Scott Davis

Joining the sales force of a startup can earn you a larger income than that of the CEO, and the risks can be as large as the rewards.  When you are finally ready to make a move, how do you make the right decision on which company to join?
Fortunately, we know someone who can help:  Sequoia Capital’s Doug Leone. Not only did he start his career in sales (selling computer systems in the 80’s), he has also seen firsthand what works in start-up companies and what makes sales people successful through his bird’s eye view in venture capital.
We are lucky to have seen a lot of Doug lately. Prior to his recent TechCrunch discussions with Medallia’s President and Co-founder Amy Pressman, he joined fellow Medallia Board member Steve Walske, Force Management’s John Kaplan, and me for a full-day forum with some of the rising stars in sales from across the country. During the forum, we covered just about every conceivable topic concerning the lifecycle of a sale and a career in sales, and one sentiment kept emerging—the desire to sell in the startup world, but uncertainty over how to conduct the job search.
We pulled Doug aside and asked him a few questions. 
Like with any job search, exploring the startup world is a process. What’s step one?
Step one is answering a few simple questions.  Do you like selling widgets (a networking box) or solutions (complicated software sale)?  Do you like selling for a large company where the roads are paved or for a smaller company where you may often be alone on the spot?  Do you want to work or coast for a living?   Really understanding yourself and therefore correctly answering these questions is the key to then selecting the right company for which to work.
Next, you shouldn’t just sit back and wait for the phone to ring.  You should network like crazy and start to zero-in on a market (not a company) which you think is attractive.  Then you should do your homework and figure out which private company is the market leader.   Lastly, you should embark on your next sale:  getting a job at that company.  If on the other hand there is a company you find attractive, you should use that as foundation for doing an analysis of the market in which that company participates, and then join the best company in that market.  
How many kinds of start-ups are there?
Basically, there are three types of start-ups:

1. Ones that are so young that it’s difficult to tell if the dogs are going to eat the dog food.
2. Ones where there’s clear evidence of market pull.  Medallia is in this category.
3. Ones that are unfortunately stuck in a push market or have a very difficult product to sell.

The trick is to say away from #3.  You only go to #1 if you are a domain expert and you have an informed opinion on a product/market, but this is a rare trait.  The real trick is to end-up in #2.
There are also companies that participate in existing markets and companies that create new markets.  The real homerun is a company that helps create a new market. Again, Medallia is an example.
What kind of salesperson goes to start-ups?
I’m always surprised by the number of sales people who have been successful in large companies that can’t sell anything for small companies.  Small companies are difficult environments and generally, the quality of sales reps in these entities is higher.  Small companies need people who are hungry, aggressive, organized, creative, smart, driven, courageous, and goal oriented.  These reps want to make money in commissions, they want to make money in stock and they usually have ambitious career plans.
What do you need to look for in a startup?
The most important thing to look for is initial market pull.  If customers are buying, you’re halfway there to finding a good company.  You want to understand new customer velocity, revenue growth and, just as importantly, what is the company paying for that growth.  If a company grows by 50% in a year but increases its expenditure in sales and marketing to achieve that growth (not future growth) by 200%, then that sales growth is not so impressive.
Next you have to judge the people and culture in the company.  You want to work with smart people, who, while imperfect, are good souls and make ample use of the ‘we’ pronoun.  You want to work in an environment where people like to get things done NOW and where performance is celebrated and rewarded.   Listen very carefully to the specific words a company’s executives use when you meet with them.  That will tell you all you have to know.  Do not be fooled by feel good sayings posted on walls as they are not necessarily reflective of a good culture.  Look for a company that believes in open communication and is run as a meritocracy versus a socialistic approach.  The best advice here is to look at the data objectively, listen and let your gut decide.  If you are a capable sales person, you have developed these skills and therefore you should use them to help you make the right decision.
What questions should candidates be asking a VP of Sales to paint an accurate picture of a startup’s sales health?
People will often do hours of due diligence on an investment and little due diligence in choosing a new job.  Often, they fall into the trap of being flattered by ‘being recruited.’  So step one is do your homework.  Understand the market and the product.  Ask a lot of questions.  Who are the competitors? Why do they win or lose? Why do you win or lose?  Why is the product price X and not Y? What has the sales turnover been in the last 12 months?  What are the company’s gross margins?  How many sales reps do you plan on hiring in the next 12 months?  What is the average selling price for the solution?  What is the length of sales cycle?  How long until a customer goes live?  What is the sales productivity model?  What percent of reps made quota last year? I could go on.
As a prospective hire, you don’t have access to financials and due diligence, but that doesn’t mean you can’t do work on your own. There’s always the word on the street, there are existing customers out there, and maybe you have friends working at the company you’re looking to join.   So you can learn a ton by just being very smart and inquisitive—the same traits you will need to be successful in a small and rapidly growing company.
There you have it, folks. Now, go find your startup.

Photo credit: TechCrunch