04
APR
2016

The Golden Start-up Rules for the New VP of Sales

Sales Leadership Roadmap

Congratulations on your new sales leadership role at an early stage company. If you come from a large company, immediately throw out what made you successful there and definitely do not implement their methodology, at least not for quite a few years. Simply stated, this methodology will not work in a start-up or early stage company. It will result in guaranteed failure within 3-6 months and it will cost you your new job a few months after that. You need to let go of what you know or learned and listen to what the market wants. You have two ears, two eyes and one mouth, use them in proportion to listen and observe more then you speak and when you do speak only do so to ask questions to learn more. Do not try to tell them what they need instead sell them what they want, doing the latter you will be much more successful sooner. In essence this is the first rule of Product Market Fit (PMF).

Product Market Fit

I cannot tell you how many times I have worked for or consulted to a start-up where the VP of Sales had Salesforce or equivalent CRM with way too many opportunity stages and overly relied on it for accurate forecasting. What happens is the VP of Sales, with pressure from the CEO and Board ends up pushing their sales team to find deals, via their “rolodex” (circa 1990’s selling style) that are not PMF and what you end of is a tremendous amount of documented activity (not selling). This activity report is generated with little to no real qualified prospects to create the illusion of potential business revenue to satisfy the upper powers. Don’t fall into this trap, man (or woman) up and let the chain of command know what the market wants versus what you have to offer (the answer is always in the market). This is the main reason many early stage companies go through 2-4 sales teams (and VP’s) before they figure out PMF or worse the company is fire sold or goes out of business.

Hiring

Keep an open mind when hiring and do not necessarily hire your prior teams. Hiring people from large or even medium sized companies like Cisco, HP, Oracle or SAP who do million dollar deals mostly selling into their installed base probably aren’t going to be a fit for your new home. In the startup world one hundred thousand dollar deals no less one million dollar deals are few and far between. I have experienced and seen the amount of time spent chasing these type of deals to rarely, if ever, see them happen for numerous reasons as they were not perfect fits (needed that extra feature or two not on the roadmap) or the company was too small to really be able to win the deal (i.e. risk adversity by the end-user). What you really need are many smaller sized “friendly” customers to help flesh out the product that will also buy and be a strong reference. At this stage you need to build a sales model of repeatability. Hire talented scrappy market makers, not the individuals who have spent many years at big company on their resumes.

Simplicity

Keep everything as simple as possible. It is easy, especially coming from a big company to naturally make it more complex than it has to be. In the startup environment this creates more excuses for failure (denial of PMF). The pricing, pitch, presentation and most importantly the messaging should be simple to understand. As Einstein once said, “If you can’t explain it simply, you don’t understand it well enough”. Understand where your solutions strengths are and sell to them while never disparaging a competitors product!

Passion

Be incredibly passionate about the problem you are solving and the solution you are solving it with. Taking a VP of Sales job in a startup for the paycheck just isn’t going to work out. You need to own this thing as if it is your baby as well. So late nights and weekends are the norm. You will always be on the grid, your vacations will become “work-cations”. You have to BELIEVE to SUCCEED. It will not come off authentic if you do not believe.

The Management Teams

Pick a company, founder(s)and or CEO that you are compatible with. Look for someone that will support you in good times and bad ones, because the road to crossing the chasm will be fraught with challenging times and events beyond your control. There will be spectacular highs followed by excruciating lows and knowing your CEO and the rest of the management team has your back makes all the difference.

Also at this stage you will need to highly interact and collaborate with engineers and product managers. You should not be isolated from them as you have been in the past working for a big company. Sales are important but the company’s engineers are equally important, especially in the early days of the product coming to market. If you behave as the stereotypical big company sales VP then they will not respect you and they will not listen to your input based upon the market needs you have found. They will dismiss you and not add the necessary features or do the product changes the company needs to be successful. Telling a founder and or its engineers that their baby is ugly takes some finesse and respect. Learn that engineering and product marketing/development is your partner not your enemy.

The same goes for the working with the marketing team. Inbound marketing is key to the success of an early stage company. The more you work with this team to refine the customer profile and or target market the faster the path to success. An inbound lead is much better then trying to cold call your “rolodex” (I highly dislike this misused dated term if you haven’t figured that out by now) hoping for a fit.

Having a great relationship with these teams is vital to your and the company’s success.

Success is Rare

You need to understand going into a start-up that 8 out of every 10 startups you talk to will fail. They just are not going to make it for a number of reasons, all beyond your control. These unsuccessful start-ups will have an unfavorable liquidity event which will usually only make the investors whole. Enter a start-up with your eyes open and increase your odds by joining a team that has not only succeeded a few times but also a team that has learned from its failures as well.

Pay Up

Do not be stingy and do not put a compensation plan in place that worked from your prior big company. You need to pay your sales people above the market rate. You may also have to have an initial compensation plan based on Management by Objectives (MBO’s) versus just revenue based. The only way good people are going to come to your company is if you pay them a high commission rate. Remember the early times at a company are the hardest sales to make so you need a highly incentivized mercenary sales team.

Teamwork

Finally your team’s success is your success. NEVER forget that. Your job is to create a structure along with a culture that breeds success and most importantly a fun to work in environment! Yes fun, people are better producers if the environment is serious but enjoyable to work at. Having some fun at work will make your employees more productive and loyal. Never be political and never take the credit away from them to shine the light on yourself, you will lose the respect of your team very quickly. Remember nobody likes that kind of manager even in a large company! Set them up to be successful and pay them well when they are. Coach them to understand what it takes to succeed in your sales organization. They need to feel like you are there to help and back them, not there to just to refresh CRM spreadsheets to sell up to your management. In fact being hands-on (not micro-managing) is absolutely a good thing to do. Practicing what you preach is the easiest way to win over your team.

By following the above you will be on a good path to not only be successful at a start-up but you will also learn a few new things as well which will keep the opportunity interesting and challenging for you. And most important, enjoy it!

About the Author
  1. Jim Carlin Reply

    Mike

    I am in that role with a different company in a unique, small industry. I have had to learn these lessons – but you are dead spot on. Let your customers lead you to where the grass is greener – and always – always – always – keep the eye on the prize of long term success. Make relationships that last – create trust – meet and exceed expectations. Hire people that you trust – then trust them. Make the small deals that make big friends. I have seen so many chase the golden apple and neglect their cash flow. Patience, dedication and a team that is ready and willing to move with the market.

  2. Dave Butler Reply

    Great post Mike

  3. Vikram Modgil Reply

    Really good suggestions Michael. The opportunities of improvement you have highlighted from your experience can help many. Thank you!

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