Some rights reserved by redwolfb14
How many times have you been at an event and met someone who gave you the pitch “I have this great idea, I just need someone to build it for me” or some variation of that?
This has become such a cliche in startup circles that it’s almost cringe-worthy. If all someone has is an idea then they’ve basically got nothing. As the old Edison quote goes “genius is one percent inspiration and ninety-nine percent perspiration.”
That being said, the other side of this pitch doesn’t get a ton of attention even though the problem is just as common.
There are lots of startups that build pretty solid products but never end up getting traction because they don’t figure out the sales and marketing side of things.
You don’t see a lot of technical founders searching for business development help, mostly because many engineers don’t even know they have a problem. They spend a year in their basement building the most amazing solution to a problem nobody has. When they do finally surface they discover that 6 of the 10 assumptions they made were wrong, and usually give up soon thereafter.
I’m an engineer, and I’ve seen this problem come up first hand. One of the most basic ways to avoid it is to start focusing early on customer validation. What that means in the most basic terms is to not write a single line of code before you talk to a few dozen customers who tell you unequivocally that they will buy the thing you’re thinking of building.
As you talk to customers tweak the pitch until you have 9 out of 10 potential customers telling you that they will pay money for what you’re planning to build (hint: 8 of them are lying.) This is your first step towards developing a sales process.
You (or your co-founder) need to learn to sell. Frankly, it’s not that hard and it’s mostly about persistence when it comes to getting a few pilot customers – they’re going to be early adopters, they won’t expect a polished sales pitch. It’s essential that this basic sales and marketing expertise lie within the core team. Which brings me to the first tip about hiring your first sales reps:
1. Learn how to sell and develop a basic process.
The most common mistake technical startup founders seem to make is to try and cop out on the sales part of the business. They feel they don’t know how to sell and are worried that people won’t take them seriously because they don’t have grey hair. So they hire an experienced sales guy (a friend of a friend,) give him ownership of all sales and just sit back and wait for the deals to flow in. It seems like such a plausible idea (it’s exactly what I did with Top Hat Monocle) and yet I’ve never once seen it work out. You need to learn to sell. It’s actually a skill very similar to raising money, so it’s something you’ll need to do anyway. Learn to sell just well enough to close the first few customers and develop a basic process that you can plug someone into.
2. Find reps who have experience with the same deal size and sales cycle as your product.
If your product costs $200 per month and has a 1-2 week sales cycle, don’t hire some with enterprise experience who’s used to closing three $500k deals a year, it won’t work out. A match on deal size and sales cycle is probably the best predictor of whether the rep will be a good fit.
3. Experience within your industry is useful but not essential if your product isn’t too complex.
Focus on item 2 above. Unless you’re selling a very complex product with a long (6 month+) sales cycle, don’t worry about industry experience.
4. If it’s a technical sale, tech savvy matters.
Don’t hire someone who barely knows how to use a computer to sell a software product. Frankly in general you should only hire people with basic technical literacy because otherwise you will be explaining to them how to use the CRM and your webinar software 5 times a day.
5. Sales reps are great bullshitters – ignore their words.
Only look at verifiable track record to assess the rep. This means getting a printed record of their quota attainment at every sales job they’ve had, then verifying that record with their supervisor. Anyone who hasn’t consistently blown away their quota at every job is a risk.
6. Place minimal value on prior contacts and rolodex.
The rolodex runs out after about two weeks. After that it’s all about prospecting and hard work. Don’t ever overlook a lack of experience or cultural fit because you feel the rep has a rolodex of clients they claim they’ll bring with them (they’re probably exaggerating anyway, see #5 above.)
7. With personality, focus on work ethic and motivation.
Sales is repetitive hard work. When hiring reps look for work ethic and drive. Look for people who need to earn a certain amount of money to maintain their lifestyle due to financial obligations – a big mortgage is the best motivator to hit quota.
8. Over time start to specialize your sales team.
Lead generation and research. Appointment setting. Follow ups and closing. Each is a separate role. You should segment by task and eventually by customer size or market. It may not even take that long for it to make sense to do this – we started specializing at Top Hat Monocle when we had just 3 reps.
9. Sales reps will maximize their paycheque above all else.
At least the good ones will. You need to ensure your compensation plan incentivizes sales and has relatively short term rewards. This typically means at least 50% of overall earnings should be from commission and there should be a monthly performance based commission payout. Don’t try to hire people on 100% commission, because you will likely only attract flakes who waste your time and never deliver.
10. Metric everything. Obsessively.
How many calls per day does each rep make. How many emails. What is the conversion rate on email responses. How many meetings does each rep go on per day. How many inbound leads are being generated. What is the time from inbound lead to follow-up. How many foliow-ups does each rep do per day. What is the mean time between follow ups. Everything. Metric everything.
This is really great insight, which applies to marketing as well.
I could not come up with a better top 10 list. Bravo, Mike. The most important being #1 – learn how to sell and how to manage sales reps yourself. It’s a crucial start-up skill and I will be eternally grateful for my first advisor at Eloqua who sent me to sales school before screwing up any more sales opportunities, or sales people.
Where you are in product development is also a key factor in selecting a sales person. If you are still figuring out what you are selling, what problem you are solving and to whom you are selling, you need a very different person than when you are ramping up repeatable sales.
At the early stages, you need someone who can question and observe, and who has enough understanding of the company capabilities and vision to bring unanticipated opportunities back to the team.
That changes once you have the product and customers well validated and sales are starting to repeat with a reasonably fixed process.
Very timely post Mike. Not enough sales wisdom is spread among startups. We are going down the path of hiring sales people at the moment – after doing sales for the company for over 1 year.
After going trough the experience of hiring a sales person, I would add that the lure of bringing someone senior with tons of experience is still very great. The thought of handing over the sales function to a pair of safe hands is very appealing. In the end, we settled for hungrier smart younger guys who will grow with the function.
So even when you had run sales for a while, the temptation to have someone take your baby and run with it remains strong.