You’re ready to hire your first AEs when you have an Ideal Customer Profile that “shakes hands” with your Minimum Viable Product
The Head Start
Running Your Company
Early
Seed
Congratulations, you’ve built a product that people want to buy – indeed, are buying – and you’re going to hire salespeople to grow your business. Hiring your first few account executives is a huge milestone for an early-stage company. It means your vision and your product can be put in the hands of others and evangelized to the world.
This moment in a company’s history is also a tricky one, as it’s the first one in which a founder is letting other people explain the vision and sell the product. Invariably, therefore, the first few AEs will fall short in many ways. They won’t have the “dyed-in-the-wool” zeal of a founder with her passion for the product or panache for closing the deal. They won’t understand the nuances of the product to the same degree a technical founder will (not even close!). Worse still, they simply won’t care about the product or the company as much as the founders.
That doesn’t mean they won’t succeed in growing the business. And if done well, hiring these first few AEs is precisely what you need to do in order to grow the business and capitalize on your vision.
As a founder, you are by definition a great salesperson. You sold investors on your vision, you convinced early employees to quit their more secure jobs to join you in your crusade, and you won your first few customers by convincing them to try to put the vision into reality. That’s very hard sales work!
Because of your passion, vision, and credibility as a founder, you are almost always a better salesperson than your first AEs. When in a meeting, you will credibly deliver a polished, nuanced, prospect-perfect pitch better than a hired salesperson will.
The problems with this founder-led sales approach are that first, you can’t scale the way that hiring a sales team does, and second, there’s a lot more to sales than “winning in the meeting.”
The first point is just math — the opportunity cost of leading sales meetings yourself is higher than the benefit you receive without support from salespeople. Let’s say the best AE is 25% less effective than you are at selling your product. Given 10 prospects, you will close four of them, and the best AE will only close three. Even if you can spend half of your time closing deals (a generous assumption), you’re already less effective than a full-time AE, as you are now closing two deals to her three. And this says nothing about the additional hire(s) you should make: if you hired two AEs who are 75% as effective as you, you’re only closing two deals where your AEs are closing six.
On the sales process itself, there is so much to sales that goes beyond “pitching.” There is prospect identification, outbounding, securing a meeting, prepping a meeting, polishing sales materials and demo materials, following up rigorously, finding inroads to other prospects in the same logo if you are multi-threading, and on and on. These are critical parts of the sales process that a founder simply doesn’t have time to do, lest they ignore every other part of their company. And you may not have experienced these tactical sales items before. As Sophia Goldberg, CEO and co-founder of Ansa succinctly said, “There’s a lot you don’t know about sales if you’ve never been taught sales.”
So you should hire AEs because they will help grow your business. But when exactly, and what kind of AE?
Some founders hesitate to let go of sales work and hire salespeople, but I’ve also met plenty of founders with the opposite school of thought. They can’t wait to stop selling so they can “go back” to working on the product or another business-critical function. The misstep here is hiring AEs too early, guaranteeing lost time for your nascent business.
In the past, I’ve advised very early-stage companies during the pre-seed to seed stage, and have seen several of them immediately hire AEs upon raising a full seed round. Sometimes this was the right answer, but other times it was quite wrong. That’s because some founders hadn’t done the work of validating what I like to call the “MVP / ICP handshake.”
The MVP/ICP handshake is my own clumsy term of art, and it’s the point at which your Minimum Viable Product clearly solves a set of problems for your Ideal Customer Profile. As the term suggests, it requires both a product and a relatively clear customer segment to go after.
Most early stage companies have the former, and many, if not most, do not have a clear idea of the latter. That’s because when you have your early vision, you’ll take all comers. You’re thrilled that a diverse group of industries, functions and levels within a company want to use your product. It validates exactly what you told investors it would do: attack an important problem and have many places to sell into. Huge TAM! Great stuff!
The problem is that a heterogenous initial customer base has only two things in common – your product, and an early adopter mindset. In “Crossing the Chasm” parlance, your “early majority” customers – those who aren’t early adopters – won’t feel comfortable buying from you until they see some like-minded customers who’ve done so before, and it’s hard to pattern match if you don’t have a trend in the customer data. As BCV operating partner Jeff Williams said, “It’s critical to ensure as you pursue your first five customers that they all have the same use case, and you can create similar, demonstrable outcomes for each of them that can be monetized. That’s when you know you have product-market fit.”
