When to make your first sales hire?

Rob, welcome back, man. Good to see you.

Good to see you. We got to hang out in person for about 30 minutes while you were up in New England.

Yeah. New England turns out beautiful in September. We did a— one of my buddies got married in Maine and swung through New Hampshire and can confirm that Rob has a great deadlifting, weightlifting setup in his basement. It's just basically behind him. So, Anybody that wasn't totally convinced can verify.

And anybody who's in New Hampshire ever, for whatever reason you might be in New Hampshire, you're welcome to come by, shoot me a note. Happy to show it off to you.

Yeah. And worth it. Worth it in September, probably October too. It's really, really pretty. Well, hey Rob, this week we are talking about scaling sales. So I think this one will be relevant for a lot of folks, but why don't we talk about like specifically why this one's on your mind? Uh, the, the post is called, When Are You Ready to Scale Sales? Uh, Scaling and Failing Sales. Uh, Rob, why is this one on your mind and what are we gonna get into today?

Uh, so I've had a couple conversations with like real sales advisors. I don't consider myself a real sales advisor. I consider myself a founder, who helps figure out product market fit for the like 0 to 1 stage, which includes selling as a piece of it, but it's not sales per se. And so I've talked to traditional sales advisors, like real sales advisors who are the people you plug in when sales works. And whenever they hear what I do, they're like, oh yeah, you are the thing that people need when they come to me most of the time. And so one person like sent it, sent it like very crisply to me where he said, I'm getting introduced to startups who want to scale sales and almost zero of them are ready for scaling sales or for a sales advisor. And so that made me think there's like interesting thing because I always talk about sales and we always talk about sales. But, um, but there's a kind of like difference between the kind of sales that we're talking about and the kind of sales that's in a lot of founders' minds when they think about sales. When you think about sales, you might think about hiring people and scaling and that kind of thing, which comes at some point, but there's this like figure it out stage that's earlier. Where if you try to do the scaling things in the figuring it out stage, you, first of all, it just like doesn't work, but it's brutal in the way it doesn't work. And so hopefully this post gives you some intuitions about when you should be thinking about the kind of scaling sales versus the selling to learn type stage. Um, and then just generally how to think about scaling. Um, uh, what it is, what it isn't.

Yeah. And we, we see those types of questions from founders in the, in the community. It's like, okay, I've maybe I've, I've done some early sales and I'm wondering like who my first sales hire should be or how I know when the right moment is to bring in somebody external. Do I, you know, when I do that, do I stop doing founder-led sales? Like what's the, what's the balance here with the evolving organization? Um, we're gonna get into, uh, uh, the concept of the case study factory model, um, and how that answers the question of, uh, how does the company evolve basically and specifically in the direction of sales? Um, but Rob, one thing I want to get into is like, you, you allude to this, what breaks when you do it wrong? Let's talk about the example of, um, you know, maybe there's founders that are listening who they haven't really started thinking about bringing on sales hires, or maybe they thought about it, they haven't done anything about it. Like what's at risk here if they, uh, you know, go too early?

Yeah. So I'll tell what my story was here because I thought, right, I, I, I had the theory that hiring sales reps causes sales to scale, right? Hiring sales reps causes sales. And, um, and I figured that, okay, I'm not a good salesperson, but if I hire a good salesperson, they will be able to sell. better than I can. And like, and so this was, this was very early on, but what happens is that when you hire sales reps or sales leaders or whatever it is, before you've figured it out, and we can talk about what figure it out means, um, they will do sales things. They will send emails. They might even book meetings. They will do a lot of work. You'll, and you will be doing a lot of sales things and helping them. feel like they are productive things. You'll be debugging messaging, you'll be figuring out comp plans, you'll be figuring out all this kind of stuff that all has the like outward appearance of leading sales, scaling sales. And what will happen is you'll wind up— this is again, this happened to me and I've seen it happen way too many times— is You'll start to have the CRM looks, starts to look promising. You'll be able to say, oh, we have a million in pipeline. We have $10 million in pipeline. I heard recently someone who's like, we have $500 million in LOIs. Cool. That means zero. Right. And so, um, but what happens is you, um, you have all this stuff that looks promising. And then again, my experience, seen it a bunch of times. Each deal starts extending or disappearing, or you get ghosted, and it feels like it was after the demo. It was after a group demo. Was that? It was. It felt like we were talking. We were talking about piloting. We were talking about da da da da da. We were like, and so they are a bunch of ones that like the feeling is oh, it's just around the corner, but that it feels like that corner keeps getting pushed out, pushed out, pushed out, pushed out, and at some point. And this, you always knew this deep in your soul, but at some point you realize, or you start asking yourself, was any of this real? Am I being gaslit here? Did I like, what is actually happening? And so that takes months, like non-zero months. It can take, I think it took me like 9 months to have that realization. Because as demonstrated, I am very slow on the uptake. And so, but like this, it's a brutal kind of failure because it seems like everything is coming into place. You have the messaging docs, you have the sales process docs, you have the CRM, you have all this kind of stuff. And then it just all evaporates and you start to question everything. Uh, up until then. So that's why you don't want to try to scale sales before it's ready. And if you, if you bring on, like these sales advisors will tell me, if they bring a sales advisor on, the sales advisor is not designed for this stage. They're designed for a stage where sales like works somewhat repeatedly.

