Bringing on a key person
October 25, 2021
by a searcher in Seattle, WA, USA
First, thank you for reading this, I know everyone here is super busy and it takes time to contribute!
Simply put, I have a recent acquisition (~$5M/yr technology co) that has a challenge in the sales department - main sales manager is gone due to cancer and a lot of "tribal knowledge" was in his head.
So we need to fill the position, not just with somebody who can take the reins and pick things up as they go along, but rather somebody who can hit the ground running with a plan based on their own experience and able to simply incorporate the pre-existing bits along the way.
And we think we have such a person, but they're naturally going to want some upside for coming in and saving the day!
And therein lies the question - we want to compensate them fairly with equity or residuals or stock options or what-have-you, but as a small company now working to become a much larger company (partly through future acquisitions), we don't want to get bound into giving away too much too early and end up in an unbalanced situation down the road.
There's a bunch of ways we could approach this of course, so we're hoping for guidance (or even horror stories :) to help suss out an appropriate arrangement that doesn't screw anybody over accidentally.
Any and all assistance is greatly appreciated!
ETA - there are several junior sales people and a sales engineer whom he managed, but he was also a "rain maker" as well, tending to bring in the larger deals.
from Texas A&M University in Elizabethton, TN, USA
Replacing a sales person, the customers mostly stay with the the product and company (not with the rep). I have seen this in my industry, though a good sales hire will bring solid leads that you can build on.
For your needs, I would suggest that you focus on a contractor arrangement and commissions. I've overpaid for what seemed like slam dunk sales hires/reps before, but been happy this was contract only and not equity!
I think it is hard to tell a good sales hire from the outset, so hedge accordingly. In the long run, grow your own personnel up into sales. They will have the longest history and knowledge of your existing customer base, which in my industry better than fancy outside hire in my opinion.
from University of Denver in Boston, MA, USA