Startup Sales – Why Hiring Seasoned Sales Reps May Not Work

A while back I wrote a bunch of posts on Sales & Marketing and have been meaning to get back to that theme for a while. Even if you don’t have “direct” sales I would tell you that “everything is a sale” including fund raising, hiring, getting press and doing business development.  So I hope these posts will be useful to all and not just those who need road warriors.

If you’re interested in recruiting sales people, I wrote on the topic of startup sales people: who to hire & when – understanding the roles of Journeymen, Mavericks & Superstars.

Evangelical sales – Understanding startup sales people and process.

One of the biggest mistakes I see early-stage startups making is hiring “seasoned” sales professionals or hiring people too senior, too early.  Here is my recommended approach.

1. Start by selling, yourself - OK not by “selling yourself” but but selling, yourself. Reminds me of Eats, Shoots & Leaves.  OK, I’m still self conscious about whether a comma goes there but you get the point.

I see way too many startup founders who don’t have experience in selling and probably don’t feel that comfortable going to customers and asking for orders.  This is probably because many founders are product or technology people.  If this is you I think it’s really important to get over this hurdle.  Spending time selling to customers is the best way to find out what their problems are and how good your solution currently is at mapping to their needs. This only works if you’re not a  crocodile sales person.  You learn by asking.

The mistake many startup people make is they hire a “sales person” to go out and talk with customers so they can do what they’re good at which is building product or “running the company.”  Sales people are a different breed, you say.  The problem is that in an early stage business there probably isn’t a perfect fit between your early product and a customer’s needs.  You learn that by showing them your product, watching their reactions, asking them questions about what they’d like to see improved and then racing back to the office to talk with the team about what you’ve learned and how you can incorporate it into your product plans.  Repeat this process 50 times and trust me you’ll see patterns.

I was WAY off between my book research about what the engineering & construction market would want (my first company) and what they actually wanted.  I only found out through customer meetings.

Also, this goes equally for business development.  How can you send some young MBA “biz dev type” out into battle to sign up partners when you’ve never met with your potential business development collaborators and heard what their goals are and how you can meet them?  If you send out the biz dev guy I’m sure he/she will ink deals.  That’s what they do.  But you’re unlikely to yield results unless there is a close alignment of benefits for them and for you.

2. Next you need to hire “evangelical” sales people - Once you’ve started to get alignment between your product offering and what customers want you’ll need to hire a sales person or two.  You should already have a good feel for the customer pain, how you solve it, how your product differs from competitors and what the acceptable price points for your product should be.  If you don’t have a “base camp” understanding of these issues you’re not ready to hire a sales person.  If you can’t figure all of this out then adding a non-founder sales person isn’t going to solve your problems – it’s just going to add to your burn rate.

But assuming that you do have a good starting point for sales, you’ll need to hire somebody to expand your pipeline of leads, help build customer relations and to allow you also to have some time for the hundred other things you’re responsible for like fund raising, recruiting, products, customer support, etc.

The next mistake people make is to hire people who have “done it before” in your field and from a big-name innovator in your field.  So if you’re enterprise sales that might mean hiring people from Oracle, Microsoft, Salesforce or whatever who have never been at an “unbranded” startup.  The skills to be successful at a sales academy company like those listed are very different than those who would work at a startup. If they left an “academy” and worked for a startup before coming to you then they’re probably fine.

The specific things you’re looking for are: intelligence, ability to think creatively, ability to work with customers on vaguely defined problems, ability to assemble an ROI business case (with a template already created by marketing) and above all else the ability to listen, summarize and follow-through.  Early stage selling is way more “evangelical” than process driven.  That means you’re more often than not trying to get customers to realize they actually have a problem versus their already having budget assigned for a system in your category.

It is a consultative sale.  Don’t confuse that with hiring “consultants” who make terrible sales people.  But a consultative sale means you need somebody comfortable working with a lack of defined structure, process or product.  If you hire that person straight from a sales academy they will be hugely frustrated that you don’t have pricing sheets, high quality sales collateral, a well-oiled sales process integrated into Salesforce.com and a clear sense of why customers should buy your product.

Having somebody from an academy institution when you’re ready to scale is awesome.  There are no people like this who know how to crank the sales machine once the product / market fit are aligned.  But hire them too early at your peril.  IMO at least.

3. Don’t bring in the big guns yet – The related mistake I see (and have made) is hiring people who are too senior.  I always tell people, “hire somebody who wants to punch above their weight class” (i.e. the person who wants to next level up rather than the person who has already done it).  Most sales professionals start by carrying bags.  As they become more senior they take on management responsibilities such as planning, forecasting, pipeline reviews, coaching staff, etc.  As they get really senior they hire people to help them with sales ops, comp plans and creating marketing collateral.

