TennisandSales

Head Of Sales

Acclaimed Answer

another thing to consider when looking at BIG v small companies

so alot of ppl are trying to decide if they want to try and work for a start up or big company.

we all have brought up comp plans and how they can be different based on the size of the company.

One thing that I just wanted to point out is that if you are looking at a small / start up company make sure you understand how the quota works.

If the recruiter tells you the quota is $1MM make sure you ask if that is based on TCV (Total Contract Value) ARR, (annual reoccurring rev.) or Recognized Revenue.

If they tell you its based off of recognized rev that can mean a few things:

you may not get paid until the company gets paid (boo!)
Deals in the second half of the year are worth less than ones in the start of the year.

Ex:

You close a deal that is worth $500K over 12 months.

If you close that in Jan. And your company bills in Feb. then the company gets $458K and $458K goes towards quota. (Not $500K)

BUT

If you close that same Deal in Sept. and they bill in Oct, then the company gets $125K and only $125k goes towards quota.

NOW, there are of course nuances here and its not the same in every company but I just wanted to point this out to make sure everyone asks the RIGHT questions when interviewing with companies.

Good luck out there savages.

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TheIncarceration

Politicker

3

SDR Manager

Really awesome insight here! Book marked this right away

Kosta_Konfucius

Politicker

3

Sales Rep

First time hearing about Recognized Rev, thank for sharing. So in your example, would the difference of the 500k deal be award in the next FY?

TennisandSales

Politicker

2

Head Of Sales

depending on how the comp plan is set up, but yes.

butwhy

Politicker

2

Solutions Engineer

Series C-E it is more common to only get a percentage of the rest of the Rev in that year since they are moving to hunter farmer and then AE only gets upsells the fiscal years after. Which is a bitch since that phase of startup also is usually pushing more multi-year deals so they might give an additional SPIFF.

Kosta_Konfucius

Politicker

1

Sales Rep

I would for sure hope so, or why would anyone close anything in Dec for 1/12 the value

butwhy

Politicker

1

Solutions Engineer

Quota fulfillment in general because startups reorg in Jan.

unclespacejam

Politicker

2

ur dad’s brother

My gig just switched to recognized rev. I’m my experience, they will roll over unrecognized rev to the next year to continue commission payouts. Annoying to start at zero here and have my rev amortized over 12 months, but long term it allows me to build up a significant base of consistent payout each month. It’ll pay off long term.

Ultimately, if you believe in the product and have the necessary support then these plans aren’t so bad.

Caveat: if they don’t roll over into the next year, I would run in the opposite direction.

TennisandSales

Politicker

1

Head Of Sales

yep super key to know.

so what you are mentioning is even worse (in my mind). where if they pay monthly, you get commission monthly.

If its going to be on recognized rev. i would still like to be paid upfront.

so if i close a deal in the last month of Q2, the company will realize 6 months rev on that deal, I would expect to get paid on that (wether or not they actually pay, since that is NOT my job)

ive had it where i get paid monthly if the customer pays monthly. it seems like a cool thing when you think about the consistency you can build up. BUT not every customer pays, and guess who has to track all that shit?? YOU! its a HUGE pain.

unclespacejam

Politicker

0

ur dad’s brother

God damn right it’s a huge pain. But for right now I’ve gotta stick with it. I own 60% of our rev so it will start to pay off in about 4-5 months.

Would love to be paid on sig but we’re too small to do that/ my mgmt won’t do it

punishedlad

Tycoon

0

Business Development Team Lead

Same, I've never heard of it before. Curious, does the amount that gets rolled over into the following year for billing count toward your quota for that year?

Sunbunny31

Politicker

2

Sr Sales Executive 🐰

Absolutely ask about how deals are weighted and paid out. It's better to understand that up front than get a potentially nasty surprise downroad.

CuriousFox

WR Officer

2

🦊

Shady companies love to pull that trick.

detectivegibbles

Politicker

2

Sales Director

This is so critical. Having been at two startups now, I still had trouble understanding quota and comp.

Hammer the hiring people with these questions until you understand. Frankly, I'd be worried about the potential performance of someone who didn't ask these questions.

Thanks for sharing @TennisandSales

TennisandSales

Politicker

1

Head Of Sales

yeah early in my career i didnt want to ask too many questions because i didnt want to seem annoying....now ill ALWAYS ask these questions because its my money and performance that is effected.

ThatNewAE

Big Shot

1

Account Executive - Mid enterprise

Great insights, Tennis ! Loved the take - usually there's so much debate around what company to go to.
This helps, thanks! :)

GDO

Politicker

1

BDM

"

If the recruiter tells you the quota is $1MM make sure you ask if that is based on TCV (Total Contract Value) ARR, (annual reoccurring rev.) or Recognized Revenue."

This is so key!

Justatitle

Big Shot

1

Account Executive

Also, understand the clawback policy and the policy in case of your termination from the company. IE, will you receive your commission if laid off, let go, fired.

TennisandSales

Politicker

2

Head Of Sales

YESSS! when i was in insurance, understanding this was sooo important because ppl canceled policies all the time and you had to know what you needed to do to keep the money you made

Diablo

Politicker

0

Sr. AE

Insightful 💡

antiASKHOLE

Tycoon

0

Bravado's Resident Asshole

I would jump ship so fast if I heard this.

fcmf

Valued Contributor

0

RSM

Great explanation, will keep this close

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