.
Think of an unmanaged transition to a new sales team like that moment you may have seen when a B-52 was used to flight-launch an X-1 supersonic test aircraft. The cumbersome B-52 is flying level and steady having reached its maximum altitude. An X-1 is released from under the B-52’s wing. First, there’s that clumsy moment before the rocket engines ignite, where everyone holds their breath. Then it either fires and the X-1 accelerates away and upwards faster and higher than the B52 could ever hope to go; or the engine flames out, and the experiment sinks slowly out of sight, leaving a puff of smoke from the ground far below as the team return to base to figure out what to try next.
As you coach, direct, and build out your sales team, remember to constantly re-examine your value proposition to your customer, your approach to the market, and your internal sales talent. If you can’t fix issues with these as they become apparent, you may not have a repeatable, scalable business model to pursue after all.
5 Things to take away:
Here are 5 lessons I’ve learned the hard way when it comes to hiring a sales team:
- Don’t hire a head of sales until your business is truly ready.
- Meantime, hire an SDR to get you meetings with leads.
- Hire a sales team only after sales are growing strongly, NOT because you have been unable to make sales yourself.
- Plan thoroughly and prepare for a difficult, protracted transition to sales team-led sales.
- Tell your sales manager to bugger off when they demand immediate independence, or to hire a team before they have even closed a sale themselves. Deliverhands-on support and leadership every day, until you’re sure your rocket engine has ignited.