How to tell when it's time to hire your first VP of Sales

Let's start with the title. VP stands for Vice President. In American companies and startups, this is not a “deputy president” but the head of a major function who answers to the CEO for it. A VP of Sales leads the sales department: builds the team, owns the revenue plan and forecast, sets up processes and works with marketing and product. In Russian-speaking business, the closest equivalent is a “sales director” or “head of the sales department,” but one level above a regular manager.

Similar titles are common, so it's useful to tell them apart. A Head of Sales leads sales, more often at an early stage when there is hardly any team yet. A Sales Director is one level below a VP. A CRO, or Chief Revenue Officer, is responsible not only for sales but also for marketing and customer success; this role usually appears at later stages.

Now the main question: when should you hire one? The short answer: not before the founder's sales have become repeatable. And often your first hires should be not a VP but one or two strong salespeople.

SaaStr founder Jason Lemkin says you need to close the first 10, 20 or even 30 customers yourself: no one knows your future customers better than you. And you shouldn't hire a VP until there are at least the beginnings of a repeatable process. Otherwise you are paying someone to invent a process you haven't found yourself. According to one guide, the mistake of hiring a VP too early, together with hiring several salespeople under them, costs a million dollars or more.

How do you know the process is repeatable? Here are the signs:

• you have personally closed about 10–20 customers;
• you have a written playbook: customer profile, first-meeting script, list of objections, pricing;
• you can predict the result: so many calls with such-and-such type of buyer produce so many deals;
• sales take up more than 20% of your time, and this is slowing growth.

From there, the sequence is as follows. First hire salespeople, not a manager. Lemkin advises hiring two at once: with just one, you can't tell whether the problem is a weak salesperson or a weak market. a16z reportedly advises making your first salesperson an experienced one who handles a deal on their own from qualification to close, and keeping a small team of 2–5 people until repeatability is proven. Only when these salespeople have started hitting their quota consistently can you look for a VP, whose job is then to scale rather than invent.

And one more tip for later. Lemkin estimates that about two thirds of founders step away from sales completely after hiring a VP, and this almost always backfires. A first VP usually needs you to keep doing at least half of what you did before.

The bottom line: first you prove that the product sells, then you prove that others can sell it too, and only then do you hire someone to manage it.

Sources:

1. SaaStr, Jason Lemkin — Top 10 mistakes founders make when hiring their first sales team
2. SaaStr — 5 critical phases of building your SaaS sales machine
3. Echai Ventures (SaaStr) — When do I hire a VP of Sales and what happens to me after I do
4. Lenny's Newsletter — Building a world-class sales org (Jason Lemkin)
5. Causo — Hiring a head of sales at seed
6. LaunchRock — VP of Sales: when to hire
7. Activated Scale — How to Hire for Sales Growth in Startups (a summary of a16z recommendations)