Bruce Lee and the Tao of Hiring Software Sales Executives

By Angel Mehta, Managing Director, Sterling-Hoffman Management Consultants

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“Sales people are RANDOM,” says a friend of mine whenever I discuss my firm’s area of expertise. Like most engineers, he views sales people as highly irrational, emotionally unstable beings who’s only real value consists of cold calling and building powerpoint presentations. I patiently explain that without sales people, there would be no customers, no revenue, no profits. Without sales people, there would be no one to tell the world about why your algorithm is better than someone elses.

“Random,” he scoffs. My friend, of course, studied mathematics at one of the world’s top technical schools. He is always giving me books on ‘pi’ (as in 3.14, not ‘apple’) and I am beginning to think that ‘Random’ is his shorthand for ‘stupid’.

Random, however, is an apt term – both for describing sales executives and the process used to hire them. In essence, random means ‘hard to predict’, and identifying quality sales people remains one of the most challenging hiring tasks for software companies. Most CEOs and venture partners that I’ve spoken with will concede (either immediately or after some debate) that despite all efforts to extract patterns from the chaos, there is no one formula that works all the time. Many are adamantly against hiring templates of any kind and believe firmly that it’s all about ‘gut instinct’.

I’ve changed opinions several times over the years regarding the value of gut instinct when making a hiring decision. Years ago, I was decidedly against relying on intuition - primarily because my research on the subject revealed that most ‘gut feelings’ are the product of subconscious processes, which in turn are the result of personal early life experiences. In other words, when I have a positive gut feeling about someone in an interview, it could very well be due to the fact that the person reminds me of my father, or myself, or even a comic book character I enjoyed reading about as a child.

In fact, the same concept applies to romantic relationships. That feeling of butterflies that we have all believe represents the sign of true love and having found one’s soulmate? It is actually the result of key buttons being pushed in our fragile psyche by the object of our affection. Most psychologists will readily admit that it is entirely possible to make someone fall in love with you - for the sake of romance, or for the sake of getting an offer letter. This is why Executive Recruiters will prepare their candidates for interviews by providing crucial data about the personal lives (favorite movies, books, music, family background) of hiring managers or investors that will be evaluating the candidate for a position. This is also why I recommend to clients that they spend extensive time with candidates on the PHONE before meeting the candidate in person (more on this in another article.)

Not that I am discarding ‘gut’ as a tool in decision making – it would be hypocritical to do so given how I’ve made hiring decisions at Sterling-Hoffman in the past. My only purpose here is to point out that one’s ‘gut’ can be unreliable, and therefore gut feelings should be carefully scrutinized.

Which brings us to the topic of hiring templates. With regards to Sales Reps, most top tier ISV’s nowadays have resorted to defining a strict set of criteria that candidates are required to meet before they are considered for an interview. Commonly, they include something along the following lines:

  • W2’s over $200k for last 3 years

  • No more than 3 jobs within the last 10 years

  • Closed at least 3 deals valued at $1m+

  • Achieved or Beat Quota consistently for last 5 years


    • While the specific details may vary from company to company (perhaps including details of a specific vertical the candidate must have a rolodex in), the gist of it remains the same. Candidates get exasperated when told they do not qualify for a position because they’ve ‘job hopped’, or failed to make quota at a startup. “Is it my fault that they ran out of capital 3 months after I started?” Internal recruiters or HR people are rarely interested in the stories behind the resume, however. Most are simply acting on clear directives from the line managers – having been scolded one too many times for submitting low-quality resumes that do not pass muster. And of course, such directives are then passed from the internal recruiters to external headhunters, and the message is cascaded once again.

    The problem with such narrowly focused templates, however, is that the stories behind the resume are actually what count the most. 90% of all startups will fail in their first 5 years of existence. By definition, then, the vast majority of people that accept a position with a high risk startup will end up with a very clear failure on their resume. Does this mean that such candidates are incapable of performing at a company that is further along in it’s lifecycle? Hardly. If anything, I believe the willingness to have gambled one’s career on a high risk venture displays a measure of courage that is to be commended. Most hiring managers recognize this, of course, but do not trust their internal recruiting staff to properly assess a sales executive’s strengths and weaknesses beyond the very strict criteria noted above. And unfortunately, our research at Sterling-Hoffman indicates that candidates are increasingly being hired based on their paperwork, and less and less because they demonstrate real competency. (Please note: I am not speaking here of candidates that have changed jobs six times over the past 5 years. There is a distinction to be drawn, I think, between courage / entrepreneurial spirit on one hand and job hopping driven by dotcom-era greed on the other).

    In any case, we are left with a dilemma. What are hiring managers to do? Millions (if not billions) of dollars of value are created or lost due to key hiring decisions. While there is no shortage of literature on hiring strategies, I will attempt to add a few (possibly contrarian) ideas that hiring managers & investors may find useful. Given that our firm’s core comptency is recruiting the VP Sales for enterprise software companies, I have been privy over the years not only to insights from CEO’s and Venture Partners on how to hire the company’s chief sales officer, but also to various opinions from our candidates regarding how to evaluate software field sales reps aka individual contributors.

