6 ms·

Wish they would've gone into more detail about the sales exemption - it seems to undermine many of the other points on the page...

bcantrill 1y ago
Happy to go into it in more detail, but the salient points are in the piece: sales folks are eligible to make more -- but can also make less. This is in keeping with the way enterprise sales is done more or less everywhere: sales is different from every other company activity in that it is very quantifiable. I don't think that there's a whole lot more to say about it?
- Arnt 1y ago
  Do you to to quantify promises they make? Sometimes salespeople boost their metrics by promising features that come from other people's work. But they also sometimes provide valuable information on what people are willing to pay for (very different from what they say the want).
  - bcantrill 1y ago
    One important detail: their comp model is different -- but the hiring model is the same. And that has yielded a deeply thoughtful and customer-centric sales team. We are very mindful of go-to-market anti-patterns![0] [0] https://softwaremisadventures.com/p/uncrating-the-oxide-rack-bryan-cantrill-steve-tuck https://softwaremisadventures.com/p/uncrating-the-oxide-rack...
- theoryofx 1y ago
  "this is in keeping with the way enterprise sales is done more or less everywhere..." For non-sales roles you're doing things very differently than (most) everywhere else, which is why it seems like a compromise to give in to an 'industry standard' model for enterprise sales. The fact that sales is quantifiable doesn't explain why sales people get instantly rewarded with cash comp (+ equity) while everyone else on the team might wait years for a potential liquidity event. The real explanation for why sales people get paid so well is that some really good sales people sold the idea of a highly favorable 'industry standard' model for enterprise sales.
  - bcantrill 1y ago
    Do not walk by their lower base! Sales people can make more -- but they won't unless they crush their number.
  - lbotos 1y ago
    > why sales people get instantly rewarded with cash comp while everyone else on the team might wait years for a potential liquidity event. Because sales people also do not make money if they don't sell? What's your counter proposal on how they should pay and attract top sales folks? I know some sales folks who would love to have $200k base with no variable component: The bad ones. Every salesperson that I've ever worked with that was worth their salt was worth the commission they made.
    - ec109685 1y ago
      You could say the same thing about paying everyone a flat salary that you attract the middling ones. And no way all salespeople are worth all the commission they are paid as all times. You think the quality of Anthropic’s salespeople had much to do with them crushing their numbers as Claude exploded? Even the most incompetent salesperson could sell their service if it’s currently the best model out there. While that should increase everyone’s equity, it’s dumb that non-salespeople can’t participate in that abundance.
      - lbotos 1y ago
        > You could say the same thing about paying everyone a flat salary that you attract the middling ones. This depends on where your flat salary lands right? 200k base pay for remote is a very good salary for most of America. The hiring process will weed out the middling ones. > You think the quality of Anthropic’s salespeople had much to do with them crushing their numbers as Claude exploded? You are right -- a rising tide raises all ships. > it’s dumb that non-salespeople can’t participate in that abundance. I think most people can't stomach the risk of the variability. Or else they'd become sales people :D
        1y ago
- zem 1y ago
  do sales folks have the option to take the flat salary instead? or is that seen as a lack of confidence in their abilities?
steveklabnik 1y ago
I forget the details, but the rough shape of it is that sales makes a lower base salary, but with a commission component that can lead to a higher salary than the standard one. I can't remember if there's also some sort of cap. You could take it as undermining those other points, but I don't. (I am, of course, biased.) We didn't do this because we needed to address some failing of these other things, we did it because sales has an incredibly strong culture of this compensation model, to the degree that it would be difficult to hire otherwise. That isn't an issue with other staff. Additionally, some of the points don't work the same way with sales, that is, the variability is easily measured and objective. Sales people don't write promo packets, you count up the amount they sold.
- halestock 1y ago
  In practice, what % of the salespeople make a higher base salary?
  - steveklabnik 1y ago
    I don't personally know. We also only started hiring for these roles very recently, so I don't think it would really even be representative yet.
- neilv 1y ago
  > we did it because sales has an incredibly strong culture of this compensation model, to the degree that it would be difficult to hire otherwise. That isn't an issue with other staff. SF Bay Area SWEs are famously compensation-focused, and this uniform salary is basically Google new-grad SWE entry-level TC. Are you hiring from the minority of good engineers who aren't driven primarily by compensation, but you just can't find the analog of that among good salespeople? > Sales people don't write promo packets, you count up the amount they sold. And you manage the imperfect alignment? (Imperfect, like the incentive to close a sale by lying to a customer, in a way that won't be discovered until next year. Or incentive to close a sale now, and don't communicate back a customer insight that would nudge the product line in a better direction longer-term, since that insight risks someone at the company wanting to talk to the customer, which puts the imminent commission at risk.)
skadamat 1y ago
Honestly it makes sense and resembles how other companies pay sales people. Lower base salary than other roles in the company for similar years of experience (roughly) but with a commission component that's some percentage of each sale. Commission is a big big part of sales culture that I suspect is hard to eliminate in an effort to be different. What's interesting is that often times the commission has no cap, so top sales people can take home higher income than even than executives (at least in cash compensation). But to the commenter's point, true transparency would share the commission % as well :)
tptacek 1y ago
Especially if you're doing account manager-type high-touch sales, which I assume Oxide is given its product, it would be difficult to hire strong sales people at all without variable compensation. It's best to think of sales as an entirely different kind of animal as the rest of the company. Like the post says, when they're making lots of money, everybody else is making even more money. One thing people who have never managed direct sales teams might not immediately grok is: good sales people are experts at gaming incentive schemes. Their work and output adapts to their comp schemes in ways nobody else's does. If you cap a salesperson's comp in a quarter, they will work to move sales out of that quarter; exactly what you don't want.
- OJFord 1y ago
  > One thing people who have never managed direct sales teams might not immediately grok is: good sales people are experts at gaming incentive schemes. Is that just circular though? i.e. I think everyone's like that, it's just unusual that it's tied directly to compensation. e.g. if I feel that my Jira output is being critically monitored, I might push something (or the reporting of something) into the next sprint if it's close and I've already done a lot in this one; I might more diligently create tickets for every little incidental thing that popped up (rather than just quietly getting it done). I'm not comp'd according to that, but it's the same behaviour, it's just 'a measure becoming a target' really isn't it?
  - tptacek 1y ago
    I don't have a more precise way to articulate this other than that adapting your behavior to your compensation is a skill, most of us are not expert in that skill even if we think we are, but even bad salespeople are like ninja masters at it.
- hinkley 1y ago
  > Like the post says, when they're making lots of money, everybody else is making even more money. I’ve worked with sales people whose compensation had loopholes you could drive a truck through, make sales that cost us more money than we made on the contract. Now a few of those are good for attracting VC money, but you have to be strategic and I’ve seen too much evidence of them not being so. If you lock up your biggest potential customers with bad contracts that makes you default dead and no good way to weasel out.
boulos 1y ago
As others have said, the sales compensation model is fundamentally a low base and then a percentage of the sale. I think Ben Horowitz had an early blog post about not trying to innovate on sales compensation models, and having seen a few attempts at "innovation" at Google Cloud, I agree. It's almost never worth the complexity. You can figure out various sliding scales, maybe even caps (but adjusting the scale is more rational), but I think flat pay is basically anathema to being a salesperson. Edit: found it, though it isn't from as long ago as I remembered. https://a16z.com/why-must-you-pay-sales-people-commissions/ https://a16z.com/why-must-you-pay-sales-people-commissions/