Hmm.

And we've seen end to end, it works. We know that it's not, everything is not a variable. Same thing with the sales hire, right? Like when you're early stage, everything is a variable. Who's our ICP? What's our messaging? What's the product like? What's the right feature to lead with? How do we demo? Everything is a variable. And that is like not a stage for somebody who is like a, even like a top sales rep. I've had, I talk about in here, a friend poached the top sales rep from a startup. Like celebrated the person, the sales rep did not close anything for him, like in 6 or 9 months or whatever. Then went on to the next startup and became the number 1 sales rep there too. And so it's just like, this is a founder stage. It's the kind of pre-physics stage when you're kind of figuring out the physics. It is. And in that stage, If you try to scale something or what, or try to do traditional things in that stage, it just won't work.

Yeah, that, not, not that, excuse me, not that specific example. But I think there's something in the founder mentality, some, not for all founders. Like there's the founder whose instinct is just like, go find demand, sell to demand, grow that demand. Like that person's probably not thinking, when do I bring in somebody to sell for me? Because their instinct is to sell. There's another type of founder, probably I'm closer to this bucket, which is like, okay, I do the product thing. Like I do the, you know, I build the thing and somebody else is the one that like figures out how to sell the thing that I build. And I think what you've really laid bare here in like recent years basically is like those things are coupled.

Yes.

They can't be uncoupled. in the 0 to 1 or 0 to 10, kind of like that really super early stage. Let's talk about when, what you're looking for before we get into how it works and stuff. We've talked about, okay, there's a lot at risk. What should founders be looking for in their business to know where they are in the, yeah, don't even think about Sales Advisor up until It's time, like, you know, pull, you know, start reaching out.

Um, yeah. So I would say the, um, I have the 3-part test here, which is, um, you need a repeatable case study, which is one kind of person trying to do one kind of thing, but blocked for one specific reason where you give them your product or they pull your product out of your hands. And they are successful at doing that thing. That's the case study. And that needs to repeat, right? Like it's not just one person, it's one person who represents a bunch of other people doing roughly the same thing. That's thing one.

Yeah.

Thing 2 is you need to demonstrate that you can, or you need to basically have a factory for repeating that case study where Step 1 is you can find those people. Step 2 is you can turn them into customers. Step 3 is you can turn them from customers into retained customers who don't churn and ideally are happy. And so, right, like, so you need the case study, you need the steps in the factory to be figured out and non-magical. And the third thing is, when I say you need to know these things, I mean real knowledge, not theoretical knowledge. You and I and anybody The kind of person who listens to this can very easily write down a repeatable case study, a thing that looks like a repeatable case study and a thing that looks like a process for sales and whatever. And those will by default be wrong if we write them down ourselves. We have to basically demonstrate the repeatable, the repeatability of both the case study and the factory by closing An increasing number of customers month on month for a couple of months. Once we have that kind of thing coming together, then it's like, okay, we've gone from the, the, the, there are infinite variables, or there are a bunch of different variables and questions to now the physics are fairly straightforward here. We know the mechanics of all of this kind of stuff. And it's now more about systematizing things And like, and we can talk about the kind of what scaling actually means, but it's less of like a figuring out, like we don't know, and more of a, okay, it works. Now how do we do more?

Yeah. The way you write about it and you lay out, I recommend we'll put the link to Rob's Substack in the show notes. The way that you talk about it in there is like, basically, you know, you start out, you're building your factory, While you're selling, essentially. Volume starts to come through that factory and as the volume is increasing, like here's what you write. And as people come through your factory at a higher rate, you'll have volume to debug where these makeshift machines break, like the machines in the factory. We'll talk about that in a moment. And then 2, be forced to redesign the machines to handle more volume. Eventually, even with these machines in place, You'll run out of your own capacity to run them at all. And so you'll hire people to run the machines. What is, uh, Rob, you've, you've been through this where, um, like that, I assume like the machine in the case of your first startup was like you running, it was more like something like delivery through Excel or like through Google Sheets that you were, it was like the way that you were delivering the product to the customer. Like that was a machine.

