My love for Tech Startups
From my first tech sales role as a Product Manager for Veritas Software in 2000 to running a boutique tech search startup currently, the tech industry has always given me a sense of anticipation and a warm, exciting buzz. While we have amazing customers such as Amazon Web Services, Citrix, Intel, Qlik, Tableau, Sage, I have a special love for helping the startups.
Maybe it is the potential widespread impact of a ground breaking solution, the fast paced high growth market, the entrepreneurial, open-minded people we get to work with, or the laser-focus-just-cut-the-noise way they get things done. Even though recruiting for startups are probably one of the hardest jobs out there, I just get an immense sense of pride and satisfaction, watching kickass people we placed rock the sales numbers from zilch.
A few evenings ago at San Francisco, I was sharing with a CTO from a Canadian BI company – that the pleasure derived from finding the person who can do the job rather than recruiting by “pedigree” is quite hard to describe. It’s like saying everyone who graduated from a particular school is going to be the president. I don’t like coming to a conclusion of a fit just by assessing the CV and the companies they come from – and I totally agree when Scott Berg, COO from ServiceMax said “Look beyond the profile” and Anand Sanwal, CEO from CB Insights said “There are plenty of smart people who are not Google or Stanford alumnis”. Reading a CV cannot replace the time and effort taken to understand their achievements, the circumstances under which they got those achievements and more importantly, examples of what they did in their career to prove they are able and motivated to do this role, at a different company. Lastly there’s a big culture fit element but it needs to be qualified properly as this can become a fluffy, non-concrete excuse to disqualify a valid candidate.
Hiring the first headcount in Asia
Looking back at some of the startups we have placed for, I wanted to share our team’s experience with such companies who set up an operation in Asia, over 3 articles. This one covers demand and revenue expectations, the next 2 articles covering the available Talent and Taxes, Govt and Geopolitical situation, will be on its way soon.
Demand:
In the last few years, we have seen startups bail out of Asia because of a few reasons: bad team and management who burn the market, the offering was too niche with not enough people willing to pay for it, the offering was too advanced then for the Asia market or a combination of those. Seeing that makes me get more rigorous with our understanding of our clients’ business; who are their competitors, who do they sell to, what are the related solutions they can go-to-market with, is the sales process straight forward or complicated? What is the USP of our client and their products? How much does the customer pay on average for it and if that works out on ROI? Knowing these ensures me that there is or isn’t a potential market and we can move to focus on the hire itself for the former.
For targeting a new market or a new offering, we offer a rather affordable market assessment service where we use secondary research (collecting data from existing research) and primary research where we compile our findings from interviews with prospects, candidates and peers in the industry to help clients make an informed decision if the market size is worth going after at that point or to delay another year and reassess. The latter means we don’t get to place anyone but that’s fine. Some recruiters might argue to say then you don’t make a sale but not all sales are made equal and I rather everyone not waste their time and conserve the cash to wait out another year.
When the market is not ready, that’s not a lot a hardworking sales team can do. What will happen is you would have hired a bunch of great people who’d probably quit after a year, giving the market a negative impression that the new team will have to manage even when this time, the market is ready. As a startup, every investment dollar is important esp. the ones invested in development and talent (or at least I hope that’s the mentality) and it makes no sense to churn a team through no fault of theirs.
Revenue:
A “fitted out” set up of an Asia office for some of our clients average around 750K to 1milUSD* year with most of the cost coming from service offices rentals, sales and marketing cost (say a modest 10k/month), salaries of sales support staff and T&E to cover Asia Pacific and Japan. Most common is the smaller setup where the first two buddies – the sales and technical pair has to put on a lot of hats to keep the lights on. Hence, sometimes there are headcount for marketing support, channel sales, inside sales etc.
Say if you are selling on premise enterprise software, the goal is to get at least 5-6m** in the first 3 years, and most of the time, you won’t get to 2m in the first year as you are gearing up but ideally, 500k, 1.8m, 3.2m are the average sort of numbers you can expect in the first 3 years, especially the max headcount you want to invest is around 2-3 for a start. We have clients that totally hit the ball out of the park with crazy numbers when everything fall in place. But having a prudent expectation and a great supportive and inspiring mgt will keep the team lean, the morale high, and this goes into turning a profit asap and gaining customer confidence.
*around 6 people – 1 sales, 1 channel, 1 inside sales, 1 marketing, 1 head of sales, 1 presales
** assuming on premise enterprise software offerings, ranging 50-200k a pop, 6-12 months sales cycle
For SaaS or anything on subscription, the number varies because there are high dollar value MRR offerings and there are lower cost ones. The most recent unicorn SaaS co we placed for, has more headcounts on account management, technical customer success managers and only 1 or 2 logo hunters as the signups and converts from freemium are strong and successfully marketed. The cost work out to be roughly the same although the logo hunters tend to higher OTE but a 50:50 or 60:40 split, so the base is more palatable from a cost perspective.
So many clients came here, expecting to hire that wonderful Rockstar pair who will make everything right and believing that customers here will love their product like they do from home. They have aggressive targets and work the people relentlessly. Many of these also prefer to hire by pedigree. We have seen many teams churned, batches by batches. There were a few that were in their 5th team by year 3 – channels avoid them and customers are apprehensive to buy.
In my opinion, this is an expensive option compared to having realistic expectations, spending time understanding your customers and gaining loyalty with your team here, while running a tight ship. The best teams I have seen has a good leader, the team is often very tight, loyal to each other and works super hard happily and great marketing and channel support.