That Creepy Salesman Part I
Back in the summer of 2010 I had summoned Tim to move back to DC. We both felt like either something was going to happen with the company, or it was best we parted ways. At the time our revenue was 90% coming from projects that needed strong software development oversight and the nonprofitCMS projects just were not bringing enough money to sustain a full time salary.
When we started nonprofitCMS just a year prior we were idiots. We charged something like $600 to build a website based on a template. We thought since we are more skilled than the average web developer we could crank out websites in just a few hours. We were wrong and I’ll probably write more about that in another post. Either way we had slowly moved up our pricing from $600 to $2000 to I think what was around $5000 per web project. Tim and I both decided the next move was to hire a salesman…
We had read a lot of business books. SPIN Selling, Good to Great, How to Build a Sales Machine, who knows what else. We were also advised by our mentors constantly about how important that first hire is. “Making a wrong hire can set you guys back…” (and presumably making the right hire will take you to the next level.
This story is no different than the classic business case studies. Considering I didn’t follow the advice of the business books or the advice of my mentor, I’m sure even if I had gone to business school I’d have made the same $50,000 mistake.
We Did Everything Wrong
When we hired our second salesperson at the end of 2012, we went through almost 9 months of searching. We got professional salesman hiring training. In a nutshell before you hire someone it is a good idea to come up with a list of job functions they will do. From there you can create a matrix of past experience they must have to confirm they can do a good job. While there is no guarantee, if someone doesn’t have experience doing something similar, you are really just rolling the dice. When your company is 2 people, and you are about to bring on your third to be the messiah, you want to make sure as much as you can upfront. Check W-2s, background check, have them take a psychometric assessment to predict success — it might sound silly, but that extra $400-500 can save months of time and tens of thousands of dollars.
Of course we had all of this advice, we just chose not to listen. The question is why?
Mistake #1 – Rushing into things
Tim: “We need to get this coming off the ground, we really need a salesman”
Kunal: “Absolutely, let’s put out an ad on craigslist and start looking. I’ll ask my cousin for a sample job description”
Within a few days we had conjured up a job description and found some interview questions on the web. We also decided to post the job ad on craigslist. At the time we figured the person would make maybe $60k per year 40k base, 20k commission. Where we got these numbers I couldn’t tell you. We were selling websites for $5k, we didn’t even bother to look at our profit margin which was actually non-existant.
We also didn’t realize how coupled we were to the sales process. Meaning people did business with us because we sounded like we knew what we were doing. We never tried isolating sales from engineering.
It seems obvious now, but how on earth could we expect someone who used to sell mortgages in a subprime market to now sell websites. How could we pay them commission if there was not even profit after operational expenses?
So bottom line we had no plan for the salesperson. He or she was doomed right from the start and we didn’t even know it.
Mistake #2 – Likability
So let’s say even with a piss-poor plan, we got a rockstar. Instead of selling websites for $5k we could sell them for $10k. Perhaps if we hired the right person we could grow to this level and make up from our error in judgement. A lesson we learned a year later when we hired Zack was that if you bring on the right person, even if they were hired for one job, if they are willing to wear multiple hats, you’ll find a way to succeed. Good to Great and Delivering Happiness both talk about this a lot — worry about getting the right people on the bus, then worry about where the bus is going. Great people fill find a way to develop the company.
Anyways – we hired this person because we felt good talking to him. The interview lasted a total of 15 minutes. We explained what the company did and he said “guys I’m totally in!” We were excited that someone else was excited to work with us and we pulled the trigger.
Mistake #3 – Desperation
How did we even fall for this guy? I mentioned we put out a job posting on Craigslist. Don’t waste your time posting on Craigslist. You’ll quickly get flooded with tons of applicants who are self-qualified. Most are vastly underqualified and the ones that are overqualified are just shotgunning out their resumes, rare chance you’ll nab them (and can afford them).
We were in a rush to bring on a salesman. More sales = more revenue and we needed more revenue to stay in business, so it made sense. After all we figured, with no sales experience we made it this far, someone doing this full time must at least do as much business as we did. (wrong again)
We had one decent candidate apply. He used to sell search engine optimizations services and was just laid off. He was clean cut, had a great font on his resume, and was energetic when we met him. He wanted a $50k base which we simply couldn’t afford at the time.
The only other candidate who was worth interviewing was this guy named Sean. He was fine with the money we could pay and was ready to get started right away.
After 3 or so weeks of looking for a salesman we were already frustrated with the process and were relieved we could focus back on the company.
The excitement level was high, finally we thought we could stop working in the business and start working on it….