A VP Sales/CRO is not a silver bullet
And they’re not even your first sales hire.
As a founder you’re very good at identifying problems and then finding ways to fix them. Almost every startup would like to have more customers. If the founding team are not sales people, it seems logical that as soon as they can afford to, their first hire should be a VP Sales or even a Chief Revenue Officer. It’s like, everything else in the business is firing on all cylinders: the product is great, the website is awesome, customers love what they’re doing - the only thing missing is more sales. Surely now’s the time to hire the best sales person they can, right?
Wrong. And here’s why.
The main focus of sales pre-$1m ARR is learning what works
Obviously everyone needs money coming in from somewhere. But if you’ve run an agency before, you know that you can’t chase every single opportunity that comes through the door. Some customers are just not going to be right: they don’t have the budget; they need some expertise that you don’t have; it’s a service that you’re trying to move away from.
Well SaaS is like that but even more so. Given that the amount of money you’re going to get from each customer is likely less than you can get from project-based work, it’s even more important that you don’t go down a rabbit hole of selling something to a group of people who will never be great customers.
If you are able to win a whole load of business in the pre-school education space but only because you are heavily discounting, then is it sustainable in the long term? If your customers have only gone with your MVP because of the free consultancy you give away with it in the absence of a full set of features, do you know whether once your product is better they will be happy to no longer have access to your people?
On the flip side, you are only selling one thing and so once you figure out how to do that: how to move from ad hoc opportunities to something that is so obviously repeatable, then that’s when things can take off.
But you need to find that repeatability yourself.
If you don’t know this stuff yet, how will a VP Sales?
If you’re hiring a senior sales person to figure out your Go To Market, it won’t happen. It’s not what they’ve been trained to do. Sales people are incentivised to sell. And in the absence of any direction from the founders, they’ll do whatever sells the most. Which sounds great until you realise that they have been selling too cheap to the wrong people. Not their fault, they just went for the low-hanging fruit. But if you haven’t worked out who your best fit customers are, where they are hiding and what they are willing to pay for your product, they might spend a lot of time (and money) chasing customers who are going to churn because they don’t end up seeing the value they were sold.
Sales Leaders are just that.. leaders.
Sales Leaders’ expertise is in hiring and managing teams of sales people. At the early stage of growth, if you hired a VP Sales who would they be leading exactly? It’s not the same as hiring a senior engineer who might create codebases, development methodologies and server configurations first, and then start building out a team around them. A VP Sales will probably want to walk into an existing team of Account Execs and an established pipeline and repeatable, predictable lead gen system. What they won’t want, or won’t be able to do is design it from scratch because they’ve probably never done that before and they don’t know the business like the founders do.
Founders need to LEAD the sales until they find a repeatable process
It’s OK to hire sales people early on, but really the sales leaders should be the founders. This doesn’t necessarily mean that the founders are spending all day hitting the phone, but they need to be the ones talking to the customers, even if it’s alongside a sales rep who does the work behind the scenes.
If you have a background of running a consultancy and your product is targeting the same customers, then you definitely have an advantage here, but the key thing you’re trying to find is repeatability so you can get someone in to scale it.
You’ll know you’ve found repeatability when you know where to find, attract and convert the customers you now know are the best fit for your business. It may be a bit scrappy still, but once you can say with confidence:
“Our best customer leads come from here, here and here.”
”And X% sign up for a demo/start a trial.”
”And Y% convert to a sale.”
“And on average they pay $Z/annum”
…then you’re ready to coach a sales leader how your business finds and wins the right customers for your product. Their job then is to further systematize and scale it.
What about if you’re a sole founder or none of you are sales people?
This is a question that comes up a lot. Either a founder is out on their own and sales isn’t their strong suit, or the founding team are domain experts but not natural sales people. Surely then, they should go and find a senior commercial person to join the team?
If you can genuinely find a commercial co-founder to join you then that’s great. The issue is they’re not really a co-founder if, along with a chunk of equity, they want a salary that is close to what they would get as an employee of a more established SaaS business and are expecting a big commission, too. Why? Because they will be wholly focused on maximising their salary and not at all interested in delaying being paid to do the learning work that goes into building a repeatable sales process.
If you can’t find a commercial co-founder, then embrace it! Focus on getting to a point where you can tell someone else how to predictably win customers first. Because nobody else can do that for you.
