Building a world-class sales org | Jason Lemkin (SaaStr)
Jason Lemkin, founder of SaaStr, shares tactical advice on building and scaling SaaS sales teams. He covers critical hiring mistakes, compensation strategies, and fostering a healthier product-sales relationship to drive growth and customer satisfaction.
Deep Dive Analysis
14 Topic Outline
The Necessity of Sales Teams in B2B SaaS
Signs and Timing for Hiring Your First Salespeople
Key Attributes for Early Sales Hires
When and How to Hire a VP of Sales
Effective Interviewing Techniques for Sales Roles
Structuring Sales Compensation and Quotas
The Importance of Hiring Sales Reps Who Sold Harder Products
Scaling the Sales Organization: Rules and Roles
Product Team Involvement in Sales and Roadmap Decisions
The Dangers of Weaponizing Product Teams with P&L
Founder's Guide to Becoming Better at Sales
Optimizing Free Trials and Annual Contracts for Customer Centricity
The Year of the Customer: Shipping Great Products
Unexpected Realities of Running Large-Scale Conferences
8 Key Concepts
A-plus Middlers
Founders are typically excellent at the 'middle part' of sales conversations, meaning they are great at explaining the product and market, answering questions, and building rapport, even if they struggle with initiating contact or closing deals.
Selling in B2B
In B2B SaaS, selling is fundamentally about solving problems for customers, not merely pushing a commodity. The best sales reps act as experts who help customers understand how a product addresses their specific needs and challenges.
Rules of Eight
A heuristic for structuring sales organizations, suggesting that approximately eight individual contributors (like SDRs or AEs) should report to one manager (e.g., a Director of Sales). This ratio helps maintain effective management and coaching as the team scales.
SDR (Sales Development Representative)
An entry-level sales role, often filled by individuals fresh out of school, whose primary job is to generate and qualify leads through outbound efforts (emailing, calling) or by screening inbound leads before passing them to Account Executives.
AE (Account Executive)
A more seasoned sales role focused on closing deals. AEs typically receive qualified leads from SDRs or inbound channels and are responsible for managing the sales process through to contract signing.
Weaponizing Functions
The practice of forcing teams like Customer Success or Product to focus purely on revenue generation, often through aggressive tactics, which can lead to customer-hostile actions, damage relationships, and negatively impact long-term growth.
Anti-Compounding
Actions or strategies that, while potentially offering short-term gains, ultimately erode customer trust, increase churn, and prevent the long-term, exponential growth (compounding) that is crucial for successful SaaS businesses.
VP of Free
A conceptual role, typically fulfilled by the CEO or Head of Product in collaboration, responsible for championing and nurturing the free user base of a product. This role ensures that the free offering is valued and not solely viewed as a conversion funnel, fostering long-term community and advocacy.
11 Questions Answered
Yes, almost every B2B business will eventually need a sales team, even if they start with a product-led growth (PLG) or self-serve model. Companies like Canva and Slack eventually built sales teams to scale, indicating that sales is a matter of 'when,' not 'if,' for most B2B ventures.
A startup should consider hiring its first salesperson after the founder has personally closed the first 10-15 customers and is spending more than 20% of their time on sales activities, indicating a need for leverage and a repeatable sales motion.
Early sales reps should be 'pirates and romantics' who are product savants, have a few years of B2B sales experience, possess enough maturity to be trusted with leads, and, most importantly, be someone the founder would personally buy their own product from.
Hire a VP of Sales only after you have at least two sales reps consistently hitting quota and closing deals. Hiring a VP of Sales earlier is a 'Hail Mary' that rarely works, as they are typically hired to scale an existing, repeatable sales process, not to find product-market fit or be the first reps.
Yes, especially in today's environment and for companies below $50-100 million in revenue, a VP of Sales should be actively involved in deals, either carrying a quota, a partial quota, or joining calls with reps for 20-30 hours a week. This ensures they understand how to sell the product and remain connected to the craft.
Early sales reps should be paid market rate (e.g., 50% base, 50% bonus for OTE). Initially, for the first quarter, they can keep 100% of what they close to build momentum and put 'points on the board.' The long-term goal is for a sales rep to bring in 3-5 times their total take-home pay.
Heads of product should be deeply involved in sales, especially for large deals, acting as 'mini CEOs' to understand customer needs, make commitments, and provide strategic product direction. Sales teams, in turn, should have a structured way to provide input to the product roadmap, ideally through a budget or allocation of story points.
