What's the first thing most startup founders do when they start searching for their first sales hire?
They start by going to their network, their VCs, or even Google, usually to get advice on two big questions: “Who should my first hire be?” or “When should I make my first hire?”
The reality is, when you ask those kinds of open-ended questions, you're going to get a lot of wrong answers.
The only time you're going to get the right answers is if the person helping you approaches the advice with a strong understanding of your business and your skillset.
That means you should probably also skip the A16Z blogs, Sequoia articles, LinkedIn posts, and Twitter threads that share advice without knowing a single thing about your business.
So if you think your startup is ready to hire its first salesperson, here's how you should approach the process.
“If you read the A16Z or the Sequoia blog and then just make your assumptions from there, or even worse, you just read what a LinkedIn creator said or a talking head on Twitter, it could be really dangerous to just take that advice at face value before you really analyze who said it, where it's coming from, and how it aligns with where your company is at.”
- Chris Gannon, Founder of Captivate Talent
Start by assessing your current sales process and environment
Before you decide on the title or person you need to hire for your first salesperson, you should look at:
- What skills you and other founders have
- How successful is your current process is
- What you need the most help with
If you decide you do need to start building a sales team, you should be looking to hire a few months before you think you will need one.
Questions to ask before building a sales team
Do the founders have extensive sales experience?
If you or other founders have a sales background or are revenue-oriented, you might be able to spend more time in founder-led sales before jumping into a hire.
If you or other founders are more product-focused, it might be time to start looking for a revenue or sales leader sooner rather than later, especially in B2B sales.
Here are the big warning signs we recommend SaaS startups look for when deciding to transition from founder-led sales:
- Founders start losing sight of product growth
- Founders are losing critical deals or struggling to win potential customers because of their pitch
- Founders are finding it tough to keep up with deal flow because of capacity
"If you are starting to lose deals and maybe it's because you aren't as quick or you don't have as much capacity to get back or to run those demos or your days are just back to back on demos or trying to follow up and chase active leads, it's really important that you get that sales hire sooner rather than later because you don't want to lose critical deals."
- Chris Gannon, Founder of Captivate Talent
What type of salesperson do I need?
Before you start hiring, you need to think about what you're looking to get out of that first sales hire.
We see first-time SaaS sales hires coming in two buckets:
- Either you need a sales rep to come in and close customers immediately
- Or you need the first sales hire to come in and build a strong foundation
If you're having trouble deciding which one is right for you, here's what we recommend:
- For startups with 2-3 years of runway left, experienced salespeople who could come in, build a repeatable sales process, and scale, scale, scale
- For startups with <6 months, optimize for maybe a more junior salesperson that could get in and close deals right away
The best hire you can make, though, is someone who can do the job today and in the future—someone who can build up the foundation and be around to scale. This takes the middle route between the two types of candidates (leader vs individual contributor).
What support can you offer your first sales rep or leader?
When you make that first hire, they will most likely need technology and people to support them.
A good first hire will ask you about:
- What kind of systems do you have in place for the sales cycle
- What kind of technology are you using to support your sales cycle
- What kind of budget do I have to hire people to support the selling function
The less you have set up, the more you'll need to look for a hire who can come in and be the person to set things up.
They need real experience in building processes and implementing tools, not just using them at another company.
Because at the startup level, founders know that budget and technology mistakes are 10x-ed in impact.
Before you consider making a sales hire, you need to check off the following questions:
1. Do you have conviction in your ideal customer profile - If you're still in “spray and pray” mode, the ROI on a dedicated sales hire will be low. A solid indication of ICP conviction is that you have 1-3 segments of customers that you’ve sold to more than once and get clear value from your solution.
2. Do you have a repeatable sales motion - Can a sales hire follow your steps in your sales process and achieve the same results? If you’re not sure, it might be too early to make a hire. If all of your deals look different and many are still coming through warm connections within your network, you likely haven’t figured out a repeatable motion yet. You have to unlock this motion before bringing someone in to replicate it.
3. Do you have enough demand to feed a full-time hire - If you’re only getting a handful of new leads per week, a dedicated sales hire will be inefficient. Instead, put that investment towards an SDR or demand gen hire to widen your top of funnel.
- Emery Rosansky, Vice President at First Round Capital
Mistakes to avoid when making your first sales hire
Before we get into the right titles, skills, etc. to hire for, let's look at some big mistakes we've seen some SaaS founders make.
