GTM 134: When to Hire Your First Sales Reps (And How to Get It Right) with Joe DiMento

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Joe DiMento is the Head of Go-To-Market & Industry Partnerships at Bain Capital Ventures. Previously, he was an operating partner at Fractal Software, helping launch vertical software companies and find product-market fit. Before that, he was the first non-founder seller at three startups, turning early traction into a repeatable sales motion. He began his career at Google and Bain & Company and holds an MBA from Stanford GSB.

Discussed in this Episode:

• When to hire your first account executives

• Key traits to look for in early sales hires

• Structuring compensation for first sales reps

• Should you ‘hire the buyer’ to be your sales rep?

If you missed GTM 133, check it out here: Build your AI Outbound Machine with ChatGPT | Jordan Crawford

Highlights:

05:03 When to hire your first sales reps.

13:17 Characteristics of top early-stage sales reps.

22:25 Designing a sales compensation plan.

31:55 Hiring for grit, curiosity & determination.

42:03 Fast-tracking your sales career.

Guest Speaker Links

• LinkedIn: https://www.linkedin.com/in/joedimento/

Host Speaker Links (Scott Barker):

• LinkedIn: https://www.linkedin.com/in/ssbarker/

• Newsletter: https://thegtmnewsletter.substack.com/

Where to find GTMnow (GTMfund’s media brand):

• Website: https://gtmnow.com/

• LinkedIn: https://www.linkedin.com/company/gtmnow/

• Twitter/X: https://x.com/GTMnow

• YouTube: /@gtm_now

Sponsor: Pursuit

The best talent isn’t actively job hunting. Pursuit helps companies hire elite go-to-market talent on a non-retainer basis. As a key GTMfund partner, they equip sales and marketing teams with top performers.

If you’re hiring for sales or marketing roles, reach out to Pursuit at pursuitsalessolutions.com/gtm or message a GTMfund team member.

GTM 134 Episode Transcript

Scott Barker: Welcome, welcome GTM community. Appreciate you lending us your eardrums for the next 45 minutes or so. Uh, I always do my best to deliver as much value as possible. And, uh, it’s easy because I always get fantastic guests like my guest today. Uh, I am joined by Joe Demento. Uh, Joe, welcome to the pod, man.

Joe DiMento: Yeah, thanks for having me. I’m excited to be here and talk about all things that go to market.

Scott Barker: I’m pumped and, uh, you’re the perfect person to do that. So I always like to tee it up a little bit for the listeners. So, uh, Joe currently leads go to market and industry partnerships at Bain Capital Ventures. Uh, Bain has been an incredible partner and friend to the fund since, uh, the very early days. So we love the team at BCV.

And, you know, really that role and it’s such a cool role you have is it’s all about, you know, working with founders to help them unlock go-to-market growth and access, you know, executive networks within the Bain network, which is very much like what we do at GTM fund. But prior to that, you were an operating partner at Fractal Software, uh, where you helped launch dozens of vertical software companies, which is super cool and helps them kind of find product market fit.

Uh, but before that, even you were an operator, um, and you were at three early stage startups and the kind of red thread is you were oftentimes the. First non founder seller, um, you know, taking that early traction when there’s no product market fit, there’s not a lot of process and you’re just kind of in this ocean trying to figure things out.

Um, and you know, that’s where I want to spend the bulk of this conversation with you because I think it’s, it’s very rare to, uh, speak with someone who’s done that three times and three times, you know, successfully, um, and. I will say for our listeners that this is probably one of the most common questions that we get from our early stage founders.

When to hire your first sales reps

And that is “how do I make my first sales hire?” And within that question, there’s about 50 other questions, but, um, you know, I want to fly you back to your first, uh, startup that you’re at. Uh, you’re in this position of kind of being the first sales hire. What does Joe look like at that time? What was your experience?

Joe DiMento: What was your background? You know, if people are trying to find a Joe, what did Joe look like back then?

I think one thing that’s worth noting is who is important, but when is probably more important? When should you actually hire an AE or more than one AE in your startup? Once you have some sales going, um, that question, that answer varies a little bit, but it’s almost always not immediately simply because you need to learn as a founder, how exactly the market is responding to your vision and then you have to have closed several deals at least before you understand, okay, where is there a pattern here that even someone who is very versatile, very adaptable, um, Um, and so one of the things we talk about at BCV is, you know, you have to have some deals closed.

Joe DiMento: There has to be some through line in those deals. Maybe it’s the problem that you’re solving. Uh, it’s not necessarily industry because oftentimes you have multiple industries in an early sort of sales book, and that’s fine. Um, but there has to be something there. And then I think about the second point on when, and then I’ll love to talk more about who is how much of it can you document in any meaningful way, right?

If you’re going to hire ideally more than one AE to start, so you can kind of see how they work and kind of learn from their efforts, what are you going to tell them when they start? What onboarding, if any, do you have, have you recorded some of these calls? You know, those types of things I think are very important.

Um, at Fractal when we had. Founders who were selling and then hiring AEs after they closed, you know, anywhere from 50, 000 to 200, 000 in ARR. Like, we encouraged them to have calls recorded, you know, a battle card that was very loosely defined in some sort of doc. You know, a bunch of Q& A and sort of objection handling.

Just because You know, those AEs, they’re hard to hire, they’re important to train, they’re expensive, and so getting them set up for success is important. So anyway, that’s a little bit on the when. Um, I’ll pause there and then I can talk more about who, unless you wanted to chat more on that stuff.

Scott Barker: No, I think it’s an incredibly, uh, insightful call out of the, the, when is a big part of that, that question. And you said something in there that I, uh, I just want to double, double click on. Uh, you said, um, preferably you hire more than one AE. Is that kind of your best practice? And you’re an early stage founder looking at your first sales hire.

