Over the last few years salespeople have been burned time after time by startups
They’ve been promised enormous OTEs, riches through equity and inbound leads… all to find themselves selling a half baked product that no one really wants, entirely through outbound.
This is partly a case of companies baiting and switching, but it’s also partly the fault of the salespeople for being sloppy at doing their due diligence when joining companies
Let me take you back to the 2017 for a moment
I’m in San Francisco, and like every single recruiter in the city, i’m helping Samsara build out their sales team
There was a lot to like about the company
The founders had sold their last company, Meraki, to Cisco for $1.3 billion dollars (cash), and during their lockup period, had grown Meraki to $500m in annually recurring revenue. They had built a sales beast.
So when they started Samsara, they had a deep pool of talent on day one, as well as access to any VC they wanted (after securing Doug Leone of Sequoia on the Meraki Series A, they locked in Marc Andreessen for the Samsara Series A).
The remit for Samsara was simple.
They wanted to hire the best salespeople (quota overperformance was a MUST).
They didn’t want people from big brands.
An example - I helped them hire the #1 rep from Base CRM.
You’re probably asking what’s Base CRM?
Exactly.
(BaseCRM has since been acquired by Zendesk)
Samsara didn’t pay very well.
In a world where mid market reps were getting $130-$150k OTEs, Samsara would pay a $120k OTE (50/50 split)
BUT quotas were pretty low
And hitting 200% was expected (top reps were 400-500% to plan)
Performance was everything - you’d walk into the office and they had a room setup, with a big picture of the Hawaiian resort that they were celebrating President’s club at, as well as the criteria that detailed how you’d get there.
And they were strict - if you weren’t hitting plan, you were out the door
So the rep who was going to make $150k at a company, would take a slightly lower comp plan to move to Samsara, but they’d walk out making $180-200k at Samsara (these numbers feel low now… 2017 was a while ago!)
And it worked. Really well.
I hired a dozen or so people into Samsara.
And then, after a year or so, it stopped working.
Other companies just raised their OTEs to $180- $200k
It’s the easiest move in the book if you’re a CRO at a weaker company.
After all, why move to Samsara where you need to hit 200% to plan, when you can go to another startup, hit 100% and W2 the same amount?
Well mostly because OTE is made up.
Let’s talk about how you raise OTE:
1: Open up a spreadsheet.
2: Copy the values below:
3: Voila, you have raised OTE.
Now, the cost to you (the employer) is $25,000 as you’ve raised the base salary of your Account Executives from $75,000 to $100,000.
But the numbers on the spreadsheet will look close enough (bonus, you need less salespeople to hit that revenue number)
And you’ve just made recruiting a lot easier for yourself.
Does this sound too good to be true?
It should.
People are pretending to scratch their heads as to why sales team performance has taken a massive dive over the last few years.
Yeah, there’s more competition, and it’s a bit harder to get through to customers.
But we’ve raised quotas by ~50% or so in the last 3-4 years as companies have fought to compete in a war for talent.
Mid-Market Account Executives have gone from holding $150k OTEs and $600k quotas, to $200-$250k OTEs and $800-$1m quotas.
The reason I am relatively unsympathetic to most salespeople crying about being burned about on-target earnings, is because (overwhelmingly), it’s the first question I’m asked.
Here’s the thing: On Target Earnings are completely made up.
The base salary is real.
The quota is real.
The rest… is up to the salesperson.
But salespeople pretend that the OTE is real.
And thousands of them have been burned over the last few years.
There are a few things here
That means you’re going to be disqualifying more candidates
It’s not a nice thing to say, but there are a lot of salespeople in tech firms who probably need to find new careers.
If you haven’t hit quota in any of the last five years… it’s probably time to try something new.
If you’ve worked in 6 roles over the last five years… it’s probably time to try something new.
You don’t want to be the Japanese Soldier who’s still fighting World War 2 in 1971.
So why does this matter for founders & CEOs?
If you have been near LinkedIn you’ve probably heard about Repvue.
It’s sort of like Glassdoor, but for SaaS sales teams.
Now if you’re an early stage startup, Repvue isn’t going to come up in the questions that candidates have for you. Reps know that early stage companies simply don’t have all the numbers.
If you want to hire good reps, especially as you scale, you need to have numbers that make sense.
Hitting quota needs to be part of the business model.
This is one of the reasons I don’t work with companies that aren’t at (at least) $500k in ARR.
It’s simply too early - the founders need to be selling at that stage.
And it’s why you need to grow with a sustainable comp plan.
With sustainable quotas.
Start building that brand as a company that salespeople can come into, and stick around.
If you want help building a great (and sustainable) sales team… book a call here