Insights from Silicon Valley
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In past articles on this website, we’ve interviewed Sales VPs at startups, and asked them what they look for in a CEO. We hope you’ve found that valuable, but this time we take a different tack. Rather than asking one single Sales VP a lot of different questions, let’s ask several sales VPs the same question.
Randy Bolten has held the CFO position at public and private companies in Silicon Valley. I recently caught up to him about Startup stock options and its pitfalls.
We all know that bad hires are expensive. In fact, that’s become a cliché, and clichés don’t motivate or impress. So in this blog, let’s look at what a bad hire really costs, in actual dollars. We look at a sales rep, the position we know best. The costs of a bad hire – and the savings (yes, there are some) – include:
Well-designed incentive compensation plans – especially sales commission plans – are a powerful way to motivate great performance. But they’re also easy to screw up, and the results are plans that not only fail to motivate, but are incredibly expensive. With that in mind, with this post we start a recurring series of blogs on the 121 Silicon Valley: The Deadly Sins of Incentive Compensation. So let’s start with Deadly Sin #16 – Changing the plan significantly every year, or even more frequently.
Jeff Yoshimura has been a part of some big growth companies, such as, Salesforce, Zuora, and now Elastic. Currently, Jeff is VP of Worldwide Marketing for Elastic, the search company behind the world’s most popular set of open source products powering consumer apps like Grubhub, Uber, and Wikipedia and enterprise systems for Goldman Sachs, NASA, and Sprint.
I run a recruiting firm called 121 Silicon Valley, and we are always asking ourselves “What does a VP of Sales look for in a Startup?” So I sat down with Steve Sovik, Chief Revenue Officer at PayEm, a global procurement and spend management software platform that automates finance processes from request to reconciliation. Before joining PayEm, Steve spent five years as SVP of Sales at Coupa Software, where he led sales growth from essentially nothing to over $100+ million.
We often hear senior management wishing their sales force would deliver “boring” results. They dream of a sales team that’s on auto-pilot, with monotonously consistent on-plan results quarter after quarter. Some companies even offer a “consistent performance” bonus for sales reps who meet all four of their quarterly quotas. But in our view, those companies are committing…
If your company has a December 31 fiscal year, you’re probably in the throes of finalizing your 2017 incentive comp plans. So in the spirit of avoiding the most egregious compensation errors, let’s revisit the Deadly Sins we’ve discussed on this site over the past year or so (for links to the original blog posts, click on the numbers):
As suspicious as I am about spot bonuses (see “Deadly Sin #4 – Too Much in ‘All-or-Nothing’ Bonuses”), we’re in the year end holiday spirit, so even we CFOs are willing to make exceptions. Use one-time rewards to recognize behavior that you might not normally see in your sales reps – or your customers/prospects. Here are some examples:
In a startup, getting your first 50 customers creates the foundation of the company and creates the traction the company needs to build a business. The momentum generated by getting those first customers means everything to the company. But what’s the fastest way to get those customers, and with the minimum use of capital?