When you hit the scaling stage of your startup, all signs are go. You have product-market fit, your initial sales efforts are becoming repeatable, and you have strong revenue growth. Now is the time to ramp up the sales team, so you snag some highly coveted sales veterans from big name industry competitors and you get the team ready for a flood of mega deals. What could go wrong?
For starters, that roster of expensive sales vets you brought on board to blow out sales. Taking a page out of the typical sales scaling playbook, you hire a crew of sales mercenaries and send them out to conquer new territories. The thinking is that this is the easiest path to scaling as they already know the market, the pain points, the key customer contacts, and the industry people to target.
You may think the problem I allude to has to do with big company sales reps figuring out how to operate in startups. If you have reached the scale stage however, that is not really the key issue as the product and process are already well mapped. The real issue is what I refer to as the three prong conundrum of building sales teams:
- Startup Compensation Doldrums
- Land of the Misfit Culture Invaders
- The Great Sales Career Wall
Startup Compensation Doldrums
It is no easy task to hire A+ talent, and for sales it generally boils down to compensation. Startups use profits for growth fuel, meaning funds get directed to hiring, marketing, and product development. It is a delicate calculus to ensure cash flow is positive and finances do not become too overextended. The result is that base salaries are much lower and commissions are closely monitored. It is not unheard of for reps getting payouts extended for several quarters after or not even getting paid at all.
The established companies however do not need to fuel rapid growth. This is especially true of public firms that have plenty of cash and finance options. They can distribute their profits towards more generous sales compensation, higher commissions, and better benefits. They have really awesome sales trips and President’s Clubs. Startups simply cannot compete on comp nor would it be wise to do so. So it bears mentioning that any candidate that asks for a similar big company comp plan is probably not a fit for a startup.
Land of the Misfit Culture Invaders
Despite the compensation gap, there are sales reps from larger companies that join startups. They often come with impressive resumes and track records and connections. They even accept a lower salary to come on board in exchange for equity, higher upside, and a chance to get on the ground floor of a rocket ship.
What the conventional playbook does not explain is that many of these sales reps are misfits. What would motivate someone making close to a half million a year in a cushy job with full benefits to join a high-risk venture with no stability? There could be various reasons which all sound perfectly valid and sensible, for example the desire to have more independence and flexibility.
In the early stages, independence and flexibility are a virtue. Not at the growth stage however. You achieve scale when you become a process machine, refining the system incrementally. Great companies enforce their vision and culture by defining “the way”. The collision between “the way” and the rebel sales reps does not happen overnight. Over time however, reps bring their own “big company” culture into the mix. There will be small shows of defiance. Foreign practices creep in. The excuse will be “we did it this way at X, and it worked for us.” When this happens, you have been culture invaded.
Most sales leaders let these acts slide. That is because the prevailing wisdom is that such reps are hard to manage. They aren’t coachable anyway, so just let them do their thing and close deals. The problem is that their attitude slowly infects the rest of the sales team. There is no accountability anymore and what had been a unified culture and structured sales process becomes fractured.
The Great Sales Career Wall
Hiring veteran sales reps in this respect is akin to a sports team building a team of all-star free agents. In the meantime, there were perfectly able sales reps with the startup from the beginning that were never given the chance. So when the team implodes because of the culture clash, the sales vets get booted with sales management and the previous sales team leaves the turmoil realizing that they hit the impenetrable sales career wall.
The way to avoid this fate is to insist on a unified sales culture and build sales bench strength into the growth plan. This requires hiring both the sales veterans as well as more junior sales reps that are readily coachable. Through observation, you begin to discern which traits and behaviors are desirable from the veteran team and train the junior staff on those findings. Thus you are investing in building up your own homegrown sales team that is indoctrinated in your culture while bolstered by useful practices from successful firms. When the vets leave over time due to attrition or move up rank, you can begin moving up the bench players to more senior sales roles and providing an incentive for junior staff to remain.
For this two-tier sales team to function, it is incumbent on sales leadership to maintain the existing culture and process. There cannot be any leniency for acts of defiance or incursions into the prevailing sales culture. This is difficult as it will create situations that could lead to losing senior sales staff. If you value the effort and time that went into developing your sales process and culture, then this will be a small price to pay. This is why building a sales bench is so critical; you mitigate the risk of being held hostage by sales mercenaries while creating your own loyal, high performing sales team.
Image credit: CC by Abecedarian Gallery