If you hire AEs too early, this is what could happen: you’ll have a revenue target you tell your board, and then you’ll start spending capital on AE hires. Those hires will spend a few months ramping up, then try and fail to close deals. All the while, as you’re not hitting your revenue targets, your burn is increasing and your out-of-cash date is approaching. Three to six months later, you’ll fire the AEs and go back to founder-led sales, but at that point you’ve lost a lot of momentum, spent plenty of capital, burned valid leads, and jeopardized your chances of company success.
I don’t mean to be too dramatic, but I’ve seen the above happen to hardworking founders with very good products. Don’t go down this road until you are good and truly ready!
Sam Li, CEO and founder of Thoropass, has seen this pattern before at a previous company. “I learned the hard way in my last startup, where the founders could not close deals. We then hired a sales team, and still couldn’t grow (hint: did not hit product-market fit), ran out of money, didn’t have enough runway to pivot, and eventually wound down the company. At Thoropass, my two cofounders and I look different and sound different, but we’ve all closed deals selling the same product. That’s PMF, and that’s when you build a sales team.”
Another problem that can arise with hiring AEs too early is the challenge of aligning product completion with the sales motion amid the unpredictability of software development. Cory Crosland, CEO and founder of PolicyFly, hired his first AE too early and had to unwind the decision. “We hired someone a year ago, hoping we could align scaling sales with our product delivery, but after a few months, we realized they were too early because our software development timelines kept shifting, making it difficult to match our product readiness with sales efforts. We had to part ways, which was super painful.” Now that sales are picking up thanks to Cory’s efforts of selling as the CEO, and the team has fully developed the product, PolicyFly is ready to hire AEs again.
The second “must-have” before you hire your first AE is sales documentation, and that’s much easier to achieve than the MVP/ICP handshake. You just need to write things down. You’ve sold your product probably messily for a year or more, and you’ve been far too busy to distill what works. Take an afternoon, maybe a Red Bull or two, and simply document the process end to end, ideally with the occasional visual, like a screenshot or clip from a demo.
If you haven’t already, now is the time to invest in call recording software. As Aleph founder and CEO Albert Gozzi said, “It’s hard to have a playbook that covers everything. […] To see what’s happening [in real time on calls] and take action is super important.”
Bringing it all together, you’re ready to hire your first AEs if you can answer “yes” to this checklist:
The one constant in startup life is change, and this is true for sales hiring as with other functions. The ideal characteristics of your first few AEs will be very different than your “steady state” AEs once you have a repeatable sales motion and clearer product-market fit.
When hiring your first few AEs, you want to prioritize intellectual agility over functional sales experience. Practically speaking, this can mean hiring a commercially-oriented, former consultant who has spent a bit of time in go-to-market organizations, instead of hiring a ten-year SaaS sales veteran.
This may seem counterintuitive. Don’t you want a great sales expert to help you build out sales? In some ways, no. You want a smart person who can sell, but who can also listen to the market, work with product and engineering to improve your offering, passionately debate product feedback and be able to close deals without much infrastructure. A tenured sales veteran will expect a sales machine to support him, with decks and case studies produced by a PMM, a robust RevOps team and a well-refined quota process. You will hardly have any of this.
BCV partner Ajay Agarwal counsels that for first AEs, “you want smarts and work ethic over industry expertise, athletes over functional experts. Someone who will work very hard and put in the hours, as the more repetitions you put in, the faster you’re learning. You’re still in this mode of learning what the customer has to say, and there’s not a recipe yet.”
To use a slightly tired analogy, early AEs are the “navy seals” of your go-to-market team. There are few of them, they’re talented business thinkers and doers, and they can wriggle their way through any customer situation they encounter. These are the people who never say “that’s not my job” when presented with a customer support need, or a marketing deck they need to produce. When you are much bigger, have achieved PMF, and are scaling up your sales org, that’s when you hire the “marines” and then later still the “infantry” – the latter group being the functional veterans who have achieved or exceeded quota repeatably, and will be plugged into a machine that will facilitate their success.
