Tips to Help you Think About Sales at Your Startup

Posted on Sep 30, 2011 | 31 comments


Sales.

It’s the lifeblood of any organization and yet most startups don’t have any sales DNA on their teams. It’s important enough that I dedicate a tab on my blog to startup sales & marketing

http://youtu.be/X2ymPqEj4TM

This week I had the chance to have an hour-long discussion with Vince Thompson (ran West Coast sales for AOL for 7 years – back in the day when AOL was what Facebook is today) and Mo Ali, who has the awesome Twitter handle @BornToCall – runs sales at This Week In.

We covered much ground. The video link is here and quick time-coded show notes at the end of the post in case you want to jump ahead to just one section. But the ground we covered was awesome for anybody wanting to know more about sales.

1. When & Whom should you hire?

  • when is the right time to hire your first sales employee?
  • junior vs. senior?
  • brains vs. relationship?
  • how can you evaluate a good sales person? how do you know one when you see them?

2. How much to compensate them?

  • base
  • bonus
  • equity
  • how to structure the comp plan

3. How do you get access to customers?

  • getting past the assistant
  • when to call
  • is it OK to call an exec on his mobile phone
  • how to handle intros

4. What is your sales process?

  • call high or call low?
  • how do you forecast?
  • how do you do pipeline reviews?
  • agile sales process?
  • how should a VC do due diligence on sales operations?
  • how much research should you do before a sales visit?

5. Telesales versus field sales?

  • how do you know when it’s OK to have telesales versus people in the field
  • should you have calls scripted for telesales?
  • should you email before you call?

6. What tools do you use?

  • Salesforce
  • LinkedIn (we talked about some tricks we use in LinkedIn)
  • Jigsaw

Time codes:

07:00 What is Thompson’s Middleshift?

10:00 Selling eyeballs & selling audience

12:30 Making the money that you sell

14:18 Your first hire should be someone who’s hungry and willing to work. No VP’s

15:00 Hire somebody who will punch above their weight class

16:00 Determining a sales guy from a bad one

19:00 Never wanting to join a club that doesn’t want them as a member

20:15 Mark’s secret sales interview trick

23:00 Make sure to listen more than you talk

24:00 Selling a startup today.

27:30 Identifying your strengths and finding the path to ROI

29:30 What is a CPM buy?

36:00 Sales people only care about money

38:00 Cashflow isn’t high…what’s the answer?

41:00 Suster: Paying a little upfront and then withholding until they get paid

42:00 The simpler the comp plan, the easier it is to see the shenanigans

44:00 The problem with the “waterfall method”

45:00 Sales people don’t want to be locked in an office

47:00 Group pipeline calls and how effective they are

51:00 One more tip from Suster on the sales world

53:00 Moneytip: Call early or call late to skip the secretary

58:00 Vince Thompson’s book, “Ignited”

64:04 Using LinkedIn to get ahead

66:00 Suster tells Jason Calacanis that Mo should get a lunch expense account

73:00 Staying on top of who is in the sales pipeline

76:00 Mark: “Don’t hire sales people too quickly, don’t hire senior people. Be smart, think quickly.”

 

  • http://www.facebook.com/daveycarson Dave Carson

    Never sleep. Enter the app store. Never hire a sales person.

  • Mat Atkinson

    Great advice on not hiring a VP as the first sales hire. Applies to the first marketing hire as well.

  • Vivek Lamba

    Simply great

  • http://byJess.net Jess Bachman

    Good to see Mo3000 in front of the camera. Jason does a terrible impression.

  • http://paxshalomsalaampeace.tumblr.com/ Emily Merkle

    This is not much more than a regurgitation of the stereotypical sales person model. This thinking is limiting to both potential hires and companies hiring.

  • Anonymous

    good post! obviously really like the “friendly wager” part. you are
    already playing! : ) we’ aren’t changing behaviors just enhancing 

  • http://tiptrades.com James Marshall

    Perfect timing! This answers a few of my questions that we didn’t have time for at last night’s talk at UCSB. Thanks Mark!

  • http://bothsidesofthetable.com msuster

    Agreed.

  • http://bothsidesofthetable.com msuster

    Mo is Da Man!

  • http://bothsidesofthetable.com msuster

    Well … which bits do you not agree about, Emily? Easy to say “regurgitation” or “stereotypical” – much harder to say what you think is the right answer. Also, for the record, much of what I said in the video is most certainly NOT what many VCs advise on the topic. Of that I’m certain.

