Investment Banking to Sales at a Tech Start-Up: Do Deals and Make Bank Without Ever Staring at Excel Again?
Can you use Excel to kill someone?
But it can definitely make you want to kill yourself.
If that’s you, the finance industry is probably not for you.
But you might still like working on deals in a fast-paced environment.
Sales gets a bad reputation because people hear the word and immediately think of Glengarry Glen Ross, or pushy car salesmen.
But selling software to enterprise customers is a completely different ball game.
And it’s a great opportunity to get paid well, work in a team you like, and spend your time talking to people rather than staring at spreadsheets.
If you find a good enough role, you might even turn down multiple PE and HF offers to accept it – like our interviewee did:
How to Turn Down Multiple Private Equity and Hedge Fund Offers and Live to Tell the Tale
Q: Before we get started, can you give us a quick run-down of your background and the career changes you made?
I went to a top school, entered banking when the economy was good to gain the skill set and exit opportunities, and then I worked in a few different groups in IB, such as financial sponsors, leveraged finance, real estate, and distressed debt.
But I grew bored with the financial modeling and technical aspects quickly, so I knew I wouldn’t stay in finance for the long-term.
At first, I tried to “fix” this by moving into a distressed debt group, but the novelty value wore off.
I also won a few PE offers, but I was tired of building models and writing documents after 4 years of doing it in banking.
So I pressed the “reset” button and went to business school instead. I figured it would give me time to think about what I really wanted to do, plus a lot of networking opportunities.
I realized that I wanted to work at a company that produces a real good or service, as opposed to a finance firm, which just provides capital or advisory services.
And I knew that tech start-ups are always looking for hungry, driven people, so I started looking for opportunities there.
I networked like crazy (over 60 informational interviews and meetings), and ended up joining the sales team at Skytree before moving to Clarizen (a cloud-based project management software company).
Aren’t those more common for former bankers?
A: Yes, they are… but there are some downsides to those.
First off, at a normal company finance is more of a support function.
It’s not like IB/PE/HF where you’re on the front lines generating revenue with your skill set.
So not only are you still doing a lot of Excel work, but you’re more of a bean-counter than a deal-maker.
Strategy was somewhat interesting, but it relied more on analysis (and over-analysis…) and internal decisions, and I enjoyed talking to people and doing deals more.
Finally, relatively few people move from finance and strategy roles into CEO positions.
One of my long-term goals is to rise through the ranks and reach that level, and I felt that sales would be a better way to get there.
Q: Those are some great points – the fact that finance roles are “support functions” at normal companies often gets lost.
Before we get into the recruiting process, what do you actually do in “sales” at a tech company?
A: It’s mostly pitching, presenting, negotiating, and closing deals.
In a sense, it’s similar to what bankers do: you research potential clients, figure out their wants and needs, build the relationship, and then move in to close the deal when the time is right.
But we sell our software product rather than advisory services – and since I’m on the sales team, I’m not responsible for delivering or supporting the product, as bankers are.
Here are a few examples of what I do:
- Lead Generation: I spend time finding new potential customers, including getting referrals from existing customers, researching companies, and cold-calling and cold-emailing to get to the right people.
- Product Demos and Presentations: When a potential customer wants to learn more, I demo the product, answer questions, and try to move them across the “buy” line.
- Contracts and Negotiations: When potential customers have questions on their contracts, I help negotiate the finer points and get deals done.
- Work with Other Teams: I’ll have to go to other teams here to answer questions, figure out what customers want, and also give feedback to the product team on new features to consider.
Notice how there’s no “Excel” on that list.
I am still “on call,” but I’m not expected to be at the office 16 hours a day handling all the random problems that come up.
How to Hustle Your Way Into a Tech Start-Up
Q: So once you decided that you were interested in sales, how did you start networking?
A: First, I decided that big companies were a lost cause because I had an unconventional background.
Just like how it’s tough to break into bulge bracket banks if you’re a career changer, it’s also surprisingly difficult to break into large tech firms, at least if you want to do sales and you already have full-time experience elsewhere.
They looked at me and said, “We want someone with sales experience – why would an ex-banker with an MBA from a top school want to join our team?”
At small tech firms, by contrast, they care more about whether you can deliver results.
Compensation in sales roles is heavily tied to results, so they’re not going to lose a fortune if you don’t perform well.
