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Why Aren't Salespeople Running Software Companies?

bostinno.streetwise.co

11–20 of 61 posts

Re: Why Aren't Salespeople Running Software Companies?

#11
post #10

Yeah. Well, can all sales people run businesses? Let's start from the basic questions: 1. How do you know X is more difficult than Y technically. How do you trust somebody who says X or Y? Should they sell you the idea because, ya know, you are a sales person? 2. What makes a sales person? Ability to sell a product A? Is selling A different from B? Do you specialize in A? How are you different from somebody who too c…

Answer to q3. Benioff (salesforce.com), Ellison (oracle), heck probably Ballmer as well, he certainly doesn't seem to get how to run product development.

Ellison was a programmer.

Benioff was a programmer too. http://en.wikipedia.org/wiki/Marc_Benioff#Career

Given the position Microsoft was in 2000, when Mr.B took charge, I don't think their position could be much worse.

Re: Why Aren't Salespeople Running Software Companies?

#14
We tried this before, as an industry. It didn't work. There's a reason investors pattern match away from sales people as founder & CEO of a startup. Sales people are often too good at selling themselves and not so good at getting product out the door. Selling ahead of the curve right up until the point you've burned your market with missed ship dates.

Having done both sales (taken product to market leading position from scratch) and development, I am convinced it's easier to add sales leadership to take a sold product to market than to add developers and fix a badly built product that happens to have a good sales leader running the show. IMHO ymmv.

Re: Why Aren't Salespeople Running Software Companies?

#15

Yes, you should launch without a product. Yes, you should get orders. Yes to all of that. But you are missing an important thing. A lot of world changing companies out there started without a business plan, much less a sale. It was about trying to see what could be done with X. Sales people don't get this. Tech is not only about making a quick buck, but about creating new things altogether. Sometimes, those new thing…

A lot of world changing companies out there started without a business plan, much less a sale. It was about trying to see what could be done with X. Sales people don't get this. Tech is not only about making a quick buck, but about creating new things altogether.

There's an interesting anti-pattern I see in business time and time again...it's the company that's run as follows:

1) Start with a successful product (regardless of how it happened to become successful) and put a top-tier MBA guy in charge

2) Slowly fire or alienate all of the engineers who had anything to do with the initially successful product (too expensive!), replace them with more sales guys and/or very cheap and incompetent "maintenance engineers" so abstract engineering vs. cost numbers can show diligent stewardship of the product

2b) Stop innovating entirely

3) Squeeze the product for cash like a vampire trying to squeeze blood from a stone

4) Eventually the product momentum runs out and the sales stop coming in

Making a new product is both hard, and expensive, it's understandable that MBA types want to try and recoup that and make a multiplier on that initial investment. They're allergic to putting huge investments back in for a round 2 of innovation.

It sometimes works (see Oracle), but usually ends up with a failed company being sold off for parts.

Chrysler is a fantastic example, the First Generation 300 (2004) started out as a very popular car, selling over 110,000 copies in it's first year. A bad merger with Daimler-Benz later, Chrysler ended up in MBA-tastic Cerberus's hands in 2007. So what did they do with their almost 4 year old flagship that was selling over 120,000 copies a year? They let it sit for 2 more years. Nothing, no new models, no minor redesigns, no real updates. In 2008 sales were half, then in 2009 almost half again. It wasn't until 2011 that a new model finally came out, and it was a shockingly modest refresh after nearly 8 years and what happened? Sales almost doubled in 2012!

My point is that it's not that hard, a new front end, some cosmetic interior changes and a fancier CD player and if doubled product sales. Why didn't they do that at any time in the preceding few years? They were simply working too hard trying to squeeze blood from stone.

At the risk of being influenced by survivorship bias, Apple under Jobs is the counter argument to this. It's an example of what happens when you ruthlessly pour resources into keeping products fresh. But somehow this lesson seems to escape so many product companies (tech or other industry).