Product leaders should allocate a specific budget (e.g., 10% of story points) to the head of sales each quarter for feature requests. This forces sales to prioritize and load-balance their needs, preventing constant disruption to the product roadmap and fostering a more objective, structured collaboration.
Always ask for the 'next step' at the end of every customer meeting. This doesn't have to be asking for money, but could be scheduling another demo, meeting another stakeholder, or agreeing on a follow-up action, ensuring the deal continues to move forward.
There is no single 'ideal' trial length; it should be customer-centric. While some companies historically pushed for shorter trials (e.g., 14 days) to close deals faster, successful companies like Slack and Canva have shown that infinite or very long free trials can work well by focusing on user value and long-term conversion.
Forcing annual contracts, particularly for SMBs, can be detrimental because customers often prefer monthly payments and may bounce if forced to pay a large sum upfront. While annual contracts look good on a spreadsheet, they can create customer-hostile experiences and negatively impact long-term customer relationships and compounding revenue.
26 Actionable Insights
1. Be Honest About Sales Motion
Founders must be honest about whether their product requires a sales-type motion or is truly self-serve, as ignoring this reality leads to failure and missed opportunities.
2. Close First 10 Customers Yourself
As a founder, personally close your first 10 customers to understand the sales process and product-market fit, leveraging the fact that customers love talking to the CEO and you are an ‘A-plus middler’ in sales conversations.
3. Hire Two Sales Reps Initially
Hire two sales reps, not just one, to allow for A/B testing of humans and sales approaches, which is crucial for early team development and learning what works.
4. Hire Reps You’d Buy From
For your first sales hires, prioritize individuals you would personally buy your product from, as they can be trusted with precious early leads and deeply understand the product, often being ‘quirky’ or ‘romantics’ about it.
5. Avoid Early VP of Sales Hire
Do not hire a VP of Sales until you have at least two sales reps consistently hitting quota, as a VP’s role is to scale a repeatable process (from 3 to 300 reps), not to find product-market fit or be the first rep.
6. VP of Sales Must Be in Deals
A VP of Sales, especially in today’s environment, should be actively involved in deals (carrying a bag or joining calls) for 20-30 hours a week to understand the product and demonstrate commitment to selling, rather than just managing process.
7. VP of Sales First 14 Days
When interviewing a VP of Sales (or Product), ask what they plan to do in their first 14 days; if they don’t prioritize meeting customers/prospects, they are likely not a good fit as they lack customer focus.
8. Sales Rep Interview: Sell the Product
During the interview process, require sales candidates to pitch or demo your product, ensuring they have done their research and can articulate its value, as this reveals their dedication and understanding.
9. Hire Reps Whose Last Product Was Harder to Sell
Seek sales reps whose previous product was more challenging to sell than yours (e.g., more technical, less established market position), as they will bring honed skills and find your product comparatively easier, leading to better performance.
10. Pay Market Rate for Sales Reps
Pay sales reps market rate for their OTE (On-Target Earnings), typically a 50/50 split between base and bonus, focusing on their ability to bring in 3-5x their take-home pay rather than fixating on the upfront cost, as successful reps are accretive.
11. Give Sales Reps Initial Ramp
For the first quarter (max), allow new sales reps to keep a higher percentage (e.g., 100%) of what they close to help them put points on the board and gain confidence, easing their ramp-up without immediate pressure.
12. Concentrate Leads on Best Closers
In the early days, prioritize concentrating leads on your best closers rather than spreading them thin across many struggling reps, as this builds momentum, improves close rates, and fosters domain knowledge.
13. Hire Stretch VPs of Sales
For your first VP of Sales, hire a ‘stretch’ candidate (e.g., a former director) who sees the role as career growth, as seasoned VPs often don’t want to do the hands-on work required in an early-stage startup.
14. VP of Sales Must Hire Better Managers
A VP of Sales can scale indefinitely if they can consistently hire and develop managers who are better than themselves, ensuring the organization doesn’t ‘crack’ due to a lack of leadership as it grows.
15. Product Leaders Deeply Involved in Sales
The head of product (or empowered PMs/directors) should be deeply involved in sales, especially for large deals, to understand customer needs, make product commitments, and act as a ‘mini CEO’ in key meetings.
16. Give Sales a Product Budget
Allocate a specific quarterly budget (e.g., 10% of story points) to the head of sales for feature requests, forcing them to prioritize and load balance their team’s needs, reducing ad-hoc disruptions to the product roadmap.
17. Product & Sales Weekly Budget Meeting
Implement a weekly meeting between the VP of Sales and VP of Product to discuss the allocated product budget and feature priorities, fostering structured communication and preventing debilitating tension.
