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How Much Equity Should Sales Reps and Leaders Get?

Equity 101 for salespeople

Good Morning! Feeling a little sluggish after the long weekend? Here’s a fun fact to strike up a convo with your coworkers: Between Memorial Day and Labor Day, Americans will consume an estimated 7 billion hot dogs – which is 818 franks every second! That’s a whole lotta dogs. 🌭 

In today’s Follow Up:

  • Equity for sales reps 101 🤑 

  • Sales tip of the day 💡 

  • Sales news around the internet 🗞️ 

  • Sales jobs, job market & a meme 😂 

What You Need to Know About Equity & Sales Jobs Ft. Mike Manzi

This week, we called in a favor from our friend, Mike Manzi

If you’ve ever used TikTok or Instagram, there’s a good chance you’ve seen his face pop up on your feed. 

Mike is a seasoned sales vet who’s served as VP of Sales for multiple enterprises and is the current founder of Official Sales Tips. 

He’s built a following of over 250K followers across his socials, where he goes viral for his sales tips and breakdowns of complicated sales topics. 

So this week, we asked him to teach us about salespeople and equity. 

Let’s dive in…

How much equity should early sales leaders and sales reps expect to get?

  • VP of Sales at a seed: ~1-10%

  • VP of Sales at Series A: .5-1.5%

  • VP of Sales at Series B: .1-.3%

  • VP of Sales at Series C: small amount

  • Sales Rep at seed: ~1-3%

  • Sales Rep at Series A: very small

*Take note - most people who are excited about equity by joining a startup don't realize that the amount of equity they're getting is so small that the company would need to sell for $1B+ to make close to $100K - and on top of that, they're options, not stocks. We'll discuss below…

What type of equity is given to sales reps, what do they mean?

🔥🔥🔥 Common Stock (Amazing) - Like getting a stock on the NASDAQ.
🔥🔥 RSUs (Awesome) - Like getting a stock on the NASDAQ but there are some limitations on when you can sell.
🔥 Options (Typical) - The option to purchase the stock at today's price, even if the market price is higher.

When is equity typically given out to sales reps?

Equity is typically distributed in a 4-year distribution, with a 1-year cliff, which is a fancy way of saying - you get none until the end of your first year. After that, you’ll get 25% distributed over the course of the year, for the remaining years of your distribution schedule. 

How can sales reps actually make money on their equity?

  • Common Stock: However you want. This is just like owning a normal stock.

  • RSU's: However you want, but there may be some limitations on when you can sell. This is like owning a normal stock, with a bit of fine print. 

  • Options: There is an ‘exercise window’ where you're able to ‘exercise’ your options (aka, buy them). Typically, this ends 4 weeks after your employment is over, but you may be able to negotiate a longer exercise period. The longer the exercise period, the better - because you don't have to spend anything and can wait until the stock price is significantly higher than the price at which your stock is purchasable. Otherwise, you need to buy the stock at today's price and cross your fingers that eventually it will be worth more than what you paid for it.

Is equity a part of your compensation package?

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Sales Tip of The Day 💡 

Replace your ‘but’ with ‘and’ when correcting a prospect.

Our solution is currently missing that feature, but it’s on the roadmap to be built this year.
Our solution is currently missing that feature, and it will be ready to use later this year.

Using ‘but’ dismisses the previous statement, while ‘and’ helps give the full picture with two truths.

Sales Around The Web 🗞️ 

🚨 A salesman was recently found guilty of scamming a university out of $3M over a 10-year period.

✍️ The cold emails formula that got a response from Mark Cuban and a Meta executive.

Cool Sales Jobs 💼 

Checking In On The Job Market

Is this how to beat recruiters at their own game? 🤔 

Sales Meme of the Day

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