Don't hire a junior salesperson if you need help building out your sales strategy
It's tempting to just hire one AE or a couple SDRs to throw at this because of the lower cost.
If you have a revenue-focused founder or one with extensive experience setting and hitting revenue targets, you might be able to get away with that.
If you don't, you're going to be in for a lot of trouble.
Most account executives or business development representatives are used to already having a winning sales process in place and having the technology in place to support their work.
They are used to things like:
- A refined CRM
- Marketing collateral, process, or team in place
- Pre-existing consistent lead flow
- Sales tools
- Historical information
At most early-stage SaaS startups, you usually don't get all of that.
You need someone who knows they won't have all of those resources right away but can still build a strong process.
Most founders win deals because of their network and grit rather than tools or lots of external help. Most account executives and sales development representatives just won't be able to do that.
Don't hire too senior because you won't get enough support on closing deals
Hiring a VP of Sales or Chief Revenue Officer sounds nice, and it probably sounds even nicer if you have the budget to pay for that kind of hire.
But the truth is, a lot of those senior leaders are less interested in getting their hands dirty and more interested in building a team of salespeople and bringing in technology.
Some might even say it results in “a lot of chief, not a lot of revenue.”
If you hear a lot of talk about budget and knowing what kind of headcount they can get, you should look elsewhere. Sure, you can spend the money there, but your return on investment might not be as great as going with someone who is willing to roll up their sleeves a little.
And one last thing to keep in mind for more senior hires: These leaders might try to spend 60 to 180 days trying to build the foundation. If you're hiring a senior leader, keep in mind the ramp time.
Skills and experiences to seek for your first sales hire
Rather than current title or years of experience, founders should look for a few key skills and experiences that any good startup sales hire should have.
There are 5 non-negotiables for your first sales hire(s):
1. They’re passionately curious
If they’re not curious during the interview process, they won’t be curious in the job.
Ask them about the last time they taught themselves something new, and focus on the questions they ask you about the industry, product, role, etc.
2. They’re proactively collaborative
To evaluate their collaboration skills, ask them to walk you through the last cross-functional project they solved.
How proactive and systematic were they? Ask them how they plan to leverage other key stakeholders in your org to get deals over the finish line. How have they done this in the past? How do they bring a group of people together (that they don’t manage) to achieve a common goal?
3. They’re focused on “Feelings AND Facts”
First sales hires need to be able to look beyond lagging indicators (e.g., quota) to leading indicators (e.g., conversion rates, loss reasons, etc.) to be successful. To evaluate their analytical ability, ask them to talk through a difficult decision they recently made and how they made it, or ask them how they use data in their job.
4. They practice extreme ownership
Extreme ownership is the practice of owning everything in your world and taking responsibility for company's success.
To test for extreme ownership, ask questions about how autonomous, motivated, and reliable a candidate is, such as, "What is your response when you see something broken in another function in the organization?" or "Tell me about a time when you took on something significant outside your area of responsibility. Why did you decide to step up?", and “What does ownership look like to you in a sales role?”
5. They’re flexible
Look for candidates with experience in fast-paced, ever-changing startup environments. Ask them questions about how they handle multiple priorities and their ability to adapt to change.
- Emery Rosansky, Vice President at First Round Capital
Look at candidates with sales experience at a similar caliber company to yours
Candidates coming from different stages will have a different skill set.
We recommend finding someone who has current or past experience working at a similar stage startup that you are at. Those types of candidates will better understand where your company and processes are.
Someone from a larger company might have trouble getting their hands dirty, while someone from an earlier-stage company might not have the skills down the line to provide guidance on scaling.
Look at experience handling budget and headcount when hiring true leaders
If you're hiring a true first sales leader, you should prioritize looking for talent that has some experience choosing tech stack, making budget decisions, and hiring.
If you're hiring more of an individual contributor, these skills will be less important.
If you do decide to hire a true leader, don't lean too much into the strategy side of things. You may end up with a hire that is more interested in getting customer feedback and trying to scale over time than getting revenue right now.
Our recommendation is to look for someone who at least might demonstrate some of these skills. They will be needed as your company grows.
We probably don't have to tell you that hiring and budget mistakes are costly for early-stage founders.
Look at what sales candidates did in their previous two jobs
To get a better sense of whether someone can be the right sales hire for you, pay attention to not only their current job but their previous couple of roles too.
Even if they aren't getting their hands dirty now, they might have previous experience setting up processes and building that lead gen engine from scratch.