18. Always Ask for Next Step in Sales
As a founder or product leader in sales conversations, always end a meeting by asking for a clear next step (e.g., another demo, meeting another stakeholder), even if not directly asking for money, to keep the deal moving forward.
19. Offer Longest Possible Free Trial
Offer the longest possible free trial that remains customer-centric, as products with free editions tend to be better software due to the investment in onboarding and user experience.
20. Avoid Forcing Annual Contracts
Do not force customers into annual contracts, especially for SMBs; instead, let them pay how they prefer (e.g., monthly), as forcing annual payments can be customer-hostile and lead to churn.
21. Focus on Lost Deals, Not Just Won
Sales teams should spend more time analyzing and discussing deals they lost than deals they won, as understanding failures provides more valuable insights for improvement.
22. Earn Price Increases
If you raise prices, ensure you have added significantly more value (e.g., 30% more value for an 8% price increase) to earn that increase from your customers, rather than just raising prices without new features.
23. Be the ‘VP of Free’
As a founder or product leader, act as the ‘VP of Free’ by championing the long tail of free users, ensuring they are nurtured and not over-monetized, as they are crucial for community and long-term compounding growth.
24. Ship Three Great Things This Year
As product leaders, challenge your team to ship three truly great things this year, as shipping excellent products injects energy into the entire company and inspires teams more than anything else.
25. Be Kind to Failing Employees
When an employee fails, remember it is ultimately your fault for hiring them or not providing the right environment; therefore, be kind and supportive in their transition.
26. Attend Top 1-2 Industry Events Annually
Even if antisocial, attend the one or two best industry events each year, as they attract top executives and vendors, offering valuable networking and learning opportunities that smaller events do not.
9 Key Quotes
We're not really selling in B2B. We're solving problems.
Jason Lemkin
You've got to hire two because otherwise there's no AB test. You have to AB test humans.
Jason Lemkin
Those first couple reps have to be people you would buy your own product from.
Jason Lemkin
You want a head of sales that actually wants to do sales.
Jason Lemkin
If you hire someone whose last product was harder to sell... it's like weight has been released from their feet.
Jason Lemkin
Software still goes on quarterly release cycles, no matter what we say.
Jason Lemkin
The stress between product and sales is a good thing. It's a, it's a sign of a well-run B2B company when there is stress between product and sales.
Jason Lemkin
Few things inspire teams more than when you're shipping great products.
Jason Lemkin
The number one thing he didn't understand at WordPress at automatic was the power of compounding.
Jason Lemkin
5 Protocols
Hiring Your First Sales Reps
Jason Lemkin- As a founder, close your first 10-15 customers yourself.
- If more than 20% of your time is spent on sales, it's time to hire.
- Interview approximately 30 candidates for early sales roles.
- Select two reps (not just one) who you would personally buy your product from, even if they have quirky backgrounds.
- Ensure these reps have a couple of years of B2B sales experience and sufficient maturity.
Structuring Early Sales Compensation
Jason Lemkin- Pay market rate for On-Target Earnings (OTE), typically with a 50% base and 50% bonus split.
- For the first quarter (maximum), allow reps to keep 100% of the revenue they close to help them put 'points on the board' and feel successful.
- Aim for reps to eventually bring in 3-5 times their total take-home pay to ensure profitability.
Interviewing Sales Candidates (Sell Me This App)
Jason Lemkin- Give candidates time to prepare (e.g., for a second interview).
- Instruct them to 'sell your product' by preparing and delivering a pitch/demo.
- Expect them to have researched the product, watched explainer videos, and understood the core problem it solves.
- Evaluate their ability to articulate the product's value and how it solves customer problems, even if they make mistakes.
Managing Sales Feature Requests for Product Teams
Jason Lemkin- Establish a weekly meeting between the VP of Sales and VP of Product.
- Allocate a specific budget (e.g., 10% of story points or engineering capacity) to the head of sales each quarter for feature requests.
- Require the VP of Sales to force-rank their team's feature requests and decide how to utilize their allocated budget.
- Product teams should also have internal meetings to discuss sales inputs and identify potential efficiencies or existing solutions.
- Communicate clearly about what's in process and the high cost of disrupting ongoing development, while remaining open to critical changes for major deals.
Founder Improvement in Sales
Jason Lemkin- At the end of every customer or prospect meeting, always ask for a clear 'next step.'
- The next step doesn't have to be asking for money; it can be scheduling another demo, meeting additional stakeholders, or agreeing on a follow-up action.
- Log these next steps in your CRM and actively work to move the deal forward step-by-step.