Should you look at your first two at once and what are the benefits and pros and cons of, uh, of doing one versus maybe two.

Joe DiMento: Yeah, yeah, um, a lot of folks will say do more than one. We tend to agree with that. Obviously there’s exceptions in every case, but partly because If you don’t do more than one, you don’t know if it’s working or if they’re not working. And also, you’re in such an experimentation mode early on as a company, right?

You want your rate of learning to be so accelerated with every single thing you do, and in that sense, having different archetypes, different approaches, but both hopefully effective in that early AE cohort can be very valuable. You know, you might have someone who’s far more data driven and really just dives into all of the information that they have through Apollo or what have you and then knows how to manage their very large book right when they’re one of two AEs.

And then maybe you have the other person who’s just the sort of very charming, very extroverted kind of goes and networks like crazy and can win any meeting over. That is less data driven, and maybe one of those approaches is going to be more effective early on, and you’re not sure, because you’ve only done it yourself as a founder, um, and then the other thing is, it’s just lonely when you’re a seller by yourself, and you’re not a founder, I mean, it’s lonely as a founder too, but it’s helpful to have someone with you who you’re kind of Understanding how they work, what they’re doing, um, And, and then lastly, one more point, is it helps the, Helps the founding team understand what’s working, right?

If one new AE has a hundred calls made a week, and the other has three hundred, and is converting more of them, Well, that’s a pretty good sign that the second one is more effective.

Scott Barker: Yeah. Sales is hard enough. Uh, doing it alone, uh, is, it’s just almost cruel. Uh, you, you need that, that built in almost therapy of having someone in the trenches with, uh, with you. And before we get into the, the archetype or the, the who, um, you, you mentioned this idea of having some sort of onboarding enablement materials ready so that you’re actually setting these people up for success.

And if I’m a founder, I’m listening to this. I’m like, Oh, shoot. I don’t really have that, but I have an open JD right now for, uh, my first AE. Um, What’s the baby steps? Like what are, what are a few things that aren’t a huge lift, uh, that founders can start to do so that when they do bring that person on board, you know, they are set up to win and, and, and hit their number.

Joe DiMento: Yeah. Uh, first off, I would say it’s not, It’s not like this needs to be prepared well in advance. I often tell founders, put the JD out there, start getting people in the interview process, hire someone, then before they start, which could be literally the weekend before, like start cranking out a bunch of learnings you have.

I mean, that’s the extreme version, but you know, that works fine sometimes. Having some call recording software is very good. I mean, it’s just going to help you as a founder learn. What resonated well and what didn’t resonate when you’re actually watching again or listening again at 2x speed on a jog or something And then of course those calls are very valuable.

You can say oh man I did so well in that pitch to this this brand Just listen to that call and that’s what I think you should try when you’re selling as the new AE So I think that’s pretty important And then in terms of what this sort of series of documentation might entail, it really can be quite simple, right?

This is the core brand value prop. These are the main problems that we’re solving as a company that we believe in. Here are three great anecdotes that kind of always spring to mind and get sort of prospects and customers excited. Obviously those should probably come from your lighthouse customers or your first design partners.

Hopefully they’ve approved that you can use their name. And if not. It’s probably okay if the AE says the name and doesn’t blast it out on the internet, you know, so I think it’s not too cumbersome an activity for folks to do and then lastly I’ll say I think it also helps Force thinking on the part of the founding team, right?

If you have three different verticals that have bought your product before you’ve hired AEs Well, which one is the best one for the AEs to go clean up in? Now, ideally, when you’re a Series B, C company, you’re going to have ten verticals, and everything’s gravy, and, and the product is used by everyone. But in order to get there, you’re going to need to focus on what really works.

And you really should have alignment among the founding team, and certainly engineering, and product, and marketing, too, about what those are, before you tell the salespeople, go close more of these.

Characteristics of top early-stage sales reps

Scott Barker: Yeah. Yeah, absolutely. And then one thing. You know, add to that to just on the topic of kind of enablement and slowly building towards a repeatable process is once you do have this person in the door, make sure that this is someone who is rigorous in kind of documenting everything that they’re doing all the wins, the losses, you know, because that is going to be so invaluable as you, you know, scale.

I guess that leads naturally to the first question, which was what is the archetype of this, where, where do we find these, these magical unicorns that everyone is looking for? Because it is a hard, hard, hard role. I’ve been in that position myself, it is very difficult.

It requires a very different type of seller and mentality. Um, you know, again, just using yourself as an example, like what was, what was. Joe, like back then. And what were the experiences you had that made you successful?

Joe DiMento: Yeah, I mean, first of all, I made tons of mistakes, so I certainly don’t want to suggest that I did it all right. And honestly, Scott, I would say a lot of it was I learned about myself in the process, and obviously that’s part of growing up in your career, but I think it has a lot to do with what my answer entails.

So I was a consultant before I started as an AE. I had some sales experiments experience before going into consulting after my MBA, but not sort of AE quota carrying type work. Um, and when I was consultant, I really spiked in the client side of the business and it was very natural to me to the point where I was once on a case and there was a very important senior client that I had sort of a very strong relationship with and the senior partner on the case asked me before I.

I had to leave for paternity because I wanted to go and spend time with my baby. Hey, can you stay on the case longer? Because you really have some rapport with this client. And I thought to myself, wow, that’s weird. Like I haven’t, I haven’t been working hard on that, right? That’s just me. I’ve been working hard, but it’s just who I was.

So I sort of listened to that and thought maybe going into sales once I, once I jumped into startups would be something that was interesting to me. But I also think that coming from the consulting background was helpful because I was thrown in so often in that environment to brand new contexts that were unknown, kind of bewildering, in high intensity environments, uh, working really, really hard, right?

