Why First Time VPs of Sales Fail (by Jason Lemkin)
At some point, we’re going to figure out how to have Jason Lemkin as a guest contributor on StretchVP. If you’re a sales leader in SaaS and don’t follow Lemkin…well…start. Here are his Twitter, Quora and LinkedIn profiles to get you started. Jason has walked the talk and then some. He’s a guru in SaaS startups and Sales. He Started/Sold Echosign to Adobe for $400M and now heads his own VC fund (SaaStr Fund), SaaStr Events and one of my favorite podcasts on SaaS.
Following the recent theme of things to understand as a first time VP of Sales – I’m diving deep into the Lemkin Knowledge Well – with a post from 2 years ago. Still as pertinent today as it was 2 years ago. You can find the original post on LinkedIn Here
We’ve talked a lot on SaaStr about how to hire a Great VP of Sales. And we’ll keep talking about it — so long as 70% of first-time VPs of Sales don’t make in 1 year. More on that here.
I wanted to take a moment to explore the flip-side … a guide to why first-time VPs of Sales that finally get their shot — fail. I’ve seen so many fail, and almost always, for avoidable reasons. Reason #1 is jumping to Stretch VP of Sales one stage too early. A great VP of Sales has to have recruited at least 2-3 quota-carrying sales reps before under her to succeed on her own. So don’t come out of the hatchery too early.
Beyond that, I see a series of other avoidable mistakes that lead to a train wreck as well.
If you can avoid most things on this list — your odds of success go up. And hopefully it will be a helpful list for CEOs as well.
15 Things Not to Do as a First-Time VP of Sales:
- Pretending you know how to do something you don’t. Too many first-time VPs of Sales pretend they’ve done it all. Do not do this. If you came up in a 100% in-bound environment, don’t pretend you know how to build an outbound team. If you were the #1 field rep in your last gig, don’t pretend you understand everything about high velocity, small ACV deals. It’s OK as a first-time VP of Sales — and a 10th-timer — to be honest about what you are good at, and what you are still learning to be good at. In fact, it will save your job.
- Not hiring people better than you. One of the biggest differences between first-time managers and experienced managers is first timers hire their friends. And then after that, they hire people that won’t challenge them. Look — you have your shot. You are finally VP of Sales at a hot, or pre-hot, or at least interesting SaaS company. Don’t blow it by hiring yes men and yes women. Don’t blow it by hiring reps you’ve worked with before, but can’t sell in your current environment. You need to bring in a few ringers. But after that, you want to hire folks that were better AEs and SDRs than you ever were.
- Signing up for an impossible plan. The best VPs of Sales sign up for an aggressive plan — and insist on being paid when they crush it. But no great VP of Sales will sign up for a truly impossible plan. Don’t agree to a plan you mathematically can’t hit. This never ends well. You’ll be blamed. You’ll be fired.
- Hoping headcount (alone) will drive revenue. At some point, every SaaS company gets big enough where headcount does drive revenue. But this is almost never the case before $8m-$10m in ARR or so. Before then, leads drive revenue. Too many first-time VPs of Sales hire way too many AEs to hit the plan. Instead, you should have enough AEs to hit the plan, but also, enough SDRs, enough BDRs, and enough MQLs.
- Not becoming a demand-gen semi-expert ASAP. You can’t learn how to be a VP of Marketing just as you are becoming a VP of Sales. But yet, somehow, you sort of do. You need to understand where the leads are going to come from — all of them. Part of this is becoming a demand gen semi-expert, even if you got little exposure here in your last company. First, if there isn’t one, you need to help the CEO bring in a VP of Marketing or at least Director of Demand Gen ASAP that can help build the funnel. Talk about this every week in your 1-on-1. You also need to help the CEO understand what % of this year’s plan will come from SQOs, and what % from MQLs. Many first-time CEOs don’t know how to do this analysis. You need to do it as part of your Day 1 plan, and revisit it every 60 days.
