WolfofSiliconValley

Sales Enablement Manager

Top 3 indiciators that a start-up is falling

What are the top 3 indicators that show a start-up is failing?

Context: 11-year old Saas start-up with ~50 employees dominated the market for the last 5 years with notable clients. They're trying to pivot their product and market identity based on customer feedback and API contingency.

A couple of months ago, they raised a Series A and went on a hiring spree. During that time period, they've also fired half of the sales team due to "performance" but 0% of reps have attained quota in the last 3 quarters.

Is this salvageable or is it time to jump ship?

🏹 War Room

📠 Startup

57 comments

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butwhy

Politicker

Solutions Engineer

- They start cutting random small expenses. Lunches, snacks, office supplies
- They raise quota sharply
- Whole teams miss quota by more than 50% and no one makes a big deal out of it

To me, I have an excellent gut. If something doesn't smell right, it's time to look around, and gtfo. Trust your gut.

WolfofSiliconValley

Catalyst

Sales Enablement Manager

Gut feeling is to dip before things get worse

butwhy

Politicker

Solutions Engineer

"0% of reps have attained quota in the last 3 quarters."

This alone is a HUGE red flag - run away, quietly.

SaaSguy

Tycoon

Account Executive

uh oh, the first and last points are happening at my org...

Mickey

Personal Narrative

This is true. When more than two leaders in a mid size company (even if they are mid level) leave, it's time to go. Also, if people are leaving, but the company isn't addressing it, it's often times because they are nervous about a mass exit. Don't be the last guy standing.

Kosta_Konfucius

Politicker

Sales Rep

Doesnt matter what stage a company is at, once leadership starts leaving that is a big red flag

WolfofSiliconValley

Catalyst

Sales Enablement Manager

Leadership hasn’t left….yet. I bet it’s coming though

Mickey

Personal Narrative

If your thinking that, start looking now. You are probably right. Trust your gut.

SADNESSLieutenant

Politicker

Officer of ♥️

They exist for 11 years and are still at 50 employees.

Don't worry I'm here all night.

Lack of growth is the key indicator IMO

bandabanda

Tycoon

Senior AE Mid Market

Was going to say the same thing been around that long and they are just now raising a Series A? And at 50 employees?

WolfofSiliconValley

Catalyst

Sales Enablement Manager

You’re telling me! I think they like to stay small

WolfofSiliconValley

Catalyst

Sales Enablement Manager

They’ve gone through a similar growth period before. This job was good enough alone on the base salary for what I was currently making haha.

SADNESSLieutenant

Politicker

Officer of ♥️

I've had the same exact experience before. the Executives heads were so far up their own ass they could see sunlight coming out their mouths. They were deaf to common sense.

SADNESSLieutenant

Politicker

Officer of ♥️

job paid 80k base for an SDR role though so I said fuck it and stayed longer than I should have. but ultimately it burnt me out and I took a year hiatus

WolfofSiliconValley

Catalyst

Sales Enablement Manager

What was your tipping point? I’ve only been here 6.5 months.

SADNESSLieutenant

Politicker

Officer of ♥️

I was only there 3 months lol.

When the CMO (who was my direct superior) started hounding me for why meetings werent being booked. I'd tell him the huge gaps in workflow/ICP/Enablement - (For example we desperately needed LeanData) We were stepping all over each other and had terrible contact info so alot of time was wasted.

We met with LeanData and this dumbass just goes on to tell the guy how we have everything handled and taken care of when we literally have everything up in flames and would of seen huge ROI for the solution.

At that moment I knew it was a sinking ship.

2 years later that company is still at the same headcount and revenue per year. same size sales team. only a matter of time before it implodes.

WolfofSiliconValley

Catalyst

Sales Enablement Manager

That’s wild lol. We have a ton of unnecessary expenses that should “help” us sell, but the clear issue is with the product, messaging, market fit, pricing, etc.

SADNESSLieutenant

Politicker

Officer of ♥️

messaging is kinda your responsibility to develop and improve. Pricing and product and market fit are totally out of hand. I'd suggest moving

SADNESSLieutenant

Politicker

Officer of ♥️

It was wild asf.

