Hooked on Solving Sales Hiring Mysteries - Issue 41
"It's so much easier to suggest solutions when you don't know too much about the problem." ― Malcolm Forbes
Sales hiring often ends in failure — especially at a startup. While failure is always nuanced, addressing a lack of clarity in your go-to-market strategy before you hire may be the key to your success.
What's going on?
Your role as a founder is multi-dimensional in the early days. Whether sales comes easy or not, you've likely started your company's selling journey as one that's you-led — staying close with early customers, evangelizing the product, and building a feedback loop into your development process. As with all functional areas, there's a lot to operationalize, so hiring seems the likely next step, given you're quickly reaching the threshold of "able to do" and "failure to scale." And if you are a reluctant seller, you’re probably anxious to put someone else in that role so you can go back to "CEO-ing." So you run out and recruit a VP of Sales, thinking that a strong leader will come in and solve all your problems. And even though there are signals that a highly pedigreed candidate with all the fancy logos isn't quite right for your stage, you get excited anyway and go into what David Shim, CEO and Founder of read.ai, calls "convince mode." Viola! You close a phenomenal VP (even though they originally self-identified that they are best suited for later-stage companies) by giving them a silver bullet offer because, Hey – they're amazing! Fast forward three months, and surprise! Your new VP of Sales doesn't want to carry a bag (aka sell) or do the bare-knuckle operational work you need done. Instead, they want to hire a team. And friction only mounts as their requests for sales headcount continue, even though at this rate, there's no way you can afford the price tag of the one doing the asking. Zero progress has been made, the product is suffering, things feel more broken than ever, and any momentum you thought you had is slipping away.
Why does it matter?
This is the type of story we hear from early-stage founders who have hired a sales leader before fully understanding the problems they were facing. Ted Kummert, Venture Partner at Madrona, says, "At times, there can be a reflex to hire as a solution to what you are facing when, in reality, you have other problems you should be addressing. In the area of sales, examining your go-to-market strategy, product-market fit, ICP, or something else will, at the very least, help you understand your next steps better." This, combined with the fact that the transition from founder-led sales, is an exposing time for the business. "Transitioning from founder-led sales can uncover cracks in go-to-market and messaging because now it's not just the CEO who is selling anytime, anyplace, anywhere," Ted said. Apart from this, unless there's definite signal that your business is reaching an inflection point, it may be premature to hire that sales leader for even another two years down the road. And when you peel the onion back and do the math, revenue often can't support a VP level hire in the first place. Without going through the exercise to understand these more deeply rooted challenges, you could be just throwing bodies at the problem and throwing cash runway down the drain.
What do others think?
"If you're thinking you need to make changes in sales, it's good to take the opportunity to ponder all the bigger questions surrounding product-market fit, your GTM plan, and messaging first. Working through this exercise can often lead to a different realization on what are the most optimal decisions to make on organizational structure and people." — Ted Kummert, Venture Partner at Madrona
"As a startup founder, if you find someone with a track record of success, you often get really excited and go into' convince mode.' When that happens, you shift that candidate's interest in later-stage companies to being intrigued and wanting to talk more about your startup opportunity. But that's when you need to come back to the reality of the role. If this person needs a team of people to be really effective, and you're not there yet as a business, that's too much firepower. They won't have enough resources to be successful at this moment." — David Shim, Founder and CEO at read.ai
“Hiring for great salespeople is always hard. It’s even harder as a founder making your first hire. When you are under insurmountable pressure trying to close deals in parallel with all the stresses of running your business, it’s easy to lower your hiring bar or panic-hire to ease the pain. The wrong person only exacerbates any pain you may already be feeling, taking months to rectify. Aim to own the number until you're certain you understand what you need so you can be more targeted in hiring the right person." — Dakota McKenzie, CEO at Dakota McKenzie Consulting, Inc.
What do we think?
Failed leadership hiring and being slow to fix a wrong hiring decision will cost your business 6-9 months in lost opportunity and lost revenue that you, as the founder, prematurely relinquished. And slowness in fixing the problem isn't a judgment on your skills as a leader. While the notion of hiring fast and firing fast sounds great, it might be months before you realize you've made a potentially fatal error and more months before you get the nerve to pull the plug on the situation. All the while, the clock is ticking, your cash runway is evaporating, and your competitors are cleaning up.
What do YOU think?
Take Action
BUSINESS CLARITY FIRST
Before hiring, get clarity on what's happening in your business and the real problems to solve. As Ted says, "Have a thesis on who is best suited for what you do. ICP and product-market fit travel together. You may think you have product-market fit, but it's always a question of product-market fit for who. Are you reaching them? Is your messaging resonating with them?"
DEFINE THE SCOPE
Once you've wrapped your arms around the business, build your sales hiring blueprint. Dakota says, "Founders should answer a specific set of questions to identify who they need to hire for in sales, based on their business model and stage, to reach the next milestone. Things like average sales price, number of founder-closed deals, how much of the playbook is built, and expectations surrounding selling vs managing a team. Run down the answers in the checklist; if all else is true, this feeds into the blueprint of the right first person to bring in."
Be stage-appropriate. Get honest with yourself about the requirements of the role and how hands-on this person will need to be as you consider the next milestone. If you do not foresee hiring a team and scaling for the next 18-24 months, it's often too soon to hire a VP. An Account Executive (or even two) is generally the right first hire to bolster founder-led sales. Great AEs build pre and post-sales processes and should be motivated to generate leads and close deals. A first leader is often hired at the director level, motivated to sell, be a player-coach, and build the early sales engine.
RECRUITING STRATEGIES
Stop convincing and get real. Be honest with yourself and the candidate about the work you need them to do. Have a conversation about how dirty the dirty work actually is. If the reality of the role is to sell and you are talking to candidates who haven't carried a bag for 5-10 years, chances are, this will not yield a happy ending.
Understand real motivations. What people say isn't what they necessarily mean. As Dakota says, "When candidates express a desire to 'build,' it is you who must probe deeper. While it may appear that they are driven by a passion for creation, often their motivation is more aligned with the desire to be part of the foundational team and to contribute to a significant increase in the company's annual recurring revenue (ARR) through substantial deals (a fancy way of saying they just want a really large commission check with minimal internal competition)."
Tools, Resources, Events
”Cleanup on Aisle 2” —> Hooked on Failed Hiring Forensics - Issue 22
Aspiring for Intelligence —> Is This The Year Apple Awakens In AI?
Lenny’s Newsletter —> What it feels like when you’ve found product-market fit
Hey! Entrepreneurs —> Take the Leap!