Matthew Tanner

RVP Enterprise Sales at EdCast

Thoughts on this comp plan?

Hey there - looking for a bit of feedback on a comp plan for an offer I've received.

Context:

Series A startup. 5M current revenue. New category-ish. No SDRs in place. Hiring 3 sales reps in US and just entering here. Enterprise SaaS in HR tech.

Salary 130k. Quota 1.588M. up to 100% @ 10%, 100-125% @ 13%, 125-150% @ 15%, >150% @ 18%>.

Current ASP is 241k, but deals could range from 50k-1m

OTE: 289K. No ramp period, quota for '23 is just prorated based on time left in year. Cycle is 6-9+ months.

Have my own initial thoughts, but curious to hear the groups take.

💰 Compensation

🤝 Interviewing/Offer

27 comments

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braintank

Politicker

Enterprise Account Executive

Seems like a really high quota for a company just entering the market.

Also doing that without SDRs is a grind.

RVP Enterprise Sales

TRUTH

CRAG112

Valued Contributor

Account Executive

Welcome to one of the most competitive verticals ever.
You will be going against ADP, Pay(cor I think?) and a host of dozens of others just like you.

oldcloser

Arsonist

💀

Paylocity, Paychex… the list goes on. Tough place to pitch a tent unless the solution is something freakishly great.

FinanceEngineer

Politicker

Sr Director, sales and partnerships

Need a ramp or insights into the pipe/sales cycle. Assuming $240k average, that is roughly 7 deals. Can you do that?
If yes, should be good to go. If not, push back.

RVP Enterprise Sales

Personally I doubt anyone is doing 7 deals a year there...or will

This is likely a bridge role given the more I learn about them. Been otb for too long now and need to get $$ in.

FinanceEngineer

Politicker

Sr Director, sales and partnerships

Then there is your answer. Push for a ramp, and sacrifice on the higher end if you have to as you are viewing it as a bridge.

CRAG112

Valued Contributor

Account Executive

Don't forget there are people working this space that go out and see people physically every single day, and they have to hustle the shit out of every day to make their numbers and be successful.

Whatever someone says you need to do to be successful in this role, you'd better ^ it by at least 3.

From there you can make some more accurate math of sales projections across the next 5 years.

SaaSsy

Politicker

Quota seems very high - what were total sales $ last year and who was selling? So what size company is your target (are you competing against Workday/UKG or the smaller players like Paylocity/Rippling)? I sold into that space briefly and as @CRAG112said, it’s a brutal competitive landscape so unless your product is somehow game changing, I would be fighting for a way lower quota and get at least 4 months of ramp to start.

RVP Enterprise Sales

Based on the math I have they sold about $3M in 2021 and about $2M in 2022. Sounds like this year has been rough with maybe a (yes, one) deal.

not competing in payroll. it's HR tech in the skills and workforce intelligence space. noone has really captured this space yet as it's still forming, though there are some companies who have pivoted in and around it for awhile (phenom, eightfold, gloat, etc.)

SoccerandSales

Big Shot

Account Executive

Saturated space from what I hear from friends in HR realm. Would be difficult to get number without some top of funnel help. Pay looks good even if you are hitting 50-75%

CuriousFox

WR Officer

🦊

Glad to see we have friends all over to help us out 😎

Pachacuti

Politicker

They call me Daddy, Sales Daddy

The comp plan seems good, but I wonder how feasible it will be To hit it. “23 is definitely a build time. It will take 4-6 months to build pipeline. So you are working for “24.

So then it’s a question of “will it sell?” And does the company have patience to give you 6+months of build time before you sell anything.

RVP Enterprise Sales

Thanks for the feedback - we won't be up against adp et al. Space is more specifically workforce intelligence and skills (closest competitors are eightfold, gloat, beamery, phenom)

I felt quota was high as well and lack of ramp and SDR + quota:OTE ratio = 5.5 just seems like the team may not really know how to set realistic targets.

That's my fear - unrealistic targets to grind up and use contacts vs stated goal of hiring someone like me to crush it and then take over US leadership

Revenue_Rambo

Politicker

Director, Revenue Enablement

The plan looks good from an overall structure standpoint.
Total comp, escalators, %s are all on par.

