Live data from Hacker News

Why Must You Pay Sales People Commissions?

a16z.com

151–160 of 327 posts

Re: Why Must You Pay Sales People Commissions?

#151
post #25

Earlier quoted context omitted.

At the end of the day, a salesperson not making quota is going to be fired. The best salesperson in the world could maybe buy themselves an extra year, at best. But eventually, if they're so great, where are the numbers? And their next job search isn't gonna look so great. They can't solve a problem on a whiteboard to make up for the fact that their prior business was a bad fit for the market, or whatever. A salesper…

Do bad engineers not get fired?

Very rarely, in my experience. The only dev I've worked directly with that was fired over job performance was first fired when he deleted the entire contents of the corporate IMAP server for a dozen or so people without having verified the most recent backups were up to date and working. We didn't lose enough for it to cause a lasting problem, but it was what finally demonstrated to the CEO that he was careless enough for us to fire.

His code was atrocious, but we'd put up with that until the IMAP incident because getting the CEO to understand that his code was bad enough for him to actually be a net loss in performance for the team didn't work until we had to scramble to recover what we could of the corporate e-mail.

Last I saw he was a senior developer somewhere more prestigious than the position he was fired from. Maybe he's improved. Or maybe he's just managing to stay above the threshold they'd fire him for.

A lot of bad developers just learn to fly sufficiently under the radar and hunker down and accept that they probably won't get many raises until they move jobs and can point to X years of service in company Y, aided by lack of willingness at many companies to stick their neck out when it comes to giving bad references (a lot of places I've worked, HR policy has been clear that we were only allowed to confirm dates of employment).

Re: Why Must You Pay Sales People Commissions?

#152
> I guarantee your sales people never sell enterprise software for fun.

A funny line, yet his "sales people" are really consultative problem solvers. Such people probably would apply their skills in areas such as community projects (e.g. sporting clubs, hobby/user groups, scouts, school, church), politics (e.g. local councils) and charities... for free.

These probably bear about the same relation to selling enterprise software as an engineer's side projects have to making enterprise software.

Re: Why Must You Pay Sales People Commissions?

#153
Here's something that's only touched upon:

Sales people can vary a lot in the amount of money they bring in, and the variance isn't necessarily explicable by things in their CV. In other words a guy can talk a good talk as well as have a positive record, but when you drop them into your org, you're taking a chance on whether they manage to get anything done. (Which is true for devs as well, but people tend to think -wrongly- they know how to identify devs.)

So paying them on commission is necessary because if they fail you want them out and you cannot afford to pay them anyway. If they do well they share in some of the upside from the uncertainty crystallising to positive.

Re: Why Must You Pay Sales People Commissions?

#155
post #101

I suspect that developers are not so much upset at salespeople getting commission, but rather why they get paid so much compared to developers. Personally I don't buy that sales skills are so much more difficult to find or are in higher demand than software development skills. Some of the difference in equity certainly has to do with the higher risk of getting fired for poor performance in sales. But beyond that it's…

Sure we like what we do but in the end of the day the engineers wake up and commute to the office to earn money for their services. Given FU money upfront, many would still code for fun of course, but unlikely the same kind of corp CRUD app or Uber for pets or cloud staging scripts, year after year as on the job.

There's no reason to envy sales people being "paid so much" anyway. For every high earner there's a dozen who are living fairly stressful, very unstable lower income life. It is a very competitive line of work, directly reflecting the competitive nature of market economy - from which many of engineers are blissfully shielded.

Re: Why Must You Pay Sales People Commissions?

#156

Earlier quoted context omitted.

> The problem is not that it's hard to measure. The people is that teachers actually have very little ability to make a marginal impact on their students though their performance, except at the very tail ends of the distribution. That's essentially true for most sales people and traders as well. There are VERY heavy tails -- that one guy at the car dealership who sells 3x as much as his peers, or the trader at Citade…

> That's essentially true for most sales people and traders as well. It's definitely not true in most sales positions, particularly the ones that are highly commissions-based. > But imagine how the teaching profession would change if 1) the gains could be accurately measured and 2) we assigned payment or prestige to teachers based on (1). We can, and we do. The fact is: the gains just aren't that large. If you want t…

That's right, we need more administrative staff, and laptops and iPads for all children. That should fix the problems in education.

Re: Why Must You Pay Sales People Commissions?

#157
post #117

Earlier quoted context omitted.

You're not going to sell to large businesses without salespeople. A $10/month product? Sure. But when you're selling a $10,000/month product, you need salespeople.

What about AWS ? I often see spend 10k+ Without much of a conversation with salespeople. But this is probably the exception rather then the rule. And of course there is high touch to grow accounts after they reach certain threasholds.

A huge portion of the small to mid-sized clients I have which end up using AWS do so because they've been approached by sales people handing out free credits like candy. Often it short-circuits cost/benefit evaluations completely.

But AWS also often start as a $10/month product, and then one more, and one more. I think that's a huge portion of their success - it's easy to ramp up the cost slow enough and in small enough steps to not trigger any major approvals until it's "too late". People usually move off AWS first when if it gets to be enough of a cost pain-point to make higher ups take notice.

Re: Why Must You Pay Sales People Commissions?

#158
post #5

I like how he inadvertently admits that engineers are compensated less well in part because they mistake their jobs for something fun they'd do anyway.

You make it sound like engineers are the odd ones out, when in fact they're the norm and sales work is the weird one. Apart from some hospitality jobs and other tipping work, most permanent jobs have a set rate per hour. From the janitor to the financial controller, almost everyone knows exactly what they're going to take home next month.

Re: Why Must You Pay Sales People Commissions?

#159

I wonder what an org would look like where engineers got compensated as well as salespeople--as a percentage of sales, where if you made a great product that sold like gangbusters, you got showered with money, but if it doesn't sell you get very little or fired. I bet at the very least the products would look very, very different.

You might be onto something. Paying devs this way could stop the rewrite in new the js framework flavor of the month over and over, and instead put focus on adding features and fixing bugs.

Re: Why Must You Pay Sales People Commissions?

#160
post #101

I suspect that developers are not so much upset at salespeople getting commission, but rather why they get paid so much compared to developers. Personally I don't buy that sales skills are so much more difficult to find or are in higher demand than software development skills. Some of the difference in equity certainly has to do with the higher risk of getting fired for poor performance in sales. But beyond that it's…

    > I don't buy that sales
    > skills are so much more 
    > difficult to find or are in 
    > higher demand than software 
    > development skills
Sure, and sales people don't understand why the entire engineering function of the company can't be done on eLance for $10/hr.

We can talk about 10x developers all we like, but if you sit in a sales meeting of many companies you'll find there are 10x sales people whose presence is easily measured.

Post reply on HN