Why The 'Founder-Managed Sales’ Step is So Critical (and Often Skipped)
A rough mental model of the steps of a startup's sales journey when selling > $30,000 ACV
Founder-led sales (~ $1MM revenue)
Founder-managed sales ($1-$3MM revenue)
VP of Sales (~ $3-5MM+ revenue)
CRO (~ $15-20MM+ revenue)
Step #2 is often skipped, albeit unintentionally – with most Founders not realizing how critical this stage is, i.e., what it means, how to navigate, and what to expect.
For quick background: The "Founder-managed sales" stage is where the startup proves a non-founder (e.g., ~2-3 Account Executives) can successfully sell from creating/generating the lead – to – closing,i.e., proof there is a V1 process, assimilation of repeatability/clear entry point, AND 'the product is not the founder.'
Here's why understanding this is important …
Unfortunately, there is a grave misconception about startup sales: sales complexity will decrease as you add more customers and move beyond 0-1. This is wrong.
While that seems right regarding more validated learning, case studies, logos, customer references, and investor confidence, it's a false positive of 'scale' if you skip over Stage #2.
BUT, before scale comes repeatability. What is 'repeatability'? It's the proof a non-founder can achieve similar-ish success, and you know how to hold them accountable at a weekly, monthly, and yearly level). Sales is a math equation at this stage.
In many cases, sales complexity is lowest when selling to early adopters and increases as you grow revenue and tackle the mainstream market ... read that one more time.
WHY?
Founder-led, visionary sales – conversion rates are the highest.
ACV is generally lower, and thus, sales for early adopters are usually the fastest.
Product is less complex/lightweight – more pointed and tightly sold.
Cost to run sales is lower, contributing to higher productivity
Of course, this is once it's sorted and shaken itself out post-validation.
Sales complexity typically increases as you move beyond early adopters and Founder-led sales due to:
lower conversion rates, no longer visionary-led
increased ACV (also to make up for lower conversion)
serving more markets
longer sales cycles
leads being spread across the team and landing in the hands of lower performers.
Now, during this $1-3MM stage, you may notice that one Account Executive (AE) outperforms the others. This individual may advance into the role of Head of Sales to support you with day-to-day management, but it is not an opportunity for you to fully remove yourself from the process.
Once the first $2-3MM is validated (and churn under control), bring in a rockstar VP of Sales to take more off your plate regarding management – they’re incentivized to scale the process via hiring/headcount. This typically happens in the latter half of Series A and into Series B. However, you, the founder, must still (1) navigate the market vision, (2) play the role of Head of Sales in critical new markets, and (3) ensure the company doesn't fall out of product-market fit, even with a VP of Sales on board.
Note: While I wrote this quickly, this post is not meant to discourage you but to help you see around the corner and understand that your decisions today in the Founder-led sales stage will have direct implications tomorrow. Remember, as something gets "easier," it's safe to assume it will get "harder" somewhere else – this is the law of business in most cases.
Yes, what is suggested is hard to do and manage. But the startup graveyard is littered with folks who went from Step 1 to Step 3 too quickly. Imagine doing that when capital is far more expensive. Premature scaling is often discussed but not often examined. I hope this helps you understand the steps in sales a bit deeper.
