GTM Navigator: When to Hire Sales Leadership
GTM Navigator is our ongoing series where we break down the essential components of crafting the right go-to-market strategy.
In this episode, Stephanie Perez, Managing Director of Business Development and Partnerships at Fin Capital, speaks with John Smith and Robert Dunn, both partners at H.I. Executive Consulting, a global executive search firm focused on hiring Board, CEO and Senior-level executives.
In this discussion, you’ll gain insights into the optimal timing for onboarding your first sales professional, transitioning from founder-led sales, to enlisting sales experts for prospecting and closing. We’re grateful to Robert and John for sharing their expertise, and we hope this installment of GTM Navigator equips you with the knowledge to enhance your sales and leadership teams effectively.
Key Highlights:
Determining the Right Time for Sales Hiring: In the journey from founder-led sales to a structured sales team, timing is everything. Robert Dunn advises that a founder should ideally begin to look for their first sales hire when they have a repeatable sales motion and a solid understanding of their value proposition. However, the complexity of the sales cycle, especially when targeting the enterprise segment, requires founders to be deeply involved until the sales motion is well-established. Don’t pass the baton too early, as premature delegation can lead to a diluted value proposition and ineffective sales strategy.
Transitioning from Founder-Led Sales: John echoes this sentiment, highlighting the rich learnings a founder gains from direct sales conversations. The feedback from these discussions, particularly with serious enterprise buyers, can be invaluable—even if not always positive—for early-stage companies. This direct interaction ensures the product evolves in a way that’s aligned with market needs.
Hiring Sales Leadership for Scaling: As startups grow, the question often arises: when is it time to hire a VP of Sales? Robert suggests waiting until there are at least two successful sales reps who consistently close deals. This indicates that there’s a repeatable and scalable process in place. Hiring a VP of Sales too early—before the sales process is clearly defined and before there’s evidence of a repeatable model—can lead to strategic missteps and hindered growth.
VP of Sales vs. Chief Revenue Officer: Here we dive into the nuanced roles of a VP of Sales versus a Chief Revenue Officer (CRO). Robert explains that a VP of Sales is typically hands-on, managing the sales reps and sales engineers directly, and is deeply involved in the day-to-day sales operations. On the other hand, a CRO operates at a higher strategic level, looking at the long-term revenue and go-to-market strategy and is more likely to be brought on board at a later stage of the company’s growth, often post-Series B or beyond $10 million in ARR.
Global Expansion and Sales Strategy: When contemplating international expansion, John advises using a small internal team as the spearhead. This team, imbued with the company’s DNA, can establish an initial presence, and leverage existing international relationships. This approach ensures that the company culture and product knowledge are consistent as the business scales globally.
How to Hire Effectively: As startups grow, their networks may not suffice for finding the right sales leadership. This is where executive search firms come into play, offering not just a wider candidate pool but also strategic advice on the hiring process. Robert emphasizes the need for clarity in role expectations and encourages founders to ask critical questions about the level of involvement and support they will receive from the search firm and other stakeholders such as investors and board members.
Key show notes (edited for brevity and clarity)
Stephanie Perez: I’m so excited to have you with us today. One of the most important things that a founder or CEO can do is hire the right people and you advise companies on this day and night, and so given the fact that this is a go-to-market series, we want to focus today on hiring the right sales leadership. And with that, why don’t you both introduce yourselves and the firm?
Robert Dunn: I’m Robert Dunn, a partner specializing in startups within HIEC’s software and technology practice. My colleague John Smith, based in London, brings a transatlantic perspective to our firm’s global reach in executive search.
John Smith: That’s right. I’m John Smith, a partner in our London office. We help businesses from startup to public companies in hiring senior-level executives worldwide.
Stephanie Perez: You both been great partners to our portfolio companies, so always excited to collaborate, but as you both know, we’re full lifecycle investors, so we invest in pre-seed all the way up to growth equity, and one of the questions that we get from some of our younger and more nascent portfolio companies is, when is the right time to hire your first sales person? When is the right time to transition from more of a founder led sales motion to one where you have experts come in and do your prospecting and closing?
