CEOs-Don't Become a Sales Hostage!
I recently met with a CEO of a b2b SaaS firm with sub-1 million in revenues. The firm has had early success with a few large brand names. Often companies at this point hire a VP Sales and several salespeople to capitalize on their early momentum and provide sales expertise that the founders feel they lack. Play to your strengths and hire to backfill your weaknesses-it’s a reasonable strategy.
Founders know more about sales than they give themselves credit for.
Here are two potential traps waiting for any founder who thinks they don't know how to sell or manage salespeople.
Trap #1 - The Sales Hostage Scenario
One of the minimal core competencies for any VP of Sales and astute salespeople are the ability to read, understand, navigate and influence the political and power structures of their prospects and employer.
It’s what makes them effective.
They also use this competency to protect themselves politically within their organization, lead the sales team, and access organizational resources.
The hazard with this ability, which often appears mysterious, is that often founders find themselves running their companies to accomplish the VP of Sales objectives which are not necessarily aligned with those of the company.
The VP of Sales wields this power because they generate the revenue and founders feel that knowing how to lead sales is unknowable.
Takeaway #1-Founders are typically the best salespeople in the organization because they understand the business problems that their client community needs to solve. Founders can sell and can hold salespeople accountable. These two skills protect them from becoming sales hostages.
Trap #2 - Premature hiring of a sales team/inadequate product/market fit resulting in structural failure of the sales plan.
For early-stage companies, until there is a repeatable model to solve customer problems and get paid to do so, the downstream effects of prematurely hiring sales leadership and a sales team can range from expensive to devastating in terms of time, money, and opportunity cost.
Any new product or service is adopted in the market along a bell curve roughly broken out into 10% evangelists, 15% early adopters, 50% split between an early and late mass market with the remaining 25% of the market in the late tail.
In the above example, the start-up has a few clients and revenues under $1m. Their product by definition meets the needs of the evangelists and early adopters. For sales to scale product market to the mass market it needs a solid value proposition that addresses the needs of the mass market. If a VP of Sales/Sales Team is hired early, regardless of how competent, and the value proposition doesn’t meet the needs of the mass market the team will run into the wall and won't be able to scale until the next stage of product-market fit is unlocked.
Takeaway #2-Validate that there is room for sales leadership and team to run before committing resources to scale sales. For do-it-yourselfers Steve Blank’s “The Start-up Owners Manual” is the foundational resource to validate business models. If you'd like a little help please reach out to me.