HBS Arthur Rock Center for Entrepreneurship’s Post

Hypothesis: “The sales compensation plan for your first sales hire attracts the wrong person and motivates the wrong behavior.”  On the most recent episode of the #TheScienceOfScaling podcast, I explore this statement with Nick Dellis, VP of Revenue at Mercury, one of the FinTech unicorns in the recent class of growth startups. Using this compensation strategy, he has established strong cultural foundations upon which to instigate scale. I left the conversation with more conviction to lean into best practices on early-stage sales compensation that I teach at Harvard Business School and in the Science of Scaling playbook. Rather than utilizing a traditional sales commission plan for the first sales hires, instead pay them 80% or so of their market OTE and give them an equity stake appropriate for their role and the stage of your startup. Here are the reasons why a traditional sales commission plan is wrong at this stage: (1) It attracts the wrong candidate. A traditional sales compensation plan attracts a coin-operated salesperson, which can yield high-performing sellers but only when the company has the foundation in place to make them successful. The most important value this first hire brings to the company is not necessarily the first wave of customers but, more importantly, a massive influx of feedback generated by dozens of sales conversations each week. To unlock this value, we need an individual who is almost half product manager and half seller. (2) At this stage, we are usually in product-market-fit discovery mode, requiring frequent reflections on feedback from the market and rapid iterations on our product value proposition and ICP. However, sellers on a commission plan are more short-term revenue-focused and will be motivated to sign up any customer rather than instigate necessary product pivots and build a foundation of the right customers. (3) The north star metric for the entire organization at this stage should be the Leading Indicator of Retention (#LIR), not maximizing ARR or ACVs.  The traditional sales commission plan misaligns the seller with this north star, incenting them to sign up any customer for as large an ACV as possible, which could lead to an unrecoverable churn/contraction issue one year later. I do believe a sales commission plan should be implemented during the scale stage, but after PMF is achieved and during the Go-To-Market-Fit phase. But Nick is proving that theory wrong. It's quite an intriguing case study. Have a listen here.  https://lnk.to/TSOS!mr

🎙 In 2023, I interviewed 50 SaaS founders. Here are the 5 things most successful ones had in common:👇🏼 📖 1. The founding story Most founders I interviewed shared a typical founding story: They either faced a problem in their past job, or they ran an agency and saw a problem coming up for clients again and again. In both scenarios, they decided to solve a problem in a space they had years of experience in. ➡️ The advantages of that approach: - The deep understanding of the problems leads to faster Product-Market-Fit. - The large network in the industry helps to get early customers and partners. 💰 2. Don’t cling to PLG. Embrace Enterprise Sales. Every single founder I talked to who did a couple million in ARR had at least 2 enterprise salespeople. But why is that so important? What Michael Kamleiter, Founder of the multi-million ARR companies Walls(.)io and Swat(.)io, shared on the podcast made that very clear: ➡️ Half of their revenue comes from Enterprise customers even though they started with product-led. 📈 3. Start with founder-led sales. Don’t hire sales guys before you didn’t do it yourself. All founders I interviewed agreed on the following point: Start with founder-led sales to figure out the sales process. Then teach that process to your first sales hires. ❌ On hiring: Don't make the mistake of hiring a VP Sales right out the gate. Hire two sales guys. Then bring on a sales leader and scale the team. 🔮 4. “Clarity brings confidence.” When Salad(.)com Founder and CEO Bob Miles said that phrase in our conversation, it really clicked for me. If you're unsure about your strategy, seek clarity. Talk to customers, potential users, and field experts. As clarity increases, so will your confidence. 😖 5. Struggling is part of the process. Most founders I interviewed had months or even years when they weren't sure if things would turn out okay. If you're in a tough spot right now, it's normal. It doesn't mean you're not doing well as a CEO.

