Join us at SaaStr Annual 2020. Many candidates will tell you they want a guaranteed draw for 6+ months. In general, making sure his/her 3 reports, then 10 reports, then 30 direct and indirect reports — work as effectively and efficiently as they can. So I want to try to help you if you’re going through this. But incentives are critical, and the VP Sales will likely be the Seemingly Most Expensive hire you ever make. Have too many of them, and your economics are wrecked. 5 years ago today, it seemed like a lot was going on on Quora. by Jason Lemkin | Blog Posts, Compensation, Hiring, Sales, I’m not ashamed to admit that when I set up our first SaaS sales comp plan, I had no idea what I was doing. Let’s say you hire your VP, Sales when you are at $1m in ARR. So here’s what I figured out, for us, and it worked well. Basically, we paid our VP Sales X% of every single dollar after we hit the plan for the year out. Then, as we first scaled up a sales team, we ended up literally copying Salesforce’s comp plan. note: an updated version of our classic 2013 post. You could make an argument the VP Sales should only be responsible for net new revenue from sales. So how can this big salary not just be a big drain on limited capital? And it’s great when they even take a quota at first, to do it themselves. If the Stretch Plan was exceeded, the comp goes up from there. SaaStr is the world’s largest community of SaaS executives, founders, and entrepreneurs. If he/she can’t answer fluidly, pass. Create a real machine to monetize the prospects and leads that find their way to you. Either way, not a great VP Sales. This will ferret out if he/she can play at an early-stage SaaS start-up successfully — and if he knows how to scale once you scale. You need sales to sell your product. It’s an exciting time in the Bay Area right now. SaaStr 102:Why You Should Not Pay Your Sales Team Commission, Why There Is Such Little Innovation In Go-To-Market Strategy & Why Adaptability Is Key Not Efficiency with Didier Elzinga, Founder & CEO @ CultureAmp by SaaStr published on 2017-03-06T06:31:29Z VentureBeat. This is the flip side of the no guaranteed draw. We crossed 2,000,000 views and had just done our first meet-up (it had no content, just conversation): That seemed pretty epic. If any of the answers are terrible, pass. Our goal is to help everyone get from $0 to $100m ARR with less stress and more … Sometimes more if you’re well funded, but it’s usually in the 20%-25% range (i.e., reps have to close 4x-5x their On Target Earnings). Not later. There’s no correct answer. Not a lot different, but meaningfully so. It’s going to take a few steps. Your VP Sales must know/have 3–5 sales reps to bring in with him. That was epic. So my uber-point here is you shouldn’t hire a VP Sales until you are ready to scale and build and fund a small, growing sales team. Tell me about them, by background if not name. You can see from the above chart, and in the BSG Team Ventures data here, that most VP Sales are heavy on guaranteed comp and light on the upside. Believe it or not, most candidates don’t understand this unless they were really a VP Sales before. It’s natural for a VP Sales not to care about costs. And the great VP of Sales all know this. Justin Welsh, former SVP of Sales at PatientPop explains how he started in SaaS in 2009 as the second sales hire at Zocdoc. And lets the candidate blame others for their own issues. Here’s what I learned and knew before I figured out the 50/50/25+ plan: No best efforts cr*p.  Even if you hire a VP Sales very early, there has to be a clear quota and plan for him or her to hit. And the great VP of Sales all know this. Optimizing how best to work with Demand Gen and marketing. No best efforts stuff. My VP Sales and I both worked toward the same goal as everyone else in the company — the end-of-the-year revenue goal. And you want to accelerate, do better … so you want to hire a VP Sales to … sell better than you. Because in SaaS start-ups, it seems like the. T coming! It used to really bug me because I am a firm believer in the strategy of Zero Voluntary Attrition and trying to hire fewer, more committed resources over a higher volume of mercenaries that, The thing is, it turns out the VCs are basically right. In a start-up, the VP Sales has to also be aligned to costs, not just revenue. Have him/her explain to you what will happen. And then … as soon as you hit that run rate (which actually should happen earlier than month 12, because you have to hit the velocity early than that to hit the full year-end goal) … you’re gonna need 6 more reps to hit the next goal. 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