From Founder Sales to Founder-led Sales: How to hire the first sales person for your SaaS

Bonus: 7 bad signs of a wrong first sales hire

Alexander Estner

and

Dominic Blank

Oct 20, 2024

Hey - it’s Alex - this time together with Dominic (Co-Founder of Hyrise)!

Today we cover:

1️⃣ When to hire the first GTM/salesperson

2️⃣ What skills do they need to have

3️⃣ What salesperson? Full-cycle vs. Specialization?

Bonus:

List of my vetted Go-to software tools for early-stage SaaS startups

How to: The first sales hire(s) for early-stage SaaS companies.

In today's article, we cover the question most SaaS founders will face sooner or later.

💡 When & How to Hire the first salesperson 💡

We will cover:

When should I make my first sales / GTM hire?
What skills do they need to have?
Marketing vs. Sales - who to hire first?
What salesperson? Full-cycle vs. Specialization?
Role definitions: SDR, AE, Sales Engineer
Bonus: Job interview questions

So let’s get started with the most crucial question.

When should I make my first sales / GTM hire?

There is not one EXACT moment in time that is right.

Rather, there are multiple points in time that make sense for your first GTM hire. However, there is one that usually never works out and can therefore be considered wrong: before you reach message market fit.

Especially tech founders sometimes don’t like to hear this but one thing is for sure 👇

You as a founder need to validate

You (the founder) need to validate:

that there is a problem to be solved,
what that problem specifically is and what it means to potential prospects,
how your solution looks like / what it needs to be valuable
what messaging and channels work to win early customers

This also means that you need to win the first 10-100 customers yourself (depending on your ACV and target market).

Once you have done that you at least have initial validation on the points above.

Plus you have sufficient data and experience that lets you document all this.

Documentation means you can instruct somebody else to replicate what you have done and / or further develop and professionalize it.

This is usually the point in time when the first sales / GTM hire comes in.

What skills do they need to have?

That’s completely dependent on your go-to-market motion (SLG or PLG), the expectations you have for the next stage of your growth journey, and what skills YOU as founders already bring to the table (a super important dimension many ignore).

Example 1:

Your ACV is <1.000€, highly transactional, and low touch (e.g. self-service with free trial). You are an expert in Marketing yourself.

In this case,

you don’t need a sales hire at all and
rather than a marketing resource that is either a complete generalist helping you get stuff done or someone who specializes in a key competence you are missing.

Example 2:

Your average ACV >10k, you have done founder-led sales until now but have no real background in sales yourself (what we see in 8/10 cases).

You have won the first customers and feel confident to have reached message market fit but no final product market fit yet.

In this case,

What you do NOT need in this stage is somebody who just blindly runs with your briefing and executes (e.g. very experienced reps from big logo companies).
Instead, you need someone with an experimental mindset, sufficient intellect to quickly adapt and that is not afraid to do outbound and approach customers. Someone flexible in terms of their mindset. It’s a profile we refer to as “Entrepreneur in residence” that may have done relevant internships in consulting, project management, or business development.

If you are a sales expert yourself, you could think about bringing in your first SDR or full-cycle seller to validate what you have playbooked.

Marketing vs. Sales - who to hire first?

It depends on many factors like your industry, average deal size, product and buying complexity, and most importantly, on the way your buyers buy.

What we can say based on our own experiences however is that when you first hire marketing, you will almost always need to hire sales in parallel or shortly after.

Example:

If your ACV is 5k (meaning your sales is transactional), your engine of growth should be marketing or product-enabled.

This means that leads are generated not by salespeople but rather by the product itself - meaning the product itself facilitates distribution (e.g. that's how Slack grew in the earlier days) and/or via Marketing (Paid search, paid social, organic, affiliates, indirect channels, etc.).

Even in this case, you will likely need a sales rep to finally qualify and close those leads. Here you need both marketing and sales, though marketing should come first.

If your ACV is <1k and you sell 30€ subscriptions, a marketing hire is crucial and no sales rep is needed until you decide to offer enterprise packages that require higher-touch interactions via a human seller.

So.. who should I hire now with all this in mind?

This is the question we get asked most often and one that burns in the minds of founders and sales leaders alike. Unfortunately, there is no single right answer.

