In the run-up to its IPO, Snowflake slowed hiring to optimize for profitability. This caused the sales team to focus on easier upsells from existing accounts (with 177% net retention) instead of new business. As a result, they neglected new logo acquisition for two years, hurting long-term growth.
Sales reps at market leaders often succeed due to brand strength and inbound leads, not individual skill. Instead, recruit talent who proved they could win at the #3 company in a tough market. They possess the grit and creativity needed for an early-stage startup without a playbook.
When a company consistently misses sales goals, the root cause may not be the sales strategy but a failure in the hiring pipeline. A high employee churn rate combined with an inefficient screening process starves the sales team of the necessary manpower to hit its targets.
The true indicator of Product-Market Fit isn't how fast you can sign up new users, but how effectively you can retain them. High growth with high churn is a false signal that leads to a plateau, not compounding growth.
In environments flush with venture capital, sales leaders developed a habit of 'throwing people at the problem' rather than strategically recruiting. This laziness led to hiring mediocre talent ('Cs and Ds'), burning through capital, and creating inefficient sales organizations that struggled when the market tightened.
Don't hire more reps until your current team hits its productivity target (e.g., generating 3x their OTE). Scaling headcount before proving the unit economics of your sales motion is a recipe for inefficient growth, missed forecasts, and a bloated cost structure.
Where the SDR/BDR team reports has significant cultural and career-pathing consequences. When Snowflake moved SDRs under marketing, they began aspiring to be marketers, not salespeople. This created a hiring bottleneck for the sales organization, which needed that talent pipeline to fuel its growth.
While founder-led sales are critical, StackAI believes they waited too long to hire their first salesperson. Bringing in help earlier, around $500K ARR, would have accelerated their ability to test and refine their go-to-market strategy much faster.
Chris Degnan got rid of the Customer Success function at Snowflake because he wasn't willing to give the "B team" access to his "A accounts." He made the sales team responsible for the entire customer lifecycle, including upsells and renewals, to ensure top talent handled high-stakes competitive situations.
Small companies often overload their first salesperson with both new logo acquisition and existing account management. This is a trap. Prospecting will always lose out to servicing known customers. Plan for account continuity early to protect your growth engine, even before you can afford a second hire.
Many founders believe growing top-line revenue will solve their bottom-line profit issues. However, if the underlying business model is unprofitable, scaling revenue simply scales the losses. The focus should be on fixing profitability at the current size before pursuing growth.