Sara Lindquist:
I'm Sara Lindquist from Fuse. We're an early stage venture firm based right here in the Pacific Northwest. And just like the founders in our portfolio, we are just getting started. We believe that founders deserve more: more urgency, more community, more expertise, more reliability - more of everything. And we aim to deliver.
Today we're kicking off a series on startup operational excellence. This first segment is all about hiring. Building a high performing leadership team is critical to success. It is imperative to do the proper upfront work when exploring and screen candidates, but as a founder, knowing what to look for based on your company's stage and how to vet the right person can be a daunting task.
In this interview series, we aim to help by providing insights on how to ensure you are properly looking for and finding the best possible candidate for your company.
Today, I sit down with FUSE operating partner, John Connors, to talk about hiring an early-stage VP of Sales. John has had over 30 years of experience as an operator and investor, and has come alongside dozens of companies to help them build out their teams.
Today, he's going to share some of that wisdom with all of us.
Let's get started!
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Sara:
John, thank you so much for being here today!
John:
Thank you, Sara. It's a pleasure to join you on this audio cast.
Sara:
Well, you've certainly seen and experience a lot along your path, so I'm super excited for you to share your perspectives on the journey and appreciate you sharing some of that wisdom today.
John:
Oh, it's so fun to be here. Thanks for the opportunity!
Sara:
Absolutely. So John, hiring is hard and very critical to get right, as you know, and have experienced in many different realms throughout your career and time is an investor and operator - and it’s especially critical with your sales leader at the early stage. To start things off, can you actually quickly explain the difference between a VP of Sales and a CRO as I'm sure some clarity would be required?
John:
Yeah, it's a really good question. The CRO title is a relatively new role definition. Generally, it just the most senior sales leader in an organization, but it is a relatively new title and it's one that I think most sales leaders in organizations regardless of size - it's the title they want. But the real difference, I think, between a VP of sales and a CRO is a VP of sales is probably the first sales leader you're going to hire in your company. And you may have to give the CRO title just because that's become the coin of the realm title for the top sales people.
Sara:
Oh, interesting.
John:
But I think of the difference as being a CRO is generally someone who runs the entire sales go-to-market effort and is usually the leader of other managers. When I think of an earlier stage company, what you're really hiring is the first executive in charge of sales and they may have very few employees, one or two to start - and be selling primarily alongside the founding team and the CEO. So I think the CRO is the title that's probably appropriate for larger companies, even though you might need to use it for your early VP of Sales hire, just because it's become standard.
Sara:
Got it. Okay. That's really helpful. Focusing in a little bit on the VP of Sales, in the context of early stage for this conversation, why is the VP of Sales such an important position to get right?
John:
Oh man, it's just such a good question. It is such a key role and there's so many dimensions to building out the customer facing side of a company. I think the first thing is - this is a key member of your team. When you're a CEO building out a company of any type at an early stage, you're really trying to build a team where 1 + 1 = 5. It's super important to get the team dynamics right of the people you hire in terms of how you're all going to work together and how you're all going to persevere together and how you're all going to drive together for success so key team member.
The second thing is this individual will probably be the primary external face of the company, other than a sales-oriented CEO or a particularly extroverted product founder, this sales leader is going to have more customer and external facing interactions on behalf of your company and your brand than anybody. So that's very important.
The third thing that is really key once they're on board, besides the culture fit, besides the role they play externally, is this individual will be really key in helping to figure out product market fit and really key helping to figure out signal from noise from customers.
John:
In the early days of a company, you get a lot of input from external contributors, whether its potential customers, whether it's people have a point of view of your company, whether it's people you know - but there's a lot of noise and the VP of Sales or CRO is going to be really key in helping to define with clarity, product market fit and customer value and separating the signal from the noise that you're getting from your early sales efforts.
The other thing that's really important to consider as a founder and/or a founding team, this sales team, and go to market team, if you're successful is going to be the largest part of your organization. More people will be hired in a go to market function if a company's successful under most business models than any other part of your company, whether it's product or marketing or finance or operations, most likely the sales team will be the largest organization you have.
