Most early stage companies struggle to identify the right time to hire a senior sales leader. Some of them get the timing right and many do not. Here’s my simple advice to founders: Don’t hire a head of sales until you’ve validated your product-market fit and have closed your first 30 deals. Why are these the prerequisites? Let’s explore.
For founders who don’t have a background in sales (or even in business, which is the case for many EdTech founders), it’s tempting to hire a sales leader quickly – basically as soon as v1 of the product is finished and you feel like you can go out and confidently sell it. In my experience, this is a mistake.
First, VPs of Sales are expensive so you’re going to invest a substantial amount of your company’s limited capital in this person.
Second, it’s not easy to find the right fit. Are you going to hire someone who’s been a strong individual contributor and may be ready for their first leadership role? Or are you going to hire a seasoned sales leader who hasn’t carried a bag in a longtime and probably isn’t too excited about doing so again? Do you want an in-the-weeds leader who’s going to build out a CRM instance and spend hours per week coaching inexperienced reps? Or do you want someone who’s a systems thinker, who can think critically about the product’s value proposition and work cross-functionally to build the right go-to-market strategy? Do you want someone with strong domain expertise or are you willing to hire form outside your industry and trust that he/she will be able to figure out the nuances of your industry? It’s possible to find the unicorn who can do it all, but it’s not likely.
Third, combining the two points above, hiring the wrong person will be an expensive mistake. What tends to happen when you hire a VP of Sales is the founder breathes a huge sigh of relief and says, “Thank God I don’t have to sell anymore!” You outsource selling your product (your baby) to this new in-house expert and you focus on things that CEOs should spend their time on, like investor pitches and speaking at conferences. Unfortunately, you didn’t hire the right guy or gal so while you’ve stopped minding the sales house, things aren’t going so well. Once you realize it, it’s too late and you’ve blown a critical year of sales growth.
Yikes! This is a sad story. Of course, you may get lucky and hire an all-star VP of Sales who accelerates your growth dramatically and positions you perfectly for a Series A. Sound better? I’m sure it does but if I were you I wouldn’t count on this scenario. I’d be a pessimist and think about what’s not likely to go well with this hire and do whatever I can do to avoid making this mistake.
So here’s what you should do:
- Nail your product-market fit
- Who’s your buyer?
- What’s the right price point?
- What budget will they use to purchase your product?
- Are you solving a problem they care about?
- Nail your value proposition
- What’s truly unique about your product and your approach to solving a big problem for your buyers?
- What’s the provocative headline that’s going to cut through all the noise and get your prospects to raise their hands to learn more?
- Close the product-to-value prop gap
- Make sure your product can deliver on the value prop you’ve landed on.
- Align your product and selling strategies and the people involved with both.
- Draft a sales playbook
- Define your basic sales stages.
- Define what it means to “qualify” a lead.
- Figure out your main source of leads (e.g., inbound vs. outbound).
- Determine if you’re primarily selling inside or in the field (your average sales price [ASP] will largely determine this).
- Close your first 30-40 paying customers – sorry, free pilots don’t count.
Once you’ve done these things, you’re now ready to hire a VP of Sales because you’ve dramatically reduced the risks outlined earlier. You’re not looking for a unicorn anymore; you’re looking for someone who can execute on a playbook that you’ve already written, who can take care of the day-to-day mechanics of sales and managing reps. You can definitely find someone to rinse, wash, and repeat on your behalf. And if you’re lucky, you’ll also get someone who thinks critically about systems and processes that will help you scale even faster. But in this scenario, you don’t need to get lucky to get to your first $3M in annual sales.