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I'm going to buck the general trend here and recommend bringing the guy on board, but note that what I say (as with all advice) isn't free from the odd concomit

I'm going to buck the general trend here and recommend bringing the guy on board, but note that what I say (as with all advice) isn't free from the odd concomitant caveat. The million-dollar question: "Am I selling to a market that I lack access to / lack the means to access?" If the answer is yes, then you need this guy. And bad. You're likely a lamb heading to the slaughter without someone like him. Enterprise software is one such (arcane to an outsider) market. For instance, it's incredibly hard to sell to CIOs / IT departments without a solid channel of motivated System Integrators. It's even harder for a startup with little credibility to build such a channel of System Integrators who aggressively push your product without the leverage of strong relationships (built over a non-trivial period of time, usually years or decades). I speak from personal experience - we added a Vice President of Sales from a Fortune 500 to our team, and it was the catalyst that our business so desperately needed. Within the space of six months, we were able to close over 10 channel partners and consequently access decision makers at hundreds of IT departments. My advice would be this: keep compensation low, as low as you possibly can. If the guy balks at this, that's a red flag. A true VP of Sales will take it as a personal affront if he doesn't have to prove his mettle through results. I can't emphasize this enough, vest equity solely on performance (revenues realized) and set a reasonable, realistic cliff (a year can sometimes be a bit too short). Give him the authority to incentivize reps adequately. There's a great example from a company called Verdiem in this TechCrunch article (http://techcrunch.com/2010/01/06/0-to-20-million-ten-hand-to-hand-sales-tactics/ http://techcrunch.com/2010/01/06/0-to-20-million-ten-hand-to...) Verdiem’s Jim Flatley taught me this at Plumtree: he fought to get early reps 15% of every sale, but after we made our numbers for the first time ever, nobody wanted to pay them less. Even after the bubble burst and every other technology company took a blood-bath, Jim kept delivering results. Another article that you just can't afford to overlook is by Mark Suster (http://techcrunch.com/2011/02/05/the-excuse-department-is-closed/ http://techcrunch.com/2011/02/05/the-excuse-department-is-cl...), and he sums up succinctly in one line what I've been trying to convey through all this verbiage: (Sales people) are more mercenaries than missionaries. This applies to their leader, the VP of sales in equal measure and the moment you internalize this (and make peace with this fact), you'll find this decision quite easy and understand how to approach the entire exercise. All the best!

thekevan 15y ago
Regarding the 15% example, did they not want to lower the rate because they decided it was worth it or they were afraid to piss off the sales people? If it is the latter, there is a work around. Sales people hold their percentages tightly and get pissed when people lower them. We own them. Don't raise and lower the one rate, add and take away others. So say if you know now you are willing to pay 15% now but think that rate will go down to 10%, introduce the 10% as the rate, but add 5% as a temporary incentive, making it an effective 15%. This way their rate doesn't go down in there eyes, it is just the extra spiff that goes away--which wasn't theirs to begin with really. They knew that 5% was temporary. However if you lower my 15% to 10%, I will always feel like that 10 should be 15. Dumb psychology but it works.

thekevan 15y ago

Regarding the 15% example, did they not want to lower the rate because they decided it was worth it or they were afraid to piss off the sales people? If it is the latter, there is a work around. Sales people hold their percentages tightly and get pissed when people lower them. We own them. Don't raise and lower the one rate, add and take away others. So say if you know now you are willing to pay 15% now but think that rate will go down to 10%, introduce the 10% as the rate, but add 5% as a temporary incentive, making it an effective 15%. This way their rate doesn't go down in there eyes, it is just the extra spiff that goes away--which wasn't theirs to begin with really. They knew that 5% was temporary. However if you lower my 15% to 10%, I will always feel like that 10 should be 15. Dumb psychology but it works.