Korva is a scroll of the internet’s best ideas.
Selling magic breaks the quota model
The quota model
The standard model gives each rep a quota, around 1.2 to 1.5 million in a company's early days, scaling to 2.5 million in enterprise, with a discount taken for attainment. Every financial model gets built from it, and underneath it sits an assumption that everyone implemented without noticing: pushing demand.
When the product sells itself
When a new AI-enabled product lands in front of customers and it is magic, the first one there sells far more than 2 million. Reps at these companies carry 10, 20, or 30 million, and one rep recently reached 50. The quota model still matters somewhat, though it is far from the first-order constraint.
Starting from first principles
Leaders from the previous generation arrived with territory plans, west coast first, then east, then central, and flamed out at scaling AI companies. The fix is to check everything at the door and learn from first principles: what the bottlenecks on delivery are, and what the bottlenecks on demand are. The best salesperson in these companies is the founder, who bridges the jagged edge of the technology to what the customer is capable of.
How does quota capacity planning work?
A company takes its bookings target and divides it by the average quota to see how many reps it needs. It then adjusts for the share of reps who usually reach quota and for the months new hires take to ramp. That adjustment is the discount for attainment. The result feeds hiring plans, budgets, and the forecast that investors see.
Why does early demand outrun sales capacity?
Geoffrey Moore's 1991 book Crossing the Chasm describes early adopters who seek out new technology and buy it before the mainstream does. A product that delivers a big leap draws them in heavily at launch. They need little persuasion, so each rep closes far more than a normal quota assumes. The mainstream market arrives later and has to be won with a more conventional process.
Why do territory plans fail for new products?
Territory plans divide a known list of accounts among reps so they do not overlap. The method suits markets where demand has to be created account by account. When a product pulls in buyers from everywhere, the geographic lines no longer match where the demand is. Reps in empty territories sit idle while others cannot keep up.
More from Invest Like the Best with Patrick O'Shaughnessy
