Firas Raouf / July 28, 2021 / 5 MIN READ

Sales Learning Curve

Firas Raouf / / 5 MIN READ

Sales Learning Curve

Picture this: You’re a startup founder that has built a disruptive SaaS email marketing tool that completely changes the way businesses track customer engagement. You’ve been up and running for two years, closed a seed round, and connected with a market segment that loves your product. Suddenly, your startup is generating $2 million in annual recurring revenue (ARR). Now, it’s time to expand and go. You’re ready to raise millions of dollars in financing and step on the gas.

At Companyon, having invested in many B2B SaaS startups emerging from the seed stage, we see this story unfold a lot. While so much has been accomplished at this point, the hard work is just beginning. The startup must now transition from a product-centric, founder-driven operation to a go-to-market-centric operation. That means new processes, systems, and operations to support new goals and ambitions in what will soon be a much larger enterprise. And that naturally means hiring — take a nice deep breath — a sales team. Yikes!

Many of our startups are between $1M and $3M ARR when we invest and often have terrific product-market fit but little to no scalable sales infrastructure. Sure, most startups budget for a VP of sales in their post-seed round, but there is usually no thought beyond that and no current sales leadership in place. And that’s because most startup founders don’t know what they need or how to build and implement a sales infrastructure.

Your First Instinct

Salesforce. Adobe. ServiceNow… We get it. You’re going to try and impress VC firms by hiring some name-brand VP of sales who, with their years of experience and profound wisdom, will propel your team to a Series B round. It’s a no-brainer, right?

Actually, what many founders don’t realize is that these name-brand sales execs aren’t doing much direct selling. They aren’t in the trenches working the phones and negotiating deals with customers. They are instead likely managing complex sales supply chains across multiple product lines and territories. In fact, their job challenges aren’t relevant to yours because they can lean on established brands, established products, and massive marketing budgets to do most of the selling for them.

Could these name-brand sales execs thrive once they leave the support of their big(ger) company? Will they be able to work independently and build a sales process and hire a team from the ground up? Remember, your brand has little to no recognition, and the resources will be scarce.

Unfortunately, when a seasoned sales exec jumps into a raw startup environment with a fraction of a budget, few resources, little brand equity, and no sales operations system, they are probably going to fail. What’s even worse is that you may not realize this for at least six to eight months into their tenure. At that point, you’ve wasted capital, maybe equity, and as much as half of your funding runway, assuming your startup is funded for the next 12 to 18 months. You can’t afford to do that.

Know Where You Are On The Sales Learning Curve

So, if you can’t hire the name-brand sales exec, what do you do? Before we try to answer this question, please read The Sales Learning Curve, a classic paper by Mark Leslie and Charles Holloway that is a must for any founder or CEO trying to build a sales team.

The paper focuses on the launch of new products and the organizational learning curve required to make these new products succeed. The learning curve is similar to the situation faced by most post-seed B2B startups. According to Leslie and Holloway, the sales learning process unfolds in three distinct phases: The initiation phase (seed), the transition phase (post-seed), and the execution phase (Series A).

  1. Seed: Startups typically offer steep discounts, frequent product customizations, and customer access to core engineering resources to their early adopter customers. This phase is a natural step in gaining some early traction and finding product-market fit. At this point, you probably aren’t hiring sales reps.
  2. Post-Seed: You’ve got some referenceable customers, sales are likely picking up, and renewals are happening. Now, it’s time to scale. Your focus should shift to building a repeatable sales model, improving your messaging and positioning, and carefully adding sales reps. The sales yield should be 2x the cost of each existing rep.
  3. Series A: It’s time to execute. Get your core model in place and hire the “steady-state” team to put it into action. At this point, companies are well-positioned to hire new sales resources at the fastest rate that the company can support.

Cue The Renaissance Sales Rep

Now that you have read The Sales Learning Curve, you should know exactly who you need to hire to jumpstart your sales efforts. That’s right, of course, we are referring to the renaissance sales rep. Here are the skills and characteristics these unique reps bring to the table:

  • They are as entrepreneurial as a sales rep could possibly be.
  • They have experience at an early-stage company and want to do it again.
  • They are willing to learn and adapt…again and again.
  • They roll with the punches and do not point fingers or make excuses.
  • They can walk away from deals that will never close.
  • They will push back on prospects that try to get something for nothing.
  • They are willing to forgo compensation in return for company success and equity.
  • They believe success (money) will come eventually.

We have worked with and mentored several renaissance sales execs and reps over the years. Typically, we find them right after we invest in a new company. Successful founding-team sales reps are almost always renaissance salespeople. They not only tolerate the grind but enjoy it.

So you might be wondering by now the secret to finding and recruiting such a rep. Let’s leave that to the next post.

Are you ready to find your very own renaissance sales rep? Companyon Venture Partner Nate Bowler will walk you through his playbook for identifying and hiring the renaissance rep.

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