Yeah.

But what did it, as the volume is coming through, like what are the machines, like what is a founder's experience likely to include? What are some of the things that they're likely to be kind of like duct taping together in order to keep the machine run or to keep the factory running before they start to bring in other people to professionalize?

So I think, yeah, I think like zooming out the case study factory, the case study in the factory, I think are the like most important things that I have created that like nobody cares about. Like nobody. I like, when I say nobody, we have 2 listeners to this podcast. I have like 40 readers on Substack. Nobody, like every time I describe this to somebody, they just, their eyes glaze over. This is a me problem because these are super important.

Yeah.

The case study and factory, they tell you exactly where to focus at any one point in time. They are the most important models that I have created. And so if you don't, if you're listening and you don't like understand it, or if at some point it clicks for you of what these things are, please tell me because I am doing a horrible job communicating this. And so, and so case study, so Case Study Factory is again, like The case study is the thing your business produces. You, your business is a system or a factory that produces as its output, not product, not revenue, but case studies. And those case studies need to be as close to identical to one another as possible.

Mm-hmm.

Uh, because if there's like a bunch of variants in different case studies, you can't, it's hard to build a factory, one factory that can put a lot of volume when everything changes, every variable changes each time something new comes through the factory. So you want rough, like, standardization through there. So it's one case study that it produces, or, you know, and it produces that at a high volume. That's what a startup is. And when you think of a startup that way, you understand how stuff moves through the factory, right? Customers pull themselves through the factory versus you having to push them through the factory, convince them, persuade them, do all this kind of twist their arms. And it tells you where to focus at any one point in time, which is what's the bottleneck or the constraint in the factory. If you know theory of constraints, you can basically use that to say, okay, where can I focus that will cause the rate of case study production to increase in the factory? There's only one place that's the constraint. Let's focus on whatever that is. Okay. That's the case study factory. Now, early on, you have none of this. You have nothing. You don't even have a hypothesis. I killed that last week. That's gone. And so what you have to do is you have to find an anecdote of somebody who's trying to do something, stuck, and will pay you. That's your kind of like first case study looking thing. And it's probably not even complete yet. And you're like, okay, cool. I need to go and repeat that a couple of times. Now, when, when you're in this stage, it doesn't make sense to con— like to create a bunch of machinery or hire machinists, right? Machinery would basically be the, like, uh, the, the process, the sales process, a very detailed and documented sales process. Doesn't make any sense to do that at this stage because you don't really know what the repeatable case study is. You've just done it maybe once or 0.75 times or something like that. Like it's, you haven't done it yet. And so at this stage, what matters is figuring out what the repeatable case study actually is. And so you want the least amount of machinery possible so you can be super flexible when you encounter a person who has some form of pull. You can say, okay, right? Like, I can just construct one slide about how we can help them and see what they do with that. Right? And so at this stage, you do not want to have a fancy factory. And having a fancy factory at this stage when you haven't figured out What pull really is, will guarantee you get the factory wrong.

Yeah, it's a, you're actually, you don't realize this because it feels productive, but you're creating a massive liability because actually deconstructing the factory in order to meet pull is hard. It's kind of like almost emotionally hard, but it's hard for like, you'll have pieces that are, I'm thinking about product right now. Like you'll build a product, that you're then trying to sell, you'll realize that parts of the product work, other parts don't, but maybe because of the architecture of them, they're hard to pull apart or something like that. Um, but even in the sales process, you're saying like, there's also things that you're putting together and early, early on, the goal is like maintain maximum flexibility while you are figuring out what is the thing that the customer is going to pull through your, through your factory.

Yeah. And like, if you, if you take something like, there's a startup I know where their second meeting in the sales process when they're like early stage was an ROI meeting. Like, and, and which sounds right. Like it's something you would see in a kind of functional case study factory, maybe while like a post-product market fit company.

Mm-hmm.

But, and so what they were doing was they were basically interrogating people to create an ROI model that wasn't relevant at all in the decision-making. They were like totally wasting the second call because they were imposing some machinery on something that did not require machinery yet when we did not know what effective, right? Like you're trying to scale something before it works. And so, and so actually, and so—

That's super interesting in part because it was probably the right advice for a certain type of company. And it probably came out of a playbook that worked for a company where that was an important part of what their factory was, but not, that doesn't mean that's especially early. It might be that you evolve in that direction eventually. It might be that you evolve in a completely different direction that never requires the ROI, but, you know, like the, a grizzled salesperson that's, you know, sold hundreds of millions of dollars in SaaS might, might not realize that that piece of advice was right for their context and not right for the startup context that they were. Yeah.