PhlipOut

Politicker

Account Executive

I was going to say.. 11y/o with 50 employees is not a startup.

it's an SMB company in their niche.
if now they are pivoting it might go poorly

Mickey

Personal Narrative

I'd question what expertise they have in play to "pivot".

CuriousFox

WR Officer

🦊

Where's @braintankhe's good at these.

braintank

Politicker

Enterprise Account Executive

Pivoting is usually a bad sign.

WolfofSiliconValley

Catalyst

Sales Enablement Manager

It’s even more of a bad sign when they tell you to not say “pivot” and “transition”

Sunbunny31

Politicker

Sr Sales Executive 🐰

Yep, takeaways start to happen - you lose perks.

They may mention belt-tightening and you may see more PIPs.

Early indicator is if your company is one of many startups vying for the same market. Not all will succeed. How does your company measure up? If you're lower in the adoption curve, you should be looking already.

jefe

Arsonist

🍁

Some solid points here, especially from @butwhy.

Never hurts to put some feelers out.

WolfofSiliconValley

Catalyst

Sales Enablement Manager

Definitely in the process of putting feelers out. This job almost makes me reconsider if I should stay in sales. Sales is natural and low hanging fruit for me, but I also have strong skill sets/interests in marketing and ops.

jefe

Arsonist

🍁

There’s definitely some appeal there… like no quota hanging over your head.

I couldn’t take the pay cut though

WolfofSiliconValley

Catalyst

Sales Enablement Manager

I’m young enough in my career where the pay cut wouldn’t hurt me. I may even get a pay raise. Quota doesn’t necessarily bother. I’m a recent former student-athlete with a decent resume. I just struggle with showing value based on my limited “years” of experience. I’ve worked at two start ups and worn many hats outside of sales. Start-up years are like dog years haha.

jefe

Arsonist

🍁

Then it sounds like you've got some thinkin' to do!

Coastal_crusher

Politicker

Sales Director

Small luxury’s go away, an exec leaves or layoffs happen

WolfofSiliconValley

Catalyst

Sales Enablement Manager

That hasn’t happened quite yet

WolfofSiliconValley

Catalyst

Sales Enablement Manager

Updated the post for more context @butwhy @Sunbunny31

Sunbunny31

Politicker

Sr Sales Executive 🐰

Based on the update, it sure doesn't hurt to look around starting now (if you're not already). If you find something better, then you can decide, but I suspect you'd be better served leaving.

Meantime, do what we always collectively recommend: don't tell your current employer, set your LI to "open to opportunities" and start getting that resume out there, while you work your current job.

Sunbunny31

Politicker

Sr Sales Executive 🐰

11 years is a very long time to still be a start up, too. :)

WolfofSiliconValley

Catalyst

Sales Enablement Manager

You’re not kidding!

CSmith

@WolfofSiliconValleyBy the comments you've made in response to what others have said I think you know that the ship is sinking and you should jump on a life boat before those start to sink also.

By what you've described, bad decisions by the executives have resulted in the current situation and the sales team ended up being the ones paying for it. I've been a part of start-ups where the execs set quotas for the sales reps based on nothing other than a number they pulled out of the sky or read about in a book and it did not go well.

Bottom line for execs with start-ups, if you have a new unproven solution that you're bringing to market that means you have no data to base a quota on to hold the reps to. Yes, set loose goals as you get ramped up but be smart about how you hold your reps accountable or you won't have any reps at all.

IMO, RUN!
Good luck!

Diablo

Politicker

Sr. AE

I also noticed lots of org level structural changes, change in the company goal every month.

WolfofSiliconValley

Catalyst

Sales Enablement Manager

Yup! I’m seeing that

Chonkonaut

Valued Contributor

CSAM of Luke Warm Chowder

- they stop paying focus and mind to customer's issues.
- they treat customers like open wallets both internally and externally.
- they keep changing the comp plan every quarter.

ventox35

Politicker

Sales Leader

1. obvious financial woes, yet hiring executives to "clean house"
2. the day 1 employees start to jump ship
3. constantly changing strategies, never ending quest for the silver bullet

BlueJays2591

Politicker

Federal Business Dev Director

0% in 3 quarters is enough of a sign to jump. I hate when companies get funding and then grow too fast and have to cut people.