What you really want are guys like Derek Rey who is doing a tremendous job over at Ad.ly.  I had breakfast with the CEO, Arnie Gullov-Singh, yesterday.  He was showing me their latest products, positioning and collateral.  It was awesome.

I said, “wow, I’m glad to hear that Krista is working out so well as our head of marketing.”  Arnie, “yeah, she is, but she didn’t do this deck.  Derek did.  He talks with customers, comes home, cranks out a new deck and has it in new proposals within the week.”  I was blown away by the quality.  He’s on the front line and hearing what customers really want.  And he rapidly iterates that back into product development to rapidly respond to customer requests and has the messages straight into our sales campaigns.

Eventually you’ll need sales “management” and either your strong early sales leader can grow into that or you eventually need to bring in somebody with professional sales management experience.  Each situations is different.  Some people can scale into the role and others can’t.  And some of the best sales people also don’t want to move into management in the same way that some great technical architects don’t always like to move into managing GANTT Charts, work progress and people.

4. Do many sales meetings together - Once you have your initial sales people in place you can’t just sit back and review their weekly sales spreadsheets and push them for progress.  You still need to be out on the front lines together.  They need to hear how you position your company and how your products will help the customers.  They need to watch and gauge customer reactions.  They need to learn from you and if they’re good (and if you’re open) they also need to give you feedback on what doesn’t work.

And you need to watch them pitch.  Avoid the temptation to always jump in and “save” them.  Take the opportunity to watch the sales process as an observer.  You learn so much from being able to sit back and just watch the body language rather than having to “perform.”  It’s also a vital part of sales training.

5. Don’t confuse your early sales success with a scalable sales process – Finally, once your evangelical team is firing on all cylinders and orders are starting to flow in the door, it’s easy to confuse this with your ultimate success.  I was there.  Once I had 4 sales reps cranking so I took it up to 10 and saw cracks in the system.  What works early in a company – the evangelic sales – does not scale well.

I often hear early stage founders telling me about their initial sales successes.  I’ve even gone on some sales calls with them to see customer reactions to their products.  I find myself often saying to these entrepreneurs, “having watched you I can see why customers are interested in buying.  You’re very personable, persuasive and you intuitively know their problems.  Plus, they know they’re dealing with the company owner.  Please don’t confuse that with your ability to scale this business. Once you’re no longer leading the sale it becomes much more difficult without a standardized approach. I learned this the hard way.”

And I’ll save what I learned for my next post: “Arming & Aiming.”

Image courtesy of LiberalEvangelical.org

  • http://twitter.com/sardire Steve Ardire

    Some good sound and pragmatic advice in your 5 points !

    and the Evangelical sales picture cracked me up ;)

  • http://bothsidesofthetable.com msuster

    ;-) worked hard to find the right picture that would be humorous and hopefully not offend

  • http://kirillzubovsky.com Kirill Zubovsky

    Very good guideline. Loved the short piece about “consultants” – I have a friend who hired an “experienced” sales person, it's been six months I don't think they've made any sales yet; non the less, the sales guy somehow managed to coerce my friend into paying him an actual salary.
    In other thoughts, if any of the founders out there need a sales person who's willing to work for ramen and beverages, give me a shout! http://attentionhr.com
    Best! ~Kirill

  • JoeYevoli

    Awesome post! I, myself had to “start from scratch”, so to speak, and start calling customers without any prior sales experience. It was nerve raking to say the least, still is sometimes. But, the product itself has taken tremendous leaps forward based on direct customer feedback.

    I sell to the customers, and provide customer support. Which gives me even greater insight into the correct evolution of the product. Obviously it can't always be that way, but at the early stage it's invaluable.

  • Greg Mand

    Great post Mark…totally agree. As an “educate and evangelize” biz dev guy I've been out there listening to customers and evangelizing new platforms (podcasting, social games) with only semi-finished products. Never saw myself as a standard salesperson. I thrive on talking with customers and understanding how the product/service I represent can best solve a problem for them. Customer input is so critical in terms of ensuring the product meets and hopefully exceeds their needs but don't forget the old Henry Ford saying, “If I asked customers what they wanted they would say 'faster horses.'” :)

  • http://bothsidesofthetable.com msuster

    For sure. Valuable lessons.

  • http://www.Entreprenant.us Entreprenant Us

    Very nice post on a topic that is not brought up too often. This part of the start up processed is overlooked many times. If I have to read another article about the “top 10 mistakes startups make” I might get sick. Thanks.