- Hiring B- sales reps to hit the hiring plan. Hiring is hard. It is so hard. It can seem even harder to a first-time VP of Sales. Aren’t Intercom, Talkdesk, Algolia, Zoom and Slack hiring all the great AEs? Don’t I have to settle? No. You do not. This is what separates a great VP of Sales from the pack. She knows how to recruit and find reps that enjoy your stage, your hunt, your job. The mediocre VPs of Sales tell you that you have to settle. You don’t have to settle. You do have to hire differently. But if you hire nothing but AEs fired by Fancy Logo companies — that just doesn’t work.
- Not getting a mentor. Everyone needs a mentor. And I almost never see a first-time VP of Sales get one. Tell your CEO you need a budget for 10,000 options and $X00 an hour for a “CRO Mentor” and go get your old boss, or the best VP of Sales you know, to be a paid mentor. Unpaid mentors are OK but paid ones are 10x better. Get budget here on Day 1. No one does this. You shold.
- Blaming others. A seasoned VP of Sales that is great just never does this. You know what — it’s your plan. If marketing came up short, if customer success screwed up, that’s life. It’s not meant to be all daisies and unicorns. If others really are to blame, your job is to help them. Backfill them. Get the most out of them. That’s what true leaders do. As soon as you start blaming others for your missed quarter — you’re basically out the door. The buck stops with you.
- Unrealistic optimism, especially around unlaunched product features. Sales needs to sell the product we have today. Warts and all. If things are tough, and I hear a VP of Sales having crazy confidence we can do better with just this next feature — next quarter — I immediately lose confidence. Sales is tough. A feature gap is always an excuse. The flip side at the VP of Sales level, is excessive confidence around the roadmap as a top revenue driver makes everyone nervous.
- Talking the Talk. Don’t talk about things you don’t understand yet. If you don’t know how to build a true CAC analysis — be clear about that. If you don’t know what SDR/AE coverage makes sense — be honest. Throwing around buzzwords you don’t understand doesn’t impress the board. They know the emperor has no clothes. It completely undermines confidence in you.
- Firing the wrong way. No one wants to fire people. But great VPs of Sales know when to fire — and when not to. You fire AEs that waste leads. That’s instantly accretive, because your Revenue Per Lead almost instantly goes up. You don’t fire AEs that are still closing at a decent rate just because things aren’t going well. You have a different root cause issue. You need a diverse sales team. There are different ways to close deals.
- Not hiring management under you that are more experienced than you. Strech VPs of Sales shouldn’t hire Bigger Stretch Managers under them, except in the most hyper-transactional environments. Even if you kill it the first 6 months as the only manager, the time will then come when you need to hire Directors of Sales, a VP of Sales Ops, and more under you. Rookie Error #1 at this stage is hiring other folks that haven’t done it before. Don’t be insecure. Be confident in what you’ve accomplished. If you’ve build an amazing culture, you can hire folks under you with more experience than you. That’s not a threat. It’s an enabler. You have to learn to do this when you hire your first management layer.
- Carry a bag too long. You’ll never be able to hit the plan for 8 AEs under you if you are carrying quota, too. Don’t carry a bag yourself for more than a quarter. It’s a trap. Especially if you are the best AE on the team.
- Owning more than Sales. Whatever you do, do not agree to be VP of Sales and Marketing. Or VP of Sales and Customer Success. Or VP of Sales and Anything Else. All it does is increase the odds you fail. You are a closer. Now you need to become a recruiter and leader of closers. This is all you should do. Anything else, and the odds you fail at both go up 10x. Minimum. This is bad for everything. Even if your CEO is pushing you to own both. Push back.
- Being non-transparent. And/or not signing up for goals and reporting against them. Don’t play games. A miss is a miss. Sign up for an ARR goal that is tough, but can be achieved. Be honest about each month how much over and under you are. Transparency builds trust. Seasoned execs know this. First-timers try to hide the ball way too often.
A seasoned VP of Sales gets the benefit of the doubt when she starts.
A stretch VP of Sales really doesn’t.
So built trust quickly. Be honest about what you know, what you don’t. Get the help you need. Hustle like there is no tomorrow. And learn to be the best recruiter on planet Earth.
And be yourself. Don’t try to copy Some Guy. Your CEO took a bet on you. She believes in you. Not someone acting like a VP of Sales. You.