I saw much of this evolution in go-to-market at Coda, where I started as the first seller (title “Product Evangelist”), then after a period of MVP/ICP handshake exploration, hired up a sales team. In the early phase, my job was as much listening to users to find product-market fit and understand product needs as it was closing deals.
I loved this work. It was intellectually flexible and multifaceted. But as we scaled and grew into a company with a larger sales team, our “later” sellers didn’t love it as much. When I was managing the enterprise sales team, I recall one of my best AEs throwing up their hands in exasperation at the thought that they would be required to provide detailed product feedback to the engineering team. They just wanted the product “fixed” to close a deal. At that point in the company’s history, they weren’t wrong: we were growing up and had moved beyond the ‘early AE’ archetype.
In short, the early sales motion feels a lot different than the later sales motion, so your early AEs will look and act differently than your later AEs. Here are some practical elements to look for in those first few hires:
It is also essential that you validate culture fit for these first few AE hires. That’s because so much of their work involves cross-functionally interacting with the entire company, including the CEO and individual engineers. There will already be a bit of tension between functions (engineering and sales are very different disciplines), so it’s best not to exacerbate this with a misalignment of cultural values.
Lastly, here’s a gut check when hiring your first few AEs. After any candidate interview, ask yourself if you genuinely want to spend more time with this person. Did they put you at ease, energize you, or inspire you in any way? If the very thought of having a follow-up meeting with them gives you pause, end the process right there. That’s real data that is expressly relevant to an AE’s duty to win over customers.
A classic principle on this topic is to hire at least two AEs at once, both because selling is a lonely job and because you can compare them to each other. If you only have one who is underperforming, you may not know if they’re not working, or if the sales motion or product isn’t working. Avoid hiring three for cash preservation purposes, unless you’re so sure that it is working that you’re drowning in leads.
Avoid hiring business development representatives initially. They shouldn’t be required at the start, since you should have too many leads to deal with, hence the need to hire AEs. In addition, BDRs are typically early in their career and less experienced, thus requiring more management oversight and training. Since the initial AE cohort may report to the CEO in an early-stage company, you don’t need to add another person to your direct report list, especially one that requires lots of oversight and training.
Avoid the trap of outsourced BDRs, which won’t work and isn’t valid at your stage. Sam from Thoropass explains, “Startups by definition are still discovering the right product/pricing/value proposition, so outsourcing is usually not effective and is a waste of learning opportunities.”
You can start ramping the AE hiring when you know it’s working, specifically:
Since AEs typically take around 90 days to fully ramp, and often much longer for enterprise sales cycles, many startups wait at least three months after the first two AE hires before hiring more.
This is a difficult part of a company’s journey, because in many ways you are starting to “let go” of your most important relationships: those with your current and potential customers. It will feel scary to delegate this work, and you will invest heavily in these AEs before you start to see results. Fret not: it will work!
But as with all things company-building, it may not feel linear. For Albert at Aleph, “It was a constant back and forth…initially, heavy support, and I’m doing 80% of the work, then pull back, 20% of the work, then I go back and do 70% of the work, and now I do 30%…iterating toward a moment where it’s working.”
When you start this hiring ramp, don’t let go of too much. Sam at Thoropass explains, “don’t lose touch with customers (like win/loss reasons, competition) by relying only on indirect insight from ‘professional’ salespeople.” This is your business, after all, and nothing is more important than what your customers think and say about your product.
When AE-led sales starts to work, you’ll notice in drips and drabs. You’ll be included in more “closing” meetings with senior executive stakeholders at your prospects. You’ll see logos in your weekly pipeline reports that you hadn’t even spoken to. You’ll begin to hear the proverbial “sales bell” ring in an office. There will be a lot more customer-generated energy within your business. This momentum will carry your vision forward to a new phase of growth.
Amid the sales call reviews and hundred other items to do every week, don’t forget to allow yourself a moment or two to enjoy the ride.
If you have questions or want to talk through the potential transition to AE-led sales at your startup, reach out to me at jdimento@baincapital.com.
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