The roles you should hire and when largely depend on factors like the stage of the company, your sales strategy, and your budget.

Ultimately, each company needs to figure out the sales model and team that works for them.

With this in mind, we will share some useful tips to help you make informed decisions on how to best configure your team at different stages and companies.

We will cover:

Full-cycle vs. Specialization Model
Recommendations depending on your company stage and environment
Definitions for the most common sales roles (SDRs, BDRs, AEs, CSMs, etc.)

🤔 1. What are my options? Full-cycle vs. Specialization

Why not just hire one single salesperson to take over the whole sales process?

Good question!

Until the late 1990s, full-cycle sales reps were the most common model in any industry. The Specialization Model began gaining traction in the early 2000s as a way to optimize sales processes.

Influenced by that period's outsourcing and off-shoring trends, this model became particularly prevalent in the tech industry, where companies aimed to increase efficiency and productivity.

SDRs focused on prospecting and qualifying leads
AEs concentrated on closing deals and managing client relationships, allowing each role to develop specific skills and streamline the sales process.

Source: MEDDIC Full cycle sales vs. SDR/AE

The model's popularity grew with the publication of influential methodologies like "Predictable Revenue" by Aaron Ross, which advocated for this split-role approach to drive consistent sales growth and scalability.

Full Cycle Sales Model

Process: A single sales rep manages the entire sales process from prospecting to closing and sometimes even account management.
Advantages: Consistent customer experience. Deep customer understanding. Fewer communication handoffs.
Disadvantages: Requires broad skill set. Time-consuming. Risk of burnout.

Specialization Model

Sales Development Representative (SDR): Prospecting, qualifying leads, initial outreach, handover to AE.
Account Executive (AE): Presentations, deep qualification, negotiation, closing, account management.
Advantages: Specialized roles increase efficiency. More leads generated for AEs. Easier role-specific training.
Disadvantages: Potential for communication issues. Fragmented customer journey. Requires coordination between SDRs and AEs.

🙇 2. Which model should I use?

As mentioned above, the model you should use depends on various factors.

Let's cover the most prominent ones: the stage of your company, and the environment your company competes in.

What phase is your company in?

Startup Phase

At this stage, flexibility and adaptability are key. Founders will likely still be involved in sales, your sales team will be small, and everyone often wears multiple hats. A Full Cycle approach usually works best here, where sales reps handle everything from lead generation to closing deals. This is cost-effective and helps in building a comprehensive understanding of the sales process.

Recommendation: Full Cycle Salesperson.

Growth Phase

As your company begins to scale, specialization becomes crucial. This is where the “Predictable Revenue” model can be particularly effective. Dividing the sales team into distinct roles—such as Lead Generation (Sales Development Representatives, or SDRs), Account Executives (AEs), and Customer Success Managers—can help streamline processes and improve efficiency.

Recommendation: Specialized roles. SDRs, AEs, CSMs.

Mature Phase

In established companies, the focus often shifts to optimizing and refining processes. Advanced metrics and KPIs guide the structure. Teams may become more segmented, with further specialization (e.g., by industry, product line, or geography) to target specific markets more effectively.

Recommendation: Further specialization. Divide roles by market segment, geography, function etc.

What's your company's environment?

Your company environment is determined by factors such as what you sell, in what industry, and to what people. Let's break down the most common ones you should take into account when building a sales team and our recommended approach for each.

Please note, these are not set in stone. Once again, it's key for every company to find the approach that works for them.

In general, the more complex the sales process, the more we recommend dividing and specializing the roles.

Your product type (Simple, complex, technical etc.)

The more complex the product, the more you will benefit from the expertise of specialized roles. SDRs can focus on identifying and qualifying leads, while AEs, who have deeper product knowledge, can handle detailed presentations, technical questions, and closing deals.

In this environment, we recommend going for more senior AEs, and having SDRs to support them will allow them to focus and reduce the chance of burnout from lead gen.

For very technical products such as PaaS and IaaS, consider adding Sales Engineers and Pre Sales roles (see below).

Recommendation: More complexity, more specialization.

Sales Cycle Length & Complexity (Average time to close a deal, Nº of decision makers)

The longer and more complex the sales cycle, the more you will benefit from specialization.