  • tom

    Great post! We are working through this on a daily basis in our startup.

    The funny (sad) thing is that most hiring decisions are made based on looking for a round peg to fit a round hole, a square peg for a fitting a square hole. Building a business is very different from managing one. The best test for consultative sales types is how many questions they ask, and how they synthesize and share the information that they acquire.

  • http://bothsidesofthetable.com msuster

    Yeah, it's where I have most fun, too.

  • SD Surf Dog

    Mark, this post is spot on, as all of your sales-related posts have been. Reading this made me cringe in remembrance as we made so many of these “mistakes” at a recent startup with which I was involved. We were able to recover and the company is doing well but we churned through a lot of reps (who were not “stage appropriate”) and burned through a bunch of unnecessary cash the first 18 months or so. Any new entrepeneurs out there reading this post would do well to heed Mark's sage advice here. You'll save yourselves a ton of pain and delays.

  • http://bothsidesofthetable.com msuster

    Ha. Yeah, they're often superficial.

  • http://bothsidesofthetable.com msuster

    re: “The best test for consultative sales types is how many questions they ask, and how they synthesize and share the information that they acquire.” – wish I had said that! Perfect.

  • http://giffconstable.com giffc

    love this extension to your earlier posts (if I may be so bold, I recommend newcomers follow the links above, especially at the Journeyman/Mavericks link and the “punch above weight class” link)

  • Kylepearson

    Do you find that the age of the first salesman has an effect on customers? For example, if a young guy is your salesperson, perhaps they don't get respect because they're “too young” or inexperienced. Or an older salesperson may be perceived to not give the instant responsiveness that a younger salesperson would be ready to give.

    Do you find that perceptions effect who should be hired in a sales or customer service capacity at a start up?

  • http://www.okta.com Frederic Kerrest

    Great post Mark, a number of gems here. I've experienced this personally and you're right on w/r/t good profile characteristics, timing on hires, etc. It's hard as an entrepreneur to not “jump in” when you sit it on a demo or call, as you point out, but it's key if you want to scale properly, and winning = scaling. Good stuff!

  • Richard Koffler

    Very good stuff. One of the commenters mentioned working for ramen. In my experience, commission-only sales reps aren't worth the effort. Yes, they are cheap salary-wise, but they rarely succeed so they aren't worth the time it takes to train, supervise and coach them. Moreover, they can kill relationships that you might never find out about (“You're from ABC Wondertech? We spoke with Joe three months ago and decided you were a company we never wanted to work with. Bye.” click. dial-tone.) That which costs nothing is worth nothing, and good sales reps know they are good so they're not available for free. Only the bad, clueless or desperate ones accept commission-only positions.

  • http://www.facebook.com/esignature Jason M. Lemkin

    Please email this list to all the VCs who never sold anything, and therefore give the wrong (and exactly contrary) advice.

  • Hamilton Chan

    As usual, your advice is insightful and pragmatic! And great to hear a second time :-)

    My personal take is: the effective salesperson is the most difficult position to fill in a company. Part of the reason is you won't know if you have the right person until you've given them enough time to try. There may be no discernible work product for months!

    Also, hiring the consultative salesperson (for B2B sales) is a paradox. Consultative types tend not to be sales-y, and sales/commission-oriented types tend not to be very professional and consultative.

    Thanks again for the insights today and yesterday!

  • http://bothsidesofthetable.com msuster

    I think young people can work as well as older people as long as they have the right DNA. In many ways buyers love the energy and enthusiasm of a bright-eyed young person. That said, they don't have to be young. Of course.

  • http://bothsidesofthetable.com msuster

    Thank you. Next post is on scaling – the place where I struggled more in my own company but obviously saw from the inside at Salesforce and learned.

  • http://bothsidesofthetable.com msuster

    Totally agree! With sales people you get what you pay for. The best know what they're worth.

  • http://bothsidesofthetable.com msuster

    ;-) true. and they also err when giving advice on hiring more generally. I know you've lived through some of these experiences from our discussions. Look forward to catching up tomorrow.

  • http://bothsidesofthetable.com msuster

    Thanks, Hamilton. Was nice to meet you IRL and hear about your interesting project. Good luck and stay in touch.

  • Richard Koffler

    Among my top instant-turnoffs when listening to entrepreneurs' pitches is, “We need money to hire a VP Sales”.

  • Matt Cameron

    Spot on Mark – I think a wonderful addition to the series might be a table that visually illustrates the stage of the business, what characterizes the sale process at each stage and then the corresponding sales talent best suited … Just because I know you have a tonne of time on your hands :-)

    Watching the institutionalized sales VP land in a chaotic and creative start-up is always painful.