Lots of very, uh, familiar parts of being a salesperson, and I was very curious. I just liked learning about stuff. You know, I was in a case where we did a lot of work for a major utility, and I had no background in utilities, and I thought, gosh, this is wild. Let’s learn all about this. And so I think spiking and curiosity is super important, especially, uh, Because, to your point earlier, so much of that role is not just closing those deals.

It’s writing down what works, learning about what has worked before, telling your founding team or the other AEs alongside you what you think works really well. And so, like, the speed of learning is such a critical ingredient in that early AE profile. And so someone who likes doing that, I think, is extremely important.

I’ll pause there. We can talk more about some of that stuff, too.

Scott Barker: Yeah, I, I, I mean, it’s one of those things where, you know, you think of all these different pools of places that you can pull people from. And, uh, I think consulting is not often a, a, a normal trajectory from like consulting to, to AE, but makes total sense in terms of like a first, uh, sales hire. extrapolate those things out. You know, you mentioned people that are constantly having new contextual experiences, high intensity, high in curiosity, like. Maybe entrepreneurs as well, someone who started a little business after university or something, you know, that might be better places to source from, would you caution against hiring an account executive with experience at a larger company?

Joe DiMento: Probably. It depends how large. So, I think the nuance of that answer is, it sounds crazy, and it perhaps is crazy to say uniformly, don’t hire former AEs for your first AEs, right? That sounds kind of dumb. But I do think there’s a big part of that early journey, I mean, I certainly experienced it where. Um, You don’t have almost any infrastructure, right?

Who’s your PMM? There’s not, there’s not one. You’re going to be revising the deck that the founder made, you know, during her weekend or whatever. Um, And so you need to be very comfortable and kind of like that stuff, right? Like, I didn’t mind doing the deck because I had done lots of decks as a consultant or what have you.

So that’s a big part of it. But then I think an even bigger part of it is you’re figuring out how this business goes to market, who are the customers that love it versus just kind of like it, therefore, where should you spend your time, you know, and of course, therefore, where is product market fit coming from whereas an AE who spent a lot of time at a company that has product market fit, no matter if it’s, you know, the number one or the number five player in a market, it’s just so much different in landing a sale. Oh, we are this product. We’re compared to these three products. You’re already probably evaluating all three.

Here’s our scorecard and you know what we do well and what we don’t. If you’re creating a category or you’re trying to rethink the way people do work, which Lots of companies are doing now with AI. You can’t use that toolkit at all. And so I would caution folks to really look hard at anyone who comes from that background and say okay But how else are they?

Very curious. Could they work well in our founder environment and with our early stage product, despite having grown up at a slightly bigger place? And then I think one easier heuristic is the bigger it is, the less likely it is gonna work, right? If someone has spent 10 years at, you know, Oracle to use a ridiculous example, they’re, they’re, they’re gonna have a hard time being the first AE at a new AI company.

Um, you know, there’s always exceptions, but I would be very surprised.

Scott Barker: Yeah. Yeah. Yeah. I think it’s about looking at how much process they were following, right? Like, and, and how many resources did they have and how often did they leverage them? Um, and having that very honest conversation with them like, Hey, there’s no sales engineer coming to save you. There’s no product marketing.

That’s going to spin up something you need. Um, you know, Reminds me of, you know, back in the sales hacker days, if I, if I needed a case study, it was me calling my customer asking for a quote, and then going on Canva and building my own case study. Yeah. Yeah. Uh, and God bless them all. Um, thanks, uh, Udi at Gong for, uh, for always being awesome back then.

Um, but, um, what are your thoughts? Um, cause there’s this other idea. Which I quite like sometimes is the idea of hiring the buyer. Um, so let’s say you’re in a vertical SaaS company and, you know, you’re selling to customs brokers, let’s say, um, could you find someone who has done that job of a customs broker and teach them the ins and outs of.

You know, being an effective account executive in, in software.

Joe DiMento: think kind of, and I’ll say that because, uh, I do think it’s very possible to incorporate folks like that on the team. Whether they are the AEs or not, I think, is debatable. Uh, for example, um, at Fractal we are working with new verticals, uh, to the founders. Um, Higher Ed Software, for example, is a company that I worked a fair bit with.

And they did a really good job of getting advisors who are not necessarily on their board, but people they go to all the time, who have relationships. And who will willingly get on the phone with them, uh, pretty regularly to just break down the realities of a particular deal or, you know, better yet, a broader landscape of the industry that they’re still getting up to speed on. And, you know, this person I’m thinking of in particular is career, uh, person in higher ed. They would not leave their job to do exactly, you know, uh, AE sales, AE sales work at an early stage startup. But they were extremely valuable for their intuition. And then on the reverse side, I do think how much of what tech companies do now is changing so quickly that having folks who are excited to learn and grow their careers as they do that and not necessarily do things the way they’ve been done before in any given industry is important.

Now, there are some exceptions. I think in healthcare, it’s very hard sometimes to not have a domain expert, sometimes in many of those calls, those sales calls. Um, so we work with some healthcare tech companies here, and often they hire at least one person who’s in a sales-ish role. They’re not necessarily a quota carrying AE, but they’re in the commercial team and they’re helping the commercial team.

Uh, not only as an advisor role, but typically I think you should get the expertise elsewhere, whether it’s full time or part time. And then the sellers themselves should be building the playbook and come from the more traditional sort of tech sales background.

Designing a sales compensation plan

Scott Barker: That makes total sense. Total sense. Um, the next big thing, uh, which is again, part of all the same question, but it’s a question that keeps, keeps, uh, getting deeper and deeper is how do I comp this person? I am a founder, like we’re having some success, but I’m kind of throwing. Darts at the board when I’m coming up with this quota, I want them to succeed.