Robert Dunn: Absolutely. Great question, and I’ve seen this done wrong many times. I would say in a nutshell, it’s when the founder has mastered the sales motion and the value proposition and can no longer cover it, but there’s two factors on this or dynamics that I don’t think are discussed enough or founders aren’t old enough that might guide them. One is what is the customer segment you’re going after? For example, if you’re oriented towards enterprise, that almost certainly is going to be a more complex sales cycle, more personas, the value proposition is going to be more complex, which means it’s probably going to take you longer to get to that point. Don’t hand off too soon. The second big factor that I do not hear discussed enough is the technology continuum versus disc-continuum, and let me explain what I mean by that. Take pure storage, pure storage was new technology in an existing space. What that means is the value proposition is already largely understood, as-is the sales motion. So a company like Pure Storage, will be able to load up on early sales hire more quickly. In fact, they know who to go hire from EMC, etc. But let’s say you’re in a new technology, in a new space, it’s going to take you longer. Do not hand that off too soon to your first sales hire because it’s probably going to take longer to get the value proposition who you’re selling to and the sales motion.
John Smith: Absolutely, Robert. I think you can sometimes rush to hire someone to hand this off to, but I think there’s really rich deep learnings for the founder to hear those conversations. I mean the product is their baby and sometimes the scrutiny you get from a serious enterprise buyer, it might not always be what you want to hear, but it’s rich feedback for an early-stage company. This can be pivotal for product development and strategy.
Stephanie Perez: Oftentimes salespeople get hired based on their networks, based on what deals they’ve closed in the past and when you’re selling in a completely new product market segment that no longer is as valuable and so you need to iterate on what the value prop is, the messaging and the education for the customer so totally resonates. I think on the other side of the spectrum, the question is, well, when do I hire a VP of sales? I’ve got some individual contributors, they’re killing it, but how do I scale this function?
Robert Dunn: I have seen many times where the VP of sales is brought in too early. There hasn’t been a successful handoff from the founder to any reps and somehow founders are often told, “if you go hire VP of sales, this will all be figured out.” That’s not necessarily the case. Make sure you have at least two data points because you should be asking your VP to productize those successes and scale.
Stephanie Perez: A hundred percent productizing, couldn’t agree more, putting together the operational frameworks, the playbooks, the demo scripts and everything, so totally resonates terms. Oftentimes the term VP of sales is interchangeably used with chief revenue officer. Two different things. Please tell us that.
Robert Dunn: When considering a VP of Sales, clarity on the role is crucial, especially if hiring early. This role might involve active selling and direct management of a small team, focusing on the immediate sales operations. In contrast, a Chief Revenue Officer (CRO), typically hired after Series B or reaching $10 million in ARR, takes on a broader scope. A VP of Sales concentrates on essential sales functions and laying the groundwork for future growth. The CRO, however, strategizes over the entire go-to-market plan and revenue streams, contemplating long-term growth, market expansion, and scaling across different regions and customer segments. While the VP of Sales ensures the day-to-day sales processes are effective, the CRO looks beyond to chart the strategic direction of sales and marketing efforts.
Stephanie Perez: How do you advise companies who may have sales leadership in place who they think are great, they’re high performing, they understand the business, they’re an inflection point, they’ve raised a certain amount, they’re a series C, they’re investors are really pressuring them to think about how to build effectively a pre IPO business. Let’s think big. Sometimes you don’t know if you should hire from within or get someone from the outside, and so how does the CEO think through this? I can only imagine what a challenge this must be when you have people who you’re fond of who you think are great, but you’re also thinking about what your investors want and also what you’ll need five, 10 years from now.
John Smith & Robert Dunn: Founders must clearly define what they expect from a Chief Revenue Officer (CRO) hire. Rather than hoping for a ‘magic bullet’ solution, assess whether a candidate’s past success aligns with your company’s market and technology stage. If your startup is pioneering both a new technology and market, be wary of hiring someone only experienced with existing markets. The ideal CRO should bring relevant skills, such as experience in building sales channels or leading international expansion, that your current sales leadership lacks. Although it’s rare for initial hires like directors of sales to advance to a CRO role in rapidly evolving companies, if the company’s direction remains consistent, allowing existing leaders to grow into the role could be beneficial.
Stephanie Perez: How should startups approach hiring for international expansion?
