Start Up Dilemma – 6 (Do You Hire Sales People Sooner, or Later)

31 Jul


Last week I met up with an ex colleague who is now running a startup in the research and analytics space, with play largely in the U.S. He happens to be fortunate in that he is part of a larger, fairly well known group who wanted to spin off this entity.

He’s been in existence just under a year, and has surpassed the goals he and his corporate board had set for year 1 – revenue, people, profitability! Those folks are now really bullish on the business, and want to accelerate the pace.

His dilemma was – is this the right time to hire specialist sales people? Not being flush with funds (obviously), probably the best he can afford is like 70 – 80K-ish dollars – that doesn’t get him rainmaker sales people (there are very very few of those anyway!)! But is it money well spent? Atleast the guy is in the same geography and can pound the streets/ walk the hallways and start getting traction!

My advice was a strong, heartfelt NO! Its a little funny actually, because if you read my earlier post in this series on when to offload other support functions, it was earlier rather than later!

So ofcourse at the heart, the solution is right – specially in offshored plays, it is critical to have sales folks in the same geography – just the physical proximity, the cultural nuances, and ofcourse the rolodex is the all powerful tool. Many offshored start ups solve it by hiring sales folks in the offshored/ delivery centre (cheaper 🙂 ) and making folks travel. Wrong move! In fact, in Europe and Asia, it is disadvantageous to not have same region people – you cannot build trust and credibility without native folks!

But, the solution is also not, hiring specialist sales people in the geography.

I did a rough analysis of our history here (and I admit it may not be the correct benchmark – one man does not n army make and all that) – but here is where it netted out (over an 8 year period):

Sales Force Efficiency

(Disclaimer : Impact analysis is not very scientific)

The hit ratio of success was not great – and the amount of time spent briefing, searching, shortlisting, recruiting just outlandish! (don’t get me wrong – we wouldn’t have been able to build our company without the ones who did well, but this is just to show hit ratios!)

So what works?

There is nothing that works as well as “doing it yourself”. The vision, the fire in the belly and the sincerity that emerges from the founder’s personna – is unmatchable! Also, your desire to make it work is that much harder, so you will stretch yourself – sometimes unreasonably so (but then, thats part of an entrepreneur’s life, right?). In my own company, we were really lucky that of four co-founders, 2 were based in the off-shored location (and hence took charge of operations and solutions development) and 2 were based in the client geography (and thus were “natives”). It was a win-win situation, and, our best salesmen was actually one of the co-founders!

But, you ask me:
i) “We are selling offshored products/ services – You just said two minutes ago it is imperative to have presence in the geography”
ii) “We are tech people – we can code, we are not market facing – how do we get the smarts to manage that?”

Both really valid questions. My answers :

to ii) first – it is a good idea to rope in a person with market facing skills as PART of your founding team – so, part with some equity – but then his/ her stakes in the venture are very high. That then makes sure that you are, in essence, “doing it yourself”

Another thing that you should do – is arrange channel partnerships. Your channel partnerships, if done right, with complementary folks – sometimes freelancers almost – takes care of the networking/ rolodex/ native face issue. In our case, our biggest revenue grosser accounts came from partners. Ofcourse, taking from the point made earlier – the channel partnerships will only get you entry, the pitch HAS to be made by YOU – After all, as I said in another earlier post, We are ALL Sales People, or need to be! (More so if you are an entrepreneur! ).

And finally, acknowledging that sales is a matter of sheer numbers, you have to invest in an offshored “calling team”. These are young, fire in the belly type sales people (start with one) who can call and arrange meetings to supplement the partners, and block your calendars when you DO travel to the client geographies.

This means, the money that you would struggle to eke out to the (actually-not-so-well-paid-though-for-you-its-a-lot-of-money) sales guy is better spent on travel – your travel!.

The situation does change if you get funding – one of the uses of external investment is always sales investment – and understandably so – your investor WILL want to see escalation in growth and the ONLY way to do that is to (again mathematics) have multiple feet pounding the client doors!