And going back a couple of weeks, right? Because despite like, or maybe it wasn't, maybe they, maybe that was never actually a thing there. It just happened to be a part of a sales process at some point that, that like, you know, we can logic ourselves into it being causal when it's actually not, which is, and so that's, again, these are all reasons why I really, really like this case study. Please help me evangelize. I don't know. I don't know what I'm doing wrong with this, but It, it, like when you pull, pull and the case study factory, like all of this stuff kind of like comes together. And so, um, but, so we were just talking about how early on before you actually know how the, like how the flow of the factory should work, uh, it doesn't make sense to build machines and to do, to do a bunch of things to impose a bunch of, it makes sense to retain flexibility. Now, as you start, let's say you get to 3 customers, you get to 5 customers and you start saying, okay, you know, maybe 2 of those were irrelevant, but 3 of them look quite similar. And I'm actually starting to see that there is a repeatable thing here. There's a repeatable case study here, possibly. It's like, okay, great. And at this point you might be delivering manually. You might be delivering as a service. You might be like, there's a variety of things that could be happening. Your sales process may just be like a slide, or it might just be you flying out in person, be like, because you can't, right? Like you just spend a day with the person and they buy for $100 a month and like none of the economics makes sense, but whatever. It's, it's just, you're kind of doing whatever it takes to figure out what the repeatable case study actually is.

Hmm.

Okay. But now it's starting to come together. And you're starting to like crank up volume a little bit. You go from a couple calls a week of which none of them convert to like, oh wow, we're starting to actually convert more and more people. And I actually have a sense of like most of what I've been doing has been counterproductive here, even while I was trying to be, you know, but I actually know what's going to cause people to buy at this stage, I think. And so then you make a sales deck. And so, and then you kind of like start to figure out, okay, and this is like the machinery. You make the sales deck, you get the discovery questions roughly right. You get the steps in the sales process kind of roughly right. And then you kind of have the product coming together. You start to figure out what onboarding is and how to make people get to success, how to make them not churn in a somewhat consistent way. You're building Again, it's like a makeshift factory at this point. It's still you and slides and a bunch of garbage, but it's, it's kind of coming together into a coherent thing that is just not magical and you YOLOing it every single step along the way. And this is how the factory starts to come together. And if you just see more volume coming into this factory, what happens?

Hmm.

Oh, your makeshift machines start to break. And you start to fix them. And, and as you do that, like, that's the method by which you go from a, you know, just magical sales process to something that is repeatable and delivery process that's repeatable. And as you do this and more volume and more volume comes through the system, you're going to become the bottleneck at some point in some, in some thinking. And that's when hiring makes sense.

Hmm. Okay. Fascinating. So in the, until you are the bottleneck, not the right time, is that just like a generalizable rule for the hiring? It's like hiring should be as a direct response to a bottleneck in the business that can only be solved by bringing in additional people. Is that true? Is that a fair characterization?

I had to think about it, but it sounds right.

Okay, cool. And in this case, it's like the first sales hire, what you would be, one thing you mentioned is it's not, you're not prescriptive about, which is annoying and probably also right, but you're like, okay, if the bottleneck in the business is lead gen, then it's somebody that looks more like has the shape of a BDR is probably—

A go-to-market engineer or something, but it's like, Okay. If the bottleneck in the business is pipeline, it's like getting enough people to talk to us, then hiring an AE who wants to do the sales process, like, might not be the right answer. It might be the right answer if you're like, no, I'm going to like spend, I want to spend all of my time on pipeline. And so sales is like solved. And so I want to put a person on that so that I can then go figure out pipeline. But what people tend to do at this stage is they just tend to say, okay, it's like, seems like things are repeating, therefore hire salesperson, which isn't the answer. That isn't the default right answer. It might actually be, no, I can close these quite well. I want to build a profitable company and not actually have to hire a ton of people, or I want to figure out how to automate our sales process or something like that.

Hmm.

And so, right, like it's going to depend. on what the bottleneck is and what you want to do about it.

