There’s a simple point I’ve been talking about a lot lately, but it’s a super important one:
When the time comes when you have enough momentum, capital, etc. to hire a real VP or two … you don’t have to start with the VP of Sales.
It’s the natural place many of us start. We get 1-2 reps to hit quota, and we realize we now need help to scale past that. It becomes the #1 clear gap, the #1 place we clearly need more seasoned help/ And indeed you do that help.
The problem, though, is expecting to immediately hire a VP of Sales as your first VP just at the perfect time is two-fold:
First, many VP of Sales candidates are waiting for opportunities a half-stage or even a full stage later these days. There are just so many SaaS start-ups today, those stretch candidates that 4-5 years ago might have joined a SaaS company at $1m ARR now want to wait until .. at least $3m-$4m to make that risky jump. Or even later. Similarly, many veteran candidates today see even $8m-$10m ARR as almost too risky, whereas a few years ago that seemed like a great time to join. Today those same candidates may want to find a $20m+ ARR start-up to join, or one with massive funding. After all, most seasoned VPs of Sales will get the same equity and more comp with less risk by joining a SaaS startup that much further along. There are just so many SaaS startups, even hundreds of unicorns now, the most in-demand candidates can just wait and pick a new role at somewhere even further along.
So by all means, hire your first VP of Sales at $1m ARR or so if you can. I did, and many of us still do. Up-and-comers that really want the role will still join at this phase. But if nothing else, don’t let your drive to hire that first head of sales close off your mind and time to making another key VP hire first.
Don’t let the hunt for a VP of Sales stop you from at least sequentially hiring another VP as your first VP.
As we’ve talked about many times over the years, you’ll likely be more than ready for a VP of Demand Gen by $1m ARR, probably even much earlier. If she can just increase your qualified leads / opportunities / etc. by even 20% (not very ambitious for an experienced candidate that can hold a number), that often covers their cost right there at almost any stage. More on why here:
Similarly, a great VP of Customer Success can do magic by $1m ARR or even earlier. Imagine she drives your net revenue retention over the next 12 months up from, say, 100% to 115%. That’s another $150k+ in bookings just from that $1m base!! That should cover her cost, and then imagine all the second-order and other revenue she’ll set up for the following quarters and years.
A great VP of Product can also work revenue magic far earlier than most of us think. What if you do hire that VP of Product at $1m ARR instead of $5m ARR, and because of that, you are able to close another six-figure+ deal by making those prospects and customers super successful? By getting the team to ship that one extra critical enterprise feature to close that deal? Again, here he or she may pay for herself in just a quarter or two by helping you close 1 or 2 big deals. I see this again and again, startups without a VP of Product struggle to juggle too many big customer projects. And they lose big deals because of it.
So yes, hire that VP of Sales at $1m ARR if you can. But if you find another great VP at the same time, hire her as well. And if you can’t find that VP of Sales? Hire any of the others if you find a great one. It’s not the same. But they should all be accretive. And also, take some stress off your plate.
(note: an updated SaaStr Classic post)