11 min read
Congrats! Your initial product’s gaining traction, you've personally closed a few deals, and the first customers aren’t churning immediately!
Maybe it’s time to start hiring a sales team?
This decision can feel like a difficult one: When is the right time? What is the right profile? Should I hire a VP Sales first, or just a couple of reps to get started? Sales teams are expensive and this is an important decision you can’t afford to get wrong.
*Deep breath*
In the famous words of Aaron Rodgers: R-E-L-A-X.
We got you.
Let's cut through the noise and break down the four key decisions you need to make.
Should I hire a sales team now?
Most founders make the mistake of building a sales team too early. You’ve got to eliminate a few layers of volatility and ambiguity before you task someone else with revenue. You need to validate that your Total Addressable Market is big enough to sell to — and that they’re willing to pay the price you’re asking for what you’re offering. If you haven’t been able to get that validation yourself, don’t expect anyone else to. Validate first, then Go to Market. There are 3 signs you are not ready to hire yet.
You're not ready if:
-
Your product or pricing is still in flux
If you are selling slightly different versions of the product to each customer, changing your pitch each time, or focusing on different value props — you aren’t ready. Sales teams are only effective if you give them an existing playbook of what is already working, repeatedly. Otherwise your sales team
Congrats! Your initial product’s gaining traction, you've personally closed a few deals, and the first customers aren’t churning immediately!
Maybe it’s time to start hiring a sales team?
This decision can feel like a difficult one: When is the right time? What is the right profile? Should I hire a VP Sales first, or just a couple of reps to get started? Sales teams are expensive and this is an important decision you can’t afford to get wrong.
*Deep breath*
In the famous words of Aaron Rodgers: R-E-L-A-X.
We got you.
Let's cut through the noise and break down the four key decisions you need to make.
Should I hire a sales team now?
Most founders make the mistake of building a sales team too early. You’ve got to eliminate a few layers of volatility and ambiguity before you task someone else with revenue. You need to validate that your Total Addressable Market is big enough to sell to — and that they’re willing to pay the price you’re asking for what you’re offering. If you haven’t been able to get that validation yourself, don’t expect anyone else to. Validate first, then Go to Market. There are 3 signs you are not ready to hire yet.
You're not ready if:
-
Your product or pricing is still in flux
If you are selling slightly different versions of the product to each customer, changing your pitch each time, or focusing on different value props — you aren’t ready. Sales teams are only effective if you give them an existing playbook of what is already working, repeatedly. Otherwise your sales team is going to exaggerate the problem of not having a repeatable sales process and start selling wildly divergent deals to each customer. That’s a recipe for disaster. Instead, wait until you can give the exact same pitch, with the same value props, highlighting the same features, at the same price point, to each customer and still close the deal. -
You can't articulate your Ideal Customer Profile
Closing deals with different stage, sector, or industry of clients may seem like a good thing. “We can sell to anyone!” But in reality, it’s a huge problem because each of these customer segments will have disparate needs, which will bloat your product roadmap and lead to a lack of repeatable sales motion. You have to narrow your focus to a specific wedge of the market. Example: “We sell to early stage (Series A — B) startups who have more than 50 employees and use Salesforce or Hubspot,” is 100x better than “We sell to sales teams.” Having a narrow ICP to hand off to your sales team is essential to ensuring you can build a reliable post-sales delivery mechanism, and keep the product roadmap from getting bloated. -
You don't have at least one referenceable customer
Sales teams lack the credibility that the Founder has. Everyone loves to buy from the brilliant CEO who built something from nothing. They are willing to take risks on an unproven product, buy features that aren’t built yet, etc. Your sales team needs proof points. Product marketing materials. Case studies. Or at the very least, one customer who is willing to get on the phone and convince another they should trust this company. Otherwise, you’ll lose a lot of deals at the finish line.
Once you’ve gotten these 3 things right, congratulations! You’re ready to start hiring for sales.
Hire Hunters, not Farmers
One of the hardest parts of interviewing sales reps is determining which profile of seller you are currently talking to. Every salesperson will try to convince you they are a “Hunter,” but in reality, the vast, vast majority of sellers are just Farmers. What’s the difference?