    1) Accept Chaos

    Several years ago, I was introduced to the philosophies of Bruce Lee, who theorized that the majority of martial arts were impractical specifically because the variables in a combat scenario were infinite and ever changing. In other words, a martial art designed to help deal with large, powerful opponents would be ineffective when used against a small, quick opponent. In response, he created a new martial art: Jeet Kune Do (‘The Way of the Intercepting Fist’) – and his philosophy holds much relevance to high tech business strategy. Specifically, the qualities that made a sales rep successful in the bubble are NOT the same that would make a sales rep successful today. Geoff Moore recognizes the same principle in his Chasm/Tornado books, indicating that what is often the ‘right’ strategy given one set of market conditions is the absolute wrong strategy in another. It follows, then, that the ‘right’ talent in one scenario becomes the ‘wrong’ talent in another; smart companies will recognize this fact and re-evaluate their hiring templates accordingly.

    2) Figure out why you’re winning BEFORE building a sales organization.

    I credit a friend (who also happens to be one of the most highly respected software sales executives in the world) with enlightening me on this very critical point:

    It was common in the bubble for software companies to conceive of their sales strategy in territorial terms. The most important task of a VP Sales was to hire enough high quality sales reps to cover every major geographic territory, so that no potential marquis customer would fall through the cracks. “We can’t risk our competitor getting there before us!” Understandable sentiment. And this certainly correlates to Geoff Moore’s ‘landgrab’ strategy for tornado economics. However:

    Jim Maikranz, former SVP of Sales at SAP America, (the same software sales deity referenced above) convinced me that this strategy is intrinsically flawed – particularly for startups. “How many sales reps does it take to make a software company profitable?” he once asked me rhetorically. Answer: ONE. At the time, out of respect for headhunters everywhere, I politely asked him to keep his opinions on this matter to himself. But the logic cannot be denied. Jim was not merely recanting the overused silicon valley cliché: ‘Hire only A players’. Rather, he was questioning the wisdom of software companies that choose to add the cost of a direct field sales organization before they understand the nature of the battle they are engaged in. It makes no sense to hire multiple sales professionals in the field before you’ve quantified (as much as possible) the messaging, qualification process, actual customer segment, etc. Sales is still about process; you need one (a repeatable process) before you can grow revenue.

    I would also suggest that sales managers who seem overly tied to a business plan calling for immediate and aggressive expansion of headcount may be more concerned with their personal careers than the company’s well being. Put bluntly, a VP of Sales may very well be worried about explaining precisely what he/she ‘achieved’ at your company when interviewing for their next position, and therefore push an aggressive hiring plan so that they can lay claim to having ‘built’ something later on. Executive Recruiters in particular are intensely focused on ‘growth’ numbers – often screening candidates out if they cannot lay claim to having grown an organization by revenue, headcount, profitability, etc. Shrewd sales executives will know this, of course, and attempt to tailor their resumes accordingly. (Of course, the very best recruiters will dig beneath the surface – seeking the stories behind the numbers – but they are few and far in between.)

    The fact remains that CEO’s should be weary of sales managers who seem driven to expand the field sales organization ahead of gaining solid customer traction.

    3) Domain Expertise matters. (A lot.)

    I recently visited the CEO of a supply chain software startup to discuss a VP Sales search. After some discussion, he commented that I was making too big a deal out of the need for ‘domain expertise’ because between him and and the VP Services, the company had all the domain expertise necessary. Yes, I agreed, his existing team were clearly experts in supply chain.

    But, I thought privately, WHO will be doing the selling?? In the case of early stage software companies, the VP Sales is rarely being recruited for his ability to manage a worldwide sales organization. The immediate priority is to acquire customers. And while the economy may be recovering, all anecdotes I have been privy to indicate that the current selling environment is still incredibly difficult for enterprise software companies. Gone are the days of being able to cold call a CIO, rhyme off a series of buzz words starting with ‘e’ and successfully book a meeting. Gaining priority on the CXO’s agenda in today’s market requires an intimate understanding of his/her personal universe, not to mention the organization’s business problems as a whole. Once again, this applies especially to early stage software companies, who face paranoid customers’ fears (often rightly so) that this newest visionary vendor may not be alive in 12 months.

    Bottom line: When hiring a Sales Executive in today’s environment, domain expertise is critical. (The more senior the position, the more fundamental this point).

    4) Pedigree is overrated.

