Never Waste a Crisis: Airtable's Brian Hagen (1)

With continued uncertainty in the macro environment, companies have been scrambling to cut costs and preserve runway. Layoffs over the last two years are growing at a steady rate as shown by the Layoffs.FYI exhibit below. 
However, for early-stage startups, hitting their next milestones often translates to hitting sales targets while maintaining/increasing margins. So how do companies manage to achieve these targets while simultaneously trimming down their teams? 

However, for early-stage startups, hitting their next milestones often translates to hitting sales targets while maintaining/increasing margins. So how do companies manage to achieve these targets while simultaneously trimming down their teams? 

We interviewed Ensemble Advisor, Brian Hagen, the Head of Sales at Airtable for his insight on ways to best leverage your sales team during an economic downturn. Brian was formerly on the sales teams at Google, Twitter, Next Door, and Dosh and is leveraging his experience selling through multiple cycles to position Airtable to emerge from the current economic uncertainty as the market leader.

Step 1: Evaluate your Existing Sales Force

Do you have advice for how founders should be allocating resources to their sales teams during a downturn?

While it’s always difficult to navigate a downturn, we learned a lot from COVID that is applicable to the current macro environment. In the early stages of the pandemic, uncertainty drove some companies to over-rotate, and unfortunately are still paying for it to this day. 

As with any downturn, founders/leaders feel the pressure to reduce discretionary spending. This is a good thing; however, when it comes to sales, you don’t want to fall victim to short-term thinking. The old playbook is to update your financial model with more conservative projections, and to trim sales team headcount to reflect the lower revenue projections. 

However, I would encourage founders to take a larger, more holistic view that will help you get to the “why.” 

• It’s expensive to hire and ramp up good sales people. For example, if you reduce sales headcount by 20% to reflect your financial model, a year from now when you believe that sales are going to pick back up, all sales driven organizations are going to need that 20% of headcount back. You will need to tack on another 6-9 months to find and train those 20% of sales people you cut. And that’s just to get back to full capacity. 
• It’s also going to be a tight talent market when the economy stabilizes, and your competitors will be ramping their Sales teams back up as well. In this scenario, you run the risk that the people you hire won’t produce the same output, so it puts you even further behind. Hiring and ramping up a salesperson that churns out of the organization is the most costly thing you can do.  

If you pull back too much to position your business for a 6-12 month downturn, you could set yourself back from achieving your initial milestones for as long as two years. Nobody knows what’s going to happen in this environment, so while it's best to take a conservative approach, don’t over rotate. If you trim several team members, especially key players, the time for recovery may put you at a competitive disadvantage. 

Step 2: Evaluate the Information and Talent Caliber You Have Today

What’s your advice on how founders can address necessary sales team trimming?

A downturn provides a unique opportunity to evaluate individual and team performance. We can use this time to up-skill talent in both the individual and the team. 

We know that we will eventually come out of the recession. We don’t know when, so it’s important to stage-gate decisions and not try to solve all problems within the first 6 months. Maybe you’re comfortable with a little less sales efficiency per sales head for the first 6 months, and if you get to the end of the first 6 months with no end in sight, then maybe you make more cuts vs. saying “we’re going to let go of 40% of the sales force.” A downturn presents a unique opportunity to retain top talent and up-level the overall talent of the team. 

Retention: First, identify the “A” players. People are looking for stability and this is a good time to reassure your “A” players, so create an intentional plan to take care of them. These top performers will be the ones that set the culture of the team and are much more valuable than the revenue they carry. When headwinds are strong, it's hard for them to be as efficient as they might be in a thriving economy. Maybe instead of $1M per year, they now bring in $800K. Perhaps these “A” players could benefit from quota relief since their customers are unable to purchase as before. This will help release some of the pressure while helping to shape and inspire the culture of the team. Also, when it’s time to hire again, the “A” players are going to be referring their networks in and therefore, are much more valuable than the revenue they bring in today.

Up-leveling: The market is also going to be full of really talented sales people affected by layoffs that you could use as an opportunity to go from 50% “A” players to 100%. If you can, you should be more aggressive here. 

How do you identify your “B” and “C” players?

We use a straightforward Skill / Will matrix that enables us to make more objective decisions.

This matrix allows for a more bottom-up approach to evaluating talent and also facilitates better decision-making. 

In part two of our Advisor Spotlight with Brian Hagen, he sheds light on how to manage risk during a downturn as well as when and how to pivot your sales strategy. Stay tuned!

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