So that leader has a really big impact on "what is the culture going to be based on the type of people they recruit to your organization?". Many dimensions to the importance of this role. First, it's a key leader on the leadership team. It's key for product market fit and getting signal versus from noise. And it's really key in terms of what kind of culture is this company going to have as this leader hires probably the largest number of employees into the company, into the go to market function.
Sara:
Oh, that's excellent. That's really helpful insight, John. It would actually be really interesting. You've worked with a lot of startups throughout your years as an investor, and I'd be curious, can you share an example about a prior experience where you've seen a VP of Sales completely change a company's trajectory? I'd be curious if you have any fun anecdotes there.
John:
I just feel so fortunate and blessed to have had the number of experiences I've had over the course of thirty-plus years of working in tech. It's hard to identify one person and say, okay, that person was the person responsible for the results of a team or the results of an organization solely. But gosh, there's a few examples that really come to mind of just exemplary leaders in early stages who made a tremendous difference at different stages. I think back to one of the earliest sales leaders I got exposed to in my technology career was a gentleman named Michel Lacombe and he was hired by the general manager of France, Bernard Vergnes to run sales for Microsoft France. The way Microsoft organized, it was really brilliant. Bill Gates was a very successful CEO and a very good manager. The team did a very good job in building the international organization in that each country was its own profit & loss and its own territory and had a general manager.
Well, Bernard was the first GM of France in the early days and he hired Michel Lacombe and Michel was just a very effective sales leader in that he was analytical. He was great at recruiting. He was great at motivating, but he was just dang good at getting the money - and that was in the early days when people were just pioneering the use of both personal computers and applications.
Michel was just incredibly effective at getting the money and he had a commercial sense that was just incredible. Michelle ultimately became the general manager of France. Then he was the president of Europe and died too young, but he was the first sales leader that I saw that just knew how to get the money and had explosive growth year after year with selling new products people had never really used before.
John:
A second, really good example was Tom Schodorf at Splunk. Tom joined when Splunk was at about just before a $25 million run rate. Maybe not even that, but he built the sales organization worldwide and the forecasting process and the discipline of scaling. At that time, it was so critical that the organization be staffed because it was clear there was market demand and building a repeatable, scalable team to meet that product demand. Tom was just extraordinarily good at it.
I'm fortunate now in a couple of companies we're involved with currently to see Anand Veerkar at Icertis and the way he's built out that sales team from a couple sales reps to now multiple geographies. We've probably grown 50x roughly since we invested in that company in Sales. He has scaled every step of the way with the way he's first and foremost hired talent. That's really key.
John:
Finally, there's a gentleman that's working with us at Carbon Robotics, Eric Scollard. Who's just got an incredible methodology and incredible way of building teams and building process and building enthusiasm for that day to day energy you need in order to really scale. I've had so many examples, but across those four I've cited very different individuals, very different personalities, but all the same type of results with the same type of key focus on team recruiting, talent, discipline, and process.
Sara:
Yeah. That's great, John, really cool to hear that across each of those examples. As you reflect on those experiences and what you described earlier, if I'm a founder or CEO and I'm considering making my VP of Sales hire, how should I think about the role when is usually the right time for a VP of Sales to come in?
John:
Boy, that's a great question. And it leads to a broader second question then is, well, "what stage am I at?". I think you have to think of these in stages, but I think for most companies, if the CEO and founders don't have any significant sales experience, you're going to find out really quickly whether or not you have Sales capabilities and you might find out the hard way. And the hard way is you have a product idea or maybe you have even an MVP or a pre-MVP product and you talk to a lot of potential customers and you hear from them, what you think is keen interest in your product. And you have good meetings and they're willing to do more meetings with you and give you more input. But somehow you just can't get that sale contract done. Sales is both an art and a science, but part of what you're going to find out, if you've never had any sales experience is really figuring out what is the customer saying? Is the customer signaling buying intent or are they being polite and giving me good feedback?
Or you're probably very interesting people with a very interesting idea and the larger the company generally, the more time they have for meetings. It's really important very early on that the founding CEO and or founders really assess what is our skill at selling and are we really getting traction of getting lighthouse adoption or trial or not?
Usually people learn that the hard way that they think they're getting a signal they're not actually getting from a customer. If you've been in the sales org or in a sales role for some time, you've learned to listen to what customers say and then divine their intent, or you've learned how to ask for the order very concretely and very specifically. And if you've never done that before, you have to learn how to do it. If a founding team doesn't have any sales experience and they really think they and their investors or based on input they think they have really found a product and market opportunity.