  • http://twitter.com/DanielSBowen Dan Bowen

    I confess I watched this and Vince annoyed the piss out of me like most great salespeople who drain money from my wallet…I can see why he was successful at AOL.  Good info but I sure wanted to hang up on him.

  • Ssuresh83

    Be fast to bring workin prototype . Eat fast ( opponent companies) . If somebody had already done , buy it. Ask seth godwin to blog abt , how good the product is, sign up fast or somebody will send u the invite. get the data at whatever cost.sell it to google saying that u have 100k subscribers. Transfer the money to Mauritius , have blonde wife die fast. !!

  • http://www.facebook.com/lblaylock Lee Blaylock

    Helpful tips and I really appreciated the timeline below so I could zero in on the most interesting sections for me without having to listen or “scan” the video.  Well done as usual Mark!  

    Not sure I agree passion is such a key characteristic of a sales rep.  Yes, they need energy, but in b2b sales my keys are a solid combination of listening skills, trust, competitive nature and action orientation.  They have to probe and listen to the customer pain, be someone the buyer wants to do business with, and then they must marshall the resources available to them to get the deal done.    

  • Anurag

    Interesting discussion.  

    As someone that has sold successfully for several start-ups and larger companies alike over the last 10+ years, I couldn’t help but feel strongly about a number of things that were said in this discussion.   While there were a number of good points made, there was also a lot of gross generalization.

    While a founder may be very passionate about the product they are building, passion alone doesn’t “sell” a product.  If it’s a direct to consumer offering (e.g., mobile app), you could do without a sales person for a long time.  But if the intent is to sell to enterprises, it behooves a start-up to get a talented sales person in early, to get those early reference accounts on which to build the rest of the business.  You need someone that understands the sales process, isn’t distracted by other responsibilities of running the business and is comfortable with the evangelical sale.  May be a tall order for a founder to do that in addition to driving the product vision and trying to get the company funded, staffed, etc.

    I don’t think titles matter.  I don’t think number of years of experience matter beyond a certain point (4 to 5 years in sales).  I agree with Mo that you need someone that’s passionate.  As is oft stated in sales circles, people buy from people – it’s all about relationships and trust.  If you find someone that you feel you can instinctively trust, is personable, smart enough to get your value prop and relay it accurately, and has experience with “solution sales”, then you’ve found the right person for the job.  

    I think it’s silly to suggest looking at airline freq flier statements as part of the reference checking process.  It’s fair to ask a person about their track record of success and their W2s.   If they are successful, you shouldn’t care about how many miles they flew or if they were able to get it all done through Skype – focus on the results, not the process.  If ability to travel is important to you, just ask about it.  If you can’t instinctively trust the person you are speaking with, you should move on until you find someone you can.  But you should definitely speak to their recent customers.   No better testimonial than one that comes from someone that was sold to – how good the customer felt about the process and the relationship will tell you a lot about the person you are looking to hire.

    I disagree strongly that a sales person that’s willing to work for a small start-up does so because “they suck” – I’ve done that several times and I don’t suck!  Good sales people are almost always motivated strongly by money.  But that’s not the only thing that motivates us.  We too go through phases of learning vs. earning.  If a sales person believes strongly in your company’s vision and can see the potential to make money (through a combination of salary, commissions and equity), they might consider quitting a well paying job to come help you build your company.  I do believe that there are some sales people that are very comfortable in a large company set up and would never consider assuming the risk of working for a small company, in addition to everything else that comes with the territory.  You’ll never talk to most of them, because they’ll never come knocking on a start-up’s door for a job, or if they do, you can weed them out relatively easily.

    As it relates to compensation, I completely agree that you want your sales people to have the potential of making more than anyone else in the company.  Most of the compensation should be tied to performance with plenty of upside (and never capped).  If they are making a ton of money, that means you are selling a ton of your wares, and that should make everyone happy.  

    As a sales person, I’d never agree to go work for a company where they were going to review the comp plan quarterly and negotiate it ongoing.  Who wants that??  Set a clear set of deliverables upfront, set up a comp plan and let them loose.  If your business changes materially, and you have to course correct, you deal with that at that time.  Nothing is more demotivating than not knowing how you are going to get compensated on a deal that you are working on (especially for products with longer sales cycles).  It can also drive unnatural behavior (giving away discounts to accelerate deal closure, etc.).  

