What are the terms I should offer this person to be fair and keep them interested?
If the former, high commissions are motivating. Anything the rep sells at this point is a sale you wouldn't otherwise have. If you're worried about the "wrong" kind of sale, you can put bounds on what you'll pay commission on, like "nothing below $X dollars" or "nothing if the company doesn't fit the definition of 'good fit'".
If you're looking for a cofounder, then give them a meaningful equity chunk of the company, vested over 4 years.
Sales is hard enough -- don't try to come up with a comp plan that adds a bunch of complexity to a rep's decisionmaking. When a customer is ready to buy, you want in clear in the reps head whether they should push for a longer contract, or a higher per-month rate, or a strategic fit for product development.
What does your company need right now?
And make sure you have a get out of gaol card if they are no good. You don't want some one burning your hottest leads if they can't get over the line.
If you want a cofounding salesperson, offer them a cofounder equity share and responsibility from the start (with a vesting schedule, a cliff, and an expectation of what they should deliver that may include a sales target). If you want a hired gun that gets paid purely on performance, you ought to be in a position to pay them a share of the cash they bring in which is what they really want.
Vest his equity over 4 years with a one-year cliff. This way you have a full year to evaluate if you want him as co-founder/salesperson. If he is not happy to be under this performance-based scheme then that's a huge red flag. After all, you have already proved you can hold your side of the bargain but he has not.
If you are already incorporated then you will have to setup a stock option pool with similar terms.
In terms of fairness of compensation, this depends on the competitive landscape. You should probably try to source a few more potential salespeople to get a feeling of what that landscape looks like.
So I'd try and set your sales guy up for success, get him off to a positive start, and be generous with commission. Agree targets that should be achievable.
If he's amazing, you'll want to agree something attractive to both of you. Possibly involving equity. If he can't sell your stuff, then you'll probably want to try someone else. So you'll need the ability to "undo.
Is the focus of business operations to produce recurring cash flow for the owners or is it to produce capital gains via growth of the underlying equity?
What is the vesting period for your equity?
Sales person psychology:
1. Sales people are always enthusiastic.
2. Commission based sales incentivize closing deals that don't advance a company's general interests.
3. A milestone based contract can help align interests.
Good luck.
Don't let them sell you on vesting based on time - they're not adding value if they're not selling.
never forget that sales people are good at selling things, which includes their own value, whereas traditionally software developers are not.
you may be particularly talented in this area for all i know, but be aware of this.
making reward results based to avoid becoming a victim of their superior ability to convince you they are worth more than they are. commission is a classic approach... its hard to argue with getting paid better if you do good work... but it does incentivise bad work if not done carefully.
... on the other hand, if you get legal advice to draw up paperwork for sharing equity the default position is to make it very difficult to cash in on, so offering equity might be safer... but i'm not sure the recipient will enjoy having to learn the lesson of how difficulty equity can be to turn into cash.
what kind of product is it? do you really need sales? usually its a way to sell more, not sell at all...
all of that said, why not discuss it with them and see what they expect too? that might be an easy way to rule them out or bring them onboard because what they might want might be either completely unrealistic, or undervaluing themselves.
OT: This sentence was exceedingly difficult to parse. Had to read it multiple times and the next sentence to figure out your intent.
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I have more than 15 years of hardcore sales experience across 7 different industries, this includes working on my own startups for 52 months.
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I have mentioned my email address in my profile. I am not sure it is visible to others or not.
I thought it was visible.
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