Interesting last comment (from November 2016) to the original article: " Important Update * I am currently employed at Pluralsight, and I feel obligated to point out that the author of this article, our CEO, no longer believes or stands behind any of the content in this article. Pluralsight does not operate under the Deming philosophy. As of January 2017, Pluralsight will be implementing sales commissions again. We h…
I'm confused why you think the old Pluralsight comment is relevant to this article: 1) The author Ben Horowitz is a VC and not the CEO of Pluralsight. 2) The article explains the psychology & incentives for sales commissions instead of advising companies to pay their salespeople zero commissions.
I have feeling sales people have too much leverage in general. Almost every company I worked for had a sales CEO. God, they are software companies! All the successful software companies have engineers as CEOs...
Engineering is about providing a tool/service that fulfills a customer need. But in the end it is not about making customers happy, as most engineering focussed blog posts would suggest. In the end it's about getting this very rare ressource called money in amounts big enough to pay your regular costs (for instance your engineer) while maybe even making a profit.
In some regards the battle for money and solving customer problems are interdependendent and can happen together by coincidence, but they are not necessarily connected. For instance a few months ago I was forced to pay a four digit lawyer bill (could've been bigger) in exchange for the lawyer actually telling me face to face he's not willing to work for me, after signing the contracts. Still can't do much about it.
What the sales people provide as value is a high spirit of competition for money, together with an acceptance for how immoral and shitty this world is. And these two skills are also valuable for climbing up the Ladder. The desire to live in a comfortable fantasy world of people helping each other all the time is not good enough. Therefore most of the CEOs are managers or sales people and not engineers.
And your companies, while maybe being shitty in the engineering department, may have still made more money than some engineering lead corp.
Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…
This is pretty much spot on, they get a commission because it is easy to work out, and has the added bonus of an easy to calculate monetary incentive.
> Unfortunately the effects of a single teacher are so noisy and indirect that it's basically impossible to measure their performance. The lack of firm data is why the debate about teacher compensation is so fraught. 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 e…
That's a myth. The real problem is that the average teacher (relative performance) is so far away from being close to maximally performant (as proved in studies which rigourously control teacher behaviour) that the impact of variation about that mean is swamped by environmental factors. People conclude that since swapping teachers doesn't make an appreciable difference, teacher performance can't make a difference. Wh…
I might become a teacher and I don't want to be a bad one. I want to be exceptionally good. Do you have any suggestions?
CEOs tell everyone if you want great CEOs you gotta pay them. If you wanna great salespeople you gotta pay them. You want great devs. You should put in a ping pong table and give out free soda. The myth that great developers aren't interested in compensation is terrible for our collective pay.
You don't see CEO's being CEO's in their free time. Nor do you see sales people selling stuff just for the fun of it. With open source, developers will spend time and effort building very valuable stuff for free. This perpetuates the perception that programmers like programming so much they would do it as long as their living expenses are met. I honestly think open source has depressed the wages of programmers. Linux…
I do see sales people doing sales in their free time, though. The best ones in my company always seem to be at parties and events with potential clients. They make it look fun!
Define bad. What metric do you use? Sales people have a single objective metric - sales.
"What metric do you use?"
The key difference between good and bad engineers is that good ones deliver the product/finishes the projects (add bonus points if on time) and bad ones don't. Quality makes much less business sense and is usually only important to the engineer himself and his peers than managers that pay his wage. That's especially true in current "move fast and break things" environment. I have seen a fair share of bad engineers (by this definition) fired, even though they had decent technical skills.
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.
I reckon it depends on the degree of customization required for the solution.
You can sign up and AWS without any customization. Even if you spend $10k/month on AWS, you don't really need to talk to AWS to create a custom deployment (from what little I know of AWS - might be wrong).
But if you're talking about a solution that requires customization, or if you want volume discounts, you will want to speak to a salesperson.
A couple of things I learned in a career in sales and engineering:
1. Salesmen make most of their money pushing and closing on a hot product with a true advantage. This is easy big money, and it's a lot lot of fun. During this mode, when they come to town, they screw the secretaries in the marketing department (back then.). This mode can't last; market saturation and the competition intervene. The company is wasting a lot of money during this period on commissions, but the good times can build some loyalty in the sales force, but not much. Top salespeople leaving for the competition when this period ends is common. During this period, the sales manager should fire at least one salesperson who is above quota, but who is slacking off and not making the one extra call. That salesperson doesn't get it, and a rookie with a good understanding of the sales material can do great in this environment, and for cheaper.
2. Sales greatness is measured by stolen sales. By this, I mean that if looked at objectively, better specs/price, or historically, customer is used to buying from company, in many sales situations, one company starts out with an advantage. A great salesperson can reverse that advantage, and in doing so, outcompete his counterpart. THIS is why you pay a commission.
3. A salesperson is different from anyone else in the organization. He has to look the customer in the eye and ask for the order. And deal successfully with what follows. The people in the Apple Store are not salespersons, and are not paid as such. Imagine: 737 vs A320. Capiche?
4. Salespeople have contempt for engineers, whose heroics make them rich. Bad salespeople don't hide this effectively, and get fired.
5. Good salespeople know: "The customer is the star." Not his product, not his company, and not him.
Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…
As an engineer, the way you get paid for the value you create is by starting a company. In fact, that's the way you do it in pretty much every profession. The only difference between the guy who owns a successful Veterinary practice and the guy working as an underpaid veterinarian is that one of them went out and leased some office space.
> The only difference between the guy who owns a successful Veterinary practice and the guy working as an underpaid veterinarian is that one of them went out and leased some office space.
I understand the point you're attempting to make but the guy who owns the has done much, much more than simply lease an office.
Many business founders put their life savings on the line. Those who don't have that luxury ramp up thousands of dollars of personal debt.
On top of that they work every waking hour. Time is a precious commodity and cannot be replaced, so risking so much of it to enjoy the slim chance of being a successful business owner is not something most people care to risk.
> the sales person knows exactly how much money they bring in I agree this is the key factor. Any job where a person can argue a clear, direct, measurable link between their work and profit is a job that can be paid based on financial results. Other jobs where you see this: financial traders, consultants with direct client contact. To take the other extreme, look at teachers. They have the potential to generate huge…
I'll just put one citation into this discussion. Raj Chetty and his collaborators produce amazing research. I attended a talk when he visited New Zealand a few years ago. In this paper he's attempting to address the dream of measuring teacher value, by measuring changes in test scores against changes in lifetime income. Yes there are other ways of measuring teacher "value" too, but income changes are relevant to this…
250k lifetime? So he should get another $6k.
Teachers and engineers don't work for money. And there are often bad consequences for people who "don't work for money."
I worked in sales so I could afford to be an engineer later. There were plenty of ex-teachers in sales. They did well.