For products with a short sales cycle, it’s more efficient for a single sales representative to manage the process, reducing the need for multiple handoffs and maintaining momentum. Complex sales cycles with many decision-makers require the AE to have full focus on nurturing relationships and moving deals through the later stages of the sales process.

The more complex sales processes require more senior salespeople. Meanwhile, SDRs can keep the pipeline full by continuously prospecting and qualifying.

Recommendation: Longer cycles, more specialization.

Your target audience (B2C, Prosumer, SMB, Mid-Market, Enterprise)

🐭 🐰 🦌 🐘 🐳 - Are you hunting mice, rabbits, deer, elephants, or whales?

Learn more about 5 ways to build a 100M€ ARR business (and how to hunt those sweet animals).

B2B and enterprise sales typically involve multiple stakeholders, longer sales cycles, and higher complexity. Specialized roles allow for more effective management of these intricate processes. In B2C or SMB sales, the sales process is often simpler and faster, making it practical for a single sales representative to handle all stages of the sales cycle.

Recommendation: Specialization for B2B and Enterprise, Full cycle for B2C and SMBs

Your sales strategy (Inbound vs. Outbound)

Inbound leads are often more qualified and ready to engage, allowing a single sales representative to efficiently handle the process from initial contact to close.

Having said this, at a certain size, it still likely makes sense to have an inbound sales team of BDRs focused exclusively on qualifying and handing off leads to AEs.

If your company is predominantly outbound, we highly recommend having a separate SDR team focused exclusively on prospecting and qualification.

Recommendation: Specialization for outbound

`💡`Rule of thumb: Deal size drives sales structure

👉 up to 10k € ACV (average contract value)

Marketing/Product-Enabled Sales. Either only AEs for closing (marketing) pre-qualified leads or full-cycle reps that also cover acquisition + closing. No SDRs.

👉 10k-100k € ACV

Marketing-enabled sales with full-cycle sales reps covering both generating + closing deals (for the lower ACV end) or specialized sales roles into generating pipeline (SDR/BDRs) and closing pipeline (AEs)

👉 >100k € ACV

Specialized sales roles in generating pipeline (SDR/BDRs) and closing pipeline (AEs).

🧙 3. Role definitions

Now that we've covered the different sales models and when to use them, let's deep dive into each of the roles.

Sales/Business Development Reps (SDRs & BDRs)

Sales development reps (SDRs) are generally tasked with identifying and qualifying sales opportunities from inbound channels.
Business development reps (BDRs) are mainly dedicated to finding new business and exploring new markets through outbound channels.
Nowadays, however, SDRs are generally also tasked with outbound lead generation.

Account Executives (AEs)

AEs handle the later stages of the sales process. They conduct product demonstrations, handle deep qualifications, negotiate terms, and close deals. They work on converting qualified leads into paying customers.

Account Managers and Customer Success Managers (CSMs)

Account Managers focus on managing relationships with existing customers. They ensure customer satisfaction, address any ongoing issues, and look for opportunities to upsell or renew contracts.
CSMs ensure that customers achieve their desired outcomes with the company's products. They are involved post-sale, providing onboarding, training, support, and proactive engagement to ensure customer satisfaction, retention, and expansion.
They are similar roles, usually account managers deal with the money side of things - renewal/upsell pricing, contracts, etc. CSMs do more day-to-day relationship work and business reviews. But as always, this largely depends on the company.

Sales Engineers & Presales Engineer

Sales Engineers provide technical expertise during the sales process. They assist AEs by conducting technical presentations, answering complex product-related questions, and customizing solutions to meet specific customer requirements.
Presales professionals work closely with the sales team to provide technical support and expertise before a sale is finalized. They conduct product demonstrations, technical evaluations, and pilot projects to show the value of the product to potential customers.
The terms presales engineer and sales engineer are often used interchangeably, but strictly speaking, there is a difference in the scope of work. Simply put the sales engineer is more on the sales side while the presales engineer is more on the technical side.

It's a wrap! As you can see, unfortunately, there is no single clear answer to the question of how you should set up your sales team. Every company goes through different phases of trial and error until they find a formula that works for them.

By carefully applying the principles and insights in this blog post, however, you are more likely to hit a sales model that works for your company from the beginning.

Bonus material:

Happy growth 🚀

Alex & Dominic

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