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Getting Sales right is VERY tough. Having the right Sales culture that is consistent with the rest of the company is vital. The aggression that Zenefits tried

Getting Sales right is VERY tough. Having the right Sales culture that is consistent with the rest of the company is vital. The aggression that Zenefits tried to copy was very similar to Oracle. If you exceed your quota at Oracle, you are paid much better than any Engineer. But if you miss your quota, you're fired. As such, Oracle frequently oversold and underdelivered, but eventually grew big enough that it didn't matter - they were the market standard and could invest in engineering. This type of Sales culture wouldn't fly in Google, Apple or a lot of other places. Some places choose to not pay their salespeople any commission. This screens out any elephant hunters capable of generating very big commissions, as well as people used to gaming the system. Annual off-site "Presidents Club" weekends for Sales people who exceed quota are very common - it's not just for the Oracles of the world. Part of it is to incent Salespeople who are at 70 or 80% of their quota to push and get to 100%. In addition to raising revenue, it increases the predictability of revenue. (Good for investors) It's very clear that Zenefits got some parts of this wrong. Overpromising in insurance is very different than overpromising in database software. Scaling a salesforce also isn't linear - especially if you're not improving your Operations at the same rate. I feel bad for a lot of the good employees who get caught up in the mess.

josh_carterPDX 11y ago
Well said. It makes me wonder how we're going to set up our Sales Team when we're ready. It's such a tough thing to think about at an early stage of a company, and since Zenefits have only been around 3 years, it was likely really hard for them to establish a solid culture/ecosystem while having their eyes on hyper growth. Definitely a lesson learned here and a lot of us new Founders are paying close attention.
- baudehlo 11y ago
  We blog a lot about that sort of thing if you're interested in it. (See my profile so this doesn't come off as a sales pitch). Building a sales team from scratch is hard and it's one of our aims to help in that goal. Good luck!
- mathattack 11y ago
  It's tough because the need changes over time too. On day 1 you need someone very technical who knows how to sell to early adopters. (Zenefits did this ok) Later on you need people better at getting to the early majority. (Generally it's by tackling one industry vertical well [0]) The head of Sales for the former may not be right for the latter. Two thoughts... 1 - The incentives you choose matter a lot in both attracting and maintaining sales people. 2 - Look to people who you have bought from that you think would fit in their culture. Call them and ask, "Do you know anyone similar to you?" Since you're an early adopter too, they are the right target. And they may volunteer themselves. 3 - You have to balance potentially long sales cycles (it takes a year to build up a pipeline) with being able to pull the trigger when you get the hire wrong. There are a lot more mishires in Sales than most other areas. Good luck! [0] https://en.wikipedia.org/wiki/Crossing_the_Chasm https://en.wikipedia.org/wiki/Crossing_the_Chasm
crdb 11y ago
> As such, Oracle frequently oversold and underdelivered, but eventually grew big enough that it didn't matter This is an extraordinarily common pattern in so many industries, when incentives are not aligned and it's OPM. And the worst thing is, if everybody else is doing it, you also have to do it. For example, bank traders could (and in some places, it seems, still can) just lever up risk since if things go well, they outperformed their peers (riskier stocks go up - and down - faster) and made a great bonus; if a crash made things thornier, the bank would be in bad shape anyway and nobody would pick you out. I remember greatly admiring a famous "value" long/short equity fund in 2006 and a friend who was a more senior and experienced trader pointing out that they were "just levered beta"; three years later that fund was down a good 50%, proving him right. I was reading, back in 2008 or 2009, the annual reports of a bank I was interviewing at. The letter from the CEO was noting, through the 2000s, the increase in risk taking in the mortgage securitisation space with increasing worry, and reassuring shareholders that no, at Bank X, this was not done because the ROI was not there to justify the risk. Then a couple years before Lehman, there was a change in CEO due to "relative underperformance" of the stock, and the letter said something along the lines of "I know we're a bit late to the game but we are investing a large amount in that space and hired some great people from the competition". Naturally that bank then needed a particularly large government bailout a couple years later, although the chairman of the board during the period famously retired with a very large pension (in fact his car was stoned for it by activists), showing that this strategy is still a great way to improve one's personal situation. > I feel bad for a lot of the good employees who get caught up in the mess. It seems to be standard in the job market to use the same strategy: overpromise and push the cost of an employee down as a result - and HR is actually rewarded for this. I've been approached by many large tech companies for jobs and when talking with the managers there, the valuation they put on the options part of the package can get REALLY ridiculous (in some cases, 4-5x what the market thinks, let alone savvy investors). Older developers are wise enough to counter these offers, but I see a lot of younger folks enthusiastically buy into the myth and quit burnt out a couple years later. I took an HR guy from a very famous and large Bay Area company that is mentioned here often for drinks and he admitted after about 7 whiskies that most of the people working there - including top, APAC-region managers - were paid about half what they could get in more normal companies, and that this was by design and a target. To be fair, I can't completely criticise them for doing it, since there was real value in working there for a while, as all the other companies in Singapore would then bid higher for your output detecting a "competence signal" in the American brand.

