पाठशाला Pathshala · वृद्धि Vṛddhi, Growth · Lesson 14 · Build

Building the first sales team: hiring, quota and comp

Hire the first reps in a group, test them on a mock sale, set quota from the close rates you have already earned, and write a comp plan that pays for collected cash rather than signatures.

Pathshala, The Founder Library · 11 October 2026 · 8 min read

The curve of a red running track with white lane lines. — Photograph: Jan van der Wolf · Pexels

A Chennai company with ₹4 crore of annual revenue, all of it sold by the two founders, hires a head of sales from a large software firm on a salary bigger than either founder’s. Six months later there is a deck, a hiring plan and no new customers. The founders are told sales takes time. Some of it does. Most of what went wrong was decided in the first week: who was hired, what they were asked to sell and how they were paid.

This lesson is the first sales team, from the first hire to the first comp plan, built from two practitioners who agree on the sequence. Steli Efti of Close set out the order of hires in his Stripe Atlas AMA, and Pete Kazanjy’s Founding Sales gives the hiring process, the quota arithmetic and the comp structure in more detail than any other free source. The [hundred-calls lesson](/library/founder-led-sales-first-hundred-calls) is the prerequisite: a team can only be hired into a process a founder has already run.

When to hire the first reps

Efti’s sequence has four steps. First, make selling teachable: early selling can be unscalable, but at some point the founder has to sell in a way they could teach somebody else to do. Second, after repeatable success, hire junior salespeople in small teams of two or three. Third, hire a junior sales manager, ideally someone a year or two ahead of you who has helped a company at your stage grow a team. Fourth, once the team reaches fifteen to twenty people and needs several managers, hire a VP or senior manager who has scaled before. The Chennai company started at step four.

The reason for hiring two or three at once is diagnostic. With one hire, Efti points out, a poor quarter cannot be traced: it might be your training, the person or the market. With three, one will usually do much better than the other two, and that tells you both that the process works and what kind of person to hire next. Kazanjy says the same thing from the recruiting side: run a parallel process with several candidates so that you fill full classes, and if more candidates clear the bar than you planned for, hire them anyway, because an unworked account costs more than an extra salary.

Which role comes first depends on where the founders are stuck. Kazanjy’s rule is to add sales development help, someone who prospects and books meetings, when founders are doing both the prospecting and the closing, and to add account executives once the founder’s calendar is too full to follow up and close. The common Indian pattern is a founder who closes well and prospects badly, which makes the first hires two sales development reps, not a head of sales.

Who to hire, and how to test them

For closers, Kazanjy’s profile is specific: people who have sold to the same decision-maker, at a similar price, with a similar sales cycle. Avoid reps whose experience is at large incumbents, who are used to selling behind a known brand and an installed base of renewals; prefer reps from mid-stage startups who have sold a new product into an existing market, because that is the job. For prospecting roles he suggests recent graduates, trained over six to twelve months before they move into closing. The traits he screens for are learning speed, resourcefulness, persistence, coachability, attention to detail and the ability to stay positive through a great deal of rejection.

The interview is a sale. Kazanjy’s process runs a written screen of about a dozen open questions; a thirty-second voicemail pitch left as if for a named prospect; a phone screen of under twenty minutes on how they would build a funnel; and a mock sale in which the candidate sends the invitation, runs a thirty- to sixty-minute demo to a founder playing the buyer, handles objections and follows up with a proposal. Stop them halfway, give one piece of feedback and ask them to run the section again; how they take it is the coachability test. On references, ask for a score out of ten and then what it would take to be a ten. In India add one check: ask for the last two years of incentive payouts against target, which a good rep remembers to the rupee.

Setting quota from your own close rates

Quota is not a wish and should not come from a board slide. Kazanjy derives it from the natural rate of execution: what has been sold over a set period, the win rate on new demos, and the number of deals a full-time closer can reasonably handle. Work it from your own CRM. Suppose the founders’ last fifty qualified opportunities closed at 20 per cent, the average first-year contract is ₹2.4 lakh, and a full-time rep can run five new demos a week. That is about twenty new opportunities a month, four closed deals and roughly ₹9.6 lakh a month of bookings once the rep is fully ramped; a little over ₹1.1 crore a year.