I want it to be fair. How do you think about the compensation structure? Because it can be very difficult in those early days.

Joe DiMento: Yeah. Uh, a couple thoughts on this. First, you can get data. So, you know, our portfolio can get data from us and we buy it from data brokers who have lots of very detailed sort of benchmarking across company stage, location, et cetera. So, uh, they shouldn’t have to start from a shot in the dark. Um, that said, I do think in general philosophy that we have and we talk about is You really want your early sales team to understand how they’re getting paid.

So it’s a simple metric it’s not a bunch of accelerators and Uh variables that they have to track because you have to track them, too Uh, I was once uh at a startup and it was a great company and everyone was very well meeting But I wasn’t I wasn’t paid accurately for a couple of months because you know The team was busy and strapped and whatever it happens, right?

So the more simple it is the better for everyone um, and then I think also a Philosophy point You want to err on the side of generosity, right? You want your early AEs to hit their quotas. Um, now you’re not going to set it so low that your business isn’t growing, but if you use a 50 50 OTE model, that means that if they’re hitting their quota, they’re delivering well in, uh, excess of the value that, sorry, you’re paying them well less than the value they’re bringing in, and then they, they’re happy, you’re happy, they’re going to tell their other friends who are AEs, uh, that they can come and, and hit their number at your company.

Um, so I think that’s pretty important. And then the last thing in addition to clarity and generosity is flexibility. You just need to tell the team, Hey, this is going to change, you know, we’re going to do right by you, you know, we’re in this to build a great big company. And we’re so excited to do that together.

Everything changes all the time. And so if this sales comp plan is different in six months, it’s not because. We don’t have your best interests at heart. It’s because we got it way wrong, right? It’s way too generous and we can’t pay you, you know, uh, a million dollars a year when we’re a seed stage company, um, uh, or what have you.

Scott Barker: Yeah. Yeah. Yeah. I think there you need to both go into it with some agreed upon flexibility, you know, um, because things just evolve so quickly, you know, at that, that early stage, it can go way better than expected. It can go away worse than expected. And, you know, that flexibility built in is, is really important and erring on the side of generosity.

I couldn’t agree. More, uh, especially cause you know, your next hires are going to ask you, you know, how did they do? What percentage of the team is to quota? Like what, what are they at? And if they’re at, you know, 30 percent to quota, uh, good luck getting, getting more talent, um, in the door. This is a hard question because it’s super nuanced and, you know, it depends on your ACV and the different selling motions and things, but can you give folks a rough benchmark of like what you’re seeing founding a ease make. So you, you set a 50, 50 split, um, numbers wise. What, what are you seeing out there right now?

Joe DiMento: It ranges quite a bit, obviously. I would say at the low end, you know, 200, 250, you know, in a big market of, of OTE, um, and at the high end, more like 300, 350. Um, and then for more enterprise, it can go slightly above that. Um, and I think the key is that that’s the O. T. E. To this point of generosity. I think it’s not uncommon for companies doing really well in certain markets to pay their early eight years, half a million dollars, in cash a year. And that’s cool, right? I mean, it’s rewarding their hard work, but also, frankly, the product market fit that the company has. Um, I can definitely get some more detailed benchmarks if you want. But I think the zooming out and thinking about my career trajectory. I was pleasantly surprised at sales comp.

You know, it wasn’t a thing I paid any attention to before I was in sales. And then when I left consulting, which pays well, I was pretty excited to learn that I could also. Um, and that’s because of the nature of the, the role and the compensation model.

Scott Barker: Yeah. And in this scenario, do you, do you cap their commission? It feels like you almost have to, cause you, you know, you only have so much money

Joe DiMento: No, I, I don’t,

Scott Barker: No cap.

Joe DiMento: think not necessarily. I mean, certainly not forever, right? If it’s been three years of uncapped and they’re way exceeding it, you should change the quota for sure. Um, but no, actually, I don’t think so because. Then they’re able to, first of all, they’re going to be ecstatic. Um, that helps you learn, wow, we, we need to change the quota, uh, and, and just increase it.

Um, and I just don’t think there should be that penalty, um, that’s artificial and arbitrary, when your whole raison d’etre is to build this market and this business and figure it out together. Um, and then lastly, like I said already, if they are exceeding it, that’s because they’re selling a lot of stuff, right?

You’ve already empowered them and you have all these customers coming in the door. Um, and I think that’s really important. One last thing I’ll say on this is, um, The kind of customers you’re bringing in are really important to think about. Um, and so for instance, do you have SPFs or accelerators when it’s certain marquee logos maybe in new verticals you want to go after?

Um, I think those are things to think about because, uh, you know, you could pay someone quite a bit because they’re hitting their number. But if you’re just sort of running the table with your core ICP and you’re not expanding. What is possible for this company in doing so by going outside of that vertical or what have you? Then, that’s good right now, it’s not as great in a year.

And, so much of that work is really the pioneering work of figuring out how you bring this product to market and you want to incentivize that with the comp as well.

Scott Barker: Such a great point. Really, really great point. Um, you know, it’s setting up the incentives to incentivize the right, right behavior. And if you know, hey, the X, X customer, they’re the stickiest. We make the most money from them. They love it. Like, either go incentivize more of them or okay. Now we’re good in this vertical.

Let’s go spiff this next vertical that we’re, we’re trying to break into. Uh, I think that’s a really,

Joe DiMento: And, and a big, one last thing on that Scott, a big part of this is land versus expand. I, because I think a lot, especially PLG products or products where there’s lots of room to run within an organization. I think it’s important, first of all, to recognize that and to expand, right, and to have NRR that grows because of your ability to continue to sell within an account.

