Does Silicon Valley have a Love/Hate Relationship with Salespeople?
Key takeaways from conversations with over a dozen CEOs of early-stage tech startups
The past two months I’ve been on a journey to choose my next venture facilitated by interviews with numerous CEOs and co-founders at pre-Series A startups and have been struck by a few recurring themes in all of them.
1. First time CEO
3. Minimal to zero sales experience
These leaders all sought consultation from investors and advisors on operations and product but not one had a trusted sales advisor or anyone on their executive team with sales prowess. When I started to think about it, I can only name two successful tech companies that were founded by salespeople: Oracle and Salesforce.
Even the vast, vast majority of VCs and prestigious advisors on boards in Silicon Valley have expertise in product and/or operations but almost never in sales. There are a few outliers like Doug Leone at Sequoia Capital who started his career in enterprise sales at Sun and HP, but he’s the exception — not the rule.
In my experience, I’ve found too many CEOs that 1) don’t understand sales (especially enterprise sales) and/or 2) don’t respect sales or salespeople.
This is not just indicative of early-stage companies. More established companies like Dropbox, Slack, Medallia, GitHub, and Palantir experienced a love/hate relationship with salespeople at one time in their maturation.
Palantir’s CEO, Alex Karp, once went on record to say he’d only hire a sales team if investors forced him to, or if he was “hit by a bus.” He went on to say, “Almost everyone here is an engineer. I’m a Ph.D. in philosophy. We have no salespeople.”
In 2016, Slack CEO Stewart Butterfield stated, “I think we can get away without having a sales team in any kind of traditional way probably forever.”
CEOs like Palantir and Slack promote a paradigm of “build a great product and sales will come” — which is not necessarily true. The right salesforce has the power to accelerate adoption, thwart competitors, and bring a product to market faster.
In a January 2019 Forbes article critiquing Palantir’s sales strategy, contributor Randy Illig points out, “All companies — no matter how great — will need sales people if they want to reach their full potential. Yes, there are rare instances where a product can take off seemingly of its own accord, but that momentum is not sustainable. Business growth is built on high-trust relationships and consultation, things that the best salespeople are built to do.”
What’s ironic about Karp’s statement is that Palantir’s other co-founder, Peter Thiel, preaches the gospel of superior distribution over superior product. Large, complex enterprise software like Palantir won’t be sold through channel partnerships, marketing at conferences, billboards, or Google ads – it will take a solid direct sales distribution channel. Yes, those other tactics will influence the deal, but the ultimate conversion will be attributable to a salesperson.
“Sex and selling are the only two endeavors a human being is expected to execute perfectly the first time without practice.” — Jerry Vass author of Soft Selling in a Hard World
Sales is not easy — especially for new products in new markets and even more difficult for complex enterprise products yet there’s not enough emphasis on honing this skill for product-focused CEOs.
“I didn’t know anything about sales at my first company, but we learned every painstaking detail in action. It took us five years to identify a strong head of sales — after many failed attempts. Now, in my second company, an emphasis on sales is established from day one. The co-founders are doing all sales for now (we’ll be ready to hire an AE soon). This is not atypical — all founders must do the first sales. What is atypical is that we actually know what we are doing now.” — quote from Y Combinator Co-founder
The solution to a product-focused CEO may not be to simply have a sales-focused CEO instead. There are challenges with a solely sales-driven company such as lack of focus on the entire customer lifecycle, lack of focus on product, and the negative consequences of “growth at all costs”.
Yet it’s salespeople who propel a company’s growth after initial traction is gained by a more product-focused sales strategy sold by product-focused co-founders.
Dropbox, Slack, Twilio, Medallia, GitHub, and Palantir have all witnessed impressive growth after building an enterprise sales team. Both Slack and Palantir CEOs did a complete one-eighty on their previous antagonistic comments towards salespeople because they realized they needed salespeople to increase their company’s valuation and become a more attractive IPO. Take a closer look at Twilio. By the end of Q2 of 2017, Twilio decided to build an enterprise sales team. At that time their share price was around $30 per share and by the end of that year, they generated $399M in revenue — an increase of 44% from the year prior. Less than two years later (and with a fully ramped enterprise sales team) the share price hovers around $130 per share with FY18 revenue up 66% to $650M.
