Hiring Your First Sales Representative? Here are some answers.

If you’re a founder who has never had a quota, managed a sales team or hired a sales person, the first time can be daunting. Here’s a quick guide for hiring your first sales person.

When should you hire your first sales person?

After you’ve signed your first clients yourself.

You’ll understand the target buyer. You’ll have confidence in how to talk about your product with prospective clients.

You’ll understand if your product is actually touching on a real need for the client, or if you still have work to do to hit product/market fit.

You’ll understand more about the sales cycle and the client’s buying decision. You’ll learn a bit about pricing and if it works for your client. You’ll know exactly the questions to ask when you’re interviewing for your first sales hire. And, lastly, you’ll be able to picture the candidates you’re thinking of hiring in front of those early clients and be able to make a judgement call on whether or not the person is a good fit for your company.

When you have enough money in the bank to hire two (or three).

When you start hiring your first few folks in sales, there are still a lot of unknowns. You’re likely still building some of the core product features that will shape your product. You’re likely still figuring out exactly who to sell into (what vertical, what size of company, etc.). You’re likely still trying out different pricing models and sales contracts.

If you only hire one sales representative, its hard to determine if that rep isn’t hitting quota because they’re bad at selling your particular product, or if they’re not hitting quota because your pricing is off.

If you hire two people, it will be easier to determine the root cause.

What should you look for in a first sales hire?

It goes without saying that you need to find someone who can intelligently speak about your product, someone who “fits in” with your prospective customers and can sell to them, and someone who understands the concept of a quota (and the consequences of not hitting it).

Someone who is willing to be a Sales Development Rep, Account Executive and Account Manager all at the same time.

Just like everyone else in the organization, they’ll be required to wear many hats. Make sure they’ve done all these roles in the past and feel comfortable juggling them all at once as you sprint towards $1–2M ARR.

Someone who is NOT a VP of Sales or a CRO.

Your first sales person’s job is to sign enough clients so that you still have a company in 12–24 months, not to strategize how to grow a sales organization and scale revenue. Getting to scale is a privilege that is earned later on in the company lifecycle. Save the VP and C-Suite titles for the Series A/B; hire someone who is ready and willing to cold call along side you.

Someone who “goes with the flow” as if they have a fire lit under them.

Your first sales hire should be someone who understands that there is no playbook, there is no set-in-stone pricing model, and there is no such thing as an annual quota (because you literally might not even have a years worth of runway in the bank). They should be the type of person who can “go with the flow,” but still have an urgent desire to build that playbook themselves.

Someone who offers up thoughtful solutions.

Your first sales hire is on the front-line with your customers each and every day. They should have a lot of opinions on your product, pricing and sales process. If your culture allows (and hopefully it does), you should designate time to take suggestions from him/her every week. These suggestions will help you build a truly valuable product AND a repeatable sales process faster.

Someone who has sold a very similar product or has been at a company with a similar business model to yours.

You probably don’t have time to explain typical SaaS business models to your first sales hires (you’ve got enough on your plate). Find someone who understands what you’re selling and can pull on past experience to get started without too much coaching.

How do you convince your first sales hire to come work at your company?

Have a great team (or co-founders) that they want to work with and learn from.

Have a great product that they can sell for real $$$.

Promise them the learning experience of a lifetime (both if you succeed or fail, they’ll get it).

Show them the growth opportunity and the possible trajectory to a Sales Leader or Sales VP in the future.

Show them the money (base + OTE, equity).

How do you structure compensation (when everything is still in flux)?

Before they sign on the dotted line, there are three negotiations you’ll have to have: Equity, Base Salary + On-Target Earnings (if they fully attain quota), Quota. This can be extremely hard to do when

Equity

Most startups in the SF Bay Area offer between 0.006% — 0.075% equity split over a 4 year vesting period for an early sales hire, depending on experience and how early the person is at the company.

Base Salary + OTE (On-Target Earnings)

Salary often depends on target market (Small Business, Mid-Market, Enterprise), average deal sizes and level of experience.

On the lower end, in San Francisco, some entry level sales reps make $40K base - $80K OTE. Higher paid reps make $60K base — $120K OTE. Experienced enterprise reps with a more mature product can make $100K-$150K base and $200K — $300K OTE.

Quota

Quota at a startup changes A LOT.

What happens when your first sales person leaves?

Most first time CEOs mess up the first sales hire or two or three.

You hire someone who is the wrong culture fit (especially if they’re coming into a team of only engineers previously). You hire someone too senior who didn’t really know what #startuplife is all about. You hire someone at too high of a pay-rate before you have a business model nailed down, and when you try to correct it, they leave. This happens and, weirdly, is normal.

Part amicably, thank them for their time at the company and, perhaps, give them a small bit of equity for their time (if they hadn’t yet hit their cliff).

Whether you like it or not, any smart sales hire that comes after them will call them to understand why they left. Let this first sales person be an advocate for you and the company. Let them help you in the hiring process as you find their replacement.