I think it's a very good idea to get that sales leader on early, but you don't want that sales leader to be ramping the team up very substantially until you have product-market-fit or something that feels like product market fit.
John:
I think depending on the background, if you are a founder that has good experience broadly, or general management experience, you've been around a sales process - you probably have a little bit more time, but if you're brand new, you either want to get an advisor that is a sales experienced person, or get that person on board early.
Then as you grow, that expectation of what that sales leader is going to be responsible for and what their skill sets are will change. There's really clear demarcations, they're not perfect, but they're pretty darn close of the sales leader that is good at getting initial deals and prospecting might be a different leader than you're going to have after $10 million of sales. Once you get to $25 million and you're hiring managers to lead territories, or even geographies that sales scale will change yet again. So there's very early stage kind of pre-revenue, early product, to early revenue, to scale revenue that are just very different sales leader and sales organization roles.
Sara:
Yeah. That's really helpful. I think that speaks to the first step, being the "look in the mirror test". Who are you as a leader? What gaps in support do you need filled? And then, understand who the candidate might be that you're looking at and just not going in blind for that phase.
John:
I've had a lot of experience, particularly in venture that a founding team is, first it takes incredible optimism to be in this business to start a business and be an entrepreneur. It doesn't matter what the business is. It takes in optimism and drive. The personality types that are drawn to and successful at this are very good at overcoming obstacles. But one of the things that I have seen that can be an issue, is many CEOs think they are good sales people and think that they are making progress with customer activities when they're not.
And because of their optimism and because of their drive, coupled with often a lack of experience in the sales realm, they can hear different things than customers are saying, or they think they can will people to buy their product. It just doesn't work like that. People are reluctant to part with their money, whether they're individuals or they're companies. Too many CEOs I've seen with no sales experience can have good meetings and hear happy talk and translate that into very aggressive sales forecasts that never materialize.
As a founder, you want a sober sales forecast that is grounded in reality. Until you've been burned by getting that wrong a few times, you probably don't appreciate it, but it's a mistake many, many, many CEOs make their first time out.
Sara:
Yeah. No, I think that's a really, really important call out. So, phase one: understand who you are as a CEO, what stage you're in, what needs you require for your company. Ok, now digging in further into the good stuff…As a founder is exploring candidates, what are the most important things that they should consider and look for in a VP of Sales candidate?
John:
The very first thing is you're hiring somebody to lead the part of your organization, whose job it is to sell things. The first thing they have to be able to close sales and lead a team that closes sales that's the north star and dig really deeply into very concrete examples of what is their quota carrying experience, their bag carrying experience as an individual and as a team leader. But number one, they have to be able to close sales.
John:
The second thing is they have to be able to forecast with at least some reasonable degree of accuracy. In early company history, it's really hard because you just don't have any history and you don't have any references and you don't have anything to go on. Their ability to forecast soberly is really, really critical. Someone gave me some really great advice when I was very early in my work career, business career. That in a forecast, almost everybody will over forecast sales and under forecast expenses.
As a CEO, that's a really good reminder when you're looking at forecasts is, be very sober about a sales forecast, and always assume you're going to spend more than the budget, even if you don't, even if you have the controls, but being conservative and accurate in forecasting is a second key thing after the ability to close sales.
John:
The third thing is team building. As I mentioned previously, if your company's successful, the go to market organization will generally be the largest organization in a company. This team will define to some extent what your culture's going to be like. You want a sales leader to be very good at closing sales, forecasting, and building a team. Those would be the three key things that I would say are really, really essential when you're sussing out that sales leadership, whether it's early stage, mid stage, or later stage.
Sara:
That's great. That's really helpful. My next question, following up on that, about the screening and interview process, what should founders do to make sure that they're uncovering all these deliverables thoroughly and accurately?
John:
Such a good question, Sara. I think the first thing is you really want to take the time. Don't be in a hurry in the interview process or in the due diligence process, do deep, deep due diligence. I think the way you should think about that is first of all, be very prepared with the questions that are key around closing sales, forecasting team building, and be prepared.