Conversely, early on, if you only have, you know, a handful of logos, but you’re running a very good business within them, you know, that’s, that’s harder to defend, right? Churn risk is much, much higher because one executive change could, could change things. Um, and so I think incentivizing new logo growth in addition to expansion within existing logos is also something to pay attention to.

But again, this is even getting a little later. Like I think if we’re talking about the first few AEs, this is not a problem. You’re going to be thinking about too much, uh, but maybe for another day.

Scott Barker: Um, so, and, and just to, uh, make sure kind of for, for the audience. So this is, uh, we’re talking like a full cycle, AE, these first, first ones, they’re going to be prospecting, they’re going to be closing, and then you brought up an important point, which is, um, you know, logo growth, you’re not going to have, you know, account managers, you might not even have, you know.

Um, and so they manage that account maybe indefinitely until you build out that function and they’re rewarded for the growth.

Joe DiMento: Uh, yeah, I think so. Uh, early on, uh, but you can pretty quickly hire other folks to help maintain the account. I think you should. Yeah. One thing that I have thought a fair bit about is. Um, the profile of an AE, you know, to use the very cliched, uh, uh, uh, uh, analogy, the hunter is very different from the, uh, CSM profile or the AM profile of farmer.

Not always, right. But in general, AEs like new deals, figuring out new customers, how to close them, how to get the signature, et cetera. And so I don’t think for too long you want that same person. Maintaining the relationship, even if they are expanding within the account. Um, just because new logos are fun, right?

Having, being able to say, gosh, I closed, you know, Nestle and then Pepsi and then another CPG brand here is, is, is just more exciting innately to a lot of people, I think, than saying, I got another division within Nestle or what have you. Um, and so in that sense, I think pretty quickly you should think about those other functions.

Scott Barker: Yeah, totally. Yeah. There’s a reason we specialize those roles. They’re definitely, uh, two different types of human beings. Um,

Hiring for grit, curiosity & determination

Joe DiMento: One last thing to go back to if it’s all right on who you should hire in this first AE profile obviously, but we should say it directly. I mean people who work really hard and are excited to do that. Now, it’s hard sometimes to evaluate that in an interview setting. It’s not as hard to evaluate that in a backchannel reference, right?

You may be connected via two other people to someone prior to hiring them, just get a three minute phone call with them. Uh, I often send an email that says, you know, did you ever work with XYZ, you know, five minutes for a reference convo and then the person calls me and that alone can often make or break the situation.

And. And then you can also see it once they start, right? I’ve worked with teams that have had a couple different AEs, some of whom looked really great and interviewed well and had pretty good references. And then as the days and weeks went by, you just thought, gosh, like we’re not seeing the same level of productivity on the input metrics, right?

The number of calls, the number of emails, just the excitement of learning all this stuff about the company that they just joined. And that’s a huge variable in the success of an AE long term of any employee in many ways. Um, and I think that’s an important one to really look at and actually measure early on when so much data is uncertain within the company.

Scott Barker: Absolutely. I think, you know, this idea of grit and resilience is always incredibly important for AEs, but it’s just almost a 10 X when it’s, when it’s this, when you’re starting from, from nothing, there might be maybe months where you’re just hitting your head against the wall, things are not working and you need to keep that, that level of hustle and, you know, the, the back channeling is, is super, super important.

Uh, have you found any other ways to kind of test for. For grit. I know for me, you know, I’ll almost like to try and talk people out of the role and be like, this is like, this is really hard. This is a really intense environment. You’re, you’re stepping into like, you know, we strive for excellence and like, really almost kind of try and talk them out of it.

Um, and the ones that thrive in those environments, you know, get, get excited and not deterred by conversations like that. Right.

Joe DiMento: I think exercises are helpful in that respect, you know, I hesitate to encourage companies to give people huge amounts of work Especially if it’s free labor for them, right? Like don’t give someone an exercise That’s a project that you need to do yourselves But if you give someone a relatively open ended assignment and you say hey spend Something like 10 to 20 hours on this over the course of two weeks You get very different outcomes and partly that is Uh, the input part, right?

I’ve then talked to candidates who said sheepishly, uh, you know, I spent 25 percent more than you told me I should. And that’s fine, that means they’re hungry, right? But then also, you’ll see just how efficient they are, right? You might get two submissions that are wildly different, and one person actually spent less time than the other, and boy, that’s gonna tell you Not about the grid piece as much as it is about the raw intellect and their ability to solve problems quickly Which is so important and I think that gets back to one other thing.

We haven’t talked about explicitly, which is I think To say it bluntly like early employees of any company You really should filter for raw intellect and intelligence and horsepower clock speed whatever you want to call it because there’s so many different parts of building the business that are unknown.

You can’t possibly predict and you’re going to have to just keep reacting. And each of those decisions changes the course of the company and people who are able to make those decisions quickly and generally with the right answer are going to do really well.

Scott Barker: Yeah, absolutely. And, uh, a plus one on giving at least some sort of small project and it can be pretty low lift, but you can find, I think the best ones, they turn that low lift into something quite extraordinary.

And, you know, I’ve, I’ve always very intentionally given them the back. Oh, when do you want this by?

And I’ll be like, ah, you know, next week, sometime and the best usually have it. You know, by the end of that week, not, not the full seven days. It’s like, if you’re having the conversation on Wednesday, it’s a million bucks on, like Friday. Um, you just kind of cause speed matters to speed matters a lot in an early stage.

Joe DiMento: And one other part on that, Scott, on the exercise piece, I think a lot of that should be, um, making sure that they understand to some degree. The company, they’re joining the product that they’re going to be selling or working on. Obviously, they’re not going to know as much as the founder, but anything that’s out there, right, did they listen to a podcast the founder was on?

