VP of Sales teaches how to choose the right company to sell for
Kyle Asay (VP of Sales) explains how the company you sell for dramatically affects your earnings and gives a practical framework to choose employers that maximize commissions. He contrasts "growth-stage" (Series A–D) companies—where comp plans often incentivize accelerated payout and blowouts are possible—with "efficiency-stage" (Series E–public) companies—where comp plans and quotas are tightened to prioritize profitability. He also provides concrete financial health metrics to ask during interviews (Gross Retention, Net Retention with specific percentage bands) and recommends validating sales-org quality by talking to multiple current AEs in addition to checking public review sites.
It's not fair, but average sellers at great companies usually earn a lot more than great sellers at average companies. Nothing impacts your W2 more than a company you sell for. In this video, I'm going to break down how you can find the best companies to maximize your commissions. We'll start with covering Company Stage and why it matters. Then we'll cover the metrics you need to know and we'll finish with the best way to understand the health of the sales work. Let's start with Company Stage. So we're going to start with a big disclaimer. The Company Stage section here is all Chi Olosophy or Philosophy of Kyle. I'll be using the terms of Growth and Efficiency stage in a very unscientific manner. This is not financial language. Any VC watch this would probably roll their eyes, but it is based on my real lived experience and the experience of many sellers and leaders I've worked with and it may be helpful for you, but it's not for everyone. Some sellers love the big company environment and aspire to sell for a Fortune 100 in their careers. If that's you, take this first part with a grain of salt, but the rest will be very applicable. I was at Qualtrics from 250 employees to over 6,000 over eight years. I saw the company go from startup to scale up to pre IPO to acquired for 8 billion and then a successful IPO. The first four to five years were a ton of fun. Comp plans were attractive, territories were large and a lot of people were making a lot of money. Then we started getting closer to an exit. We brought in new finance execs that drove compliance with pricing and contracting which slowed everything down. We brought in new sales operations executives that carved out territory to support a much larger sales org that made it harder for up to take quota. We brought in new comp executives that diluted comp plans help us get closer to profitability. That meant if you maintain performance year over year you made less money during the growth stages. Selling was fun during the efficiency phase. Leading and selling was not as much fun. Then I joined MongoDB. I completely missed the growth stage and moved right into the efficiency world. Now to be fair, I didn't join Mongo to maximize my earnings. I after took a pay cut by taking on a smaller org but I wanted to get into the more technical space for long term career reasons. So it was a good move for me. But it was a bit of a miserable experience. The focus was more about payback periods and reducing cost of sale rather than improving rep productivity. That wasn't wrong, it was just the stage that we were at. My experience with Late stage Qualtrics and MongoDB is not unique. Both are incredible companies. Both have had remarkable success and made a ton of people a ton of money. But those experiences taught me the difference of growth stage versus Efficiency stage companies. Many of the big name companies are now in that efficiency stage. They're focused on comp plans that prevent blowout earnings. Pair of toys are small because they have too many reps and seats and the market is heavily penetrated with low cost competitors constantly batting at their heels. Now you do get some incredible advantages for companies of this stage. You often have great brands for your resume, you get strong structure and enablement and you get incredible products that work along with significant product market fit. And all of those things have incredible advantages. But you need to understand the trade offs that you make in my extremely biased so take it with a Gruen and Salt opinion. Growth stage companies are usually where you want to sell and not so early stage that you're worried about and wondering about product market fit and company Runway and unexpected layoffs. Not so late stage that your comp plan will get crushed over and over if your company misses their earnings per share forecast. The simplest indicator of a company stage is generally just their stage. If you're series A through D, you're likely in the growth stage. If you're series E through publicly traded, you're more likely going to be in the efficiency stage. Now you can use these guidelines to shortlist potential companies to sell for, but it's not going to tell you everything. So I'm going to give you a couple of questions that you can ask in the interview process to confirm the stage. The first question is how did the comp plan change this year compared to last year? Growth stage companies will change comp plans to incentivize behavior. For example that launched ARCA this last year. Our most recent comp plan added more incentives to encourage desired behavior. The comp plan got better, not worse. Efficiency stage companies will change comp plans to pay out lower commissions, usually through rep level quota increases. Because if your OTE stays the same but your quota goes up, it's effectively a decrease in variable compensation. The next question to ask ask is did anybody blow out their comp plan recently? And as a follow up, approximately how much did they earn? You're looking for two things here. One, is it possible to blow out the plan? And then two if you do blow out the plan, do you make an exciting amount of money. For example, I've seen a rep hit their annual number in Q3 and then close $400,000 in Q4. Their accelerated commission rate on