Q: What is a typical organizational structure for a SaaS startup with sales reps?
A rough structure from 1–25 sales reps:
- CEO acts as VP of Sales.
- CEO hires 2 reps, in the beginning, each barely pays for themselves, but by months 4–6 they are able to close 3x-5x their total compensation.
- Once 2+ reps can do 3x-5x their comp, the model gets pretty efficient.
- Have to scale from reps 3–8 or so. CEO often struggles to manage so many directly.
- CEO starts looking for true VP of Sales before $1m, ideally hires one by $1m in ARR.
- VP of Sales hires next 5–10 reps herself.
After 8–10 reps, you have to add more management:
- A VP of Sales can probably only manage 6–8 reps and a handful of SDRs herself.
- So for each 8 AEs or so, and 8–10 SDRs, you need a Director to manage them, or at least a team lead. You can’t skip this step.
- You also start specializing more here. Segmenting by customer size, and sometimes geography.
- By 15 sales reps, you probably need a first head of sales operations to handle training, onboarding, compensation, quotas, etc. Earlier if you can afford it.
(note: an updated SaaStr Classic answer)
Published on February 5, 2022