Despite these positive results, salespeople don’t have the most overwhelmingly positive reputation and I’ve been seeking to understand why.
In his book, To Sell is Human, author Daniel Pink asked research participants for word associations with “sales” or “selling.” The most common answers?
“In our culture, salespeople have a dubious image: lazy, unorganized, unaccountable, unable to hold a regular job. If you can’t do anything else you can always be a salesperson. Just the opposite is true, the best salespeople are so good and often too far up the ladder that they don’t appear to sell. The best salespeople are trustworthy to a fault, conscientious, and hardworking. Ordinary people don’t understand that sales is a technical transaction. Selling well means listening well. Sales is problem-solving — not hustling.” — Jerry Vass
Perceptions like these are why salespeople have to continuously stand out from the crowd, built trust and credibility with buyers, and overcome the Seller’s Deficit Disorder.
A 2018 CSO Insights Buyer Preferences Study reported only 23% of B2B buyers view salespeople as one of their top 3 resources to solve business problems.
Let’s change the perception of what it means to be a salesperson.
Can we create a new mold of a sales leader and show what’s possible?
Here are my proposed solutions for accomplishing these goals and changing the sales axiom:
- Focus on the full customer lifecycle. The traditional model of sales is to compensate the salesperson for the value of a customer’s first-year contract. Considering the potential lifetime value of a new customer and the high cost of churn, there should be additional incentives based on value creation over time. Let’s consider a scenario where one salesperson closes two deals at the same dollar amount. Customer A closed in six months, became an unhappy customer, asked for a ton of new product features, and churned in year two. Customer B closed in three months, did a case study, renewed and expanded the contract in year two. In today’s sales comp structure, the salesperson gets commissioned the same for both deals. What if we found a way to align comp packages for salespeople around revenue and operation metrics such as time to close, time to value, time to deploy, renewals, up-sells, and NPS?
- Sales training (internally and cross-functionally). We teach salespeople how to sell to different audiences, stakeholders, and influencers. They learn how to sell to technical buyers, economic buyers, executive sponsors, etc, but why not train them on how to use those skills to sell internally within their own company to gain power and influence and build meaningful relationships with cross-functional leaders who propel sales success in product, engineering, marketing, and customer success? Some proposed courses: 1) How to sell a prospect’s feature request to Product 2) How to coach a product-focused CEO when she attends a sales call 3) How to build a strong alliance with Marketing
- Hire non-traditional salespeople. The best salespeople I’ve ever known come from non-traditional backgrounds where they’ve had to overcome adversity at some point in their life. The right salesperson persona for a young startup may not be someone who sold into an existing install base at blue-chip technology companies. I’ve seen stellar salespeople come from backgrounds in engineering, non-profit, and liberal arts.
- Incorporate sales leaders on the executive team to balance and compliment product-focused leaders. This does not mean companies need to hire their first full-time individual contributor salesperson prematurely before clear product/market fit is found. It’s more of a recommendation to find someone on your leadership team, board, or advisory team, that has strong sales experience as an individual contributor and as a manager.
- Re-write the salesperson job description. The best salespeople stand out from their peers because they are empathetic, consultative, and data-driven. Let’s discover those traits in the interview process because it will reap great rewards in the sales process and help build cross-functional credibility within the seller’s organization.
At the beginning of this editorial, I asked a question. Based on one’s experience I can predict the answer. Regardless of the answer, everyone sells something which means there is an opportunity to improve sales skills across the board and have more empathy for the end user (salesperson). As I launch into a new sales leadership role I will challenge myself to implement the above solutions and provide updates when appropriate. Happy selling.