bcantrill 1y ago

Happy to go into it in more detail, but the salient points are in the piece: sales folks are eligible to make more -- but can also make less. This is in keeping with the way enterprise sales is done more or less everywhere: sales is different from every other company activity in that it is very quantifiable. I don't think that there's a whole lot more to say about it?

Arnt 1y ago
Do you to to quantify promises they make? Sometimes salespeople boost their metrics by promising features that come from other people's work. But they also sometimes provide valuable information on what people are willing to pay for (very different from what they say the want).
- bcantrill 1y ago
  One important detail: their comp model is different -- but the hiring model is the same. And that has yielded a deeply thoughtful and customer-centric sales team. We are very mindful of go-to-market anti-patterns![0] [0] https://softwaremisadventures.com/p/uncrating-the-oxide-rack-bryan-cantrill-steve-tuck https://softwaremisadventures.com/p/uncrating-the-oxide-rack...
theoryofx 1y ago
"this is in keeping with the way enterprise sales is done more or less everywhere..." For non-sales roles you're doing things very differently than (most) everywhere else, which is why it seems like a compromise to give in to an 'industry standard' model for enterprise sales. The fact that sales is quantifiable doesn't explain why sales people get instantly rewarded with cash comp (+ equity) while everyone else on the team might wait years for a potential liquidity event. The real explanation for why sales people get paid so well is that some really good sales people sold the idea of a highly favorable 'industry standard' model for enterprise sales.
- bcantrill 1y ago
  Do not walk by their lower base! Sales people can make more -- but they won't unless they crush their number.
- lbotos 1y ago
  > why sales people get instantly rewarded with cash comp while everyone else on the team might wait years for a potential liquidity event. Because sales people also do not make money if they don't sell? What's your counter proposal on how they should pay and attract top sales folks? I know some sales folks who would love to have $200k base with no variable component: The bad ones. Every salesperson that I've ever worked with that was worth their salt was worth the commission they made.
  - ec109685 1y ago
    You could say the same thing about paying everyone a flat salary that you attract the middling ones. And no way all salespeople are worth all the commission they are paid as all times. You think the quality of Anthropic’s salespeople had much to do with them crushing their numbers as Claude exploded? Even the most incompetent salesperson could sell their service if it’s currently the best model out there. While that should increase everyone’s equity, it’s dumb that non-salespeople can’t participate in that abundance.
    - lbotos 1y ago
      > You could say the same thing about paying everyone a flat salary that you attract the middling ones. This depends on where your flat salary lands right? 200k base pay for remote is a very good salary for most of America. The hiring process will weed out the middling ones. > You think the quality of Anthropic’s salespeople had much to do with them crushing their numbers as Claude exploded? You are right -- a rising tide raises all ships. > it’s dumb that non-salespeople can’t participate in that abundance. I think most people can't stomach the risk of the variability. Or else they'd become sales people :D
      - 1y ago
zem 1y ago
do sales folks have the option to take the flat salary instead? or is that seen as a lack of confidence in their abilities?

