Tips for Founders on When and How to Build Out Core Sales & Marketing Teams
Christoph Janz is a partner at Point Nine Capital, a VC firm based in Berlin that invests all across Europe, but maintains a strong focus on early-stage companies in two specific sectors – SaaS and online marketplaces. As someone with a lot of specialized experience, Janz has some good advice to share with early-stage founders who are trying to figure out market fit and how to close their Series A or B round, including some pointed advice on the smartest way to gradually build up your core team.
“Your hiring choices are some of the most important decisions you’ll ever make,” says Janz. “You need to know who to hire at each stage, from the seed stage where the business is mainly run by founders to later stages where you need to work on building out the management team. In my experience, it’s always a key topic, but as companies progress, the founders and the Board spend more and more of their time on trying to define which are the positions to hire for and how to find the right people for those roles.”
It’s no secret that how you build out your leadership team can make or break an expansion stage company. How do you know when to make your move, and which people do you hire first? “We typically invest when a company has a few thousand or maybe a few tens of thousands in MRR,” says Janz. “At that early stage, hiring senior people usually isn’t the first thing we advise founders to do. Instead, we recommend that for the first six to twelve months after we’ve invested, the founders think about hiring great contributors in marketing, sales, development and product.”
While hiring for the development or product teams may be fairly intuitive for many founders, hiring key players in sales and marketing is often more of a challenge. Janz has some specific advice on how to approach team building for these two key functional areas.
Often, especially for B2B SaaS companies, the first senior executive hire is a VP of Sales. “Most companies we invest in have a product- or tech-driven focus and a typical setup of having two co-founders – a CEO and a technical founder,” says Janz. “What they typically don’t have is someone with sales leadership experience.” Janz acknowledges that getting a great VP of Sales on board can present an extremely difficult challenge, particularly for European startups, which don’t have the talent available in the Bay Area or the east coast of the US.
In addition to the potential scarcity of talent, there are nuances to the role that must be considered. “You have to be really clear about who is the right person at each stage because the requirements change drastically in each phase of growth,” Janz explains. “For example, the sales leader who can take you from $1 million in ARR to $10 million in ARR is probably not the same person who will take you from $10 to $100 million ARR or who can take you from $100 to $300 million ARR.”
Finally, Janz points out that timing is a critical element of making a successful VP of Sales hire. “The great VPs of Sales are out there, but they won’t join a company that hasn’t yet figured out how to sell its product,” Janz says. “You’ve got to prove, at least on a small scale, that you can sell this thing.” This means that, in most cases and even though it may require that they step out of their comfort zone, founders need to figure out the first couple of sales themselves.
“The time to think about hiring a VP of Sales is once you’ve figured out that you can sell the product and have hired one or two sales people who have been able to make sales,” says Janz. “At that point, you’re ready to hire someone who can help scale the sales team from, let’s say, two-and-a-half people to twenty.” And that person, Janz says, should be someone with the sales leadership experience to manage hiring and firing, training, coaching, and working through compensation models.
When it comes to the chicken-and-egg question of which comes first, sales or marketing, Janz thinks it depends on the individual business. He has seen, however, that founders are often able to handle initial marketing needs more easily than sales needs.
“Founders sometimes have a greater affinity for marketing because marketing today is much more product-driven and technical than it used to be,” says Janz. “A lot of today’s marketing is built around growth hacking and involves running highly quantifiable experiments.”
For these reasons, Janz believes that marketing can frequently be owned by founders for a longer period of time than sales. In fact, he recommends that founders take a more hands-on role from the beginning. “Founders need to develop and build out the initial content marketing messaging and strategy, including what the company stands for,” he says. “It’s very hard to hire somebody to do that for you. It’s just one more thing that founders have to figure out themselves.”
But, once that foundation has been laid, there are a number of roles that you can hire to support the plan. “You’ll eventually need to hire people to augment your efforts like a content producer or someone who can help on the SEO/SEM side and so on,” says Janz. “And at some point you’ll also need a VP of Marketing who has done it before and can look at marketing holistically.”
Janz cautions, however, that – like the right VP of Sales – the right VP of Marketing may not be easy to find right away. “Hiring your VP of Marketing may be even more difficult than making the VP of Sales hire,” he says. “The number of people with the right profile and experience in B2B SaaS marketing is even lower than in the sales arena. So, rather than looking for a VP of Marketing ‘unicorn,’ a better strategy may be to hire two less experienced but really smart marketing people.”
In this scenario, each of the hires can own a piece of the marketing function. For instance, one might focus on demand gen, while the other focuses on product marketing or branding and communications. “In marketing, there are ten or more distinct disciplines including everything from content to branding to positioning and so on,” says Janz. “Ideally, you will find a CMO or a VP of Marketing who can own the whole thing and build out a full team, but that may not come until the series B stage or later. In the meantime hiring a few key people and having your founder coordinate the marketing efforts is a smart way to go.”
Who you hire and when you make those hires are ultimately both decisions that can only be made based on your company’s particular circumstances. There are no hard and fast rules. However, the approach Janz and his team recommend provides a good rule of thumb that deserves the consideration of any founder pursuing Series A or B funding. Making smart hiring decisions that are appropriate for your company’s growth stage is just one more way to demonstrate your overall vision and ability to lead successfully.