Scaling Start-Up Sales Teams

How fast should start-ups scale their sales teams?

Matter Made founder Elias Rubel recently had former HubSpot CRO Mark Roberge as a guest on the Best of SaaS podcast. The two discussed a problem that both Matter Made and Mark solve frequently: How fast should a start-up scale their sales teams?

The answer, how fast is slow? Most start-ups fall into the trap of thinking the quicker they can build a sales team the quicker they will close sales. Here’s how not to do it.

5 steps to killing your start-up

  • Step 1: Close seed round
  • Step 2: Product market fit (calculated incorrectly)
  • Step 3: Close Series A round
  • Step 4: Hire 10 reps
  • Step 5: Fire 9 reps after burning through cash

So many startups follow this pattern. They raise, they have product market fit as perceived by some faulty equation, then they raise a healthy Series A and hire 10 reps in the next month to close all sales they are about to get.

What could possibly go wrong?

Hiring takes time. Hiring well takes even more time. How many interviews do you have to do to hire 10 good sales reps? And then once you have them, each needs to be on-boarded, you need a management structure, and importantly, you need to feed them leads.

Within a year most startups are down to 1 - 2 reps after burning through millions of dollars. A better approach to scale is a better pace.

5 steps to scaling your start-up

  • Step 1: Close seed round
  • Step 2: Product market fit (Mark is writing a book on this now)
  • Step 3: Close Series A round
  • Step 4: Create a go-to-market strategy
  • Step 5: Deploy a paced hiring strategy for sales team

Statistically, 70% of Series B start-ups will fail. With a better hiring strategy, ramping up rather rushing into it, Mark believes that could go down to 50%. Still a lot, but a vast improvement.

Mark recommends a ramp that includes two instrumented measures, customer retention and unit economics. Hire one rep a month for five months and watch those two lead indicators. If they are good, go to two reps a month. After four more months go to four a month. After four more months go to eight a month. “That’s freaking scale!”

Adopting this slower pace to hiring, and watching the two lead indicators, a startup will know two quarters in advance of P&L which is what most companies use to evaluate whether they are doing well. It’s like having a crystal ball.

You can listen to the full Best in SaaS podcast here.

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