The best candidates have somewhat recent experience and are willing to put in the sweat equity rather than just focusing on strategy and management.
Look at the candidate's references
At this stage, you need to find someone who is proven to get the job done. The risk of taking a flier is too high when you're looking to build a sales structure that will fuel growth for the next few years.
During the hiring process, make sure to get at least two references from qualified candidates just to make sure you're making the right hire.
Look at the intangible skills
There are 4 qualities I look for when hiring startup salespeople: desire, commitment, outlook, and responsibility, with the greatest emphasis on commitment.
The fundamental question at the heart of all sales is tied directly to commitment. What are you willing to do to hit your goal (within ethical boundaries), and when you commit a deal to your forecast, how important is it to you that you hit it?
- Sam Jacobs, CEO at Pavilion
Experience is great, but in the startup world, you really need to focus on someone who's going to come in and get stuff done.
During the interview process, look for intangible skills like grit and motion—the ability to keep things moving and growing.
The right title to hire for a first SaaS sales hire
Unfortunately, there's no right answer here. But we're going to try to give it our best crack, depending on your personal situation.
When to hire a VP of Sales or CRO for a first sales hire
Take this route if you are able to provide a budget to hire AEs or SDRs to support this hire soon after and have enough runway to allow this leader to focus on strategy.
If you want immediate sales, this is not the recommended route.
If you want someone who can come in and think more holistically and get things like customer feedback, messaging, etc. right, this can be a good hire.
When to hire a Sales Director, Director of Sales, or Head of Sales for a first sales hire
This is the middle route and most likely the safest route.
When you make this hire, focus on candidates who aren't just in middle management. You want someone who is close to deal flow so they can bring in immediate value to revenue.
When to hire an Account Executive or Sales Development Representative for your first sales hire
This can work when you have a founder with a strong sales or revenue background.
If you, as the founder, are focusing less on sales, you'll also need to have a strong system and tools in place for this hire to succeed. You cannot expect this individual to build a repeatable motion on their own.
Sometimes, even if you don't have a strong sales system in place, you can still bring in a founding AE as your first sales hire. In this case, you might want to consider supporting the AE with a hands-on consultant and double checking that this hire can thrive in some ambiguity.
The right titles to search for when looking for candidates
This is another answer that depends on the individual candidate.
For most first sales hire searches, you'll probably look at titles before you end up looking for some of the skills mentioned above.
You can look at candidates with any current sales title; the important thing is to pay attention and screen for the skills they have and how they will fit into your startup.
It's okay to hire a VP of Sales. A candidate may have that title at an early-stage startup but might function closer to a sales manager.
The thing you want to avoid, though, is hiring someone based on their title but finding out they don't fit the actual jobs you need done for your sales process.
What equity should you give your first sales hire
In early 2023, when this article was written, we saw most SaaS startups offering 1-1.5% equity to their first sales leader.
A year ago, when the market was extremely hot, we saw some founders offering sales leaders between 2-3%.
Before making any equity offer, also consider what type of leader or hire you are making.
Is this going to be your leader to guide you through the future? Or are you going to have to make another hire down the line that's a true sales leader?
If this hire isn't the leader to take you where you need to go, you might want to consider reserving some of that equity for a future sales leader.
The best thing to do is to ask other founders in your network, your VCs, or even a recruiting company like Captivate Talent that knows about equity offers from other startups we work with.
Final thoughts on making hiring your first salesperson
When you're making your first hire, you need to look at what your founding team looks like and what skills and jobs you need done by this hire.
The best hire you can make is one that can help you win deals now and build a scalable system for the future.
If you're unsure of what to hire, consider going down more of a middle route, maybe a Director of Sales.
You don't want to go too senior for someone who will focus more on strategy or go too junior for someone who won't be able to build a consistent sales process to scale the team in the future.
Remember, titles don't matter as much at the early-stage. You want to focus on evaluating someone's full body of work vs hiring for a title.
And you will probably need to set aside some equity for your first hire.
If you need more advice on making your first SaaS sales hire at your startup, feel free to get in touch with us.
Even if you don't end up working with Captivate Talent on your first sales hire search, we're happy to help point you in the right direction for any questions you might have about this key hire.
Our case study with Opaque to help them find their first sales hire, a Founding Account Executive: https://www.captivatetalent.com/case-study/opaque
Our case study with Paddle to help them expand in the US and hire their first US sales leader, an RVP of Americas: https://www.captivatetalent.com/case-study/paddle