Scaling Sales
When is Your Startup Ready to Hire a Sales Leader? (And Who Should it Be?)
By Dean Sperry, Practitioner, Accelerate Innovation, in conversation with Donny Dye, Founder of Quota NYC.
As a Founder CEO, you quickly realize you’re walking a lonely road when it comes to executing your company’s vision. You’ve got the highest personal investment, a fact that often leaves CEOs in the salesperson role long past the ideal transition moment.
Of course, in the beginning, there is simply no one else equipped for the job. The CEO has to be out there getting their hands dirty and listening to their customer. If they aren’t, they might miss the mark and fall prey to the Traction Gap, the Go-To-Market phase of company building between Initial Product Release (IPR) and Minimum Viable Traction (MVT), where most startups fail. [i]
No one besides the CEO has the authority to change the course of the company in response to feedback. At this stage, it is, in fact, a mistake to delegate the role.
In speaking with Donny Dye, Founder of Quota NYC, we agreed it’s during the product discovery phase that a startup needs its CEO adjusting the offering to match identified customer needs. The CEO is Lead Explorer on this expedition and they need both courage and humility to succeed.
EARLY STAGE COMPANIES DEPEND ON CEO-DRIVEN SALES
That humility is the openness to hear truth and pivot when required. You can’t outsource either of these qualities, which come with a CEO at the helm of sales during the early phase of the traction gap.
A CEO who is speaking to potential customers has the ability to alter the pitch, change product specs, and ensure the most viable vertical available is claimed. They have the best insight into these pivots or otherwise the honed skill of listening and using outside insights to their power to pivot successfully.
Once a company has locked in on its market and is growing, the CEO quickly becomes too busy to handle the sales efforts single-handedly. But this moment also creates a risk. How does the founder replace him or herself without sacrificing the momentum they have worked so hard to create?
Hiring a company’s first sales team member is a phase that challenges many CEOs. They are usually able to recognize they have a capacity problem, but aren’t sure exactly how to navigate this transition.
The transition requires preparation, expertise, a keen sense of timing, and most importantly, the introduction of a new key team member.
CLASSIC SALES TRANSITION PITFALLS
PITFALL 1: CEO anticipates market proof too soon
In the early days, it is common for a company to offer a product for free or at a discount, to secure customers. This cannot be viewed as validation of your sales cycle or a scalable product. Market proof only comes with sustainable payment of the full market price.
PITFALL 2: CEO steps out of sales seat too early
When a CEO steps out of the sales seat too early, they run the risk of not understanding the real reasons why purchases are being made. This pitfall will lead to optimistic projections and sales hires that miss expectations. Sure, some clients may like the product, but has the CEO really found a market where the company is a necessity? Even if they’ve managed to sell at full price a few times, the reasons behind those purchases could be unique and not common enough to build an expanded sales effort.
PITFALL 3: CEO expects salesperson to find a market
A sales team is not meant to identify a target market or build a sales process. They’re hired to execute within a sales strategy at a high level. A CEO must have already identified the market, the process, and a set of targets for their Minimum Viable Product to start collecting real revenue, proving repeatability of the sales process.
A sales member should be hired to accelerate this established trend, not to generate it.
HIRING YOUR FIRST SALES LEAD
Now, say that the above boxes are checked and the major pitfalls have been avoided. The CEO has made enough sales to confirm their market and they are ready to hire a sales team that will continue accelerating this specific strategy. It’s time to start developing what Donny Dye calls the “Grace Notes.”
The Grace Notes are a set of key themes that are presented in every pitch — whether the CEO or a sales rep has the conversation. Grace Notes are the common points of impact built from and informed by the CEO selling direct and the resulting feedback loop, which in turn informs the sales process.
Once these items are in place, it is time to look at hiring a sales team member. The first sales hire is typically an Account Executive. This is someone who can run the gauntlet of your new sales strategy as a representative of the company, not the highest executive. In many cases hiring two AEs can validate a company’s sales strategy even faster.
There are three areas of strength that most sales leaders exhibit. Many will have a skill set in one or two of these skill sets.
1. The Rockstar
This leader emerged as a top performer on the sales team and is the most comfortable selling and closing business.
2. The Manager
Meant for the defined product stage when the infrastructure is already built. The Sales Manager is able to empower their team and maintain the hard lines around process (API, CRM, able to meet minimum or not, etc.)
3. The Strategist
This sales leader builds structures with the goal of handing them off to a Manager sales leader who can then take off and operate within them. In most cases, you will not need a strategist long term, but they are critical for setting the company up for success.
The Strategist should be your first hire: they interpret the feedback while building the necessary infrastructure around the real-time interactions of expanded sales conversations.
CREATING YOUR FIRST SALES TEAM
Who is on the sales team matters. As does the time when they join. There is no point in having a Sales Manager if you have not yet developed a sales strategy. Similarly, a Rockstar isn’t going to help amass a team of sales wizards.
If you hire your Rockstar too early, they will cause friction with an evolving product. If you hire a Manager with a clear process, they’ll likely spend the first six months looking around for something to manage and struggle with the ambiguity.
This is why a company’s first sales leader must be the Sales Strategist. They will develop a process-based system for the primed product and focus efforts at the market level. Sales Strategists develop the sales infrastructure and strategies that will outline your value story and strengthen your Grace Notes.
Bringing on a Sales Strategist right when the CEO is ready to step out of the sales leader role allows for fresh eyes to hone an accelerating business. Then, you hire your Sales Manager who can execute and uphold the strategies which have been built by the strategist. Alternatively, hiring multiple sellers or AEs who can compete within the model the strategist has built further increases sales growth trends.
AS CEO, WHERE TO LOOK NEXT
Once a CEO’s sales team is firmly in place, the next phase must begin. This is where the CEO’s ambidexterity is demanded. As you’re establishing repeatability and discipline within one market, you must also be back in that same, early product-discovery mode, waiting for the next market opportunity.
It’s easy to fall into the lull of a targeted market, where strong sales are happening. But the point of building a sales team is to be allowed, as a CEO, to look back outside your original ICP to other potential verticals.
This is why CEOs should constantly be in a state of sense and respond, able to paint the train while it’s moving.
This is another part of the job where the CEO role can feel isolating. They must always be looking at the bigger picture, maintaining a broad view of their company and its future. Knowing how to hand off responsibilities once traction is achieved in key market segments in an essential success factor for any CEO.
It is also essential to recognize that some roles that you hire for are temporal.
Key transition moments require key transition players.
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To learn more about Accelerate Innovation, contact Jacob Sandler at jacob@accelerateinnovation.com to set up an appointment, or follow them on LinkedIn and Twitter.