steveklabnik 1y ago

I forget the details, but the rough shape of it is that sales makes a lower base salary, but with a commission component that can lead to a higher salary than the standard one. I can't remember if there's also some sort of cap. You could take it as undermining those other points, but I don't. (I am, of course, biased.) We didn't do this because we needed to address some failing of these other things, we did it because sales has an incredibly strong culture of this compensation model, to the degree that it would be difficult to hire otherwise. That isn't an issue with other staff. Additionally, some of the points don't work the same way with sales, that is, the variability is easily measured and objective. Sales people don't write promo packets, you count up the amount they sold.

halestock 1y ago
In practice, what % of the salespeople make a higher base salary?
- steveklabnik 1y ago
  I don't personally know. We also only started hiring for these roles very recently, so I don't think it would really even be representative yet.
neilv 1y ago
> we did it because sales has an incredibly strong culture of this compensation model, to the degree that it would be difficult to hire otherwise. That isn't an issue with other staff. SF Bay Area SWEs are famously compensation-focused, and this uniform salary is basically Google new-grad SWE entry-level TC. Are you hiring from the minority of good engineers who aren't driven primarily by compensation, but you just can't find the analog of that among good salespeople? > Sales people don't write promo packets, you count up the amount they sold. And you manage the imperfect alignment? (Imperfect, like the incentive to close a sale by lying to a customer, in a way that won't be discovered until next year. Or incentive to close a sale now, and don't communicate back a customer insight that would nudge the product line in a better direction longer-term, since that insight risks someone at the company wanting to talk to the customer, which puts the imminent commission at risk.)

skadamat 1y ago

Honestly it makes sense and resembles how other companies pay sales people. Lower base salary than other roles in the company for similar years of experience (roughly) but with a commission component that's some percentage of each sale. Commission is a big big part of sales culture that I suspect is hard to eliminate in an effort to be different. What's interesting is that often times the commission has no cap, so top sales people can take home higher income than even than executives (at least in cash compensation). But to the commenter's point, true transparency would share the commission % as well :)

tptacek 1y ago

Especially if you're doing account manager-type high-touch sales, which I assume Oxide is given its product, it would be difficult to hire strong sales people at all without variable compensation. It's best to think of sales as an entirely different kind of animal as the rest of the company. Like the post says, when they're making lots of money, everybody else is making even more money. One thing people who have never managed direct sales teams might not immediately grok is: good sales people are experts at gaming incentive schemes. Their work and output adapts to their comp schemes in ways nobody else's does. If you cap a salesperson's comp in a quarter, they will work to move sales out of that quarter; exactly what you don't want.

OJFord 1y ago
> One thing people who have never managed direct sales teams might not immediately grok is: good sales people are experts at gaming incentive schemes. Is that just circular though? i.e. I think everyone's like that, it's just unusual that it's tied directly to compensation. e.g. if I feel that my Jira output is being critically monitored, I might push something (or the reporting of something) into the next sprint if it's close and I've already done a lot in this one; I might more diligently create tickets for every little incidental thing that popped up (rather than just quietly getting it done). I'm not comp'd according to that, but it's the same behaviour, it's just 'a measure becoming a target' really isn't it?
- tptacek 1y ago
  I don't have a more precise way to articulate this other than that adapting your behavior to your compensation is a skill, most of us are not expert in that skill even if we think we are, but even bad salespeople are like ninja masters at it.
hinkley 1y ago
> Like the post says, when they're making lots of money, everybody else is making even more money. I’ve worked with sales people whose compensation had loopholes you could drive a truck through, make sales that cost us more money than we made on the contract. Now a few of those are good for attracting VC money, but you have to be strategic and I’ve seen too much evidence of them not being so. If you lock up your biggest potential customers with bad contracts that makes you default dead and no good way to weasel out.

boulos 1y ago

As others have said, the sales compensation model is fundamentally a low base and then a percentage of the sale. I think Ben Horowitz had an early blog post about not trying to innovate on sales compensation models, and having seen a few attempts at "innovation" at Google Cloud, I agree. It's almost never worth the complexity. You can figure out various sliding scales, maybe even caps (but adjusting the scale is more rational), but I think flat pay is basically anathema to being a salesperson. Edit: found it, though it isn't from as long ago as I remembered. https://a16z.com/why-must-you-pay-sales-people-commissions/ https://a16z.com/why-must-you-pay-sales-people-commissions/