Building Teams – Don’t Over-Index on Industry Experience (Insights from Jason Lemkin at SaaStr)

Jason Lemkin is the “the Godfather of SaaS” and he knows a great deal about hiring best-in-class A-level talent.

I agree with how Jason Lemkin thinks about building great teams.  In many of his articles he talks about how to hire a VP of Sales or other sales professionals and he suggests to not over-index on industry experience.  I wanted to share this because many companies do the opposite of what Jason suggests and focus on industry experience rather than actual professional expertise or the value and ROI people bring (i.e. industry stuff can be easily learned while professional hands-on selling or sales management experience take many years to learn and to master).

Some of the articles where Jason Lemkin suggests not to over-index for industry experience:

  • When hiring a VP of Sales: “What is much less important: Don’t over-index on domain expertise. This can be learned in a month or two. The skills to build a team at your price point? That takes years to learn.” (link)
  • When hiring for transactional Mid-Market sales (not large enterprise sales): “For highly transactional sales, ignore this advice. Too many leads, too much velocity, for the rolodex to matter. And lack of domain expertise per se — you can pick that up in 60 days, if there is enough support from the rest of the team.” (link)
  • What is much less importantDon’t overindex on domain expertise.”  (link – “What do you look for in a VP of sales?”)

 

Is There Any Correlation Between Industry Experience & Exceeding Your Sales Quota Targets?

In a nutshell – No.  I haven’t seen any data supporting such correlation and haven’t even seen much anecdotal evidence of this.   The important thing is that I don’t know of any meaningful data (numbers don’t lie) from companies showing this correlation especially from those who recruit based on industry experience.  I am curious if they have looked into correlation or causation between industry experience and achieving great performance for the company.  This is why I am sometimes surprised when I see companies over-index on industry background (where is the data stating that this is even useful?).  Basically they just harm their ability to bring in great candidates and miss out on many talented folks – I wrote about how companies miss out and end up under-valuing talent for all the wrong reasons and it’s a self-inflicted wound.

In the past, and in 80%-95% of B2B business service companies (either where I worked or companies which I advised), having industry experience for someone who is a sales professional or is a senior sales executive did not have any meaningful correlation (and certainly no causation) to hitting or exceeding sales goals.  What really matters is the skills and the hands-on expertise in doing the job itself, not the industry knowledge.  Being an effective B2B sales professional or manager or executive is an expertise that transcends verticals or industries in 80%-95% of the cases.

Here is an example. The key skills of a good VP of Sales that truly take years of experience to develop and hone and improve include building great teams, creating a Sales Strategy or design an effective Go-to-Market Strategy or engineer a highly effective Sales Process – and a good VP of Sales can do this equally well in any B2B space – there is no different whether they do it at a company that sells security software or a cloud management platform or a business application.  It’s the same process.

Similarly, if a mid-level Account Executive and sales professional has worked at a B2B SaaS company selling backup software to IT Directors then this same AE can easily use that sales skill to go to a different industry and sell security software to Security Managers. They can just as easily sell Sales BI/Analytics SaaS to the head of Revenue Operations.  It’s the selling skills that matter, not the industry experience. A smart professional can apply these skills anywhere and sell effectively to any B2B decision maker.  The process of selling doesn’t change much except for some nuances which are very easy to quickly pickup and master.

With that said, it’s fair to say that industry experience is an important factor in some niche industries – in many cases it’s important in healthcare, sometimes in financial services (where, for example, you need to have a CFA or CPA). But in 99% of the times in tech, the specific industry experience is “nice to have” but not critical and absolutely necessary.  If you are hiring smart people then they can easily learn about your industry in 1-2 months if not sooner. This is why Warren Buffett looks for intelligent people but not necessarily those with industry experience as shown above.

 

Many are Overlooking Key Characteristics that are Important by Over-Indexing on Industry Experience

When companies over-index on industry, they overlook “between the lines” type Talent and also skills.  Do you know what is much harder to find than industry experience?  Soft skills like leading people, effective communication, building teams, managing teams, EQ, etc.  And also hard skills – just selling effectively, qualifying prospects, or developing sales strategy, or analyzing sales performance data.  It is quite simple to learn about a new type of industry, about the buyer persona and their needs, or the type of new product and how it’s used.  Skills take many years to master and they very much correlate highly to attaining and exceeding sales quota.  But learning about the industry takes very little time to read about, talk to other people and learn about and there is a near-zero correlation to hitting the quota.

 

Is There Real Proven Data and Real Examples That Industry Experience Does Not Matter?

Absolutely.  I offer specific ones below and these are just from my own teams (there are countless examples at other companies).

