When hiring your sales lead, don’t make this mistake

Funding drives our entire ecosystem. Like cheap Saudi oil sending shockwaves across global markets, so too the ebb and flow of venture/Investment capital determines the pace by which ideas have a chance to become profitable realities. We’ve written and read a great deal about the 4x increase in VC investments over the last four years. But that investment cycle seems to be winding down. Venky Ganesan, Managing Director at Menlo Partners, was recently quoted saying early stage VC has “… almost evaporated” and that many early stage adtech companies are struggling just to get meetings with venture capitalists. And according to Chris Douvos, a managing director at Venture Investment Associates, “VCs could feel a crunch in 2016 and entrepreneurs may find themselves short of cash.” He says that startups will be forced to refocus on monetization and profitability.

While there are a number of factors that trigger each successive stage of funding, the way a company scales its sales team is more impactful than many founders initially realize. Understanding the type of sales people to hire should be considered relative to where a company falls along its funding spectrum. These considerations are quite nuanced, and adtech companies that get this right can position themselves as a much more appealing investment than the competition.

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All too often we’ve heard startup founders who have just received seed funding tell us the first person they need to hire is a “connected sales executive” or a “sales leader with brand equity,” a “rain-maker.” They point to senior sales executives from Google, AOL, or any number of media and adtech behemoths because founders believe that this profile or type of sales background will instantly bring established connections, guarantee growth, connote respectability and trigger future rounds of funding.

This hiring strategy rarely works, as carries with it a slew of potential problems. Unless founders and CEOs have first asked themselves exactly what they need from their initial sales team or what they want “rev1 sales” to accomplish, it’s all too easy to hire a sales leader whose personal career objectives are not fully aligned with the immediate sales execution objectives. This is when we like to introduce the “let’s be honest” conversation with the prospecting entrepreneur/founder, which goes something like this: “I know you want a well-established CRO who is currently overseeing $100 million in revenue at a competitive platform but, let’s be honest, why would that person join your company given its current stage?”

Let’s assume you’re a seed funded company, there is a lot to be worked out in product suite vision, distribution strategy, pricing model, and other things you may not have even considered. Does it really make sense to hire an SVP Sales or CRO to build a sales team when it’s not yet clear exactly what the platform is going to look like in six months? At this stage, it is all about driving initial revenue, not about impressive titles or building a complicated sales team structure.

In terms of sales strategy, seed/Series-A funded platforms need two things above all: meetings and test budgets. To best accomplish that, it makes far more sense to bring on a smart director-level sales person. Look more for candidates who can set up meetings, get the technology in front of the right people, secure test budgets, and ideally grow into the role of VP over time. This person needs a few qualities: rudimentary “block and tackle” sales skills, a natural curiosity about the platform or space, an evangelizing sales style, entrepreneurial flair, and experience having sold a product that has never before been introduced to the marketplace.

Bringing on an executive level sales person with SVP or CRO title, when all you really need right now is to trigger attention, traction, and some initial revenue can backfire with costly repercussions. However once initial meetings and test budgets have proved positive and are evolving into secured sales agreements, the next round of funding won’t be too far away, and it will be time to start investing in organizational evolution and strategy. We recently worked with a well-known, highly disruptive private marketplace platform with sights set on a Series A. After the seed money came in and about five months before Series A funding was to be secured, word came down from the executive team to activate the search for a CRO. As this company wooed well-known sales leaders in the industry with the promise of an imminent large round, investors began putting their term sheets together and the two factors worked simultaneously to help close one another. A month later the company was able to make a huge splash, announcing Series A funding and the new hire at the same time. Yet, it all began with seed money and a junior sales guy calling for meetings.

In a market climate where it is increasingly difficult for adtech startups to move past seed round funding, it’s critical that CEOs approach hiring as strategically and thoughtfully as they would product development. Making the right hire at the right time is critical to not only receiving funding, but also for long-term sustainability in an increasingly consolidating space.

Dan Goldsmith is managing director at Three Pillars Recruiting. He has 15 years experience in technology and media sales, 10 of which have been spent focused on executive recruiting across the digital media landscape. He started his technology sales career selling enterprise level solutions at The Mathworks. He then built the New York digital media sales recruiting practice at AC Lion, where he recruited for DoubleClick, Google, OpenX, Pontiflex, and many more.