In this article we offer some advice to Software Founders, who are about to raise or have raised their Series A, on when is the right time to hire a VP sales.
Building the right commercial organisation is one of the most important things that a SaaS Founder can do for their company and choosing the most suitable candidate to lead sales is critical to the success of any startup. If a company has achieved good initial revenue traction and product usage they will know that they need to hire a more senior sales person to enable them to focus across all functions. They will often be grappling with the question of whether to hire a VP Sales or alternatively a less experienced, and therefore potentially cheaper senior Account Executive to lead revenue efforts through the next phase of their growth. It’s a question we’re often asked and wanted to offer some guidance on the considerations that need to be weighed up.
Transitioning from Founder-led Sales
In many cases a business has raised a Series A (or comparatively large Seed) and reached perhaps between $1-3M ARR with the Founder leading the charge into early customers. The Founder will be able to evangelise well and paint the vision that they are passionate about to early adopters. Investors will likely have opened doors also to help build initial momentum. In many cases the best sales person initially will be the Founder, and while it is likely a senior Account Executive will be able to help close early deals, they probably will not have had the experience that a VP Sales has in some of the other strategic aspects that will help drive the business on towards its first $10-20M of ARR.
The Value of a VP
It’s important to emphasise that a VP Sales is not simply the person who is out selling. A situationally relevant VP will absolutely spend time with current and potential customers as a crucial part of their role because it allows them to understand in depth how the customer perceives the value of the solution, how it should be positioned, and what the ideal sales cadence would look like. Additionally, there is a lot of value a VP would bring in persona development, customer segmentation and pricing that is essential to allow the business to scale efficiently. A strategic VP creates the feedback loops from the customer back into the business, and they are thinking about taking care of the current quarter, as well as the next few down the line. The influence a VP has cross functionally on wider business strategy is why you entrust sales leadership at this crucial stage to someone with the experience and capability, rather than a less senior person who likely won’t have the experience to draw on to think more strategically across the business.
If the time is right, it will be important not just to hire the first Sales executive, but also the team around them. Mark Roberge calls this moment in time finding the ‘a-ha moment’, when the usage in a cohort of customers is such that you can be confident of some initial Product/Market fit. The VP is going to spend a lot of time on discovery with those early customers helping the business figure out whether they have that fit, and if they do a team can be built around them. An experienced VP is going to have some valuable playbooks around identifying A-players, and they will be able to inspire them to join. They will also likely be strong on training and development, compensation planning and pipeline management. Establishing a strong sales culture is vital in a business’ nascent stages. It would be easy for momentum to stall with a number of false starts if you make the wrong hire leading the team as it is harder to unwind bad habits than it is to build a positive environment from the ground up.
A strong VP will likely also be able to manage initial efforts in Marketing and Customer Success with the right resources around and underneath them. There will come a time, likely when the business is entering Series B territory, where specialized execs in these functions will also be required to help the business to scale further. For the initial stages though, given the feedback loops the VP Sales can create, it can work to have all revenue efforts tightly aligned as the business builds on its initial traction.
The key take-away from this piece should be to emphasize that a VP Sales will add a lot of strategic value to enable the business to scale efficiently beyond what a senior seller would bring. Good VPs will be hands on with initial customers but also able to map out a plan for new business and team building. There will be certain senior sellers, particularly if they have learned from directly working under a great VP, that will be ready to step up into this role. But they key is, a Founder would still be hiring them to fulfill the VP duties and expect them to bring the value we have outlined. It is likely that if the metrics were looking strong and you only brought in a senior seller, then traction would dictate you bring in a VP very soon after. SaaS is all about acquiring and retaining the right customers with long term value, and an experienced VP knows how to plan for that efficient, scalable growth.