Product-led Sales adds a human element to the customer journey: a backstop to anything that can't be explained by itself. Whether the problem is with the customer, their context, or you simply not having a good explanation... product-led sales got you covered. It's an interesting dance between moving more of the customer journey to self-serve while proactively moving those that are activated or need help to sales. A real-life analogy to me is when you walk into a store and you can browse by yourself and don't feel watched. If you need help you ask someone or you carry your purchase to the cashier yourself. It doesn't sit right the other way around with someone hovering over you, showing you the entire store whether you're interested or not. Benjamin Lamson has a talent for framing these concepts in a new and concise way from his very product-heavy sales perspective in Episode 34 which is out now! Timestamps: 05:00 Are you only a real salesperson if you have a gong at home that you ring after closing a deal? 07:20 Product-led Sales as a fallback to struggling customers 10:30 Should we incentivize for closing contracts in early-stage companies? 14:22 Early-stage hire mistakes in the past 18:00 Everyone becomes more efficient and cross-functional, breaking down those silos, what about big companies? 26:05 What is wrong with our startup scene? Founders accepted valuations that were ridiculous. 33:15 Compassion as a founder towards other entrepreneurs’ loneliness. 38:20 Jobs to be done in startups on a shoestring budget 47:15 Being extremely specific about your ideal customer and applying it to business decisions 49:35 Initial price points for a company offering 54:40 Insecurities and Impostor Syndrome 64:40 AI will impact every product. #productledgrowth #productledsales #growth

I was speaking at the youngStartup Ventures conference last week One of my slides was about the burn rate impact of hiring a VP Sales before you are ready I had to wait for everyone to sit down and stop taking pictures You see, most founders I speak with have the following strategy to solve sales challenges Hire a VP Sales, let them hire 2-3 salespeople, give them tools and tech …Expect miracles Doing this increases their burn to $60k a month and creates unsustainable burn Unsustainable burn = immense pressure on everyone = burnout and turnover You want to talk about sustainable growth models, here is the better way: Hire 1 Seller - pour into them with love, coaching, support, and reasonable expectations Once they start to be successful, AND only once that happens…hire a 2nd seller Repeat the process that made seller one successful If that works…STILL don’t hire a VP Sales Hire a fractional CRO Sellers one and two should be paying for themselves, and part of the fractional by now. Fractional CRO: Documents the process being used by Sellers 1 & 2 Finds ways to improve the process Implements further tech for scale Refines GTM Strategy Hires 2 more sellers Ramps them up Replaces self Now is the point you are ready to hire a VP Sales. If these things are not in place yet, or not working, you likely have a bigger problem than sales Like idea / product market fit Fix that before you try and “fix sales,” because sales is not the real problem This is sustainable growth folks, and how you go from Pre-Seed to A successfully or fix sales for a legacy company that is in decline

In our mini-series about avoidable mistakes, Chris Smith shares the top 5 mistakes pre-seed founders make with sales. 🏗 Weak Foundations 🙈 Qualification Delusion  🦥 Lack of Focus & Research  😭💸 Emotional & Incentive Misalignment  🖐 Hiring a Head of Sales Too Soon Read the full post for more helpful tips and insights👇  https://lnkd.in/eE5g_sXe 

"I can't sleep at night." Hard Tech Start-up CEOs after missing their latest revenue forecast. In part II of our series, "A CFO, a CEO, and a VP of Sales Walk into a bar... we tackle the problem from the CEO's point of view. If your sales are weak, you might find yourself in one of 2 scenarios. Check out the full blog to find out what those are and how to solve the problem with the right tools and the right people. 👇 https://lnkd.in/ezzNukEU #whatsyourMO#startuplife#CEO#salesfunnel#salescoaching

Why Founders Must Own the Sales Process in the Early Stages 🔥 A couple of weeks ago, I met with two co-founders who were eager to launch a new B2B offering. They were considering outsourcing the discovery meetings and sales conversations to my company, salesmentor. While it's flattering to be considered, I advised them not to. Instead, my advice was to get "stuck-in" ASAP and do sales themselves! Why? Because I passionately believe that founders need to be directly involved in sales, especially in the early stages. 👉 Here's Why This is Crucial: 1️⃣ Deep Product Knowledge: Founders have an unparalleled understanding of the product, making it easier to articulate its value proposition convincingly. 2️⃣ Customer Insights: Direct engagement with customers provides founders with invaluable insights, which can be instrumental in product development and market positioning. 3️⃣ Authenticity: There's a unique level of trust and credibility when the person selling you a product is also the one who created it. 4️⃣ Agility: Founders can quickly adapt their sales strategies without the bureaucratic red tape that often exists in larger organisations. 5️⃣ Investor Relations: Demonstrating an ability to sell not only boosts revenue but also makes the company more attractive to investors. The Takeaway It might not be sustainable for founders to handle sales in the long run. But doing so in the initial stages can offer unparalleled advantages. It's not just about closing deals. It's about understanding your market, refining your product, and building a business that people believe in. No matter how much you want to avoid getting your hands dirty with selling, as a founder, it is your responsibility to roll-up your sleeves and get stuck-in! If you're a founder grappling with the question of whether to outsource sales or a company looking to optimise your sales strategy, let's connect. At salesmentor, we specialise in SaaS sales consultancy and recruitment to help you build a high-performing sales team. #Sales #StartUp #Founders #B2B #SaaS #SalesStrategy #Salesmentor

