Building a Sales Team

One Tough (But Rewarding) Job: Being the First Sales Rep at a SaaS Startup

echojason@gmail.com'

Jason Lemkin

Ah, the first sales rep.

Being the first salesperson into a start-up in a rewarding — but very tough job:

  • Your Founder Boss likely will never have managed a salesperson before. She likely won’t know what you are supposed to do 40+ hours a week.
  • Your Founder Boss may have strong views on what you should be doing. Which may be wrong. Whichever founder was doing sales, likely thinks that may be the way to do sales going forward. Which it may well not be.
  • Your Founder Boss may think you are very expensive. If the founders are making almost nothing, coming in with a high OTE (“on target earnings”) may make you, on paper at least, the most expensive employee in the company. This can create a lot of pressure to deliver, quickly.
  • Your Founder Boss may have unrealistic ramp expectations. Great salespeople should ramp quickly. But they can’t ramp in a day. This can create tensions, in some situations at least.
  • You likely won’t have enough leads to hit any sort of quota. It’s too early. Most start-ups below $1m in ARR don’t have enough in-bound, organic leads (say ~50+ qualified leads) a month to keep the first salesperson busy. You’ll have to find a way to get more leads on your own.
  • Your boss may expect you to do it all. Be an SDR, a demand gen person, a cold caller, a product marketer, an opener and a closer. Everything.

So this is a tough job 🙂 With not a truly typical day. And because of this, it’s usually not a great job for someone without a least a few years of SaaS selling experience plus the ability to be pretty self directed plus the ability to have a thick skin.

But for the right person, that’s smart and tough, and somewhat creative … it can also be one of the most rewarding positions. The sales “hacker”. Often times, the First Salesperson goes on to just amazing things in successful start-ups. And they have a special relationship with the founders and early employees that Reps 10, 20 and 200 will never have.

If this sounds exciting to you, consider it.

If it sounds like it lacks enough structure … don’t go in as the first salesperson.

Now, if you are a CEO hiring your first rep ever.  A few tips on the flip side:

  • Try to hire someone with at least 2-3 years of Account Executive experience.  Less than that, and it’s the blind leading the blind.
  • It’s OK to hire someone “mid-pack” — if they can be amazing at evangelizing your product to prospects.  You don’t want your first sales reps to be terrible at sales.  But often, in the beginning, it’s better to have someone simply pretty good at sales that also truly understands your product and can be an evangelist for it.  This is better than someone who was the #1 rep at her last start-up — on a team with tons of support and help.  Selling a product without a brand, without enough logos, is tough.  You need early reps who truly have a passion for what you are doing — and where their passion will follow into their pitch.
  • Understand the AE will naturally want to do what she’s experienced at.  Outbound, inbound, relationships, upsell.  Small deals vs. large deals.  You’ll get the experience you hire.  Don’t expend a cold caller to become a field rep that can close $250k deals.  Or vice-versa.
  • Remember, salary vests and bonuses are earned.  If you first rep wants say a $140k OTE (on target earnings), with a $70k base and $70k bonus structure, don’t worry that much about it.  That may seem expensive if you are paying yourself close to nothing.  But remember, so much of that $140k is contingent.  If she doesn’t close any customers, she doesn’t earn the bonus.  And the salary “vests” (i.e., you pay 1/12th of the salary each month).   A decent AE should pay for herself in 3-4 months, at least break even by then.  It’s not a huge investment, viewed that way.
  • Expect a fast ramp to a modest quota — but a slow ramp to a large one.  It’s fair to expect your very first rep to “pay for herself” within 60-90 days if you’re already at $1m in ARR or so.  I.e., it’s fair to expect a ramp in just a few months to say $10k-$50k a month in bookings.    But give her breathing room to get to a $400k-$500k quota.  It’s not easy.  Make the goals for the first 3 months easier to hit, at least.  Pay out the bonus in the beginning just for hitting a modest quota.
  • Understand how many leads you really have.  A seasoned sales rep can handle 50-100 qualified leads a month.  So if you have 20-30 qualified leads a month, that’s enough to keep her busy.  But less than that isn’t.
  • Remember sales people are there to sell.  The other stuff is, at best, a distraction.  It’s natural to want your first reps to also do demand gen, do qualification, build their own collateral, etc.  And they will.  But the sooner you can get them help here, the better.
  • Hire two.  Hire two reps, not just one.  That way, at least you are running an A/B test.  More on that here.

Good luck — to both the rep and the CEO!!

Published on May 9, 2017
  • How much validation of high propensity prospects, proposition and pitch (the sales roadmap) or inbound leads is needed to flip out of customer dev. evangelism into quota carrying sales ? With zero inbound leads and no playbook its a tough sell to sell.

  • entrepreneur333

    Yes, well written Jason, I have gone through a lot of this stuff at my current company.

    I also think that it is important to have a decent equity component to this person’s comp structure b/c you most likely can’t pay them market price at that stage of your startup. Plus, if this person is the right fit they probably have a personality where they want to help you build the business. Equity incentivizes them to look at the short+long term when they are working on deals and bringing feedback back to the business.

    Lastly, make sure that dog hunts. Like you said, it’s hard to bring in logos when you don’t have a ton of credibility in the market.

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