Hunter profile:
-
Creates their own pipeline
The vast majority of sales reps are unable to fill their own pipe. They rely on inbound leads, SDRs, and an existing brand to do the dirty work for them. Reality hits them hard in the face when they suddenly join an under-resourced startup like yours and have to actually, you know, cold call and prospect. Across half of a million Members on Bravado, we’ve seen that fewer than 10% of sellers can actually self-source deals. This is the biggest thing to filter on, and where the majority of hires go wrong. -
Creative / Flows like water
There is no established playbook for how to close the first 100 deals at a company. It changes week by week, company by company, deal by deal. There are reps who are capable of figuring out the path to least resistance, tweaking the pitch to increase velocity, identifying a new segment of market to go after that’s ripe for the picking. You need someone who can do these things vs. waiting for you to come up with all the answers. -
Obsessed with closing deals
No other way to put this: there are people who absolutely flat out refuse to lose. They take every deal personally. Every quota commands their full attention, and they are never, ever satisfied with just hitting it. They want to obliterate it and prove to you (and the world… perhaps themselves) they are the greatest salesperson alive. If your early sales reps don’t have a massive chip on their shoulder, they are never going to show you what’s truly possible. It’s your job to build a comp plan that unlocks this appetite (more on that later!), but this is an innate quality rarely found.
How do these characteristics compare against Farmers?
Farmer profile:
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Lost without enablement
Farmers are methodical and strategic in building long term relationships, but they get hung up easily when they hit obstacles early on. If your lead list is in a CSV with raw data and no easy button to click to filter for low-hanging fruit, a Farmer is going to have analysis paralysis and drown in the spreadsheets. -
Needs an instruction manual
Farmers are fine-tuners, not major pivoters. While your sales process is still in its infancy, a Farmer will need a lot of hand-holding. They’re the kind of people who ask permission instead of forgiveness. You need people who bust through walls and clean up later, not someone who lets a deal die while waiting for a green light. -
Uncomfortable with ambiguity
Until you have a neatly packaged product that’s everything your clients could dream of right out of the box, your sales team has to be comfortable answering questions with, “I’m not totally sure right now, but I can find out.” That’s surprisingly hard for Farmers — they want to make promises up front and feel confident the business can deliver on them. In the beginning, you need sales people to bring you the feedback and questions your ICP repeat most. That’s the feedback loop that tells you how to get better. That feedback loop sounds like doom and gloom business failure to Farmers. They like to sell boxes with clean edges and pretty bows.
When you’re interviewing, your questions have to hit just right so the candidate can’t fake the hustle. Farmers know what you want to hear, even if it isn’t 100% accurate. After all, they were Hunters once upon a time.
Getting this right by yourself is nearly impossible. That’s one of the reasons early stage companies trust Bravado to help them hire for sales. We’ve worked with over 1,000 Seed — Series B companies to find the Hunters they needed to scale revenue.
Interested in learning more? Book a call with Bravado.
Solo act or dynamic duo?
The "how many" question isn't just about headcount — it's strategic. Start with just one hire or two? There's no universal answer, but one option is markedly better than the other.
Starting with a solo act has its merits. It's focused. You get a concentrated learning and feedback loop, easier management, and clear accountability. It's also easier on the budget, which matters when you're watching every dollar.
But if things don’t work, you'll never truly know if it was the product, the market, or the rep.
In addition, sales reps are competitive. Hire 2 Hunters and tell them both “whoever outperforms in 6 months is getting promoted first” and you’ll get the productivity of 5 highly motivated reps.
This dynamic duo approach will accelerate your scaling. 2 hires means faster market penetration, diverse skill sets, and certainty that if they both fail, it was probably the product or market you got wrong. The downside is that you'll burn cash faster and add an extra layer of management / disputes to handle. But in almost every case, worth it.
Thus, we almost always recommend you start with 2 reps vs. just 1. The only exception is if you have cash limitations, in which case, you might just be better off continuing to sell yourself.
Quotas and compensation
Let's talk revenue, quotas, and cash money.
You can’t use conventional wisdom to build your Founding AE sales quota and compensation plan because Quotas are based on historical performance. There’s no repeatability in the business yet, so neither you nor the rep truly knows what kind of revenue they can generate in a quarter. The typical process for setting up a sales quota is to use what the sales team did last quarter / year as a benchmark. Because you don’t have the luxury of that data, it’s better to create a simple, flexible plan that rewards high performance without setting your reps up to fail.