  • Don Hicks

    Excellent advice. But what is needed is a business development professional. BD executes four key initiatives. 1 – Introduce new products into new markets. 2 – Lead merger/acquisition initiatives. 3 – Negotiate strategic partnerships and alliances. 4 – Prototype sales and marketing strategy. A good BD professional will not only find your first big customer (a company the VC have heard of) but will understand how and why the customer made a positive decision.

  • http://www.nabbr.com MattMinoff

    Can you talk about some of the successful strategies you have seen in selling to digital ad agencies? I think many digital media startups find it difficult to even get meetings with media buyers let alone get any meaningful information.

  • http://twitter.com/mdaoudi Mehdi Daoudi

    I have lived this… hired sales guy who worked in same industry thinking it would help. 3 months later nothing happened. decided to go separate ways, rolled up my sleeves and things started to happen. i think the process in a B2B scenario should look like this: have founders do inside sales + sale, then next step hire a young sales person who can take on the lead gen, close the deal then promote that inside sales … But @ the end of the Day, if you the owner of the company can not sell then no one will or can. One of the biggest lesson i learned so far.. and it's even more difficult if you are not a natural born sales person.
    The other thing i learned is do not hire from the same industry. you think it will help, they come with a Rolodex, they know the space… but it just does not work. they spend their time comparing your product to what they used to sell…
    thanks Mark for this post, 1 year late but better now than ever for the next generation.

  • http://twitter.com/mrskuza Arek Skuza

    Very interesting. I like section with “too senior”. Happens often that there are 5 managers and 2 employees.

  • Tbertuzzi

    Great take on hiring for startups but if I may be so bold I would like to disagree on just one little point. I agree that a startup selling into the innovator/early adopter space needs to hire “evangelical” sales people but where I disagree is in that you can't hire experienced people to do so. My point is that you are confusing two issues: the issue of having experience with the issue of being able to be creative and sell in a consultative manner.

    Junior woodchucks filled with piss and vinegar are fantastic in the right role but rarely have the ability to translate the information they are hearing from the market back into evolved messaging that resonates. They don't have the experience or the knowledge base to do that for you. Trust me that Derek is the exception not the rule.

    On the other hand if you create a hiring profile that requires some level of experience selling to innovators and early adopters (which would exclude the sf.com, Oracle etc reps) then you are assured of getting someone who has been there done that and does have previous experience to draw upon.

    Anyway, just another viewpoint based on what we have seen in the market. Thanks for sharing and for listening.

  • Eliot Burdett

    Great article Mark – as a sales recruiter who has started two software companies from scratch, I know these rules in spades. #1 comes up a lot in my recruiting biz, where a founder or CEO without sales background wants to bring in someone who is practiced at selling and who they hope will close a lot of business. As you put it “they hire a “sales person” to go out and talk with customers so they can do what they’re good at which is building product or “running the company.” “

    The problem is that at the outset, the CEO/founder knows the most about the solution, has the most credibility with the customers (they want to deal with the CEO/founder), and has the highest incentive to sell. Plus an early stage company these days typically doesn't have the infrastructure to properly support an experienced rep, or have the volume to properly pay a them. The good news is that selling is not that difficult if you just seek to have conversations with customers about challenges and create conditions for them to easily buy (vs selling).

    Also special mention of the comments on 100% commissioned reps. In 20+ years, I have only seen that work in mature companies that have strong brand recognition, tons of rep support and can tolerate high staff turnover – typically not characteristics of startups.

    Thanks for sharing!

    Eliot.

  • http://twitter.com/TomScontras TomScontras

    A great conversation; would love to have everyone here join us today at 1PM (EST): http://bit.ly/dosvnk

  • http://twitter.com/yesware Yesware

    Early in my first startup, Alan Philips, one of my advisors, said “You can't hire another sales guy until you're over $1m in revenue. Until then, you're the sales guy.” I was shocked by this, but I followed his advice. He was, just as you are, Mark, completely right. There is no substitute for the founder getting out and talking with customers as the company gets off the ground. Thanks for the great posts on sales.

  • http://adityamishra.in Aditya

    Very nice post that is spot on. In my work with startups, I've found many occasions where I'm pushing one of the founders to be the first sales guy and all of the founders insisting that they need an MBA type for sales. Similarly, I've found many cases where a startup hires a senior guy too early. I'll be recommending your post verbatim to each of such future entrepreneurs; nothing needs to be changed.