John:
The second thing is really be very clear that in these interviews you want to do most of the listening. You want to be prepared with insightful, succinct questions, but you really want to be able to dig into "what is it this candidate is telling you?". I think the other thing to look at is what are some key indicators that you can look at a resume or a work history and you say, okay, does this candidate have a demonstrable record of success or given the stage of our company and the stage of this person's career, we're taking a bit of a flyer.
We think this is a great athlete, but they don't have that much time. They don't have that much game experience yet. First finding out "Hey, is this candidate someone who has a demonstrable track record of success in their life and in their career?". Get to know the person and say, "Hey, I feel comfortable that this person has a demonstrable track record of success in their life", and then measure in the domain as well.
John:
The third thing I would look at is what's the frequency of job change? What was the reason for the change? Was someone following a typical successful career path that every couple years either they get promoted or recruited, or if it's an internal move, they're getting moved at increasing levels of responsibility or recruited to companies in a bigger opportunity than they left? That is they're really growing.
Or was that frequency of job change? Are there things that give you pause and you wonder "well, maybe they don't know everything about the reasons behind this frequency of job change?", But I would really determine that.
John:
The next thing I think is really critical is are they an A player? I think it's probably harder to determine that in some ways the larger the organization they come from, because if you look at the description of their job and what they've provided to you about their career and the jobs they've had well, in a larger organization, there's a lot of elements to success in a large organization, including brand including resources, including stability, just go on and on, that it's harder to suss out is someone from a large company going to be successful in this earlier stage company, because it's just harder to tell if they were the A-player in a large organization or did they just happen to be in, at a larger organization that was successful.
You really want to spend time if they're coming from a much larger organization into a role that will just have very high accountability and very visible success-failure metrics in an early-stage.
John:
The other thing that I would we really dig into is do they really have the numbers quantitatively to describe the success they've had? Really dig in and really understand, "okay, what was the quota for that year that you had this great success for the entire team? What was the region quota? What was the territory quota? What was your quota? Were you given lots of leads? Was it mostly renewal revenue? Was it expansion revenue? Was it pioneering new accounts?" Really digging in an understanding with each job, what numbers did they put up and then as individuals, or as their group - because - there's a famous saying that success has many fathers and it's very true.
You want to really dig into, okay, what did this individual lead as a sales contributor or as a sales leader, to the quantitative numbers that were achieved? I think also you want to spend a great deal of time on the references they provide, and then try to find some feedback from those individuals that would've worked with, or been aware of this individual that isn't a supplied reference. But take the time.
John:
I was particularly impressed recently in last several years with a reference call that a CEO was performing -he was recruiting as a CFO, very successful company. Everybody who listens to this audio cast would know the company if I gave the name, but I was amazingly impressed with the time this CEO took on the reference call with me. I think our call probably lasted well over an hour.
Sara:
Wow.
John:
He was incredibly well prepared, but he wasn't in a hurry. His view was, "this is such an important job that I'm going to take the time to do this reference checking very thoroughly. And I want to know everything that this person knows that worked with this CFO for a number of years". It was, don't be in a rush, take your time with the reference with the diligence, but look into a demonstrable track record of so success, how often have they moved jobs and why? Are they really an A-player that you can count on for this critical role? And then finally, do they really have the numbers quantitatively to describe the success? For a sales role, that's really critical.
Sara:
That's great, John, and you actually are leading into my final question really well, which was leaning into the reference checks. How do you perform these well? Making sure you allocate substantial time, but do you have any other tips here for references a founder or CEO should ask for? I'd just be on how to get the most out of those.
John:
It's such a good question, Sara. Just, how do you get good at hiring people and making sure they're a fit? The first thing I would say is that as a CEO and as a leader of a new company, one of the things you need to get really good at is building a network and using others networks. And so, that's one of the things that a venture investor or private equity investor, or an angel investor, or a seed investor, just anybody that puts money into your company, you definitely want money, but then you want help. There's nothing more in important than getting the team hired and having references on the team, both known and unknown references.
John:
I think one of the real key things is allocate the time, but then don't be shy about reaching out to anyone and everyone in your network in order find out who might know this individual, who might have worked with this individual, or who might have a trusted relationship that would know about this individual and can give me both the pluses and the minuses.