ThatNewAE

Big Shot

Account Executive - Mid enterprise

- The sales teams are not hitting their quotas
- Cut down on off-sites / team outings or stuff that is not CRUCIAL for running a company
- Constant comp plan changes and drifts, no clear SPIFFs.

HeyJude

Art Director

- Poor communication from upper management.
- Cutting back on expenses.
- Management starts jumping ship.

Arzola

Valued Contributor

Business administration

If no one complied but they still fired and gave as an excuse that it was the performance I would say, GREAT RED FLAG DETECTED, RUN!!!

dadasaurus

Opinionated

Enterprise Account Executive

Some thumbnails I always look at are a good measure, like revenue per employee. 200k is a company that is solid. If the revenue per employee is growing then that's a great sign and they should be adding headcount = growth.

I don't understand the "pivot" of product and market identity - are they changing the name or branding or marketplace focus or both? Based on customer feed back too? That must be some pretty negative feedback. In the end, if they are still doing what they're doing and developing/ADDING a new product then OK, that warrants going out and seeking funding if you don't have the money to do it organically after 11 years (that in itself sounds strange...). But if they are just rebranding and changing the marketplace, then that reeks and I can tell you that VC money is super tight now and getting tighter and there isn't a single one that would touch that with a 10 foot pole. How they got any VC to fund that crap makes zero sense and if they really did get the funding its only a matter of time before their investors step in and start putting pressure on them. Sounds to me like that seeking funding story and pivot nonsense is just an internal line they are telling employees, and rest assured that kind of thing leaks out very, very fast to the market which will hurt sales even more.

I have to concur with everyone else on this one... its time to look elsewhere. Added all up together the whole thing reeks BAD, and I'm guessing sales are seriously tanking and only the few at the top know that. By the time it goes very visibly south it will be like rats running off a sinking ship. Its a crappy time to be looking for work right now too, so I'd start looking now since it will take you longer to find the right new home. In the mean time, just play the game and lead on like you are a lifer.

WolfofSiliconValley

Catalyst

Sales Enablement Manager

Lots of things to consider here. Lay offs haven’t started yet. The company is still hiring which is confusing. It’s definitely make or break time

SADSAAS

Valued Contributor

Account Executive

Agree with most of the comments here. Having worked at a few start-ups, typically stagnant growth is a sign of failing.

If the company was at 50 employees 5 years ago and is still at the same headcount - not a good sign...

TechnoSeal

SDR

Are you sure we don't work for the same company? This just happened to me and my whole team was cut. Fortune 500 clients. Massive product issues and AE's kept major accounts hanging on by a thread. Sales cycle was insanely long. 3-18 months. Leadership seemed to only listen to investors that the product would "sell itself" and were totally disconnected from reality. We grew 60% in 2022 but they wanted 100%. Major mismanagement of technical partners that were main sources of revenue in the past. RUN RUN RUN RUN RUN

WolfofSiliconValley

Catalyst

Sales Enablement Manager

That all sounds erely similar

Closingkitty

Old School Bravo

Account Executive

-decreased marketing budget
-layoffs
-ARR targets decrease
-budgets cut

Maximas

Tycoon

Senior Sales Executive

Jump ship I would say.

ccm424

Valued Contributor

Head Of Sales @HumanticAI

I would definitely start the search

jak2323

VP of Sales

the word "pivot" is an ominous sign. Extremely rare that a company can actually pivot. There are loads of books on this.

sav0626

Executive Account Manager

raise quotas
changes in job roles or giving employees (too many hats)
revolving door (no one wants to stay)

Mickey

Personal Narrative

The question is why was the performance poor?

Do you think that the reps that left were working hard AND had the right skills?

If you aren't sure, then the new VC's are cleaning house and don't think much of the staff.

If you think that they really do have the skills and work ethic (putting aside any bias), then the next round of new hires are going to fail as well. If this is the case get out now.

AnchorPoint

Politicker

Business Coach

so what did you do?

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