
Ask HN: How do I share equity with a sales partner? - nns
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&#x27;ve met a really enthusiastic sales rep that I can see myself working with. But we haven&#x27;t made a sale yet.<p>What are the terms I should offer this person to be fair and keep them interested?
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trjordan
Are you looking for a sales rep or a cofounder?

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'".

If you're looking for a cofounder, then give them a meaningful equity chunk of
the company, vested over 4 years.

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.

What does your company need right now?

~~~
Gustomaximus
An additional thought. Given the sales guy is an unknown (enthusiasm means
little against results) why not put equity into sales results. E.g. 1% equity
against every $10k in sales up to XX% + some level of reduced commission if
this seems fair to include. Also you can put a minimum sales in so if he turns
to a dud or loses interest quickly you don't have some random with a tiny
share.

And make sure you have a get out of gaol card if they are no good. You don't
want some one burning your hottest leads if they can't get over the line.

~~~
notahacker
This sounds like it's offering salespeople the worst of both worlds: they have
the cofounder's risk that the equity is worthless unless they do everything in
their power to help the company succeed for as long as it takes, and yet
they're not being treated like a cofounder in terms of share of equity and
influence at the start. And the people that want to share in the growth of a
company they've helped run and the people that choose to work commission-only
roles because they like the autonomy and are confident they earn more being
paid on performance tend to be different people.

If you want a cofounding salesperson, offer them a cofounder equity share and
responsibility from the start (with a vesting schedule, a cliff, and an
expectation of what they should deliver that may include a sales target). If
you want a hired gun that gets paid purely on performance, you ought to be in
a position to pay them a share of the cash they bring in which is what they
really want.

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katpas
The best thing I've ever read on coming up with a sales commission structure
is this article by Lars Dalgaard > [http://a16z.com/2015/07/23/sales-
compensation-beware-you-get...](http://a16z.com/2015/07/23/sales-compensation-
beware-you-get-what-you-ask-for/)

~~~
galtwho
Some valuable lessons there from a Sales perspective

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cynusx
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.

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.

If you are already incorporated then you will have to setup a stock option
pool with similar terms.

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.

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tobinharris
Whatever you decide will probably be wrong.

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.

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.

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brudgers
What is the legal structure of the company?

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?

What is the vesting period for your equity?

Sales person psychology:

1\. Sales people are always enthusiastic.

2\. Commission based sales incentivize closing deals that don't advance a
company's general interests.

3\. A milestone based contract can help align interests.

Good luck.

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rrival
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.

Don't let them sell you on vesting based on time - they're not adding value if
they're not selling.

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jheriko
you should be vary careful.

never forget that sales people are good at selling things, which includes
their own value, whereas traditionally software developers are not.

you may be particularly talented in this area for all i know, but be aware of
this.

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.

... 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.

what kind of product is it? do you really need sales? usually its a way to
sell more, not sell at all...

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.

~~~
kkoomi
> making reward results based to avoid becoming a victim of their superior
> ability to convince you they are worth more than they are.

OT: This sentence was exceedingly difficult to parse. Had to read it multiple
times and the next sentence to figure out your intent.

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adamqureshi
10% commission for the first sale he gets you. SEE what happens after that.

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katpas
A16z have just released a podcast on this exactly
>[https://overcast.fm/+BlzEI52II](https://overcast.fm/+BlzEI52II)

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TheRealmccoy
Hello !

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.

I have more than 15 years of hardcore sales experience across 7 different
industries, this includes working on my own startups for 52 months.

cheers!

~~~
sharemywin
should put contact info in profile.

~~~
TheRealmccoy
hi !

I have mentioned my email address in my profile. I am not sure it is visible
to others or not.

I thought it was visible.

sorry for the trouble !

i can be reached at realmccoy2k2AtGmailDotCom

cheers !

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Spooky23
Just give him money. An entitled salesdude is a problem.

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sharemywin
don't do anything until 3-6 months of constant sales.