    Btw, a lot of this is also covered very nicely in the book Selling the Wheel.

  • Suva

    I think I know exactly the kind of person you should be looking for. MBAs with right mix of experience, appetite, team skills and street smartness.

    Fortunately, for you, if you are in Europe you can find the best if them at Manchester Business School. Hard working and team oriented, with more appetite than their counterparts from the top of pile MBA.

  • lucidtyson

    As a career sales person turned venture-backed CEO, I can attest to the truth of, not only this post, but those you've linked to as well.

    Nicely articulated.

  • http://www.repeatablesale.com/ Scott Barnett

    Amen Mark. Can't wait for the next set of posts on this subject. I have been blogging about this topic as well, but not for the past several months and I need to get back to it. I just hope I can be half as articulate as you are. I have no idea how you crank out so much material every week… it takes me a week just to get back to reading my regular blogs, much less writing!

  • http://www.efellemedia.com Fred Lebhart

    Chalk this up to 'learned the hard way' -#3, #4 AND #5. The 'scalable sales process' is an important piece of advice because as the founder of the company I'm often told that my 'energy and enthusiasm' has convinced my client…of course my other sales members have energy and enthusiasm but it'll never match what I have for the company and products I've built from the ground up, so expecting them to have the same success rate (90% closing) isn't scalable OR fair.

  • rustinb

    Hey Mark,

    Just wanted to say that this is probably my favorite post of yours to date. I liked it so much I use it for a job description http://theblogfrog.com/About/Jobs.aspx (BlogFrog is a community platform and network of 50,000 mom blogs)

  • Jillmant

    Touche! I would add: hire people who are both evangelical AND have a deep sense of integrity. These are the people who will seek to understand your customer, truly hear them when they speak and create agreements that are win/wins for both their company and the client, within the realistic parameters of what can and can not be accomplished.
    Everyone says they are customer focused, but that very statement denies the fact that we still need to put our oxygen mask on first before we can assist others. A great seller knows they are there to make the sale for themselves and their company. This is why it is so important that the founder and developers do attend client meetings alongside the sales team. They need to hear what customers really want and what their true needs are. This allows for internal collaboration and a true assessment of what can and can not be done right now and aids the sales team in developing a deck that not only addresses the client need, but one which can truly be delivered.

  • http://www.gordonbowman.com Gordon Bowman

    Great post Mark.

    As a former founder and now in Sales (@ Pandora) this post really resonates. You are right on about the evangelical and consultative sale. I think too many startups are in love with the idea of getting a heavy hitter before they really need them. Better to get someone in who a) knows how to ask the right questions and b) is hungry to put in the work.

  • http://www.gordonbowman.com Gordon Bowman

    Nailed it. It's all about the consultative questions. One strategy I try to use is to to ask at least 10 questions to the client before you even mention yourself/your company/your product.

  • http://www.google.com/profiles/d07engel David Engel

    @Richard – I'm curious, why?

  • Richard Koffler

    Because for all but a few start-ups, financing doesn't cover the price of a vp of sales, a function that in my opinion is the responsibility of the CEO. With few exceptions, I have little faith in CEOs who can't sell, especially for start-ups. If the founder is a techie who can't sell, s/he shouldn't be CEO when the venture goes commercial.

  • http://twitter.com/chrisbradshaw44 chris bradshaw

    As a “senior sales representative” in the medical device field, I am probably a complete outcast on this blog post…Great, spot-on post btw! Makes complete sense which is rare these days unfortunately as companies grow too quickly. One of the best sales tools I have learned is the “advocacy and inquiry model.” Advocacy is about how ideas are presented and explained where Inquiry is about how questions are raised and answered. Advocacy alone is insufficient. Likewise, inquiry alone is insufficient. Balancing these two increases likelihood of others to take action.

    “Evangelical” is key. I am too “senior” for my current med sales job, performed extremely well, but lack the passion to take next step into mgmt. Why? Because my real, newly found passion is what lands me here to comment on this great post. I am infatuated with the social media/web 2.0/tech space but hungry enough that when I do get a shot with a new start-up/young company I will be that “evangelical” sales rep that is essential to the growth. Lastly, I agree that the founder needs to sell and even sell the “sales guy” because he is the one who makes the kool-aid. I don't think I saw one comment about “culture.” The founder should hire like-minded people. I was a pitcher at a high-level. I couldn't do it without my catcher..vice versa. You have to be on the same page and compliment each other in your skill sets. I could go on and on… :-)

    Don't hire a “been there, done that, fast talker.” Hire a ” been there, still there, still doing, still hungry” type of guy!