Yeah. You've written about this in the past through the Weird If It Didn't Work. And I think this was actually related to sales criteria or hiring criteria for early sales hires. Like what are the things that instead of like things that might work, what are the characteristics you should be looking for that would be weird if they didn't work? And I feel like this is, this kind of like lasers in on that to a certain extent. It's like if you're If you're clear on the specific bottleneck, it makes it much more obvious what you should be looking for in a candidate. Um, and also the, probably the shape of that relationship, whether it's bringing on a full-time hire, whether it's doing, you know, uh, some kind of like a fractional, um, how do you think, Rob, what's the difference between bringing on a co-founder and bringing on a like sales hire? Or like, it feels like there's, uh, there In some cases you have like a technical co-founder and the, and the business co-founder or like, you know, that, which is like almost sort of a, sort of your first sales hire in some ways. But how do, how do we, how should we think about the difference between somebody that you consider like, okay, they co-founded this business or they're building it and somebody that's brought in, uh, you know, maybe it's more specific to sales or I don't know. How do you, how do you think about that?

Yeah, I think I, I generally think like if the factory isn't built yet, Or like the fact that there's, we don't know the case study or the factory. You have to bring on somebody at a co-founder level because that is a founder-level thing to figure out. Once it is, once the factory and the case study are assembled, it doesn't necessarily need to be a co-founder. You can bring on a co-founder if you want for any variety of reasons.

Yeah.

But the, but Like hiring a sales rep before the factory and the case study are assembled, uh, is like not going to work. It's like, and it's, I think it's actually a disservice to the salesperson you're hiring. Um, because they're just set up to fail.

Yeah. Let's, let's talk about, um, and then we'll, we'll wrap. Um, what should you give? How do you bring on that first sales hire? Um, To help them be successful, to avoid the, you know, how do you, like, you've identified that you're the bottleneck, you know that the solution to that particular bottleneck is to increase capacity, like bring in somebody. How do you set them up for success? What are you giving them? What are you handing them? Yeah.

What are you doing? Yeah. So, so thing one I would recommend is to actually find a sales advisor who ideally is, is, uh, pilled in pull. Who is, who knows the theory. And what that, the reason is just like you get a VP of sales who's done this a bunch of times, scaled from 1 to 10 plus a bunch of times, they're going to know a bunch of stuff about onboarding successfully and like, and hiring that you won't. And it's just like helpful stuff that will save you 6 months. And so I just recommend finding a sales coach for for that stage specifically. And then second is, and what they will almost certainly tell you is like, okay, cool. First, we need to have like a process documented. Basically the machine, the machines that you have developed need to have instruction guides and you need to follow those instruction guides yourself to prove that they work. And then so that you can then hand off the instruction guides and they will also work. And, um, and yeah, probably a bunch of other things like, I have strong opinions on who you should hire, uh, uh, like what kinds of sales reps you should hire early on, which we can maybe come back to if anybody's interested in the future. But, uh, in general, those are the, those are my recommendations.

Awesome. Um, well, anything before we wrap, Rob, that you would, you would add here? Uh, other takeaways, things that founders should do for this, do with this? Yeah.

So I, like, I, I end with the scaling question, which is basically once you have a case study and kind of like a rough factory, Like scaling is a function of just asking one question again and again and solving it, which is what's the one thing that is currently limiting the amount of volume coming through our case or exiting our case study factory? And what do we need to do to eliminate this constraint? That one question is the question for the scaling stage. And you just keep asking it and it's almost, it's whack-a-mole with constraints. Uh, and, and that's how you, and that, that question causes you to then hire, right? It causes you to then bring on advisors. It causes you to raise money sometimes, right? Like it's the thing that will cause all of the downstream actions that lead to the behavior that we see as scaling.

Yeah, we'll have to dig into your archives and find the case study, the original post on the Case Study Factory, which is really good and worth, I would say like that was my thing taken away from the, this is a, This is actually a Case Study Factory podcast episode disguised as a, when do I hire a person? And as you mentioned, we were talking before we started recording, it's like almost all of your content is actually like a Case Study Factory, uh, startup as a Case Study Factory, uh, post disguised as like one of these other symptoms of that or where it specifically plugs in. Um, but this one in particular had me thinking about what, where Where are the bottlenecks in my startup? What does this mean about the way that I should divide my time and my attention? And how can I increase the way that I'm thinking about my startup as a case study system or factory? And so maybe an exercise in there for our listener if they accidentally made it this far. Other than that, we've got, if anybody accidentally again made it this far, we're starting the next PMF Camp on literally Monday. And so if you're listening to this on Friday or Saturday, I'll be checking my email this weekend if you have interest in joining. rc@reframeb2b, uh, and we'll leave some info in the, in the show notes. Anything else, Rob, that is on your mind before we wrap?

No.

All right, cool. We'll catch everybody next week. See y'all.