Hiring sales people is one of the hardest tasks for any start-up. I’ve been part of dozens of sales hiring processes — some good, some bad. The biggest lesson I’ve learned is that many start-ups hire a sales executive too soon. Waiting until the right time (and hiring the right sales person) is crucial.
The story that went furthest in convincing me was from a SaaS startup that recently closed down. According to one of the employees, the company was on a good trajectory. It had created a solid product that a lot of smaller companies were buying. After raising a seed round, the founder went about finding a VP of Sales. He hired someone who’d taken another tech company from $5 million in sales to $300 million. Surely this person would be better at sales than the founder (who was an engineer and didn’t have sales experience), right?
Over the next few weeks, the VP of Sales was able to negotiate a major purchase from a big corporation. But the deal required some spec work (new features that would not be useful to other clients). It was a slippery slope and soon all the engineers at the start-up were working on the spec work. You know how the story ends: The big corporation pulled out of the deal and, after wasting a few months on all the spec work for this big client, the start-up didn’t have enough cash left to go back to steady and small growth.
Of course, there are many elements that contributed to the undoing of this start-up: bad strategy on the founder’s part, bad negotiating skills on the VP of Sales’ part, and bad luck in terms of cash timing. But the biggest lesson I took away was: Be careful with the timing of your first sales hire, and make sure you hire the right person.
Here are our some lessons:
1. Founders: Sell the product yourself before hiring a sales person
Don’t hire a sales person if you have not sold at least 10 deals and if you don’t feel like you fully understand the product-market fit. It’s tempting to want to hire a sales person to figure all this, but it rarely works. Sales people can’t tell you how to improve your product such that it’s sellable. They can only sell a product that is ready for prime time. Olga Vidisheva of Shoptiques (disclosure: the company is a client of ours), says “I needed to know the pitch first so that I could tell my first sales person how to do it…besides it would be impossible for me to evaluate the new person if I hadn’t done it myself”
2. Hire a sales person who can fill your current needs
If you’re selling a $500 a month subscription software, hire a sales person who loves selling in small increments. Don’t hire someone who loves big negotiations. If you’re bringong onboard inside sales people, make sure you have a process in place. Inside sales people can’t hustle and work magic with no direction. Consider your situation before you make your hire.
3. Ask the right interview questions
One client of ours recently told us he keeps a list of the 20 questions he always asks a sales person. Make your own list before you start (or tweet at us for advice).
Among the questions we think are important are:
1) What was your quota at your last company?
2) Did you meet your quota?
3) What kind of quota was it — were company wide sales measured or was just your individual deal flow counted?
4) If the former, how many deals did you yourself bring in?
5) Are you better at sourcing deals or at closing deals?
6) Where do most of your deal leads come from? Is it your existing network or do you tend to find new leads each time you start a new sales role?
7) How do you stay organized with your leads and what CRM do you use?
I always like to give sales candidates a few tasks that mimic the kind of work sales people would do on the job. For example:
1) Google hires you to sell its new self-driving car. Whom do you sell it to and how do you make the pitch?
2) You need to create a list of leads for a new iced tea company that wants to sell in retail stores. How do you come up with the list of leads?
4. Get an outside party to interview the candidates
In addition to your own interviews, ask others who are more experienced in sales hiring to take a stab at interviewing a candidate. Some companies ask investors for help (great way to put your board into use!) while others query qualified friends for assistance. Victor Wong, CEO of PaperG, says that he is increasingly asking his investors to do interviews as they can often spot additional traits that weren’t obvious to him. You can also ask a professional recruiter or HR consultant for help.
In the end, you want to find the best person for the job for this key position. You can’t rush it. Take all the necessary steps, or, like that SaaS company I referenced above, you could be sorry.