Let’s start with the basics:
The Variable portion is dependent on what % of their Quota they hit. But again, you can’t set a Quota because you don’t have the benchmark. So, now what? Do not try to guess based on what you’ve closed as a Founder. Quota is SO important to sales professionals — you have to base it on reliable, relevant data. No data, no Quota. No way around it. But, you still have to somehow create a compensation plan that pushes your reps to close as many deals as possible, fast.
How do you do that?
Across 1,000+ Seed / Series A startups that we’ve helped transition from Founder-Led to Sales-Led, here’s the formula that is most successful:
Let’s talk about why this formula works so well.
Base Salary
The typical base salary for an early-stage AE depends on the segment of market you are selling into. Here’s a rough guide:
However, these numbers are typically only 50% of the total comp for an AE. They are also expecting to make an additional $70,000 — $175,000 (depending on the base) in Variable commission.
So, when hiring a Founding AE, you have to moderately overcompensate on Base Salary because the Variable component is murky.
Not only is the Variable component murky, but your Founding AE is going to be building just as much as they’re selling. We won’t get in the weeds here on how much time it takes to set up a new CRM, craft scripts, define deal stages, and manually prioritize leads. But, suffice it to say your first sales rep will spend a lot of time on non-revenue-generating activities so your next reps don’t have to. Go heavy on the Base Salary until your sellers are solely selling.
A good guidepost here is to use the following:
This is a fair way to compensate someone for taking the risk of pioneering the sales-led motion at your company, while still leaving room to pay them a lot more if they overdeliver. Hunters are commission obsessed and they know Founding AE’s do a lot of work that doesn’t stack commission. You’ve got no chance of convincing Hunters to be your first reps if you skimp out on Base Salary.
Variable
The variable comp for a seller at most SaaS companies ranges from 10-20% of TCV. 10% is more common for large enterprise contracts. 20% is more common for smaller, SMB agreements. TCV (Total Contract Value) incentivizes a seller to close a multi-year, more expensive, larger committed revenue contract instead of settling for a lower price or shorter term agreement.
Here, it’s best to again pay at the top end of the range. As an example, if your business model supports paying 15% of TCV, I’d suggest you pay your reps more in the beginning:
- 25% in the first 3 months of tenure
- 20% in the next 3 months
- 17.5% from months 6-9
- 15% after 9+ months
This type of sliding scale incentivizes a rep to close more deals, at higher TCV, as quickly as possible.
Note — this is a flat percentage. You aren’t setting a Quota and then paying them based on their percentage of Quota Attainment. You’re just giving them this percentage right off the top of every deal they close.
Once new revenue becomes consistent enough to find a benchmark, you can start setting Quotas. And when that time comes, you’ll likely need to start looking for a Sales Leader. You’ll want to call us first.
By the way, be transparent with candidates from the first conversation about comp. You should only be talking to SaaS sellers who are familiar with the mercurial nature of startups, but they’ll appreciate you letting them know where they’re starting, where they’re going, and the rationale behind how they’ll get there. The fastest way to lose great sales people is to give them any reason to suspect you’re fucking with their money.
And, if you’re talking to the right salesperson, be prepared to negotiate. The star hitters who are going to help you scale will show off their skills before you even hire them — no cheesy pen role-play required.
The bottom line: this is a million dollar decision
Nailing your first sales hire isn't just about filling a position — it's about catapulting your company's growth. If you make the wrong hire, quickly churn the right hire, or don’t properly incentivize growth, it’ll easily cost you half a year in burnt runway and missed revenue.
Find the right talent, hire them at the right time, and optimize their compensation for long-term success. You’ve got no business without revenue and you’ll get no revenue without a successful sales team.
We’ve helped over 1,000 companies get this right and we’ll give you a strategy session on the house when you’re ready to start looking.
Before you kick off the recruiting process, you need tactical guidance on how to identify, attract, and close a killer rep. We wrote the whole playbook: How to Hire a Rockstar AE. It will take you step-by-step through the interview process so you can weed out the Farmers and increase your win rate with the Hunters.
Once the offer is accepted, you’ve got Onboarding and Ramping to think about. These are two critical keys to success you’ve got to line up before the deal is done. To dive into those details, read our case study on Lumos in Revenue Recap: Founder-Led to Sales-Led.
We can’t overstate how crucial your first sales hire is. If you think you’re ready to take the leap, start with a free strategy session. There’s no such thing as too prepared when it’s your revenue on the line.