    As much as I like getting paid upfront, I think most sales people will agree to have part of their compensation tied to cash/collection and part of it to deal value.  This way the company’s balance sheet is not entirely out of whack if a number of large deals come in.  Performance accelerators work well when implemented relative to an annual quota – quarterly plans are more likely to gaming.

    This is my first time responding to your blog post and my own verbosity is turning me off.  I’m 75% of the way through listening to your discussion, so I may resurface later if something else riles my sales ego! :)

    Thank you again for these ongoing discussions and blog posts – I’ve learnt a lot from them and hope to keep doing so.

  • http://twitter.com/BornToCall Mohammad Ali

    Agreed that the skills you mentioned are must for a salesperson regardless if its B2B or B2C. That being said, I feel being competitive and being action oriented are traits of passionate people. 

  • http://rbeale.com RBeale

    A few notes on this interesting Start Up Sales Discussion:

    1) Regarding – What do you look for in hiring?  Mo says, “Passion.”  I agree.  If you only look for passion in an individual, you will lose.  Most sales reps are passionate.  Why?  We all want to make money.  Passion is important, but here are a few more things start ups should look for when hiring a new sales rep:
     – Passion
     – Historical Performance (top 5-10% in the current sales organization they are in)
     – Sales Process – Tell me about your sales process?  How do you qualify/disqualify prospects?  What questions do you ask to uncover goals (revenue), plans (to achieve goals), challenges (faced when achieving goals), timeline on achieving those business goals? How do you identify and reach decision makers?  How do you develop urgency in your sales process?
     – Hustle
     – Where do you want to be in 5 years?  

    Lots more to talk about. In fact, I should probably write a blog post on the topic.

    @RBeale:twitter 

  • Mark

    I enjoyed this post as it relates to recent blog post concerning “selling your way “ to fund your entrepreneurial launch.
     
    What I have found is the successful entrepreneurs, innovators, were often working for someone else at the time and saw a market problem that needed to be solved. So they set out to solve that problem…and next thing you know they have a successful company and are growing profitably. If their solution perfectly solves a problem that enough people have, they really do not need to be as good at “selling” as marketing to potential buyers who have that problem.
     
    What the majority of, particularly technology based entrepreneurs, do is “come up with something amazing” then look for a market. After all their idea, their “baby” is so brilliant even a monkey could sell it right?….Wrong! These are the founders, entrepreneurs, who have an amazing technical expertise but often lack the ability to market and sell their solution. Hiring a salesperson in this case may just frustrate the both of you.
     
    If you are in the first group…congratulations, that’s about 10% of you out there and your first hire should be a marketing person.
     
    If you are in the second group, don’t hire anyone until you clearly understand the problem your product or service solves and for what buyers. Then equip your salesperson with tools that clearly explain the problem you solve.
     
    Again, I enjoyed this post and will link to it on my blog.
     
    Mark Allen Roberts

  • http://twitter.com/StartupMonkey Startup Monkey

    Thanks Mark, great post & video. I agree, I have found that many VCs and boards think that a VP of Sales (especially from a big brand company) is the fast start or quick fix needed to ramp sales. My experience is that this rarely works and just creates more friction within the rest of the company. Hire the hard worker over the big talker if you want to build sales into the culture of a company, not just force fit what ever cookie-cutter tactics worked in their last job.

  • Sam Nelson

    Good roundtable Mark – one future post idea might be how startups with low cost products or services should approach sales (if at all – SeoMoz as an example doesn’t employ any ‘Sales’ folks).

  • Dave W Baldwin

    Great roundtable.  I guess for those worried about the Sales guy/gal making more is the fact +Sales, +Rev = +Value benefitting everyone with equity.

    Take the guy/gal with scars.

  • schmedford

    Excellent follow up comment.  As someone with a similar background, I agreed with every single point you made. 

  • http://twitter.com/TMattCameron Matt Cameron

    Mark, I believe that Vince’s “forecast” description was an excellent way to measure pipeline progression, but in my view you need a second element, which is related to forecast probability.

    [Disclosure: Salesforce.com’s process was flashed into my personal EEPROM]

    Simple example:   

    Say Sales stage 2 criteria = Initial discovery meeting and there is a problem-solution fit. 

    This might be 20% through the sales process , but I might forecast it’s probability as 90% because it happens to be my brother-in-law that I am selling to and he promised me the deal.

    As a sales leader, my job has been to ensure that deals never reach stage 5 of 7 and still be in low probability (ie we are losing slowly).  I think that all sales organisations need to learn the difference between progression and probability because failing to do so leads to wildly inaccurate predictions – How many sales guys have a pipeline stuffed fat with deals at >70% progression, which never close, but it keeps their inexperienced boss off their back?

