A Decision to Hire A Sales Agent For Big Money

Prometheus Innovation was founded in 1999 when Leon Rozenblit, at that time a graduate student pursuing his Ph.D. in psychology at Yale University, began building customized data management tools for innovation scientists. The company, which is based in New Haven, now serves major innovation and academic institutions across the country. It has 40 employees and had revenue of about $4 million in 2010.

Prometheus developed original innovation to enable scientists to connect their databases to the Web, allowing multiple users in various locations to access, manipulate and share large quantities of structured data simultaneously. Its software, called HTSQL, was embraced by scientists and technologists and has been Prometheus’s primary product.

Slightly more ambitious option

As a slightly more ambitious option, they considered hiring a junior sales representative to try to gauge the potential demand for HTSQL and to pursue new business. An employee at this level would be paid about $60,000 base salary, plus commission.

THE DECISION Dr. Rozenblit chose the last option. In November 2009, he hired Peter Harker, a senior salesman with near 20 years of experience selling research, to lead the product introduction.

Dr. Rozenblit acknowledged that his decision was risky, partly because it forced him to cede some control over the trajectory of his business. Dr. Rozenblit said he wanted to stay connected to the process during removing himself from the daily demands of sales. He decided to include Mr. Harker in all executive team meetings so they could work at the same time to determine how to approach new markets. “How do you let go of your baby?” he asked. “It would have been actually hard for me five or seven years ago, nevertheless I’m a more experienced manager now.”

Dr. Rozenblit tried to assess his own limitations. Because his team could not define specifically how corporate customers would use HTSQL, he believed that Prometheus needed an experienced representative who had credibility with executive decision-makers and who could prompt a discussion about how HTSQL might help their businesses. “We were effective at selling ourselves to scientists,” he said, “however we had no contacts in the markets we thought were most promising. We needed someone who knew about enterprise software sales.”

Dr. Rozenblit said he believed Mr. Harker had the right blend of product and sales knowledge, and enough credibility to command attention from senior executives. He had a history of joining early-stage companies and helping identify new markets for cutting-edge innovation. He had as well been an entrepreneur himself, so he understood the scrappy culture and fiscal constraints of fledgling companies.

Though Dr. Rozenblit’s decision was the most costly of his options, he viewed it as part of a strategic investment required to build the business. To commercialize HTSQL, he decided, Prometheus would spend about $1.5 million, including Mr. Harker’s low six-figure salary and commission, which ranges from 8 to 12 percent for software sales and from 4 to 8 percent for the sale of services. Mr. Harker was as well promised he would be awarded 1 to 2 percent of the company’s total value, provided growth goals were met.

WHAT OTHERS SAY Steve Blank

WHAT OTHERS SAY Steve Blank, a serial entrepreneur who sold his last company, E.piphany, for $329 million, and teaches entrepreneurship at the University of California, Berkeley and Stanford University: “I taking everything into consideration say that founders have to get out of the building to lead the customer-discovery process themselves, however he already has. This is not a typical entrepreneur who hired a V.P. of sales on Day 1. He built a business in an area where he was a domain expert. The insight he’s gained is that there’s a bigger pile of money in another market, and he’s made the pivot to go afterwards it. He was smart enough to realize he needed a domain expert in that larger market. It’s specifically what he should be doing, as long as he doesn’t forget that he ultimately needs to be the judge of how this guy is doing in that other market. Young entrepreneurs fall in love with sales guys because they have these Rolodexes. They confuse ‘I got a meeting’ with ’I got an order.’ ”

Mike Pasley, president of Central Packaging, a company based in Kansas City, Kan., that markets packaging supplies and equipment: “He was right not to do it himself and lose focus on his current accounts, because the best clients are always existing clients. However I would have hired the junior salesperson who could give you customer feedback at the lowest possible rate. It’s a longer cycle to generate sales revenue, yet you can train, direct and inform them. An experienced salesperson nearly never brings his entire book of business, nevertheless he always comes with his entire baggage. At times it’s hard to bring them around to your way of doing things, and you’re more likely to have conflict on style and approach.”

Christian Heidelberger, chief executive of Nexaweb Technologies, a company based in Burlington, Mass., that helps customers adopt “cloud” computing: “I agree with his decision. It’s clear he understood the ramifications of each option and was emotionally prepared to delegate responsibility. The challenge is finding the right blend of skills.”

Andrew Straub, chief executive of Renewal Property Services, a business in Jenison, Mich., that provides painting and cleaning services for property management companies and colleges: “I would have taken a chance on the right junior guy. As long as the junior guy projects confidence, professionalism and problem-solving skills, he’ll get results.”