On Sales leadership, hiring, ILs & Stretch VPs

You guys have all probably read Shreyas Doshi’s tweet thread this week on Incompetent Leaders, he refers to as ILs. If not, here you go.

Shreyas Doshi @shreyas

First-time founders, CEOs, and even employees should understand the playbook of the Incompetent Leader (IL). The IL is savvy & charismatic, and excels at 4 things: 1) Feign competence 2) Create confusion 3) Buy time 4) Fail up The IL playbook & what to do about it 👇🏾

As someone who has hired ILs a couple of times in the last 4 years, here are some thoughts I wanted to share on this.

As an early stage company trying to break through 1M ARR or somewhere in that ballpark, all of you are told repeatedly to make your sales hires asap. You’re probably out hunting or just hired someone. I’m asked about 10 times a year, where and how to hire VPs of sales and product, mostly in the US, sometimes in India. Watching out for the IL playbook, like Shreyas mentions, is super important.

I thought I’d share a few pointers for the hiring & year 1 phases of sales leaders from my journey.

1. Avoid hiring leaders from large corporations - breeding grounds of ILs:
   This is something that most head hunters in the US will tell you. Most VPs and ‘successful’ quota carrying / achieving leaders in large companies succeed because they have a large army of AEs and Directors under them, in a highly automated self running machine. Think about the 90s quote “no one ever got fired for selling IBM” and replace IBM with Oracle, Adobe, MSFT, Salesforce. They’re people managers, not leaders who roll up their sleeves and go do the dirty work of figuring out how to sell the product you have, work the demand gen team, think through the right required team etc. They’re used to having someone else do this for them.

   I’ve hired 2 of these, I failed miserably. They were replicas of the IL persona Shreyas defines here. And I was a classic first time founder noob who fell into this trap of constantly going the extra mile to give them what they needed, only to be told something else is missing.

2. Have 2 hungry sales reps before hiring a VP (a strong foundation that can call BS on an IL):
   As a founder, you’re probably doing some of the sales in the early stages of the company. To friends in other companies, through the network etc. If you’re not, you probably should start. Hire 2 sales reps wherever you live and have them shadow you. Most young / up and coming sales reps know how to follow up, get meetings, take notes, keep track of accounts. Train them on your business by taking them with you.

   In particular, I’ve found that having a few already ‘closing’ reps, makes VPs realize that you have the beginnings of a sales engine already. They know the product is wanted. It doesn’t matter if your reps are not hitting quota yet. You’re probably still warming up on the idea of a quota at your early stage and finding a way of setting quarterly goals. As long as your reps are showing the ability to learn from you and show you how to close deals, you’re in a good starting place.

   The only thing you need to look for, when hiring these sales reps, is the hunger and will to take NO from anyone and go right back to them shamelessly, until they’re told off. These are experiments you can do before hiring your VP, so you can call BS on an IL who makes excuses because you’ve seen your reps first hand and you’ve shown those goals yourself.

3. Find yourself what Jason Lemkin calls a Stretch VP:

   Jason ✨BeKind✨ Lemkin ⚫️ @jasonlk

   If that VP you want to hire has it all ... why would they join you? Your real choice: Stretch VP or Didn't Really Do it VP

   And read more about the stretch VP here >>
   https://www.saastr.com/if-you-are-going-to-hire-a-stretch-vp-do-it-early/
   
   I have found a few stretch VPs in the past few years. 1 of them was grown from within the company. He started off as a customer engagement and experience manager and eventually became one of our VP of Sales - 3 year journey to get there. He helped us with finances, with building our RevOps and did all kinds of things before he eventually started owning sales quota. He was a super stretch VP by Jason’s terms - he was the right guy for the 10M stage not the 2-3M stage. And by having him shadow me for a few years while playing critical other roles, we eventually had him shine. I have a huge bias for growing leadership teams from within the company. It’s incredibly painful because you have to grow and have them grow with you, by your side. You don’t always get the luxury of wisdom from those who’ve been there, done that. But you get a ‘T’ shaped person who can do multiple things in the early stage of the company and is ready to be a stretch VP when the time is right.

   Our second stretch VP was a sales person from a large company in the US :) But the difference between her and the past 2 that had failed was that I knew how to spot an IL third time around. She came in hungry to grow, to prove herself and has absorbed the stress of having to race towards 25M to such an extent directly from me and the others that she started finding her spots of advantage across teams to figure out how to get an edge in ‘closing’ deals. She worked very closely managing and engaging the demand gen team, she took over the actual ‘close’ event when an AE or two didn’t work out. We’re still on a journey in sales team building, so I’ll wait before I comment on the same.

4. The Demand Gen blindspot & the IL-pipeline BS:
   Most founders I speak with, ask me about where and how to setup demand gen engines. Finding product - channel mix is one of the most important things you need for your sales process to succeed. This means you need to experiment across Email, LinkedIn, Google, videos, text, image etc before you know where your customers are.

   One of the first things an IL will tell you is that you don’t have enough pipeline for them to convert. They’ll apply industry standard conversion rates and tell you they need a minimum of 300 or 600 or whatever your company' category’s number is before they can do anything meaningful. And while some of it is true, a large portion of it, is not. We got to 3M+ before even setting up a demand gen engine. We had a person. Not a team, not an engine, until then. Our conversion rates were around 20-30% in the early stages. We went after no more than 10 leads every quarter. Highly personalized, 100-150K+ targets. We didn’t need 100s of customers in the first few years, we needed 10s. Industry standard conversion rates hover btwn 4-8% for low end $$ and $$$ SaaS. For enterprise, it works very differently and its incredibly hard to find data out there.

   Of course, we have an engine today. But it took us 3 years to build a full fledged engine, hitting volumes and showing statistically significant data for us to begin finding patterns in our demand gen process. Ask yourself what your business needs today. What kind of customers are you closing? Do you really need 100s of leads a quarter or few 10s with a very high close rate. Get your product feature <> Channel mix right early on. Experiment extensively to find the right channel. And then allocate budgets accordingly. Find yourself demand gen reps who will go after targets, engage them and not let them go. Pair your sales reps with the demand gen reps for persistent follow ups.

   Get ahead of the BS. Prep for an IL to show up to say this. And let them know during the interview process that the expectation of the close rate is X% given the patterns / history.

5. You’ll fire a few ILs before you get to the guy or gal you want!
   Roy (Sequoia) told me 4 years ago that every enterprise company has to go through 3-4 VP Sales before they *really* find someone. He reminded me of that exact point every year I fired an IL. I’ve fired 2 to date. I’m on my 3rd and 4th. Both have worked out thankfully. And am getting ready to add my 5th to 3 and 4, rather than replace. Fingers crossed.

   The pain of not hitting quota is one that has given me ulcers over the years. More than anything else. Quota. I don’t know that I’m very different today. I still suffer from Quota hitting PTSD but I know its ok to fail, learn, and do different mistakes.

   Make sure you’re not making the same one again. Set some expectations with your incoming VP: make no excuses on their behalf (I did. A lot. Especially when I wanted it to work real bad and liked the person), get the demand gen and other engines in place so they have very few holes to poke at, make sure they’re not the hole-poking type, and last but not the least, 9 months. I now have a 9 month rule. If I can’t see quota coming through by 9 months, I give them a 3 month warning. If they don’t make it in the last 3 months, they’re out.

   Many other companies give their leaders no more than 6 months. In enterprise, I’ve found that magic begins to happen between 6-9 months. And if it doesn’t, then it probably is never going to.

Fix one thing every week, measure its impact and tweak, track that one thing for a year, enjoy how successfully you’ve set that one thing in motion, then hand it off to the next rightful owner.