    It is common knowledge amongst recruiters that the quickest way to peak the interest of a hiring manager is to quote the names of ‘pedigree’ companies when discussing a candidate. By ‘pedigree’ companies, recruiters are generally referring to the ‘gorillas’ – market leaders that have a recognized brand not just in their particular category, but in general. For example, applications companies will generally look for candidates that have come from Siebel, SAP, Peoplesoft, etc. Infrastructure companies may prefer candidates from the likes of BEA Systems, IBM-Tivoli, BMC, Veritas, and so on. The reasoning here is not entirely flawed. Market leaders offer superb product and process training, and particularly for smaller companies desperate to show immediate progress, it makes sense to hire sales reps that can hit the ground running. Further, at the executive level, ‘pedigree’ candidates add credibility to a corporate story and can be a factor in raising additional financing.

    More often than not, however, I believe that ‘pedigree’ is valued out of fear, rather than logic. In other words, it is easier to deflect blame for poor hiring decisions if the hiring manager or recruiter can say, tongue in cheek, ‘Well he was a star at Siebel!’ Once again, I am reminded of Bruce Lee. The skills required to succeed at Siebel (or any other market leader) may be significantly different from the skills required to succeed within your organization. Further, it should be common sense that selling software for a market leader is EASY – relative to selling on behalf of a # 2 or # 3 player, never mind a startup in a new category. A market leader’s position gives it immediate access to every RFP, and places it atop every shortlist. So is it wise to hire a candidate that was trained in an environment where customers were easy to come by?

    For this reason, I am beginning to suspect that sales executives who have climbed the ranks at smaller software companies are more likely to perform when the economy is suffering. They tend to be comfortable ‘street fighting’ for customers, and aren’t easily deflated when a prospect says ‘no’. Further, they are used to coping in an environment that lacks an intricate support infrastructure, and generally accept lower base salaries than their pedigreed counterparts.

    5) Million dollar deal sizes are NOT mandatory.

    Primarily because most companies aren’t pushing forward with projects of that scope right now. The norm is for most CIO’s to go with smaller initial rollouts, refine the processes, and then examine the value of purchasing additional licenses. (There are exceptions of course – but most market watchers would agree that the trend has been towards smaller rollouts). The central point here is that candidates should not be eliminated from consideration purely because they have failed to close deals at a minimum level. Repeat: the stories behind the resume are what matter. (Of course, a tele-sales rep used to selling shrink wrapped tools at $5k per deal would not be considered for a high end enterprise sale.)

    It may also help here to comment on the assumption behind a hiring template that requires a sales rep to have closed million dollar deals before being considered for a position. The theory is that deals of $1m+ are highly consultative in nature, require navigation and evangelization across multiple departments and functions, and usually involve selling at the C-level. Once again, this assumption is not without merit. That said, I would much rather hire a sales executive that has had to struggle to sell $500k deals for a startup, than a sales executive who closed $1m deals for Siebel in 1998. I would wager that orchestrating a smaller deal for the startup required as much of a consultative process (if not more) as the larger deal for a gorilla.

    6) Standardize the process.

    This point may appear contradictory to the majority of my comments above, but rest assured it is not. Hiring templates do not always work, but as always we must be careful not to throw the baby out with the bathwater. Every software company should have a standardized template for hiring sales professionals if for no other reason than such templates help in identifying patterns over time. Far too many hiring decisions are made informally, with offers being extended because the hiring manager and candidate discover good ‘chemistry’. Especially when sales professionals are involved (I imagine technical readers are snickering right about now).

    My own preference insofar as a template for sales reps is concerned is to initially screen for three quantifiable items: domain expertise, multiple customer references (at the level you plan to sell to), and at least one successful stint with a company that was # 3 or # 4 in it’s category. The balance of the decision will be based on a set of particulars that will vary from company to company. No doubt that readers will have their own ideas and preferences regarding which top level criteria matter most. Please send me your opinions on this topic – I’m eager to hear your stories. Or, for advice on how to build a template for your company, try www.selectingwinners.com - the founder, Barry Shamis, has a special competency at helping software companies figure out how to screen for the very best sales professionals and has come highly recommended to me several times.

    Conclusion

    As a final comment, I would urge all readers to be cognizant of the fact that there are no easy answers. The industry is littered with consultants who attempt to quantify best practices in an attempt to find the one true success formula. Saavy executives recognize that there is none; which is why freshly minted MBA’s will so often admit that the first thing they had to learn upon entering the real world is to forget what they were taught in school. I too have suffered frustration at my own inability to arrive at a perfect evaluation process over the years; I’m a search guy, I thought. Isn’t this what I do? How do I know if we hire this guy or not?!

    I voiced this last question recently to another close friend, himself a former superstar VP of Sales with Siebel. His answer? “Follow your gut …”

    Angel Mehta is Managing Director at Sterling-Hoffman, a retained executive-search firm that focuses on VP Sales & VP Marketing searches exclusively for early stage enterprise software companies. For more information about Sterling-Hoffman, visit: www.sterlinghoffman.com or send Angel an email at: amehta@sterlinghoffman.net.
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