Building A Sales Organization

For Startups, It All Starts With Good Planning And Aligning Cultures

(Rockville, MD -- February 25, 2003) Most people tend to think that it’s the products that are the arcane part of a technology business. If you’re a founder who came out of the engineering side, building a sales organization can be as esoteric as middleware. Instead of navigating bits or networks, building a sales force means navigating human motivation and corporate culture. It’s especially difficult when you’re just getting started, moving from a period when the founders did everything to the moment when you hire that first professional who will form the cornerstone of your sales organization.

According to Gina Dubbé, Managing Partner at Walker Ventures and someone who has held key sales and engineering management positions with companies such as RJO Enterprises, Oracle, PRC, Interleaf, and Trusted Information Systems, “Hiring the first salesperson is often the most difficult issue for a company because it's a cultural introduction. You have a company filled with engineers and principals and people for whom this is their livelihood, their baby. To bring a salesperson in is like a knife through the heart for many companies.”

Dubbé was moderator and an active participant in this morning’s Netpreneur Coffee & DoughNets event, a discussion on “Building A Sales Organization” in which she was joined by a panel that included Carolyn Hyde, SVP of Worldwide Sales & Marketing at SER Solutions; Walt Roger, Director of Public Sector Business Development at Akamai Technologies; and Bob Skinner, EVP of Worldwide Sales at Icode. Billed as “War Stories from the Startup Front Lines,” the event was filled with hard-won practical advice from sales veterans.

The event was also a very special session since it marked the revival of this popular monthly event series for entrepreneurs. Last year, the Morino Institute announced that Netpreneur would be sunsetting in 2003, but a coalition of local groups—including the Tech Council of Maryland, the Northern Virginia Technology Council, the Washington DC Technology Council, and Virginia's Center for Innovative Technology, along with sponsors Comerica, Ernst & Young, and Fenwick & West—joined together with Netpreneur’s support to produce a series of three programs.

Why is culture such an important element in building a sales organization? There are several reasons, and the most immediate is that salespeople often have different set of expectations and motivations from the startup crew. For one thing, the good ones are motivated by money. As Dubbé noted, “You bring a sales rep in who you're paying on performance, and you've got an engineer sitting right next to him who’s not being paid for performance. You have to encourage risk reward, and that is often a problem for an early stage company.”

That’s just the start. Culturally and by disposition, not all salespeople are the same—some are better account managers, others excel at closing new customers. Inside salespeople are different from field reps. Some salespeople have the temperament to work long sales cycles; others need a constant flow of transactions. Some constantly work to develop their own new leads; others are lost if you don’t feed them prospects. It’s so important that the first sales person you hire is the right one for your company because he or she will set the culture and tone that future hires will follow.

As Rogers  advised, “You've got to find a person who can come in initially and help generate revenue, but who also has the skill set to build an organization. It’s not an easy person to find, but that's what you've got to be looking for.”

And here’s another cultural factor that entrepreneurs should be especially wary of: the big company/small company dichotomy. At a startup, you simply can’t afford the kind of big company mentality that requires stacks of collateral or who feels that it’s somebody else’s job to change the toner cartridge. As Rogers put it, “There’s no ‘they’ here. If the conference table has to be wiped before the sales presentation, you wipe off the conference table.” That some people can’t succeed in such a culture may have nothing to do with their ability to sell.

According to Skinner, “The best mix I found is somebody that has been around for a while, started off in a large company and got good classic sales training, then moved into smaller companies. They've had that smaller company experience before they joined your company.”

Can an early stage company get that kind of person? Yes, according to Dubbé, though it’s not easy. “Some of the best hires you make are salespeople who have hit home runs in the past and are willing to bet their compensation on their ability to perform. Those people are willing to take a big chunk of equity in lieu of salary or a very low base with a very high upside. They are hard to find, but once you get them into an organization, they can be the key person that is responsible for that organization's success.”

Since money is how salespeople keep score, the compensation plan is the key to their motivation and the key to steering the specific kind of results you’re looking for. There can be tremendous flexibility in plans within and between organizations, and they have to be carefully crafted to take into account the nature of your market, the pieces of your solution, your channels, sales cycles, and more. Panelists suggested a variety of factors to take into account, topped by a bit of advice from Dubbé.

“Never cap upside,” she said. “You want somebody who is going to swing for the fence, who looks every day at their pay stub, and you want the compensation plan to incent them for every dollar they bring in.”

In order to do that, and to do it profitably, you have to truly understand the nature of your business inside and out. Everything grows from that understanding. According to Hyde, before you even think about hiring your first sales person, “Make sure that you understand your messaging, that you understand your target market, that you understand why someone would buy your product or solution. What's the return on investment? You have to have a plan in place prior to even thinking about bringing that person on board.”

With a plan in place, you can begin building a sales organization. The panelists covered a wide variety of important topics to help, such as when remote reps fit in, generating leads, specific tips for comp plans, evaluating and interviewing prospective hires, assessing a person’s network, selling to the federal government, monitoring pipeline, and tips for managing salespeople. The complete text is available in the transcript and video.

Notwithstanding any clashes of culture, and lest the thought of building a successful sales organization begin to sound too alien, remember this observation from Skinner, “You have to be an entrepreneur if you're a salesperson.” And all entrepreneurs, whether they’re founders or salespeople, can get unified behind the idea of winning.

Copyright 2003, Morino Institute. All rights reserved.