Jason M. Lemkin argues early-stage startups should let new sales reps keep 100% of revenue they close for the first three months, with no base salary. The goal is ensuring they earn more than their previous take-home pay to fuel motivation and cash flow, even if it costs the company short-term.
Chapters
What percentage is commission? What percentage is salary? Everyone gets this wrong. We, we could talk about that if that's relevant, but in the beginning we get this all wrong. What matters is, can a sales rep close more than they, than they take home? In the very beginning, that's all that matters. It's just you selling, right? The first 3 months of a new rep, you're, you're lucky if they can close as much as their take-home pay is, their OT. Okay. And so in the really early days, my early, early day comp plan is, look, your first 3 months, you, you keep 100% of what you close. That, of course, that's not profitable for the business, but you gotta invest in them, right? You keep 100% of what you close. And if, if you have enough going on in your business, usually that's enough to put, to put supper on the, on the stove. And that's without a salary.