One great example is Joe Caprio who was on my team at InsightSquared where he was selling Sales Analytics to VPs of Sales but Joe’s prior job was selling uniform/linen cleaning and laundry service for Crown UniformHis prior industry experience was in uniforms and cleaning services selling door to door, not in SaaS or in Analytics.  It doesn’t get much different than that.  He is one of the most talented sales pros in all of SaaS. Absolute dyed in the wool sales pro – a role model for many sales reps in the industry. And today he is a VP of Sales at Chorus.AI.

Another great example is Randy DeHaan – he was selling events and tours for Boston Red Sox.  The industry experience was completely different from BI/Analytics and B2B SaaS.  And guess what, he did exceptionally well in B2B SaaS. Why? Because success had nothing to do with industry experience – but it has everything to do with being a Talent. Randy is one of the best sales professionals.  Both Joe Caprio and Randy were smart, hard-working, consistent, reliable/dependable…very talented professionals.  They were both in the office at 7am on so many days getting prepared, investing a lot of effort, and putting their best foot forward.  This kind of effort and hard work ethic is 10x more important than industry experience. And it correlates to top-tier performance and highest level of success in terms of attaining and exceeding their goals consistently (and this is definitely based on real data from my own team). Today Randy is a Director of Sales at Salsify which is one of the fastest-growing SaaS companies selling to e-commerce (by the way, also a different market and vertical from Randy’s prior job and he is doing great because it’s his skill that matters, not industry experience).

Another example is Joe Knight who was a Defensive Coordinator (Football Coach) at a local college. That’s as “different industry” as you’ll ever get.  In fact most SaaS companies wouldn’t even look at his resume for more than a few seconds. But he is also a dyed in the wool sales pro – real Talent.  Why?  Again, it has nothing to do with industry and everything to do with these factors: a real hard working and dedicated professional, very smart (something a lot of companies don’t identify because they don’t focus on reading “between the lines” but which I do and this was very clear to me from seeing his resume). Joe is also REALLY coachable – he just constantly asked for real feedback to learn from and become better.  Many folks don’t want feedback and don’t like getting feedback but Joe was always the opposite and asked for critique and genuine feedback on his “film reviews” (recorded sales meetings / calls) because he wanted to become the best version of himself. And he was definitely doing just that – becoming better at a fast pace.  BTW, on this last point – that’s called Coachability and it is a great trait in some of the best sales professionals – a critical factor in the best sales professionals out there – Joe Knight showed it right away… Coachability is a great deal more important in people and is correlated to successful performance far more than specific industry experience.  In any case, back to Joe – he is well on the path to becoming a true Sales Professional (a distinction for only the best sales representatives who became true Pros), sales manager, sales director and ultimately VP of Sales – this is already clear and it’s just a matter of time.

I have many other examples but here is another good example. How about Ross Nibur who was actually a chef and an event planner selling services to a totally different market.  He took his skills and used them to be a successful SDR (Sales Development Rep / Outbound Prospecting Rep) and today he is a Director of Revenue at Toast.  He also won an award as the “Top 10 Sales Development Leader” from Inside Sales.

These are not unique examples – these are just the few of the many examples I bring up from people who were on my own team but I have many more like this and I see this all the time.  The problem is 95% of companies in B2B SaaS wouldn’t recruit these highly talented professionals because they are recruiting incorrectly and grading them on the wrong factors (i.e. starting with industry experience which is mostly inconsequential). So if you want to find some of the best people out there – look at their skills, smarts, effort and hard work ethic, commitment, passion, prior success…but don’t over-index on industry experience.

 

What is a More Effective Way to Recruit Talented Sales Executives or Sales Professional?

If you recruit in a way that is open-minded and open up your recruiting funnel and make an effort to actually focus more on people’s talents and skills rather than industry experience then you will find absolutely exceptional and highly talented people sooner than you thin. And will win the precious “time” (i.e. not lose months due to a search which will be very costly especially when you need sales people to close deals).  You also will benefit from finding under-valued Talent and these folks will be very loyal and hard working. In fact some of the best people I had on my team where from different industries.

Here is a better way to recruit talent:

  • identify and recruit Talent (with a capital “T”) or A-players who will fit into your system and culture and will execute well
  • hire smart people who work hard and have integrity (Warren Buffett’s 3 factors for recruiting people)
  • in most cases the industry experience does not matter so hire for the kind of selling expertise that takes years to learn

 

What else? Is your company making the mistake of “over-indexing” on “domain expertise” or industry experience?
 
 


Original is posted at Revenue-Inc.com: Building Teams – Don’t Over-Index on Industry Experience (Insights from Jason Lemkin at SaaStr).