Here is where it gets squishy for me.
-- ASP for that quota translates to about 6 deals. (25-33% logo growth)
-- Hiring 3 reps means each needs to close 2 deals between now and the end of the year.
-- Sales cycle being 6-9 months means you've got a 50/50 shot at best to make that number, less if they haven't even hired the sales reps.

Questions I'd need to ask to understand if '23 is even remotely realistic
1) Who sold the base of the existing deals?
2) How many deals have closed so far this year?
3) What is the ASP of those deals?
4) What is the velocity of each of those deals?

RVP Enterprise Sales

great questions - and all of which I intend to ask carefully. looks like i'll be treating this as a bridge role based on some of my further diligence. at this point just need some decent income. just chatted w former rep and all my suspicions and red flags have been confirmed.

Revenue_Rambo

Politicker

Director, Revenue Enablement

Good luck in your deep dive. Series A can be a real crap shoot.
If they don't have any sales reps yet, you gotta wonder what the founders traded to get those first deals signed.

RVP Enterprise Sales

The whole story is even more concerning...

Hired a couple folks in AUS to get the thing off the ground (late '20) and transition from founder led. had success in 2021.

2022 hired a team in the US to start the penetration effort. VP and a handful of reps. Every single one of those is gone. I know why at a high level but fundamentally 2H '22 did not go as planned and they restructured the whole biz in april. they are now trying again with ICs in US, being more thoughtful on who they pick.

the goals, expectations, etc. are not aligned with reality and the board is applying a lot of pressure which doesn't help either.

Revenue_Rambo

Politicker

Director, Revenue Enablement

The wheels fell off most businesses end of '22. Sounds like the board panicked, and didn't even think about the momentum the lost by cutting it all and having nothing for 4 months.

You'd be wise to look elsewhere, but if you decide to stay on the path see if they'll do 1 thing.

Convert 1 of those 3 AE reqs into 2 SDRs. To even begin to have a chance you need bodies actively working to fill the top of the funnel. This would also let your AEs more easily transition from filling pipeline to running deals without sacrificing lead sourcing.

CPTAmerica

Opinionated

President/CRO

so your minimum to earn comp is increasing total company revenue by 30%?? How long did it take them to get to $5M? Who sold those deals? How many total customers?

RVP Enterprise Sales

Yea, the expectations are misaligned with reality. If the 3 hires they make were to hit the numbers in '23 (which is not at all realistic/likely) they would increase total revenue by 50%.

it's taken them 3+ years to get to $5M. those deals were sold by founder + first hire sales from what I can gather.

the long and short of it is, this thing is covered in red flags BUT I need to stop draining my bank account and get some $$ in. so this will be a bridge role which is disappointing, but almost every seller i've ever spoken to has at least one in their career. this will be my first in 15 years.

CPTAmerica

Opinionated

President/CRO

Yeah not unheard of to have over the top expectations at that stage. At least the base is descent. Is there a way for you to earn shares/equity?

Diablo

Politicker

Sr. AE

Decent salary but quota looks high. How many clients they have that are contributing to that 5M and how long the company is in the business.

Maximas

Tycoon

Senior Sales Executive

Believe SDR here is super essential,quota to me is insanely high TBH!

AnchorPoint

Politicker

Business Coach

What are you comparing it to? The best overall opportunity wins... whether that is where you are now or here is up to you. Do not make a decision simply based on money... that is usually always a loser.

JDialz

Politicker

Chief Operating Officer

$5MM annual revenue? That Rev/quota factor is tiny. That deal size spread is also ridiculous.

Whatever this company makes/provides, it sounds like the founder is incompetent.

Notmy1strodeo

Member

Ent AE

I'm in the space now and let me say it is HARD to sell anything to HR right now. Skills and skill hiring is a hot topic but still a nice to have not a need. Eightfold has done an ok just of selling upmarket and Phenom seems to be doing ok. But there are a bunch of new companies popping up every day.
While the comp looks good on paper, getting to the OTE in year one or two will not be likely. These deals take 9+ months. (I was told 6 months when I interviewed but that is not the case. We have a deal that is going on for over 1 1/2 year because everything has to line up perfectly before this tech is implemented.
The way comp plans are structured are good insights into expectations of the Board and Founder(s).
And no SDR, how's the marketing? Have they invested in leads or partnerships that will help?
Completely hear you on the bridge role, just hope a little of this insights help.

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Matthew Tanner

Thoughts on this comp plan?

27 comments

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