Q: So once you decided to focus on smaller firms, what was the next step?
A: I relied heavily on LinkedIn, and I started by making a list of all the tech companies in my area that fit that the profile.
But there’s a small army of them in the SF area, so I had to be more specific and focus on software companies (since it’s one of the higher-margin businesses in tech).
So I narrowed down my list, started searching for the companies on LinkedIn, and reached out to anyone who was connected to employees at those companies.
Each time I met with or spoke to someone, I would ask for 3 more introductions at the end; I ended up conducting around 60 meetings total.
I won the offer like this:
- I contacted a venture capitalist who introduced me to a well-known salesperson in the Bay Area.
- Then the salesperson introduced me to an equity research analyst who covered tech companies.
- Then the research analyst spoke to a recruiter on my behalf.
- And then the recruiter introduced me to a frat brother of his who was working at a start-up that was hiring at the time.
Q: OK, but couldn’t you have contacted the recruiter directly and saved a lot of time?
A: No, and here’s why:
But in the tech industry, recruiters mostly care about engineers, and small firms don’t even like to use recruiters because of the placement fees they charge.
So if you’re going for non-engineering roles and you’re focused on true start-ups (i.e. not companies with hundreds of employees and $10+ billion valuations), you probably won’t have much success going through recruiters.
Q: Thanks for explaining all that.
What types of questions did you get when you finally made it to interviews?
A: Typical questions were:
- How can you immediately add value to our company?
- What are you going to do your first day to generate sales?
- Describe your strategies for finding potential customers and closing deals.
Here’s what the process looked like:
- First Round Phone Interview: I spoke with the VP of Sales.
- Second Round In-Person Interview: I spoke with the VP of Sales and Director of Sales.
- Final Round In-Person Interview: I spoke with the CEO and CTO.
The focus of each interview was different – people at the VP level and below (“managers”) spent more time understanding why you want to do the job, if you can tolerate some monotony in the beginning, and if you’re motivated to excel.
The first few months of any sales job can be monotonous as you “learn the ropes,” such as how to cold-call or handle inbound leads; it will also take several months to really understand the product you’re selling.
C-level executives such as the CEO and CTO focused more on assessing my “fit” with the culture of the company and whether or not I bought into their vision for it.
You really need to do your homework on the company, its competitors, and the industry as a whole to answer these questions – it’s not like IB interviews where the questions asked are similar, even at different banks.
For sales roles, you should not be shy about what you’d personally gain from the role – money and promotions – because they want people who are driven to succeed.
Q: Thanks for sharing all that.
Beyond doing the research, how do YOU figure out if it’s actually a good company to join?
A: It can be very difficult because tech start-ups are all over the board and it’s up to you to ask good questions to the right people.
What matters most is how much you learn, and that will depend largely on the people around you.
I would be very careful to understand the composition of the team and your fit with the manager – if the team or your manager is weak, it will be a challenging experience.
Q: OK, but what specifically can you ask to determine any of that?
A: I spent a lot of time researching the investors in the company, the pedigree of the management team, and my manager’s background.
You can find a lot of this on resources like CrunchBase and LinkedIn; I focused on companies with significant funding (> $50 million) and more than 100 employees because I wanted firms with good market traction.
Once I had done that research, in interviews I asked questions such as:
- How many customers do you have?
- How quickly is your customer base growing?
- How many people do you have in various functions?
- How many people are you looking to hire?
You want to assess how much revenue they’re generating, how quickly they’re growing, and how profitable they are.
Unfortunately, private companies will rarely, if ever, answer these questions because the information is closely held by the management team and the Board.
If you have a connection to a Board member you can sometimes use that to get this information, but even Board members can be biased because they’re also recruiting talent (i.e., you!).
So the best method is to assess the quality of investors, the management team, and your manager.
A Day in the Life of a Sales Rep: Coffee is for Closers?
Q: So what is an average day in your life like?
And how much time do you spend doing “hands-on” work vs. managing other people?
A:I get in at 7:45 AM each day, and I spend the morning on customer calls.
After that, I follow up with anyone who has expressed interest in our products.
Usually, this consists of calling them to see why they’re interested, what their objections are (objections = the first sign of serious interest), and if they want to get a free demo.
On some days I’ll already have meetings set up, so I’ll head over to the company, present to a team there, and give them an overview of our product.
