blog - why cloud computing companies misfiresI have spoken to many VCs. Most of them are in sync on one fact: the odds may be against you if you are hiring your first VP of Sales for a SaaS start-up. VPs of Sales are fired more often than professional sports coaches. Hiring the right VP could be the difference between gaining or losing momentum, minimizing or maximizing internal confusion, and catapulting or crippling your organization as you make the transition from Internal Traction to Initial Scale.

I have spoken to many VP of Sales that have been fired. The real question is Who was wrong? The guy doing the hiring? Or the VP who didn’t have the right skill set but took the job anyway? If you don’t know what a VP of Sales does at a SaaS company then how can you hire the right one? Knowing what a VP of Sales does in a SaaS company is crucial to catapulting your organization’s growth. It is always enlightening to talk with a CEO after a mis-fire at the VP of Sales level. When looking at a SaaS company in the $500k-$25m range, the following are critical factors that the successful CEOs I spoke to understand.

Recruiting and Backfilling: The great Vice Presidents of Sales that I have met are great at putting together excellent teams of killer sales reps. The perfect VP of Sales candidate for this position will already know that. He or she will have a pipeline of the next 3 great sales reps. I have put together recruitment programs for clients to do this on both small and grand scales by using our Lifetime Warranty Program. The right VP of Sales will know that the company’s success depends on finding these producers.

Assisting / Looking Out for Sales Team: Time and again the failures are due to not working closely with the sales team to help reps close deals. We all want sale guys that don’t need to be managed. The key is to create an environment that assists them to do what they do best which is to hunt. I spoken to more and more companies that are going with an inside lead generation team to allow the outside hunters to do more hunting. Cisco, Softchoice and VMware just to name a few who have built large inside sales teams to procure leads and sales. Some of this is domestic and some is built over in the Philippines. I have had a lot of experience in hiring these teams in the Philippines and if you think hiring good sales guys in the USA is tough, its even harder overseas but the payoff is great when you succeed.

Also don’t overlook the importance of canvassing the websites and associations that publish the information going on in your niche on who moved where and who is doing this and who is doing that. These information outlets will uncover , much information which will keep you and your team from overlooking the importance of being on the lookout for future opportunities Watching over deals before they blow up, and follow-up with all direct- and indirect-reports will insure that they are working efficiently and effectively. They will be more efficient and effective if they know beyond a shadow of a doubt that you are inspecting these areas. We pattern a Reverse Engineering approach in our business and also in our recruiting of sales guys that has always uncovered a number of new leads for our clients. The successful cloud computing VP of Sales I have spoken with are really adept in all of these areas.

Tactics: From talking to successful VP of Sales in Big Data, SaaS, IaaS, PaaS and other segments of the Cloud industry, I have concluded that they have deduced their roles into knowing how to segment customers, pitch scripts, determine the best approach to Demand Marketing, and perform Gap Analysis. Successful VPs of Sales I have talked with were ready to hit the ground running in all of these areas.

Strategies: In a survey I did with a large group of successful VP of Sales in SaaS, they all looked ahead to determine potential markets, solidified the customer base, determined where to spend resources, etc. You would be surprised at how many VPS keep a tight relationship with a recruiter who provides the most up to date information on the street to assist with these strategies. It is equally as important for the VPS to have a strategy for their next career move. Most of the successful VPS focused on Tactics until they hit $20-25m in ARR when in a startup enviornment, at which time Strategies became #3 on the list. These VPs of Sales had strong managers who were able to handle the core Tactics. Our company has introduced our Hypergrowth Strategy to help Vp of achieve their core tactics and yearly goals. At the end of the day it all comes down to hitting bonuses.

Selling: All of the successful VPs of Sales had one thing in common: they could create and sell deals themselves. They were all excellent prospectors, consultants, and closers all wrapped up into one. They looked at deals like herds of cattle and could get them into the corral and close the gate better than most of their counterparts. I put this on the list because it is overlooked too many times with the carcass of a mis-hire because the hire was the wrong guy at the wrong time. If the VP you are looking at cannot sell better than you, then pass on him.

So, when is the best time to hire a VP of Sales?

If you, the founder, have been acting as VP of Sales with 1-2 reps to help you, but the time has come to catapult your business, it’s time to hire a VP of Sales who is even better at selling than you are.

Consider this: In the case of an SaaS company, If you are hitting $1m in ARR (Annual Revenue Requirement) and your goal is $2m, you will need no less than 3 reps hitting their quotas of no less than $300k each. If your ACV (Account Current Value) is $5k, you will need to close about 200 deals as quickly as possible. This goal will require that you hire 5-6 more reps to hit your next goal. In no time at all you will have expanded to over 400 deals per year. While your VP of Sales should be able to close your key deals – hitting his / her personal quota at first – the volume of deals will quickly become too much for them to tackle by themselves. If you are hitting $1-$2m in ARR, it’s time.

From what I’ve seen in the market place, very few VPs of Sales will be able to create organic demand where there is none, or fix a great-product-no-revenue dilemma. No doubt the VP will need to close deals but it is a pipedream to think he will take you to the Promised Land by himself because you need too many deals to hit your number. You will know it’s the perfect time to hire your VP of Sales when you are ready to fund, build, and scale a growing sales team. I have used a technique we termed hypergrowth to make this happen.

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