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Craft Ventures

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✍️ Essay
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The clearest arithmetic anywhere on rep economics: the rule of 10 for quota against base, four months to productivity, draws during ramp, and why teams attain about 70 percent of quota capacity so you must plan over capacity.

Simple Math to Set Up a Sales Team

From Craft Ventures by David Sacks 12 min read

  • Rule of 10: an AE's quota is 10x base salary, and the standard SaaS commission rate is 10 percent of ARR.
  • Pay a 50/50 base to variable split, then accelerate to 15 percent commission past quota.
  • Plan for a 4 month ramp and about 70 percent average team attainment, so carry excess quota capacity.
  • Set a manager's quota at 80 percent of their team's capacity; below 400K new ARR per AE, sales-led may not pencil.
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Answers I have been offered the first sales hire job at a startup. What should I check before I say yes? What should a new rep's first 90 days actually look like? How many reps should I hire next quarter, and in what order? I have been handed a comp plan. How do I work out what I will actually earn? What do OTE, pay mix, accelerator, draw and clawback actually mean? I am a founder writing my first sales comp plan. What is the simplest thing that works? What is a fair quota for my first rep when we have no history to go on? How much should the whole GTM org cost, and how do I know when we are overspending?
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