First Revenue Employee Hire – what’s realistic for a startup?

First Revenue Employee Hire – what’s realistic for a startup?

So, you’re hiring your first Revenue Employee for your new startup, Congrats!

I’ve called in revenue because sometimes it’s called called Sales, or Business Development (Biz Dev) or Sales and Marketing. But make no mistake, this first hire is about revenue and getting revenue traction. It’s not about “strategizing” about getting revenue.

This isn’t about bringing in a Co-Founder to drive Revenue. This is about committing cash, monthly to a hired gun.

Starting with the timing of the hire: 

  • Do you have a product your ready to go sell? TODAY? This is often discussed as the Minimum Viable Product (MVP) that I have noted in the past or a more complete explanation is covered in the Lean Startup. If you don’t have a MVP in site you should NOT hire this person yet.
  • Before you hire this person, have you made the first sales? As the Founder you are the your own best sales person – if your a technical person, I know that was a low blow… but it’s true. Also, if you can’t sell the product/services/offering then a Biz Dev person won’t be able to sell it, no matter how slick you think they are…

Credibility with your investors is not based on your ability to hire (or overpay) a person that used to work at Oracle or Sun, it’s based on actual revenue and sales traction.

Role of the hire:

  • What skill set and role do you need at this point in your company? Let me give you two ends of the continuum:
    • A Senior Sales Executive with Enterprise Sales experience who has built large sales teams?
    • A Junior sales person that can follow a sales script and go bang away on the phones for cold calls?
  • What type of product are you selling?
    • Enterprise sale? For a complex and long sales cycle, this is likely an outside sales person, someone with a Rolodex (does anyone even use these anymore?)
    • Services sale? This will require the ability to crank out proposals. You’ll need someone that has good writing skills and has done it before.
    • Recurring monthly subscription? This is likely an inside sales person driving leads through AdWords and marketing.

Make no mistake here… someone has to sell the first 10, 50 or 100 customers. Setting up a Google AdWords campaign doesn’t replace a sales effort. Go meet with prospects, cold call them, do a trade show – as one of my mentors used to have posted on his desk “Nothing happens until somebody sells something”.

This is why you as a Founder need to go sell the first customer (or 5). Because your going to get the direct product feedback you need to adjust and pivot your idea.

What are the salary expectations?

“Dave, I have a Senior Sales person (who we really need) that is willing to come to work for us for $5k a month to start with a rapid ramp to $180k”. OK, if this is the starting point in your salary discussion or if you are bringing on a friend who has been making $160k a year in their current corporate job, watch out.

First, as a startup you are going to have conflicting needs for cash over the next few years. If someone has an expectation of making $160+ at a startup and you agree, both of you are delusional.

  • Delusion 1 Founder – But my forecast shows we’ll have a huge hockey stick, we can pay that… as 1% of gross sales
  • Delusion 2 Sales Executive – I can make the same amount I’m making at my current company and get 20% of the stock in NewCo!

Next up… Base Salary, Commissions, Titles  and Stock Options.

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