Since we sell enterprise software, the sales cycle is very long and it takes many meetings to get all the decision-makers past the “purchase” line.
If it’s an earlier stage meeting, the focus will be on the product demo and the features/benefits; later stage meetings are more about negotiating the specifics of deals, the legal points, and finalizing the pricing.
Also in the afternoon, I may give customer feedback to the product marketing team, speak with anyone that needs to be in the loop, and even interview candidates who want to join our team.
I leave at 6 PM, so the average day is around 10 hours.
There’s some travel involved, but much of it is local and I tend to do most sales work via the phone, especially in earlier-stage deals.
Q: What about the culture and hierarchy?
A: I report to the VP of Sales directly. The VP of Sales, in turn, reports to the CEO directly.
Depending on the size of the company, here is the general hierarchy:
- VP of Sales
- Director of Sales – Front-line manager (exists at larger companies)
- Account Executive – Manages the sales process and relationships with customers
In some ways, the culture is similar to banking because sales also attracts smart, intense people who want to win and who will work hard to get there.
And just like in banking, you’re watched very carefully and every decision you make can be questioned.
Sales reps also have quarterly quotas to hit, which adds to the pressure.
On the other hand, no one here expects you to be in the office for 16 hours a day.
Even if it’s a start-up, there’s no point in being here at 2 AM because customers won’t even be around.
Another cultural difference is that there’s more respect for people regardless of the level they’re at.
No one here ever thinks, “Well, we pay you a huge amount of money so we can treat you like an animal and make you do whatever we want, 24/7.”
Q: Speaking of getting paid a lot, what is the compensation like?
A: Cash compensation is lower than what you’d earn in IB, but you also get equity here, so the potential upside is quite high if the company does well and goes public or get sold in the future.
Account Executives get paid based on the size of the customers they cover and the size of deals they close; compensation is generally split 50 / 50 between cash and commissions.
The total compensation for an Account Executive that hits his/her numbers is known as “On-Target Earnings” or “OTE.”
A big advantage of sales is that when you go over quota, you get massive accelerators which can significantly increase your compensation.
The best sales reps at start-ups actually make more than the CEO!
Another difference compared to banking is that commissions are paid on a monthly or quarterly basis, and paying them out like that is a legal obligation of the company.
Q: That’s all very helpful, but can we get some specific numbers on the comp.?
A: Sure, here you go (all figures in USD):
- Account Execs covering Small and Medium-Size Businesses: $100-$120K OTE, on the low end.
- Account Execs covering Enterprise: $250-$280K OTE.
- Outperforming Sales Reps: $750K up to potentially $1 million in good years.
You also get equity, but the exact percentage depends heavily on your bargaining position; experienced sales executives have more power than career changers.
I would take a look at Andy Rachleff’s “Startup Salary & Equity Compensation” tool to get an idea of 25th-75th percentile salaries and equity grants.
You’ll see there is a massive variance in the compensation for sales reps, because so much depends on your performance and experience going into it.
Even though sales can be very lucrative, you should not think about the compensation or the discount to IB/PE pay that much – make your decision based on the type of work you’ll be doing and the team you’ll be joining.
Especially if you’re coming in after several years in finance, you’ve probably saved more than enough money to be comfortable…
Future Plans: Sales to CEO?
Q: What are your future plans? What options do sales professionals typically have?
A: My future plan is to start a business or rise up through an organization and become the CEO. I like this role quite a bit, and I definitely fit in more with a normal company than I ever did in finance.
There are plenty options for sales professionals: they can move to product management, marketing, or most other divisions at the company.
Q: Based on everything we discussed so far, who would fit in best with the sales team at a tech company, and why?
And who should avoid it altogether?
A: Let’s start with who should avoid sales: If you’re introverted and prefer to work on your own rather than talking to people, sales isn’t for you.
If you like to analyze and analyze and analyze rather than taking quick action, sales is also not for you.
People who should pursue sales: If you are a former athlete and you enjoy high-pressure environments, you may love it.
If you’re not afraid of rejections and you don’t care about repeating the same thing over and over again until you perfect the craft, you would also love sales.
Many people from top universities “look down on” sales roles, but in my opinion it’s far more interesting than spending your time staring at spreadsheets and documents.
It’s also a great way to get to know people in other industries, since your customers will come from all walks of life.
Q: Thanks a lot for your time!
A: My pleasure.
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