    I loved the interview and will be recommending it to all B2B startups.  Actionable advice that will save people from mediocre outcomes.

  • http://twitter.com/mysaleshabits Andy S-H

    Mark – really enjoyed this episode.  It would have been interesting to hear more on what you and the guests look for when hiring reps.  Passion is what I heard, but there is more to it than that surely?  I would put “credibility”, “action”, “business acumen” and “rolodex” above passion. 

    I expanded on my thoughts around this at unstoppablerep.com

    [Mark – if it is not appropriate to link in comments, please delete the last line]

  • http://paxshalomsalaampeace.tumblr.com/ Emily Merkle

    apologies…I should have elaborated. I think there is a “right answer” for the wide variety of hiring managers’ needs out there. What is a bee in my bonnet as it were, is twofold: 1) that sales professional stereotype: moneygrubbing, self-serving, “ABS” (always be selling”, etc. 2) that there is another species of sales professional out there. They are experienced in their niche; well-rounded. They actually want to work for start-ups – not for pay; we all know that pay & ground floor opportunity do not go hand in hand off the bat. These people – and I count myself among them – are not only passionate (which I like that you honed in on) – they are passionate about the opportunity they are seeking. They can choose to defer gratification. They truly want to be a part of growing a company. They kick ass and they know it – but they do not need fancy titles or any plaudits. They do not need to be micro-managed i.e. counting calls in SF.
    I never liked the idea of being considered a “salesperson”. I nearly have a PhD in cognitive psych – which has helped me greatly in the past 12 years in this space. I am a principal in my second swing at starting up a new co. Worked for start-ups the past 2 years save for a year at the NBA.
    Aside from that – the question originally was “when to hire a salesperson?”. You start a new company with everyone in ops as salespeople. Only my programmer is not actively engaged in client acquisition and development. We’ll hire when: 1) we have enough data and cash under our belts to be able to forecast with a good degree of certainty our continued ramp; 2) when we can afford to pay a salesperson on a generous, unlimited commission plan – NEVER cap a commission plan; 3) when we have the time to take the time to find the right fit.
    And it basically comes down to fit. Not rolodexes (I swear I scream every time I hear someone talk rolodex). Not “seniority” – our space is subject to massive title inflation, so seniority means little.
    To me, my first hire comes when I can look far enough ahead to make sure I am not bringing someone on that I may not be able to support with a comp plan that is mutually motivational for employee and company (and clients); when we have the time to dedicate to a search.
    No interview “tricks”, no secrets – you know them when you find them. And as far as “hitting above your weight class – all professionals should operate that way :)
    my 0.02. thanks.

  • http://www.sahilparikh.com Sahil Parikh

    Good stuff! I see a lot of web apps being built in the last year or so. How many can actually sell themselves is a ?

  • Greg Matinian

    Thank you Mark! As you said doing remarkable marketing and sales is the 80% of the success of the start ups. It keeps me hoping for more blog posts about these topics… 

  • http://twitter.com/addroid_com Addroid

    What a fantastic episode. Also, the cap table walkthrough with Kelly was very helpful. I hope you do more like this. Thanks!

  • http://theblakefirm.com Austin Business Lawyer

    Great to see this discussion, as I find that sales and marketing is typically one of the most neglected aspects of business planning during conceptualization and development in many startup ventures.

  • http://www.twitter.com/cfv John Gant

    I *never* take notes on videos. This is a first and a MUST read for all startups, especially at the “just founders” stage!

  • http://adingintheuniverse.com Emily Merkle

    I did not focus my vitriol / at this point, waning – at you, but rather your guests – you just gave them the airtime. Perhaps I have lost my sense of humor in this area – in factt I have. In realizing that, I will err on the side of me being a curmudgeon & sincerely apologize to you, Mark; I should have been more specific as to whose comments were annoyingly trite.

  • Juan_olano

    This would be a perfect topic for us too. I second your request Sam. I think the dynamics and the criteria in the sales hiring/process/comp plans are totally different when your target is, say tech sales to B2B with $30-$60 monthly fees. There are cases of complex sales (take time to close, take effort to explain and takes a lot for the sales rep to learn) of relatively high impact products/services, type CRMs, Gps tracking, Drip Marketing. You dont have here the ability to compensate at 100k plus comm plus bonus, yet you need reps that handle a complex sales process, sometimes long process too.