The way I would think about it is - you think about how much we know about, let's say if you're a football fan in American Football - look at how much we know about players that are going to go into the NFL out of college or the player that our team adds or whatever - we know everything about them, good and bad.
John:
Well, I think you want to know most everything you possibly can about this candidate before you get to the offer stage. You want a candidate who's very honest about both their strengths and their weaknesses, because there will be some strengths that will be critical from this really, really important hire for the overall culture and team of the company and there will be some weaknesses that could be a real issue for them, not just succeeding in their job, but might be a weakness that impacts your overall executive team leadership.
So knowing what those strengths and weaknesses are, is really key for you as a CEO for each of the key members of your team and for any new hire. It's almost as if you are conducting a 360 review process of these potential candidates before they're even in your company, be that thorough about it because you want to know who it is that you're hiring and you want to have aligned expectations and goals with every key executive on your team. And the sales exec will be one of the most critical ones to really have a very good working relationship with, because as I mentioned at the outset, if you're successful, they're going to hire the largest number of people into your company. Secondly, they in addition to their team are the primary, external face of the company you have founded.
John:
So it's one of the most critical hires you'll make - good and bad - that it may not work out for the person or for you, and it isn't uncommon that early stage companies have multiple sales leaders in the first four, five years either because it doesn't go fast enough for the sales leader and their team, or there's a misalignment with the product organization or with the CEO or the sales leader just didn't quite have the right skillset and personality match for the stage you were at.
The more thorough you are in knowing what you want in interviewing very carefully and in setting very concrete expectations, the higher probability you'll have of success. And I know for sure the happier sales team you'll have because sales teams like clear goals and they like as few obstacles as possible in front of achieving them. So that's your job - to set clear goals and eliminate obstacles in their success by having a great product, great transparency and great responsiveness to the innumerable challenges you're going to face in the early years of building a company.
Sara:
That's so helpful, John. I remember in one conversation we've had about this, even just level setting yourself, going to the conversation that any reference that the may or may not come from the candidate, they likely wouldn't say yes to the conversation, unless they have good things to say, I remember you said this so well. It's so important to go in understand this is not a black or white, trying to understand if this is good or bad, but you just need to go with your specific deliverables on what you want to find out about the candidate. Having that initial framing going in will really help you use a fine tooth comb to actually get more out of the conversation. I just thought that was really, really helpful.
John:
Exactly. As a leader and the team you're building any new executive you bring on board is going to find out real quickly, what are the issues and challenges and weaknesses of the founder and the founding team that they weren't aware of before they hired, and they joined. Likewise, you are going to find the issues and weaknesses and challenges of a sales leader. Some of which you might have had a clue about, some of which you didn't, everybody has to muddle through that - that always happens.
In every organization, whether it's a for-profit, nonprofit, it doesn't matter. You're going to find that there are no perfect leaders CEOs, and there are no perfect sales leaders, but the more you know, and the more transparency and honesty and integrity about those relationships - and assessments of "who am I?" and "who are you?", And "what are we trying to do collectively?" - the better likelihood of success for your entire company.
This one is so key because one of the biggest issues I see in the early stage world - now that I've been doing it for some years - that is very difficult to overcome is if the product-market-fit isn't quite right, the value proposition is isn't quite right and we ramp up go to market activities, and we burn a bunch of money before we have product-market-fit and before we have the customer value proposition really figured out. It's very disheartening because A, you've burned up a bunch of money, but secondly, you've burned up a bunch of time.
And what people are giving you when they join your early stage company is they're giving you their time. The longer it goes without demonstrable success, the more burned out the team becomes. But also the larger the opportunity cost becomes to those you've hired, who have so many alternatives for highly compensated employment in Tech - that getting the sales thing right early so you don't burn capital unnecessarily and you don't burn time is really key.
Sara:
Oh, that's a really, really helpful point. Well, John, this was fantastic. Thank you so much for taking the time to be here and share this.
John:
You're so welcome, Sara. Thank you for inviting me to your podcast!
Sara:
Absolutely. It was a blast!
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Sara:
Thank you for joining us and be sure to check out our next conversation on the hiring journey. Next up, we'll discuss the VP of Product role.
Thanks again. We'll see you on the next one!