"Mainstream advice won't create extraordinary results. Real-world strategies from other CEOs and founders will." Earlier this year, we launched Revenue Journal to give founders and CEOs first-hand insights into how other B2B companies drive revenue growth. Now, we meet with leaders behind some of the world's fastest-growing companies every week and share their takeaways in our forum 🚀 Before running into the holiday season, I just wanted to share a few gems from the fantastic line-up we've had so far: In our podcast Meet the CEOs: 1 / Christopher Voss ( RELEASED TODAY 💥 TRAILER BELOW ), CEO & Founder, Ex-FBI negotiator & Author of Never Split the Difference. Topic: How to master B2B sales negotiations. Awesome episode if you're stressing about closing the last deals of Q4! 2 / STEFAN YTTERBORN, CEO & Founder of CAKE. Topic: How CAKE went from a local B2C offering to an international B2B expansion. 3 / John McMahon, 5X CRO & Author of The Qualified Sales Leader. Topic: How to close larger deals and build a team of A-players. 4 / JR Butler, CEO & Founder of Shift Group. Topic: Transforming elite athletes and military veterans into sales professionals. 5 / Petter Hedborg, CEO & Founder of Modular Finance. Topic: How Modular Finance reached 10M Euro in ARR with a growth rate of 40% and an operating margin of 60%. In our articles: 6 / Rana Salman, Ph.D., CEO & Salman Consulting. Topic: How to pick apart your sales process - and spot ways to improve it. 7 / Pontus Meijer, CEO & Founder of Visual Art. Topic: How Visual Art increased revenue by 200% and entered 6 new markets in 3 years. 8 / Jonathon Ilett, VP of Global Sales at Cognism. Topic: 5 actions that took Cognism from €20M to €40 million ARR in a year. 9 / Andreas Sjölund, Co-founder of Quinyx. Topic: Mistakes to dodge for fast business scaling. 10 / Mattias Matsson, CEO & Founder of OneGroup. Topic: The CEO behind OneGroup on how they grew revenue by 241%. And don't miss Upsales latest release, The CEO's Strategic Playbook to Complex Sales. It's built upon the collective wisdom of John McMahon, Jack Napoli, Brent Adamson, Nate Nasralla, Pim Roelofsen, Jamal Reimer, Christopher Engman and Peter Gustafsson. Thanks to all the fantastic people who contributed to Revenue Journal in 2023 🙏 And YES - let's talk about the elephant in the room 🐘 One of the biggest challenges we've had during these first few months has been to find women in our niche (B2B, revenue 8M+ euros, fast growth). I'm sure they're out there, but it's hard to track them down. So, if you're feeling extra generous this year, please help us and tag the most epic founders, CEOs and sales leaders you know in the comments - especially women. We're currently building our 2024 line-up of contributors, and all suggestions are welcome! PS. We're also working on some partnerships/initiatives for a more equal representation next year, but all help is appreciated! Merry Christmas and a happy new year! 🎅

I lost 15 pounds! My secret diet is founder stress and coffee lol I guess it’s better than gaining weight. This is the first time I am the founder of a business and my founder pains are just as real as yours. Over the past 15 years, I’ve been the initial Sales Leader for 5 successful startups where I successfully took the sales reins from the founder. Today, my business is to do the same for other founders. I work with founders who know they need to build a sales team to grow or because they can’t stand it. I work with founders who hate sales but know they have to understand them to grow their business. I work with founders who need to build their sales muscle to grow their business. I work with founders that take that stress and convert into action, learn how to take control of sales, and grow their sales with new insights. If you are one of these founders, please let’s connect. My plan is to keep losing weight but not as a side affect but with intent. Who knows, maybe I’ll bring back the daily epic meal, my version of fasting ;) —— Hi, my name is Noé, and I help founders help themselves by building their sales muscle so that they can lead their organization from a place of knowing. If you have any questions about transitioning from Founder-Led Sales, please DM me so we can start the conversation and see if this is the right time for you.