Perhaps a better non-tech example is Coca-cola. Sure it's more or less the same product, but Coke spends extraordinary amounts of money keeping their brand fresh, slight changes in bottle shape, even slighter changes to the logo and packaging, effectively putting a new front-end on their product. It's one of the most valuable brands in the world.

Re: Why Aren't Salespeople Running Software Companies?

#16
post #15

Yes, you should launch without a product. Yes, you should get orders. Yes to all of that. But you are missing an important thing. A lot of world changing companies out there started without a business plan, much less a sale. It was about trying to see what could be done with X. Sales people don't get this. Tech is not only about making a quick buck, but about creating new things altogether. Sometimes, those new thing…

A lot of world changing companies out there started without a business plan, much less a sale. It was about trying to see what could be done with X. Sales people don't get this. Tech is not only about making a quick buck, but about creating new things altogether. There's an interesting anti-pattern I see in business time and time again...it's the company that's run as follows: 1) Start with a successful product (rega…

I reason the style of thinking you describe comes from the 70s/80s when mergers and acquisitions started to take place more and more. It became worse in the 80s (the decade that gave birth to the predator's ball (look it up)). Corporate types don't see products. Neither do they see people. They see quarterly results. Product development takes a back seat, because that costs money. So, they just milk it while it lasts and then blame the next CEO.

But you don't need to run a business like that. Sure, you can be a blood-thirsty profits vampire. Yet still make investments into product development that will allow you to have more blood to suck in the future. I'd say its a balance between profit/innovation, which Jobs became good at.

Re: Why Aren't Salespeople Running Software Companies?

#17

> I'm brand new to the software industry and while I know nothing about software... Then why are you giving advice on how to run software companies?

agreed. It is pretty silly. When one has no experience, one should be willing to do a little more research first and talk to a few more experienced folks. There are many sales & marketing driven software companies. Sometimes it works, sometimes it is a disaster. Personally, I think that the trick is usually about finding the right balance between business, design and engineering, not putting one on a pedestal above the rest.

Re: Why Aren't Salespeople Running Software Companies?

#18
Seriously, this article made front page from someone who openly admits he is not from the software industry yet questions how it operates?

Simply put: Software companies aren't all the same. Some sell to consumers (B2C), others to businesses (B2B), and others sell to both.

You won't find many B2C companies with sales people, due to the cost of sale outweighing the return from one customer. Oppositely you won't find many B2B companies without them, as cost of sale is built into the price (read up on high vs low involvement products if you need to know more). B2C's typically rely on marketers instead, as they can help spread a message across a broader prospect base, keeping the cost of sale down.

Sales is a set of activities a person does to compel someone else to sign a contract. So all those B2B startups probably do have sales people (eg people selling), just that they may be the founders or developers helping prospects with the hope of them converting to customers.

Finally, the reason salespeople aren't running software companies? Depends what you mean - no they may not be founders. But once a company is growing, and trying to grow faster - show me which company doesn't seek advice from their sales and/or marketers on how this should be achieved.

Re: Why Aren't Salespeople Running Software Companies?

#19
post #10

Earlier quoted context omitted.

Answer to q3. Benioff (salesforce.com), Ellison (oracle), heck probably Ballmer as well, he certainly doesn't seem to get how to run product development.

Ellison was a programmer. Benioff was a programmer too. http://en.wikipedia.org/wiki/Marc_Benioff#Career Given the position Microsoft was in 2000, when Mr.B took charge, I don't think their position could be much worse.

True, but I expect all three spend a fair portion of their time selling nowadays. Sales is a collection of activities, not necessarily a full time role.

Re: Why Aren't Salespeople Running Software Companies?

#20
post #10

Earlier quoted context omitted.

Answer to q3. Benioff (salesforce.com), Ellison (oracle), heck probably Ballmer as well, he certainly doesn't seem to get how to run product development.

Ellison was a programmer. Benioff was a programmer too. http://en.wikipedia.org/wiki/Marc_Benioff#Career Given the position Microsoft was in 2000, when Mr.B took charge, I don't think their position could be much worse.

And agree with your comment about Mr B, probably could have found a better example :)
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