Micah Smurthwaite
As the first sales hire at Cloudflare, I learned firsthand from both our high growth and my own mistakes how to build a world-class sales team. Early hires are the cultural cornerstones of an organization. As Vinod Khosla described the initial hires at Sun Microsystems, “Initial hiring is way more important than you think because of its multiplicative effect. So, it’s worth taking a little longer when you hire those people.”
The first sales hire will set the best practices, cultural tone and is responsible for making sure each subsequent new sales hire succeeds. For this reason, it is important that startups look to hire missionaries, not mercenaries, when they bring on their first sales team member. If the first sales hire is a “coin-operated” mercenary whose priority is to overachieve quota and is a great solo player, they may be more competitive than collaborative. In contrast, if the first hire is a missionary who cares more about evangelizing the product and is a team player, they will naturally enable the next set of hires to succeed.
Hiring the missionary
There is an overwhelming amount of declarative advice on how to make your first sales hire: They should have experience selling at an early-stage company, tenure in that company to a much larger team (five to 50 employees, or $100,000 to $10 million ARR), they’ve sold at your price point, overachieved quota consistently (beware of this one. Quota overachievement can be a false positive and may be the result of a fruitful territory, a comp plan where quotas were too low or selfish “me-first” behavior.), etc. What you should look for are missionaries, and they exhibit two key qualities: resourceful ingenuity and team-based behavior.
Missionaries are resourceful team players
At early-stage startups, there is more work to do than people to do it. These are resource-constrained environments where roles go beyond job descriptions and are “jack-of-all-trades” positions. This first sales hire is not an ordinary sales gig. It requires a missionary with a deep interest in the technology who wants to evangelize the product. The resourceful missionary must have an enterprising mindset to build their own sales collateral, a clever approach for testing pricing, a passion for the product technology and an ability to navigate the organization so engineering and product teams can hear the voice of the customer.
While resourceful skills are needed to test out different sales motions, the most important quality the missionary must have is a team-first attitude to share those learnings with colleagues. As the missionary, and the subsequent missionary hires, are developing a repeatable process they are engaging in novel intellectual work; this is not routine execution. When someone develops better messaging, or discovers a new use case, the goal is to spread that expertise so overall collective intelligence and team performance increases. If that operational know-how becomes siloed and an individual optimizes for themselves, instead of the team, the organization loses.
A team-player mentality is critical for the missionary hire not only to ensure knowledge share, but also mentorship. If you have an individual contributor who is used to excelling in a sales territory as a lone mercenary, they may not be inclined to lift their teammates. Consider when the second and third sales hires join the team. The first sales hire shouldn’t feel threatened or competitive, you want them to be overly helpful, ensuring the new hires succeed. You need this teamwork for your organization to be successful. This is why team goals for sales teams work so well in the early days, they align interests and put financial weight behind the giver’s mantra of not worrying about who gets credit.
Testing for the team player: Referrals and team sports
One reason candidate referrals have a higher rate of offers than general applications is that their soft skills have already been tested and vouched for. Plenty of candidates have the hard skills to do a job that can be tested for in a few brief interviews. However, the soft skills of cooperation, knowledge sharing, apolitical behavior and being a good teammate can’t be accurately gauged in a brief interview; they are only vetted out over a long period of time working alongside someone.
Hiring former soccer or basketball players who are used to including and lifting teammates, instead of the person who played a solo sport like tennis or wrestling, de-risks the odds of hiring a poor team player. Yaniv Masjedi, CMO of Nextiva, said, “I love hiring water polo players. I won’t discriminate against a golfer or sprinter, but I find that the more collaborative the sport, the better fit they’ll be in a team.”
Testing for resourceful skills
One great way to test for ingenuity in an interview is to ask the candidate to bring a sales deck and pitch the product. Having them pitch the last product they sold will give you a sense of their technical depth and presentation skills, but asking them to create a sales deck for this role is even better. It tests their inventiveness, ability to quickly learn the product, research competitors, identify potential buyers and compile it all into buyer messaging — all things they will have to do on the job. You’re not looking for perfection in this sales deck, you’re just testing their ability to be resourceful.
Mercenaries who excel in large organizations may join a nascent sales team and utter phrases like, “Where are my training videos?” or “Who in marketing can help me with a webinar?” The answer to those questions is, “You want a training video? You need to build it yourself!” The early sales team has to build the playbook themselves. Often individuals coming from large organizations aren’t used to operating resourcefully in a resource-constrained environment.