Did they read all the help docs on the site? Did they look at, you know, uh, Hacker News thread in which the company was talked about? Like, the more that they do that, clearly, they’re intrinsically motivated to do it to some degree, right? They think it’s cool. They think the company’s interesting. And that level of passion I think is very important, right?

If someone doesn’t believe in the broad mission of the startup that they’re joining. Uh, and they’re just doing it to make a buck, they’re just not going to do as well. Um, they might be a great salesperson, but I think, uh, going back to the archetype discussion of sales profiles, the true mercenaries, the people who are just like, Hey, give me the call script and I will just kill my number and I’ll always make president’s club.

Like, I don’t think those folks are great early because they need to be motivated by something other than

Scott Barker: Yeah, that passion is so, so critical. Um, and last thing I’ll say on just, um, you know, projects and giving candidates projects. There’s a lot of people who are like, I don’t get people to do free work, but I think some of the best ones are when you can give them a project project that even if they do spend.

You know, 40 hours on it, they’re actually going to learn something that will help them in whatever role they, they land, you know, uh, there’s ways that, you know, it’s not so specific to your company that, you know, no, you’re going to go learn all about, you know, the latest developments in AI and come like pitch that to us and like, that’s going to be super helpful for their, their career anyway, you know, um, the.

Other piece going, going back a little bit to, to comp. So you’ve got your, your OTE, um, equity, you know, traditionally AEs don’t get as much of the equity split, uh, as I think some, some should. Um, and this early hire is so, so critical. Um, what do you think is fair in terms of, uh, equity for this, this type of role?

Joe DiMento: Yeah, um, again, depends a lot on the stage, but early on, they should, first of all, equity should be a meaningful driver of their motivation, right? To this point on passion, you want to build the, I don’t know what the term du jour is, maybe it’s not decacorn anymore, but, You want to build the very large business that people will know about and you’ll be able to participate in the growth of.

And that’s equity comp, right? That’s not just sales comp and cash comp. Um, so there should be some meaningful component there. Uh, it ranges a lot. You know, I’ve seen anywhere from five basis points in an early AE hire to more like 20, um, if the company’s, uh, pretty early and. And the person’s really good, um, can go slightly beyond that.

But obviously, if you’re getting close to sort of half a percent or even a percent, then that’s a, that’s more of an executive level, higher, maybe even C level at that point. Um, and again, the cash comp is a big deal, right? I mean, I remember, uh, talking to founders who. are more technical and saying, Hey, why is it that the, the AE is going to make more money than my full stack engineer who’s actually built like most of this product and is incredibly hard to get and was paid, you know, a quarter million, three quarters of a million dollars at meta.

And the reality is, sales is a different business, right? You make the OTE when you hit the quota. And if not, you don’t necessarily stick around. And then also the equity piece is different in those two circumstances. That engineer probably has a much bigger equity package than the AE. And that’s just kind of how the market has evolved over time.

Scott Barker: Yeah. Yeah. And then, you know, on the flip side, if you are taking a founding AE role, I would always try to negotiate more, uh, more equity, bet on yourself. And I think that’s also a good signal if you’re a founder, if they’re maybe even entertaining, like, Hey, can I, My OT go down, but I get more, more equity.

Like, I think those are strong signals that this person believes in the mission wants to be here long term and, and believes that this can be a true, you know, deck of Gordon, if, uh, if we’re, we’re going with that

Joe DiMento: We’re still doing it. You know, and I think very pretty commonly, at least now, certainly when I was being interviewed at places like Coda, I know Uber did this, they’ll give people a menu. They’ll say, Hey, here’s three options. One is heavily weighted to cash. One is more heavily weighted to equity. Which do you want?

Now, people should still negotiate within that. But it kind of lets you choose your own adventure a little bit, uh, in that respect. And frankly, I think the earlier you’re going, the more you should definitely believe in the mission and therefore be excited to sign up. Almost, almost if it were unpaid, of course, not actually if it were unpaid, and then you should motivate yourself with equity because that’s really the kind of outcome you want to generate and the ultimate driver of the success of the company.

Scott Barker: Yeah, totally. Um, so switching gears, uh, a little bit, um. So that was such a fantastic breakdown. Thanks for running through all of that. Okay. Let’s say, you know, now I’m, I’ve got my first sales hire. I’m, I’m, I’m in this role. How do I approach this behemoth task that’s ahead of me? How did you approach it, at Coda and some of these companies that you were a part of, like you’re 30, 60, 90, like, where did you start?

Fast-tracking your sales career

Joe DiMento: Uh, it’s a great question. I’m smiling because in my first week at Coda, I was at the time reporting to the CEO, Shashir Mabhotra, who I just have such tremendous respect for. And he, I remember he said something like, Yeah, go ahead and pitch the product to a couple people this week, if you don’t mind. And I was kind of like, oh my god, like, I don’t, I just got here, like, I have to figure this out.

Uh, and you know, I called up some friends who I knew, who I trusted, who had genuine business problems that they were working through, and I I pitched the product to them, uh, you know, in my very limited capacity. Uh, and I think to Shashir’s credit, a huge part of his philosophy and something I’ve carried with this is you learn by doing right.

The more you can actually start doing the work, the better you’ll certainly assess how well that person’s doing the work if you’re in the part of the founder, but in the part of the seller, you’ll actually just, uh, You know, learn from those mistakes and move on and and grow and improve as a result of that So I think that’s why this call recording thing is important, right?

We didn’t have that at the time because the product was even earlier. We were in stealth Uh, but if you can watch all of the long calls of the founder then boy you have a bunch of anecdotes, right? You can kind of lean back in your chair and confidently say the anecdote about why this new prospect should consider buying the product versus kind of Trying to remember or frankly not being able to have an anecdote and just saying something that’s more theoretical.

