Counterintuitively, Peets argues that very low sales team attrition (e.g., 2%) is a red flag indicating a lack of accountability. For a scaling company, he models 25% annual attrition, comprising performance-based terminations (~10%), promotions, and voluntary departures, as a sign of a healthy, high-performance environment.

Founders often hire their first sales leader to solve the problem of selling, which they haven't yet cracked. This role requires an entrepreneurial "renaissance rep" to discover the sales motion, not someone with a big-company resume to simply execute a known playbook. This mismatch in expectations is a primary cause of high turnover.

When motivated reps must seek coaching outside their company, it's a clear indicator of dissatisfaction. These growth-oriented individuals are signaling their needs aren't being met and will likely leave for an organization that invests in them.

More devastating than financial pressure, the emotional toll of employees visibly losing belief in the founder's vision is the most painful part of a startup downturn. This erosion of trust is a critical, yet often undiscussed, leadership challenge.

Beyond metrics, a key sign your startup is failing is when the industry ecosystem subtly exiles you. The founder noted his calendar emptying, logos being removed from partner sites, and being ignored at events as clear signals of a downturn.

When a company has a highly effective sales team, it can consistently hit revenue targets despite having a weak or nonexistent product strategy. This success masks underlying issues like the lack of a clear vision or a reactive roadmap. The deep-seated problems only become apparent when sales inevitably get tough.

When a sales leader consistently fails to attract A-players, it's a vote of no confidence from the talent market. Top performers are signaling they don't believe that leader can advance their careers, which is a major red flag about the leader's own capabilities and future success.

Technical founders often fall into the 'Field of Dreams' trap, assuming a great product will attract users organically. This is dangerous because when organic growth inevitably slows, the company is left without the necessary sales machinery to compete and survive.

Many of the smartest founders and best companies ultimately fail due to the leader's lack of emotional intelligence, humility, and ability to manage people. They obsess over product and market fit but neglect the human dynamics and talent retention that actually sustain a company.