So, you ask the question – when then should i hire specialist sales people? My answer – when you can afford the good ones:)

In this context, I always remember what the founder of a very successful offshored analytics company told us (he was a single founder – had no partners, but did get funding early on – and then successively with larger frequency). He did not, till fairly late in his entrepreneurship journey (and his company was a substantial size by then) hire any specialist sales people. His quote was “Jo founder ka khoon til til jalta hai, woh aur kisi ka nahi jal sakta – tou hum log hi convincingly sale kar saktey hain!” Translated, this means – only the entrepreneur’s blood boils bit by bit for the need to make revenue – no one else can do that job with greater conviction!.

Well said, Sir, and I fully agree!


12 Responses to “Start Up Dilemma – 6 (Do You Hire Sales People Sooner, or Later)”

  1. Manoj Kumar July 31, 2013 at 11:22 pm #

    If you can afford to hire the top notch rainmaker salesperson, you must do that. If you cant afford, just do it yourself. Don’t make the mistake of hiring mediocre sales people. They just waste your money…..take undue credit for sales that actually happen due to your product/service features/quality…..and are a drain on your finances as well as the motivation of other staff supporting them.

    • joshsang August 1, 2013 at 7:05 am #

      yes, (this is true of all disciplines actually) – but the question ofcourse is – how do you make the difference between top notch and mediocrity while hiring..

  2. rubybhattacharya August 1, 2013 at 3:37 am #

    I’ve heard horror stories of start-ups ramping up sales people while not really understanding customers needs. Selling to those you have already contacted for feedback and input, customer discovery is a much easier sell, and appealing when input is given. This process however is better done much earlier on before even thinking about bringing on sales people.

    • joshsang August 1, 2013 at 7:04 am #

      absolutely! first step is always mining network, f&f and beta customers – that you can, and shd do yrself!

  3. RajeshRajesh Thiagarajan August 1, 2013 at 11:06 am #

    Very valid and insightful post. As a tech founder, I have realized that the founding team is the one that has to do the initial sales & marketing. It is good to have inputs & feedback from customers (at least potential customers) in the initial days of a start up than just offloading it to a sales specialist. The need for scale comes only after there is a product-market fit and $ to spare (investment probably) to scale.

    • joshsang August 1, 2013 at 3:57 pm #

      I think even from the clients side, they wd prefer to talk to the guy whose brains are creating the product!

  4. Avinash August 1, 2013 at 12:11 pm #

    In my opinion most stalwart salespeople of the rainmaker sorts rarely move out of their jobs to join other companies. A few of them start on their own. The best sales people are invariable entrepreneurs who have the passion for what they are doing and sell as a result of that passion. Career sales people who are rainmakers tend to have a lot at stake in their current positions and companies too do not want to let go of these people at any cost.

    • joshsang August 1, 2013 at 3:56 pm #

      So I guess next question – are rainmaker salespeople born or made? (How can companies turn their salespeople into rainmakers)

      • Avinash August 1, 2013 at 4:41 pm #

        I guess it is a combination…but I would veer towards most of these rainmaker sorts having stuff in them which can only be partially learnt. So 75% born, acquired skill very early on and the remaining 25% learnt – For instance networking, using the network appropriately etc are skills that come very naturally to some of these folks and cant be thought easily. Very hard for companies to turn the sales people into rainmakers. We should do a check of sales training departments and see if the track very measurable metrics of before and after situations.

      • joshsang August 1, 2013 at 8:41 pm #

        yep agree

  5. Deepak August 2, 2013 at 1:21 pm #

    Awesome post, and thanks for making it much clearer with the quote – “Jo founder ka khoon til til jalta hai, woh aur kisi ka nahi jal sakta – tou hum log hi convincingly sale kar saktey hain!”

    • joshsang August 2, 2013 at 1:46 pm #

      and you would empathise better than most i guess – sales specialist turned entrepreneur? 🙂

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