Um, so digesting as much as you can talking to as many customers or prospects or people with the problems in, uh, in question that you can. So, for instance, if you have friends who are In an industry that could use the product, call them up and just go very, very deep and honestly about what you think the product is, how you think it might work.

What do they think about competing products? Right? Cause you’re just training yourself about all of this context. Um, I often tell folks who are. Getting into new industries for the first time. Just learn everything you can at every moment, right? Read any substack, download any podcast, watch YouTube on 2x speed while you’re doing the dishes, like, talk about it with your friends and sort of stumble over your phrasing, right?

I mean, there’s no substitute, I think, for that experience. And the more you can throw yourself into that, uh, as quickly as possible, chances are, the more successful you’ll be in actually selling that product,

Scott Barker: Yeah, learn by doing, uh, and yeah, I wish, wish Gong was around when I first

Joe DiMento: Right?

Scott Barker: Selling, I was so unbelievably fortunate that my first sales job in tech, I just happened to get sat by the number one AE and I still remember his name, Brendan Shaughnessy. Thank the Lord for Brendan, uh, just hearing him.

On the phone day and day accelerated my learning curve just exponentially. Um, and now we have, you know, technology that can, can help us, um, do that. So one thing I forgot to ask is this comes up quite a bit too, is, um, should this first sales hire. Should we be looking for leadership qualities? Cause I think a lot of times when I talk to founders, they’re like, yeah, we’re going to hire this first person.

And then they’re naturally going to become our manager. And then we’re going to build a team around them. And, you know, yada, yada. How much do you weigh? Like that? That’s great. If that happens, um, But should you be thinking that way?

Joe DiMento: I think early on, it is a nice thing to consider in the hiring profile. Probably not quite a non-negotiable, but pretty close. I think it’s because of the things we said earlier, right? Are they so passionate about this mission? Are they deeply curious people who love solving problems? Are they Incredibly hard working and are going to put a lot of effort into it I mean, those are great characteristics in a sales leader for sure um And pretty soon if you have a team of one, two, three, four, five AEs It’s completely untenable for a founder, CEO, or CTO to watch all those comm calls and give all that feedback.

And so you do need some level of sales management somewhat soon, call it 6 to 18 months from then. And that person coming from the ranks makes complete sense. Um, and in fact, I think one error that some folks think through, maybe not always do, is they think, great, we have some salespeople, let’s hire the big boss who’s going to run this team for 20 years, and that is, is still not the right profile, right?

Going back to, uh, what we mentioned earlier on this sort of, um, true mercenary sales profile not being great as an early AE, I think similarly, a true VP or CRO type person is probably not the right fit when you have a handful of sellers. Uh, and maybe more, uh, a couple of years beyond that. So, for instance, uh, Jeff Williams, who’s an operating partner here at BCB, he’s been a CRO at multiple cybersecurity startups.

You know, he always says, don’t get the VP too early, because you want someone who can kind of grow that managerial emotion, and then you want that person who’s a true VP who can think much more strategically. Hey, how are we going to go internationally? Like, which segments do I already have relationships in, that we can double down on in the market?

And that’s very hard to get very early on. And so generally we say, don’t even try. Try to hire that more player coach person or promote them from within.

Scott Barker: Yeah, I have seen that outside big boss VP fail so many times. It, it

Joe DiMento: Yeah, especially in your

Scott Barker: like batting close to a hundred, like at least with the companies I’ve been, you know, a part of, um, so I think that is a good word to use, of caution. Um, you mentioned. What are your thoughts on player coach? I’ve, I’ve been in that role before.

It’s very hard, very hard to do. Um, do you think it’s a necessary evil?

Joe DiMento: It’s almost a misnomer to say it’s a binary distinction, right? Like always early on in a startup’s journey, you’re going to have a, even if you have a sales manager, someone who’s getting in the weeds and getting involved in individual deals and doing all this work that is not just managing the team now specifically, should they have a quota?

That is their own versus their teams. I think that’s a little squishier because then you get into conflicts of interest, frankly, and empowering and motivating their own team versus hitting their own number with their own deals. And those motions are quite different, right? Listening to gong calls and going for a coffee chat with someone on your team and figuring out how they’re truly motivated in order to make sure that they’re successful.

It’s just so different than calling your prospect again, uh, or having the nth meeting in order to close the deal and get the DocuSign signed. So I do think that’s a little risky, but certainly they should think like a player all the time, even if they are a coach, uh, and the best folks definitely do that.

Scott Barker: Yeah. What I’m hearing there is like comp them like a player. And if they start coaching while they’re playing. playing, that’s probably a good sign to move them into the management position.

Joe DiMento: totally, and it goes back to what we talked a little bit about earlier, which is these early AEs should be learning and documenting too, right? So if you have, let’s say you have four AEs selling your early product, and not only is one of them doing pretty well, but they’re doing well because they have a process that’s pretty buttoned up, and they’ve started to share best practices with the other AEs.

They’re even teaching the founder some things about how their product is perceived in the market. Well, shoot, that’s basically the job, right? So in many ways, I think the person will kind of select for themselves. And rather than having to be sort of anointed from the I. C. position.

Scott Barker: Yeah. Yeah. Well, man, I could talk to you about this topic all day long. Um, it’s so incredible to be able to extract some of this insight and all this, this learning that you’ve had. So I really appreciate you sharing it. I have, I have two more questions, but before we, we get to them. Anything else broadly on this topic?

We didn’t cover that you might think, uh, is important.

Joe DiMento: Uh, so this is slightly related, but a little, uh, a little adjacent. But I think that early stage founders in particular need to think very hard about marketing. Especially product marketing and don’t wait too long to do that. Simply because we’ve talked a lot about how you hire an ease, right?

