Ready to hire? If you’re a startup, a quick word of caution from my friend John Chan, CEO at 2x, a growth agency specializing in sustainable growth for e-commerce and SaaS companies.
I don’t know which came first, John’s quote or Paul Graham’s popular reference to Airbnb as a cockroach that won’t die, but it’s great for illustrating this point: Hiring comes at a high cost. Once you add someone to the payroll, you’re increasing your monthly burn rate. Aggressive growth is necessary if you need to corner the market before competitors, but it’s only appropriate once you’ve achieved problem-solution fit + some sense of product-market and business model fit. If you haven’t done that and are still experimenting, it’s more important to minimize cost and weather the storm.
The cost of a bad hire is also high. Besides an increased burn rate, hiring the wrong person could greatly slow decision-making, create unwelcomed dynamics or politics within your team, negatively impact morale, and ultimately, the process of rehiring and retraining will cost more than if you had done it right the first time around. Never hire merely to fill a gap; take the time to ensure you’re conducting proper due diligence to determine if they are the right fit before committing to them.
Once you decide to hire, start by filling sales or marketing roles. Employing individuals whose main role is to boost revenue is always a smart move.
Experience vs. Passion
I favor the latter for SDRs. Skill can be trained, but authentic passion, on the other hand, is nearly impossible to instill. Experience usually becomes more necessary for management and strategic input. In those situations, my suggestion is to avoid hiring salespeople based solely on their experience and familiarity with selling your type of solution; instead, seek out experience with a similar sales process.
It’s hard to change habits, especially bad ones built up with experience. If someone is unfamiliar with selling your solution, they get to start with a clean slate. While it may seem like a big benefit to hire someone with a large network of potential customers they’ve built up with their previous employer, there is no guarantee that network will favor your solution. If they know the process, such as how to sell HR solutions in Fortune 500 companies, they can easily build a new network from scratch.
SDRs who are familiar with your sales process but not your specific offering are often more open to experimentation in finding the most effective way to sell to your prospects. This is particularly beneficial for startups that are still exploring the optimal sales approach.
Compensation
In his book “To Sell Is Human,” Daniel Pink discusses the concept of compensation and its role in motivating salespeople. He argues that while traditional, commission-based incentives have long been the norm in sales, they may not be the most effective motivators.
He argues that commission-based incentives are effective only when the task has been optimized and requires increased output at a faster pace. However, in tasks involving problem-solving, such as sales, commission can inadvertently hinder performance because it restricts creativity by limiting perspectives. Individuals are less inclined to experiment and instead focus on replicating existing methods, even if they are not the most effective means of achieving desired outcomes.
Pink suggests in today’s world, where salespeople are increasingly tasked with problem-solving and relationship-building rather than transactional selling, intrinsic motivators such as autonomy, mastery, and purpose are more powerful drivers of performance.
Salary-based compensation models have been shown to effectively improve sales performance by enabling salespeople to focus more on serving others rather than closing transactions. I can’t speak on behalf of everyone, but as someone who has worked in sales roles, I find this resonates with my compensation preferences. Commission also promotes individualism and runs counter to the spirit of fostering teamwork and collaboration within your organization.
That said, there’s a rainbow of options when it comes to how you can compensate your SDRs. This applies to any other employee as well and is especially valuable for startups lacking the resources to offer competitive salaries.
Compensation encompasses and isn’t limited to:
- Monetary (salary)
- Commission/Revenue share/Royalties
- Equity/Stock Options
- Strategic Partnerships (e.g. you help me with sales, I’ll help you with marketing).
- Work flexibility (hours/location)
- Employee benefits (pension, vacation policy, medical/dental/vision, etc.)
- Perks (daycare, gym, office snacks, etc.)
Be creative and flexible with how you approach compensation!
Ironically, although employers are offering more perks and benefits than ever; employees are still constantly claiming companies are not doing enough for them. The disconnect occurs because employers are shoving bloated one-size-fits-all compensation packages in front of employees without properly understanding what each individual values. It’s no surprise that many company perks and benefits are often underutilized.
Suicidal as it may sound, I’ve personally declined more lucrative contracts in favor of lower-paying projects that give me the flexibility I seek as a new father to spend more time with both my boys. If you truly wish to woo and retain the best talent, it pays to understand and involve them in negotiating compensation that’s both reasonable for you and desirable for them. This leads us smoothly to our next topic:
Motivation
It’s important to understand this not only for recruitment but also because it plays a key role in employee retention. I like to think of it this way: there are 4 main dials (I call them the 4Cs), each of which is weighted differently in importance by different individuals. Everyone has an ideal level for each of those factors, and if one is strongly out of balance, or if two or more are subpar, that person is highly likely to leave. The 4 Cs are:
CAUSE
Does your company’s mission still align with their personal mission?
This is the reason why pivots are associated with high turnover, especially if the pivot changes who you’re serving or what you’re providing as a solution. The new direction may not be what your other team members originally signed up for.
It’s easy for salespeople to feel disconnected from the bigger picture and perceive themselves as another cog in the wheel, especially if they don’t directly influence product design or service their customers. To address this, involve them not only in daily reporting and metrics but also expose them to how the business is growing and changing because of their efforts. Help them understand how their work contributes meaningfully to the larger cause. Celebrate the stories of your customers and growth of your impact metrics.
CAREER PATH
Do they perceive a trajectory for growth? Or do they feel stagnant?
Encourage and support their personal and professional development. Consider implementing an internal mentorship initiative or tailor feedback and performance improvement plans to each individual based on their personal goals.
CULTURE
Is your ethos of doing business aligned with their values?
COMPENSATION
Are you providing a sufficient living wage: a safety net allowing them to bring their best selves to work every day?
I won’t delve into further detail as we’ve already discussed points 3 and 4. Also, note these 4Cs are comparable to Daniel Pink’s Autonomy (Culture), Mastery (Career), and Purpose (Cause).
Recruitment Sources
I’m a big advocate of recruiting from your community: your customers or volunteers. What better place to start than with people whose problems you directly solve or who are already inherently passionate about what you do?
Another great option is recruiting from external groups or communities (e.g. LinkedIn, Meetup groups, etc.). If taking this approach, I recommend interest-aligned rather than skill-centric groups. For example:
Interest-Aligned: AI Stable Diffusion Group, Embodied Carbon in Construction Group
Skill-Centric: Product Managers Group, Game Developers Group
The latter is good for finding skill-specific team members to fill in your gaps; however, it’s much harder to filter them for mission and value alignment. On the other hand, if you have already found someone passionate about your cause, it is much easier to screen for skills and experience.