We are just getting started with a new product. I have been the sole developer and founder till now. The MVP is now ready and I've met a really enthusiastic sales rep that I can see myself working with. But we haven't made a sale yet.<p>What are the terms I should offer this person to be fair and keep them interested?
Are you looking for a sales rep or a cofounder?<p>If the former, high commissions are motivating. Anything the rep sells at this point is a sale you wouldn't otherwise have. If you're worried about the "wrong" kind of sale, you can put bounds on what you'll pay commission on, like "nothing below $X dollars" or "nothing if the company doesn't fit the definition of 'good fit'".<p>If you're looking for a cofounder, then give them a meaningful equity chunk of the company, vested over 4 years.<p>Sales is hard enough -- don't try to come up with a comp plan that adds a bunch of complexity to a rep's decisionmaking. When a customer is ready to buy, you want in clear in the reps head whether they should push for a longer contract, or a higher per-month rate, or a strategic fit for product development.<p>What does your company need right now?
The best thing I've ever read on coming up with a sales commission structure is this article by Lars Dalgaard > <a href="http://a16z.com/2015/07/23/sales-compensation-beware-you-get-what-you-ask-for/" rel="nofollow">http://a16z.com/2015/07/23/sales-compensation-beware-you-get...</a>
I would advise against incorporating a company until the first sale is made. You want to delay this as much as possible.
When you do incorporate, setup reverse vesting for him so you can easily get his equity back in the case you have to fire him.<p>Vest his equity over 4 years with a one-year cliff.
This way you have a full year to evaluate if you want him as co-founder/salesperson.
If he is not happy to be under this performance-based scheme then that's a huge red flag.
After all, you have already proved you can hold your side of the bargain but he has not.<p>If you are already incorporated then you will have to setup a stock option pool with similar terms.<p>In terms of fairness of compensation, this depends on the competitive landscape. You should probably try to source a few more potential salespeople to get a feeling of what that landscape looks like.
Whatever you decide will probably be wrong.<p>So I'd try and set your sales guy up for success, get him off to a positive start, and be generous with commission. Agree targets that should be achievable.<p>If he's amazing, you'll want to agree something attractive to both of you. Possibly involving equity. If he can't sell your stuff, then you'll probably want to try someone else. So you'll need the ability to "undo.
What is the legal structure of the company?<p>Is the focus of business operations to produce recurring cash flow for the owners or is it to produce capital gains via growth of the underlying equity?<p>What is the vesting period for your equity?<p>Sales person psychology:<p>1. Sales people are always enthusiastic.<p>2. Commission based sales incentivize closing deals that don't advance a company's general interests.<p>3. A milestone based contract can help align interests.<p>Good luck.
Make sure they're commission incentivized. I learned this the hard, expensive way. If there's a way to structure equity grants around sales performance, do it. At the very least, make sure you have minimum requirements beyond 1 year of time for your cliff on any equity agreements - ideally, attach a reasonable sales target as a schedule.<p>Don't let them sell you on vesting based on time - they're not adding value if they're not selling.
you should be vary careful.<p>never forget that sales people are good at selling things, which includes their own value, whereas traditionally software developers are not.<p>you may be particularly talented in this area for all i know, but be aware of this.<p>making reward results based to avoid becoming a victim of their superior ability to convince you they are worth more than they are. commission is a classic approach... its hard to argue with getting paid better if you do good work... but it does incentivise bad work if not done carefully.<p>... on the other hand, if you get legal advice to draw up paperwork for sharing equity the default position is to make it very difficult to cash in on, so offering equity might be safer... but i'm not sure the recipient will enjoy having to learn the lesson of how difficulty equity can be to turn into cash.<p>what kind of product is it? do you really need sales? usually its a way to sell more, not sell at all...<p>all of that said, why not discuss it with them and see what they expect too? that might be an easy way to rule them out or bring them onboard because what they might want might be either completely unrealistic, or undervaluing themselves.
A16z have just released a podcast on this exactly ><a href="https://overcast.fm/+BlzEI52II" rel="nofollow">https://overcast.fm/+BlzEI52II</a>
Hello !<p>If you shall require help with sales at your startup, please do let me know. I don't require anything in return but may not be able to devote a lot of time, but would try to do my best.<p>I have more than 15 years of hardcore sales experience across 7 different industries, this includes working on my own startups for 52 months.<p>cheers!