Start markings painted across the lanes of an athletics track. — A new rep starts some way behind the line the founders ran from. The first quota should allow for the ramp. Photograph: KoolShooters · Pexels

Then discount it for reality. A new rep will not close at a founder’s rate in the first months, and Kazanjy notes reps being paid for two quarters while they ramp. Set the first quarter’s quota low, raise it each quarter as the rep’s own data arrives, and keep the first annual quota attainable; he is explicit that unrealistic quotas drive turnover, and a team in which nobody hits target learns that target is fiction. Show candidates the arithmetic before they join: the funnel numbers, the quota and the fact that the founders have hit it.

Base, variable and the five-times rule

Kazanjy’s splits are about half base and half commission for new-business account executives, and about 60/40 or 70/30 for prospecting and account-management roles, where the rep controls less of the outcome. The constraint that ties pay to quota is the cost of sales. Keep total sales cost under about 20 per cent of revenue, and a rep with on-target earnings of $100,000, half of it variable, needs about $500,000 of annual bookings, which sets the commission rate at 10 per cent. In rupees the ratio is the same: a rep on ₹12 lakh of on-target earnings, ₹6 lakh of it variable, carries a ₹60 lakh quota at a 10 per cent commission rate. Check the plan against the customer economics too. David Skok’s SaaS Metrics 2.0 treats the months needed to recover acquisition cost as a strong predictor of a software business, calls profitability anaemic beyond twelve months and notes that many of the best companies recover it in five to seven; a comp plan that keeps cost of sales near a fifth of first-year revenue is how a sales team stays inside that line.

Pay commission from the first rupee booked, not from a threshold, unless you have the data to justify a cliff; Kazanjy observes that missing a goal narrowly and losing the whole payout is demoralising, and he reserves all-or-nothing plans, such as paying nothing below 85 per cent, for mature teams and mostly for account management. Above quota, pay more per rupee, not less. Do not cap commission. A rep with a $40,000 monthly number who sells $60,000 is, in his words, a great problem to have. The figure shows why the arithmetic rewards this: below quota the fixed base makes each rupee of revenue expensive, and above it the company can afford an accelerator and still pay less than 20 per cent for the revenue.

A comp plan is the only instruction every salesperson reads every month. Whatever it pays for is what the company will get.

Paying for the right behaviour

The plan decides behaviour more than any training does, so write it for the behaviour you want. Pay on cash collected, not on signature: Kazanjy pays commission when the money comes in, and on instalment deals pays a share of each instalment as it is collected. In India, where the gap between a signed order and a credited payment can run to months, this one rule turns every rep into a collections officer, which is exactly right. Reward upfront payment: Jason Lemkin’s model, which Kazanjy describes, adds an accelerator of 25 per cent for cash paid upfront, and an annual plan paid in advance shortens payback on every customer.

Decide the hard cases in writing before they happen. If a customer churns in the first three months, is the commission returned? If a customer goes out of business, Kazanjy’s own view is to pay the commission anyway when the company can afford it and not put acts of god on the rep. If a rep discounts to close, does commission fall with the price? It should, or every deal at quarter-end will be discounted. Put the plan in a one-page document that each rep signs each year, state that it is reviewed annually, and keep the offer letter consistent with it; the [employment contracts](/library/employment-contracts-offer-letters-that-hold-up) lesson covers what the letter must say. Then pay commission on a fixed date every month, on time, without exception; nothing destroys a sales team faster than a late incentive.

The monthly sales team review

First working Monday of each month, ninety minutes, founders and every rep. For each rep, on one sheet: conversations held, opportunities created, win rate, bookings, cash collected and attainment against the month’s quota. Compare reps against each other and against the founders’ rates from the CRM; in a class of three, the spread between the best and the worst is the lesson. Read the lost deals aloud with the reason in the buyer’s words. Then change one thing: the script, the qualification rule, the lead source or the territory. At the end of each quarter recompute quota from the new data and raise it if two of three reps beat it. At the end of the second quarter decide, for each rep, to keep, coach or replace, and decide whether to hire the next class. Pay the month’s commission before the review, not after it.

The rupee figures are illustrations; the ratios and splits are from the sources below. Nothing here is legal or tax advice on employment terms.