that 400k was over 30% because they were at a growth stage company, which is not a bad commission check for a commercial ae. If comp plans are getting significantly worse, the company is most likely prioritizing profitability and efficiency over growth. If no one blew out their comp plan, quotas are either too high or territories are too tight. And then if someone blew out their comp plan and didn't make an exciting amount of money, accelerators are too low. Growth stage companies are okay overpaying for great sales talent. They'll lose some money short term in exchange for new logos and accelerated growth efficiency. Stage companies don't want to overpay for anything. Every deal is scrutinized for profitability and every sales org is inspected for payback. Period. Which company sounds like more fun for you now? Regardless of the stage, you also need to understand the health of the company. A poor health company at any stage is not not going to lead to great outcomes for any seller, no matter how talented you are. This is especially applicable in SaaS right now because AI is going to hurt, maybe even kill a lot of SaaS companies, but it's also going to create a lot of new unicorns. You want to find the latter and avoid the former. So the first question to ask in the interview process when you're at the financial evaluation level is what is your gross retention rate? Gross retention rate measures how much of your renewal baseline renews. As a basic example, if company has 10 customers spending $10,000 on average, they have a renewable baseline of $100,000. If one customer that spends $10,000 doesn't renew, their gross retention is $90,000 or 90%. This metro does not incorporate upsell at all. It's all about how well the company renews their base. Really good in this area is 90% or is 95% plus. Anything in this range is a great sign of a need to have and sticky product. The next question you want to ask to uncover the next critical metric is what is your net retention rate? Net retention measures how much your customer base grows each year, not counting new logos. After you take out the lost renewals or churn and you add in the renewals plus expansion, is your customer base growing or shrinking? Under 100% means the company is at risk risk of decreasing revenue year over year, which is not a good thing for any company, especially in SaaS. 100% means that between churn and expansion the customer base stays the same year over year. Any growth in the revenue will have to come from net new logos which is not ideal for sustainable accelerated growth. 110% plus is good, 115% or higher is great and then 120% or higher is best in class. 120% means that on average $100,000 of customer spend turns into $120,000 spend at the renewal. The company in this state can hit good growth rates just off of current customers and expansion new logos are a bonus. Now these metrics of gross retention rate and that retention rate will help you find healthy companies. But you don't just want to work for a healthy company and you want a healthy company plus a quality sales work. There are a lot of tools out there to identify the quality of a sales org at a very public facing you like Glassdoor, repview, et cetera. But they have a couple of issues. One, they're, they're lagging metrics and two, sometimes they're a bit biased metrics. I'll give you my real life example. When I was interviewing at launchdarkly, they had terrible scores on both. I'll admit it was a, it was a bit of a concern from me. But then I dug in and I learned some of the context. We had a new exec team that had joined to help the company transition from inbound to outbound sales, which is hard and painful. AES were very upset that this new team was asking them generate pipeline because they felt that they should just receive inbounds and SDR support. And then AES were really upset about the direction of this and so they, they left and they often left terrible reviews on their way out. If you fast forward a year after I joined, we promoted about 40% of the reps my sales orgs. We've doubled the average sales price, average rep productivity has increased by 40% and regretted attrition, which is people quitting has gone down to nearly zero. Our metrics have improved, but we're still way down a bit in our scores by legacy rep feedback. Any of you reps on my org today you'll talk to engaged, excited and motivated AES. And I know this because all the AES I interview now to join my org are doing just that. They reach out to members of the current team to find time to chat with them about sun at launchdarkly and that is the best way. Definitely not the quality of the product. You might sell the executive team, sales leadership and compensation plans. You should definitely look at all the websites that collect feedback from sellers. But I know of sales orgs with great reviews where the team is now miserable because of recent changes and sales orgs where scores are kind of met. The people are happy and crushing their comp plans because of recent changes. So you got to validate what you're seeing with the people that know best current AES of the company that you're evaluating. You want to try and talk to at least three people. Otherwise you may talk to an outlier. You don't want to just talk to the AE that's Loving life. They have an incredible territory. They're killing it from inbounds. You also don't just want to get feedback from the AE that's really disgruntled about maybe recent poor performance. If you talk to three individuals, you're going to get a real picture of the quality of the sales work you are considering joining. I've built out a list of a few more questions that you can ask these AES in your process to measure the strength of the sales org. You can grab that list in the in the post, in the description, and if you've watched until this point, I've given you kind of the blueprint of finding great companies to sell for. You'll still need to learn how to sell once you land a great job. 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