josh_carterPDX 11y ago

Well said. It makes me wonder how we're going to set up our Sales Team when we're ready. It's such a tough thing to think about at an early stage of a company, and since Zenefits have only been around 3 years, it was likely really hard for them to establish a solid culture/ecosystem while having their eyes on hyper growth. Definitely a lesson learned here and a lot of us new Founders are paying close attention.

baudehlo 11y ago
We blog a lot about that sort of thing if you're interested in it. (See my profile so this doesn't come off as a sales pitch). Building a sales team from scratch is hard and it's one of our aims to help in that goal. Good luck!
mathattack 11y ago
It's tough because the need changes over time too. On day 1 you need someone very technical who knows how to sell to early adopters. (Zenefits did this ok) Later on you need people better at getting to the early majority. (Generally it's by tackling one industry vertical well [0]) The head of Sales for the former may not be right for the latter. Two thoughts... 1 - The incentives you choose matter a lot in both attracting and maintaining sales people. 2 - Look to people who you have bought from that you think would fit in their culture. Call them and ask, "Do you know anyone similar to you?" Since you're an early adopter too, they are the right target. And they may volunteer themselves. 3 - You have to balance potentially long sales cycles (it takes a year to build up a pipeline) with being able to pull the trigger when you get the hire wrong. There are a lot more mishires in Sales than most other areas. Good luck! [0] https://en.wikipedia.org/wiki/Crossing_the_Chasm https://en.wikipedia.org/wiki/Crossing_the_Chasm

crdb 11y ago

> As such, Oracle frequently oversold and underdelivered, but eventually grew big enough that it didn't matter This is an extraordinarily common pattern in so many industries, when incentives are not aligned and it's OPM. And the worst thing is, if everybody else is doing it, you also have to do it. For example, bank traders could (and in some places, it seems, still can) just lever up risk since if things go well, they outperformed their peers (riskier stocks go up - and down - faster) and made a great bonus; if a crash made things thornier, the bank would be in bad shape anyway and nobody would pick you out. I remember greatly admiring a famous "value" long/short equity fund in 2006 and a friend who was a more senior and experienced trader pointing out that they were "just levered beta"; three years later that fund was down a good 50%, proving him right. I was reading, back in 2008 or 2009, the annual reports of a bank I was interviewing at. The letter from the CEO was noting, through the 2000s, the increase in risk taking in the mortgage securitisation space with increasing worry, and reassuring shareholders that no, at Bank X, this was not done because the ROI was not there to justify the risk. Then a couple years before Lehman, there was a change in CEO due to "relative underperformance" of the stock, and the letter said something along the lines of "I know we're a bit late to the game but we are investing a large amount in that space and hired some great people from the competition". Naturally that bank then needed a particularly large government bailout a couple years later, although the chairman of the board during the period famously retired with a very large pension (in fact his car was stoned for it by activists), showing that this strategy is still a great way to improve one's personal situation. > I feel bad for a lot of the good employees who get caught up in the mess. It seems to be standard in the job market to use the same strategy: overpromise and push the cost of an employee down as a result - and HR is actually rewarded for this. I've been approached by many large tech companies for jobs and when talking with the managers there, the valuation they put on the options part of the package can get REALLY ridiculous (in some cases, 4-5x what the market thinks, let alone savvy investors). Older developers are wise enough to counter these offers, but I see a lot of younger folks enthusiastically buy into the myth and quit burnt out a couple years later. I took an HR guy from a very famous and large Bay Area company that is mentioned here often for drinks and he admitted after about 7 whiskies that most of the people working there - including top, APAC-region managers - were paid about half what they could get in more normal companies, and that this was by design and a target. To be fair, I can't completely criticise them for doing it, since there was real value in working there for a while, as all the other companies in Singapore would then bid higher for your output detecting a "competence signal" in the American brand.