John Smith: Sure. If I were going to suggest a template for it, I think where possible, I would initially use a team from within. So if you’ve got people from early joiners at the HQ who you can put together on with a pod who are interested in international assignments and send a support person as a pod of three or four people and get them to land in a new region, then it carries some of that muscle memory, the DNA, the knowhow of the business into the region. So I think that’s probably step one. Step two is to leverage customers that you work with in your local market who are international. Use them to get a springboard into additional territories. Same is true with partners, same is true with your investors. If you can lay the ground with that initial pod of three or four, I think that’s probably the best way to get started, and then you can figure out how you want to set about building and hiring in the region.
Stephanie Perez: How would you advise companies to think about looking elsewhere and utilizing a function like yours, right? An external search firm who can help them find the right candidates. When is the right time to do that and how do you even go about doing that?
Robert Dunn & John Smith: To decide when to engage an external search firm, evaluate your network first; if you can’t identify the right candidate, or if you’re uncertain how to vet the candidates you have, it’s time to consider professional help. A good search firm offers more than candidate options; it guides you through the entire hiring process, from interview strategies to compensation and organizational fit. Choose a firm experienced at your company’s growth stage and in your technology sector.
Ensure the firm’s team is adequately staffed and inquire about the partner’s direct involvement in the search. Operational experience in the search team can be invaluable, offering depth and understanding that goes beyond ticking boxes. Be selective and establish a good rapport with the firm, as trust and chemistry are critical. Remember, a misstep in hiring key roles like a VP of Sales or CRO can cost your company significant time and momentum, so choose a firm that aligns with your company’s needs and values. When the internal network is exhausted or uncertain. A search firm brings a wider candidate pool and helps streamline the hiring process, from interviews to compensation structures.
Stephanie Perez: Here’s a tactical question, but how long should you expect a search to last?
Robert Dunn: So glad you asked that because I’ve many times seen unrealistic expectations, especially from founders or first time CEOs. Look, one, it takes time to just turn it on and then you don’t want to make the wrong hire. You should plan at least three months and it could go six months. So back into it by budgeting three to six months. And of course, that will guide you into when you should start this process. You can’t just start it tomorrow and expect to have the person hired
Stephanie Perez: What are some common hiring missteps, and could you share any personal learnings from your experiences?
Robert Dunn: Founders often misjudge the role or involve too many stakeholders late in the process, which can derail hiring. Okay, so let me start with the easier one: calibrating the position wrong and often, going too “high”. There’s this sometimes sense if I go higher (I’ll get a CRO instead of VP of Sales), that that’ll just make it work better. And that’s not necessarily the case. And second, it’s vital to align expectations with investors and board members early on to assess who needs to be involved and who the key decision makers are.
As far as mistakes I’ve made, I have not always clearly gauged the sentiments particularly of investors. What are their criteria? Sometimes the criteria for the hire is not what the company’s telling me. That’s a real unpleasant surprise. So, I’ve tried to get better. Sometimes it’s a little awkward because again, a very strong-minded founder, you must be almost a start in a company from scratch. They’ve got a picture in their mind. It’s not necessarily the same as the investors. I’ll say another mistake I’ve made is I haven’t sometimes challenged the investors enough like, look, if you want to be in this, you need to be in this. You need to have someone from your team. If it’s not you, someone from your fund on these calls, because otherwise you are going to be surprised and we all lose.
John Smith: I’d add in addition to knowing who the stakeholders are in the process, you also need a clearly defined view of who you want involved. Because the flip side of having too many stakeholders, is that you wind up with “search creep”. You ask enough people and sooner or later you’re going to get a dissenting voice. So you need to have a really clear view of who’s on the committee, who’s on the panel, and stay true to that. I think is one mistake learned from over the years. And another theme would probably be “don’t assume too much from the search itself.” We all have our prejudices. You hear company X and you think, “there can’t possibly be anybody in that company.” But no, you must dig, you’ve got to look, you’ve got to talk to them. Because even in companies where you might instinctively think my next CRO is not coming from company X. Once you speak with the right candidate, you find out there’s a match.
Stephanie Perez: Couldn’t agree more on the importance of collaboration, especially if you’re in a situation where you have a very hands-on investor.
I really appreciate your candid responses today. As you can imagine, this is a new experience for a lot of founders, and having someone who can help them navigate this process is always valuable. So very much appreciate both of your time.