The people selling your product, of course we haven’t talked about, but intrinsic to this is who are the engineers building the product engineers and PMs, I think sometimes companies hire both those. And then they pick their heads up and realize, Oh my gosh, like this that we built is not at all what this is being sold or being demanded by the market.

We have a total mismatch in what our messaging and product positioning is. And that’s really an important marketing exercise that shouldn’t be an afterthought. And I think it’s, uh, I think the best founders think about this early and kind of have a plan for product marketing before it’s too late.

Scott Barker: I’m feeling another, uh, episode coming up here. I think at some point of how to hire your first marketer, your first product marketer, we’ll just, we’ll just keep it, keep it going for each, each role. Um, that’s a great call out though. So final two questions. I always keep these questions the same. Um, and they are intentionally vague, so you can take them any way you want.

It doesn’t have to be anything around what we’ve discussed. Um, but my first question is what is one widely held belief? That revenue leaders or founders hold to be true that you think is bullshit, or at least no longer serving us.

Joe DiMento: Yeah, I have a, I have sort of a cop out answer, Scott, which is, uh, I don’t have a hot take here and I think because of where we are in the technology life cycle of AI, honestly, um, it will surprise you not at all to know that here at Bain Capital Ventures, we’re talking and thinking about AI more than perhaps we should, uh, and perhaps it’s healthy, but we, I mean, it is going to change so much.

Our private equity. Uh, side of the business is thinking a lot about, uh, when they acquire a company like Fogo de Chão or, uh, um, or Canada Goose. Like how, how is AI going to enable those businesses? And we’re thinking about it too on the venture side. And it’s just changing so many processes and in a way.

And perhaps greater than the Internet that I think it’s dangerous to say, okay, we’re still going to do this like we always have, but everything else can change. Um, and so I think, I think it’s important to reevaluate a lot of our prior assumptions. Um, and then the last thing I’ll say is, I do think the thing I like about early stage sales is you’re learning, things are changing all the time and therefore there.

There’s rarely a single right answer. There’s, there’s certainly some wrong answers. Like, I don’t think you should, uh, not compensate AEs using a variable compensation method, for example. But, um, I don’t want to go so far as to say, like, everyone has that wrong. Um, maybe it’s my personality too.

Scott Barker: I like it. Well, what I’m hearing though, is almost rethink all of your beliefs. Now that we’re in a new

age of AI, you know, re underwrite all of your thinking, all of your systems, all of your process. We are in a new world now. Um, and so rethink it all.

Joe DiMento: Yeah, I mean, we’re seeing that with, uh, AI enablement for SDRs and BDRs, right? I mean, there are now AI BDRs, and you might be getting spammy, uh, cold outreach from, uh, from a bot, essentially. That will certainly change the way humans behave. I mean, humans are extremely adaptable. Five years ago, COVID locked us in our houses for, you know, indefinitely and many of us, uh, survived and, and lived to do normal things despite that incredible change, uh, in our lives.

And, uh, akin to that, I think this is going to change a lot of things in business and we should look hard at our processes. And really re evaluate them based on that.

Scott Barker: Absolutely. And my bot might be responding to that

Joe DiMento: Yeah. No, it’s just It’s just gonna be

Scott Barker: And my, my bot will know what I want and my needs and maybe they’ll get some meetings because, uh, it will be valuable. Um, I love it. Okay. Final question. I call it the silver bullet question. Of course, there’s no silver bullets and go-to-market.

I wish there were, but. Uh, what is just one tactic or strategy that’s currently working for one of the companies, uh, that you’re working closely with in the portfolio?

Joe DiMento: simple one Just being extremely customer oriented no matter what I think especially the earlier you go, right? When you have a huge sales team and you you have, you know tens of thousands of leads a month and you have a process that’s like a 45 day close then, you know, you can Take a customer in, close them, move on, you need not know that much about them, frankly, because they came to you.

At the beginning, it’s the complete opposite, right? You’re literally going out there and saying, hey, you’ve never heard of this product or even this idea, but here’s why I think you might want to consider it. And in order to make that happen, you need to know exactly who that person is. What do they care about?

What do they do in their job? What’s their boss’s name? Like, are they gonna get promoted? Do they care about that? Do they have kids? Like, do they work on the weekends? Like, all these things that I think You can’t go wrong obsessing over, and many of the great companies we work with now just do that to a T.

Uh, one of my favorite founders, uh, Chris Terlica of MaintainX. When we, when I see him, he can just rattle off the names and the nature of all these customers. And they have thousands and thousands of customers. And he just keeps focusing on that because of the value that they’re driving. And so I think you really can’t go wrong.

Be with being extremely customer obsessed and making sure that your team does the same thing. And really cares a lot about these people because they’re paying money for something that you’re building and you got to do right by them.

Scott Barker: Absolutely. Absolutely. Customer obsession. I think that is a great way to end the episode. It is so incredibly important and it was always important, but it now somehow feels even more. Important as we automate more things, you know, just being that human to human and knowing them, uh, intimately on an interpersonal level is, is really a massive differentiator.

Um, well, Joe, thank you so much. This genuinely was a very, very enjoyable conversation. One of my, my favorite episodes, and I’m excited to share this with many of our founders. Cause like I said, I get this question all the time and it was fun to really go. Go deep with you. And, uh, again, appreciate all the support from you and the team at, uh, BCV and, uh, you know, to our listeners, I say it every week, uh, listening’s one thing, you know, actually executing is something totally different.

Uh, hopefully we gave you some tactics, strategies to go and, uh, either be successful as a first sales hire or go find that person who’s going to change the trajectory of your, your business. And, uh, we’ll see you all next week.