Last week, a YC founder asked if I knew any solid AEs. “What type of AEs are you looking for?” I asked.
“Someone with 2-3 years of closing experience.”
He needed to refine his parameters.
There are a couple of key categories to consider when hiring AE’s 2 through 10 (Your first sales hire will be a completely different breed and deserves a separate post). Here’s a basic framework that will help you avoid a bad hire:
1. Prior Success at a Similar Stage Startup:
I can’t tell you how often I’ve seen a so-called amazing rep from a large company struggle at an early-stage startup. If you’re at Series A, you should think twice about hiring any reps at companies beyond Series C. I know that sounds like a small pool, but this drastically increases your chances of finding someone with the necessary grit.
Series C AE’s are accustomed to battle cards, rely on Sales Engineers in early conversations, and have devoted SDRs prospecting to fill their pipeline. This is not a viable strategy for early-stage startups, especially in the current environment where the burn multiple is top of mind, and every person on your team needs to do more.
2. Your ACV and Sales Cycle:
At my last startup, a rep told me, “I didn’t come here to close $50k deals.” I was annoyed by his comment, but upon further reflection, I realized I shouldn’t have hired him in the first place. He was a true enterprise, top-down sales rep. We were bottoms-up, and our ACV of $60k was better suited for experienced mid-market reps looking to move up to enterprise.
If your ACV is $20-$30k, and it takes 30 days to close a deal, don’t try to hire true enterprise reps, at least not yet. Yes, elite reps will help you steadily increase your ACV and shorten your sales cycle, but you still want to ensure they are comfortable closing the deals you’re closing today. Elite enterprise reps tend to have big egos, and nothing bruises an ego like going from closing $200k deals at their last company to $30k deals at your startup. This can damage a rep’s morale and hinder performance.
3. Inbound vs. Outbound:
Where do you get most of your leads from?
Back at Teleport, we had quarters where more than 50% of our new ARR was generated via outbound. I made this explicitly clear in my interviews with AEs. More often than not, I disqualified top-performing reps who came from a purely inbound company. The truth is, I didn’t think they would have fun selling at Teleport. Outbound is tough, and if you’re an AE who has been eating off a 100% inbound engine for most of your career, chances are you’re not going to succeed in an outbound environment. At least, that’s not the bet I’m willing to make.
Everyone is gushing over PLG these days, but the one thing few people talk about is that successful PLG reps seldom know how to do outbound well. So if you need reps that can prospect, you probably shouldn’t be looking to hire from Figma. Successfully hitting your number via outbound at a startup with no brand recognition is a different ballgame.
4. Domain Expertise:
We’re rapidly transitioning from “growth at all costs” to “efficient growth,” which means you must ensure your reps become productive as soon as possible. An easy way is to hire folks who have sold to your Ideal Customer Profile and understand your space. In hiring the first reps at Teleport, I noticed those who had a good grasp on selling to security teams had an unfair advantage. Two of the best reps I hired came from Evident.io (a security startup later acquired by Palo Alto Networks). I saw the same thing when advising Rudderstack. Their best-performing reps came from Amplitude and Segment—they had strong foundational knowledge of Customer Data Platforms.
Domain expertise becomes less important as you scale and develop your repeatable selling process, but it’ll help you accelerate ramp times as you build your initial sales team.
When it’s time to hire your second AE, you can de-risk the process by focusing on the following 4 categories:
- Previous startup experience: This ensures your candidate will be resourceful and capable of navigating ambiguity.
- Similar ACV and Sales Cycle: Some reps thrive in closing $30k deals in 30 days. Others live for constructing $200k deals with dozens of stakeholders. Make sure you’re hiring a rep to sell the types of deals you’re closing today.
- Inbound vs. Outbound: Don’t expect a top rep from a purely inbound company with brand recognition to crush it at your unknown startup via outbound.
- Domain Expertise: Reps that know your space and buyers will ramp much faster.
Thoroughly screening for the above categories as you go from 2 to 10 reps will maximize your chances of building a winning team. Additionally, you can increase each rep’s likelihood to succeed by ensuring they start building momentum in their first week. How? Get them enough at-bats and existing customers to mine for expansion. I will cover how you can do this in a follow-up post.