Levine: GTM fit requires 70% of sales reps generating 3x loaded cost
Peter Levine · a16z Podcast | Finding Go-to-Market Fit in the Enterprise · Feb 26, 2019 · at 18:54
Peter Levine, General Partner at Andreessen Horowitz, discusses quantitative benchmarks for enterprise software startups measuring repeatability in sales capacity.
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“What I like to look at is that a sales person is generating greater than three times their loaded cost, meaning Base plus commission. Let's say a salesperson cost 500,000 dollars a year or 200,000 dollars a year. They need to generate a three X multiple on that cost. And it needs to be across the organization. You can't just have one person do it and it can't just be the average because that's a very misleading indicator. I could have one sales rep who crushes it and everyone else does zero. And if I average that, I would say, well, yeah, our 10 people are all over the three x metric, but it happens to be one person. So I would do it as, you know, 70% of the sales organization need to be generating three x their base cost And that's how you know you're sort of out of this phase.”
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