Thus far, we have covered sourcing, screening, and hiring the initial sales team, but we have not addressed one important question.
Who should be your first sales hire?
I receive this question from start-up CEOs at least once per week. In fact, over the past few years, I heard it so frequently that I devised an informal case, which I teach at Harvard Business School, MIT, and other leading institutions.
Let's walk through this hypothetical case. You need to make your first sales hire, and you have the following four candidates in your late-stage pipeline:
Candidate 1: The SVP of Sales
This candidate used to be the SVP of Global Sales for the Fortune 1000 company you hope to disrupt. He has 25 years of sales experience. In his SVP role at the Fortune 1000 competitor, he ran the entire 500-person sales team and oversaw $2 billion in annual revenue.
Candidate 2: The #1 Salesperson
This candidate worked under the SVP of Sales. He is currently the top salesperson on the 500-person sales team at the Fortune 1000 competitor you're looking to disrupt. He has three years of experience in frontline sales.
Candidate 3: The Entrepreneur
Until recently, this candidate was CEO of her two-year-old start-up, which just ran out of capital. Prior to running her own start-up, she was a salesperson at a large company. The company is known for breeding salespeople with excellent fundamentals, but she has very little sales experience with your target buyer context.
Candidate 4: The Sales Manager
This candidate works at a large company with a large sales team. She was promoted to sales manager six months ago. She earned the promotion because she was a top sales rep and demonstrated exceptional leadership potential to build and develop her own team. She doesn't have much experience selling to your target buyer.
What do you think? Who is your first hire?
Well, of course, there are pros and cons associated with each of the four candidates. I have laid out my perspective below, starting with my least favorite hire and ending with my favorite hire.
The SVP of sales (candidate 1) is my least favorite hire. Nonetheless, start-up founders are typically fixated on finding someone like the SVP of sales for their first sales hire.
Here are the pros of the SVP of sales:
Rolodex. The SVP of sales is likely well connected at the executive level with the types of customers you want to attract. Those connections could be an enormous advantage. In fact, if you have a small addressable market with only a handful of target buyers (e.g., the top 10 telecom companies in the country), the SVP of sales becomes a lot more interesting as an early hire. However, I believe industry connections are overrated in most sales hiring contexts these days. Are there really still a lot of deals being done on golf courses and at ball games? Not really. Strength of network is an easy dimension to screen a candidate on. Many people lean into the characteristic heavily, but for the reasons I mentioned, I believe it is overrated.
Industry knowledge. The SVP of sales likely has great instincts around your buyer context, especially from an executive's strategic perspective. He has great instincts about the optimal go-to-market strategy, sales methodology, value proposition, and so forth that will work for the buyer you are targeting. Similar to his Rolodex, his industry experience is an easy attribute to assess but is overrated in the sales hiring process.
Here are the cons of the SVP of sales:
Hesitancy to roll up his sleeves. I have seen so many start-ups hire someone like the SVP of sales, and upon arriving, his first question is, “Where is my assistant?” The SVP of sales has spent the last decade learning to delegate. Unwinding these instincts and asking him to roll up his sleeves will be no small feat.
Lack of recent front line experience. The SVP of sales probably hasn't directly sold a deal in years, maybe even a decade. Your first hire needs to be out in the trenches, talking directly to potential customers as often as possible.
Low pace. I fear the SVP of sales will struggle to adjust to the high-energy, cut-corners pace required in an early-stage start-up environment.
The #1 salesperson (candidate 2) is a step up from the SVP of sales but is not advisable in my opinion. The only situation in which I like the #1 salesperson is one in which the founder/CEO of the company has a sales management background and is willing to invest the time to properly coach this hire. In this case, the #1 salesperson can succeed.
Here are the pros of the #1 salesperson:
Industry knowledge. Similar to the SVP of sales, the #1 salesperson really knows the buyer you are targeting. The slight difference here is the #1 salesperson's knowledge of the buyer will be much more relevant to the front line. The #1 salesperson will have great instincts around how to connect with the buyer, how to speak the buyer's language, how to find the buyer's current priorities, and so forth.