I like the question Michelle Zatlyn, COO of Cloudflare asked in my interview, “Tell my about a time when you had to ramp up quickly on something new.” It was a clever way to query how a person resourcefully learns about something new when there is very little onboarding infrastructure. Another great question to gauge their ingenuity and see how they think is, “Let’s say you start tomorrow, what are some of the first things you would do.”
Map your compensation plan back to the missionary model
Much like hiring a missionary, designing a compensation plan that encourages teamwork and increases collaboration, positions the entire sales team to excel. While team goals on a sales team seem counterintuitive, they were a key ingredient to Cloudflare’s success. Data from academic studies back up the case for team goals. Take for instance research around the effect of team compensation versus individual compensation in retail department stores that found that team goals produced more sales over individual goals. It’s easy to imagine why, with a team compensation goal the art of each person’s sales craft is shared fluidly among the team and collective intelligence improves within the group. However, if we are competing in a zero-sum game, I have a disincentive to share my strategies that make me more effective and the group know-how diminishes.
One phrase stands out in the study: Peer interactions are critical considerations in designing sales force incentive plans and broader firm strategy. A firm can have a high-level firm strategy, but the tactical execution is driven, or derailed, by peer interactions and incentives. Especially in the early days of a startup where you have a hunch what the right sales strategy is, but you need to test variations of it, and collective efforts among peers is critical to refining, writing and executing a repeatable sales playbook. How can managers facilitate peer interactions and foster a team-based culture of trust?
Team compensation plans are one way to reinforce the team-first ethos, but managers can also use flat organizational design to remove hierarchy and bond groups. To unite teams at Intel, Andy Grove required all employees to remove titles and ranks from their office doors and desk placards and eliminated reserved parking spaces for executives. Grove told employees he wanted them to display the same commitment and dedicated teamwork that emergency workers demonstrate when responding to natural disasters, putting aside self-interest and territoriality for cooperation and mutual support. Cloudflare also was a titleless organization, and it created a culture where the best ideas could rise to the top and prevent a manager from pushing them through based on their artificial authority.
Building the repeatable process
Jason Lemkin at SaaStr recommends hiring two sales reps before layering a VP of sales. At two hires you’ll hopefully avoid the homophily bias by having two missionaries, with differing perspectives, to test out different go-to-market tactics as they create the sales playbook. With two reps, you’ll also create a level of friendly competition. Remember that cooperation and knowledge share are more important at this stage than competition — a leaderboard with two sales reps doesn’t make sense. As Alfie Kohn writes in “No Contest: The Case Against Competition,” “Trying to do well, and trying to beat others, are two different things.”
Once the early missionaries are producing sales that equal the fully loaded expense per sales rep, you can bring on more missionary hires. Once the sales yield is twice the fully loaded cost per sales rep the company now has a repeatable sales process and you can bring in mercenaries who can onboard with a predictable ramp and output.
When to call in the mercenaries
Now that you’ve hired your first few missionaries, set your sales team down a path of collaboration and joint success, mapped your compensation model back to that teamwork mentality, and have a tried and true sales playbook, you’re ready to bring in the mercenaries.
A mercenary is a traditional salesperson who is extrinsically motivated by financial returns, thinks in short-term goals like quota attainment and is more competitive than cooperative. Competition is now more valuable than collaboration at this stage as sales activities don’t require much learning or knowledge share — the sales process is already refined.
The skills mercenaries have selling a mature product and executing a repeatable process are not the skills needed for the early days in a startup. Mercenaries excel at ramping through a finely tuned onboarding process, leveraging marketing resources to drive campaigns and presenting with a degree of refined professionalism, but may lack the skills needed to build the onboarding process, design marketing campaigns and compose the presentation messaging. The mercenary is extrinsically motivated by short-term sales goals, cementing their position in the President’s Club and optimizing short-term financial payouts. The mercenary is a great cog in the machine, the missionary has to build the machine.
If a candidate asks you in an interview, “How many salespeople made a million dollars this year?” you’ve found a mercenary.
Crawl, walk, run
Once the product has achieved enough traction and it’s time to scale, sales reps can be hired as rapidly as management and financial constraints will allow. How quickly you should hire is another topic. Hiring too quickly can derail the culture that has made you successful to this point. Culture is inherently democratic, if there are more new people than old people, the new people set the culture. If you hire too many mercenaries too quickly, you may end up spoiling a winning culture.
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