World-class sales fundamentals. The #1 salesperson is a true salesman. Anyone who achieves top ranking at a large company can be expected to bring a lot of natural sales abilities, a strong work ethic, and a competitive spirit.
Here are the cons of the #1 salesperson:
Ability to succeed in an unstructured environment. When the #1 salesperson joined his current employer, he sat through weeks of training. He was presented with a pitch deck. He was educated on the sales methodology. He was armed with sales tools to streamline his processes. At a start-up, the first sales hire will need to develop all of these resources from scratch. I am not sure the #1 salesperson is equipped to do so.
Lacks leadership experience. Of the candidates, the #1 salesperson is the only one with no leadership experience. Your ideal first sales hire should lead to many more hires. It would be nice if he had the abilities to both execute the first phase of customer acquisition and build out the initial team.
I like the sales manager (candidate 4). She's not the ideal fit for the role but I like her.
Here are the pros of the sales manager:
Willingness to roll up her sleeves. Unlike the SVP of sales, she was recently selling on the front line and should not have a problem getting her hands dirty again.
Leadership experience. Unlike the #1 salesperson, she has some leadership experience as a relatively new manager. She likely can build out your sales methodology, hire successfully, implement the CRM tools, and evolve into a coach of an eight-plus person team. You should give her the opportunity to prove herself and grow into a sales director or VP. In doing so, you are providing her with a unique opportunity to fast-track her career. Her motivation and dedication to the job will be off the charts.
Proven track record. Her recent promotion was likely driven by her great success as an individual contributor and her potential for strong leadership.
Here are the cons of the sales manager:
Industry knowledge. She has not sold to your buyer. As I mentioned in the assessment for the SVP of sales, I am far less worried about this attribute than most people are. However, unlike the SVP of sales and the #1 salesperson, she will experience a learning curve.
Entrepreneurial instinct. This attribute was also a weakness of the first two candidates, but I want to highlight it here. Entrepreneurial instinct is what really differentiates the entrepreneur from the sales manager. The sales manager will likely ask you, the CEO, about your vision for the company value proposition and the types of buyers you are targeting. She may engage a bunch of these buyers, pitch your vision, and fail to get traction. Since you might not have product/market fit figured out yet, she will be left scratching her head. She needs to learn your target customer's biggest challenges without you having to tell her. She needs to understand how your target customer is thinking about solving these challenges. She needs to take the pulse of your target customer's honest response to your value proposition. After running these calls, she needs the innovative ability to see the patterns, iterate on the target customer, iterate on the value proposition, and accelerate the company toward product/market fit.
The entrepreneur (candidate 3) is my most desirable candidate.
Here are the pros of the entrepreneur:
Entrepreneurial instinct. Of all the candidates on the table, the entrepreneur is most likely to accelerate the company toward the right product/market fit. In fact, this aspect of her role will probably be the element about which she is most passionate. Given how important that piece is, her skills here are tremendously valuable. She will dig in with prospective customers to learn about their challenges, opportunities, perspectives, and priorities. She likely has the entrepreneurial instinct to step back from these conversations and help the CEO and the product team to identify the patterns and understand where to pivot.
Sales fundamentals. I also love that she has received formal sales training and gained experience at a large organization. These fundamentals should enable her to engineer the appropriate sales methodology and structure it for scale.
Leadership potential. Her entrepreneurial experience has likely equipped her with the experience and ability to lead.
Here are the cons of the entrepreneur:
Sales management fundamentals. She has probably never hired or managed a salesperson before. Despite this weakness, I would still bet on her ability to get me through the product/market fit phase of the business. Once that's established, I can monitor her reasonably closely as she begins to hire and develop salespeople.
Industry knowledge. Like the sales manager, she does not have experience with your target buyer and will need to scale the learning curve.
If you are in the process of thinking about your first sales hire, hopefully this exercise helped to frame the decision.