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FogCreek has eliminated commissions, too. http://blog.fogcreek.com/why-do-we-pay-sales-commissions/ http://blog.fogcreek.com/why-do-we-pay-sales-commissions/ S

FogCreek has eliminated commissions, too. http://blog.fogcreek.com/why-do-we-pay-sales-commissions/ http://blog.fogcreek.com/why-do-we-pay-sales-commissions/ So have we. My thoughts? Commission-based sales is almost never a good alignment between sales people and the company. Almost always sets up unintended consequences and leads to local maxima before reaching global optmima. Also, if you're a software product company, you end up with the "doers" (software people, support, etc.) earning far, far less than sales-people, which causes them to get fed up and leave. Yes, we're a business and we have to make money, but without great software developers we won't have anything to sell. Put everyone on salary and then have company-wide profit sharing (that is equal amongst the divisions/people) tends to align everyone's interests.

orangethirty 14y ago
Also, if you're a software product company, you end up with the "doers" (software people, support, etc.) earning far, far less than sales-people, which causes them to get fed up and leave. I don't understand this point. The sales person is the one making sure everyone else gets a paycheck. Why should they be treated equally? They are the stars of the show, not the developers, or management. If people get fed up, then let them. Code does not sell itself.
- mindcrime 14y ago
  I don't understand this point. The sales person is the one making sure everyone else gets a paycheck. Why should they be treated equally? They are the stars of the show, not the developers, or management. If people get fed up, then let them. Code does not sell itself. Your take on this sounds just as wrong to me, as the one you quote. Wouldn't it be better to take a more holistic view and realize that both the "sellers" and the "makers" are equally important? Sure, code doesn't sell itself, but a salesperson with no product to sell doesn't do anybody any good either.
  - tptacek 14y ago
    This would be true if there were good salespeople languishing for lack of decent products to sell. There probably aren't.
    - orangethirty 14y ago
      Exactly. That's why I have a line of other engineers waiting for me to teach/show them how to sell the product they built. Being a hybrid between a software engineer and marketer does give me a perspective that few here get to see.
    - mindcrime 14y ago
      There probably aren't. Right, but somebody made those products. If that had not happened, those sales people would be useless. My point is that you simply can't disconnect one side of the equation from the other. No products == no sales No selling == no sales product + selling == sales
      - tptacek 14y ago
        crappy product + great sales = $$$ great product + crappy sales = :( It always depends, of course. There are great products that sell themselves. But then, for those products, you don't need commissioned sales to begin with.
    - bane 14y ago
      Very true, finding good products to sell is much much easier IMHO than finding a half-way decent sales person. The number of resumes I've seen of professional sales-types who've bounced around companies every year is astonishing. Many companies give new sales people about a year to perform and replace them after that. I've seen entire careers of failed sales people who've lived the no consequence life of this year at a time roaming sales guy. It's a huge red flag. Once they leave a company, they simply flood their sales network with resumes until they land someplace for another year. Rinse and repeat. Likewise if the sales person is good and they're printing money, they're likely to stay at that place and keep the fat commission checks coming unless they get a killer offer someplace else. Being a shitty salesperson is ludicrously easy, being a good one is unbelievably hard.
- monochromatic 14y ago
  You might as well say that the accountant is the most important person, since he's the one who makes sure people get paychecks. Or even the employee who literally hands out the checks, if you want to go even more ridiculous. Truly the star of the show is the paycheck delivery boy.
  - tptacek 14y ago
    Most businesses can easily replace their accountant without significant cash flow hits. A lot of companies would die if they lost their whole sales team.
    - vacri 14y ago
      A lot of companies would die if they lost their whole accounting team. A lot of companies would die if they lost their whole design team. A lot of companies would die if they lost their whole support team. Picking and choosing your industry and your company sample gets you all of these.
      - tptacek 14y ago
        I do not think a lot of companies would die if they lost their accountant.
        vacri 14y ago
        I like how you stack the deck - when it's accounting, it's just the one staffer, but when it's sales, it's a whole team. If you're large enough to have an accounting team, you're going to hurt if they disappear all at once.
        tptacek 14y ago
        Losing a good accountant is unlikely to have an impact on revenue. Losing a good account manager is very likely to have an impact on revenue.
- tcbawo 14y ago
  Fog Creek might be a special case. Over the years, Joel has amassed a good deal of goodwill and has probably done a better job of selling his product than any salesperson.
- sgift 14y ago
  There are many software companies selling software without dedicated sales people. There is not one which has sales, but no developers to build the product.
  - GFischer 14y ago
    "There is not one with sales, but no developers to build the product" I wish. You've never sold software to the state then... I've seen a lot of vaporware being sold (and if they win the bid, then they scramble to get the lowest common denominator made).
  - jasonlotito 14y ago
    You ignore the reality that one does not need to own or run a software company to sell software. You cannot sell something without sales and marketing. You can, however, sell something without a product. It happens all the time.
  - theorique 14y ago
    Sell something, then find the lowest-bidding code monkey team from a freelancer web site to throw something together that approximates what you have just sold.
- evilduck 14y ago
  The sales person is the one making sure everyone else gets a paycheck. It's a symbiotic relationship and should be treated as such. What value does the salesperson offer without a product?
  - jasonlotito 14y ago
    The ability to get money for something that does not yet exist. This money can then be used to build the product. This happens all the time in the real world, especially in our industry.
    - Evbn 14y ago
      Does that money stick if the product never shows up?
      - mindcrime 14y ago
        No, if the product never shows up, you haven't done "sales" you've committed "fraud". A lot of people in this thread are really bending definitions and stretching logic to try and make an argument that sales can exist without a product, but it can't do so in reality, at least not sustainably.
    - evilduck 14y ago
      But even now, you just stated the goal is selling a product, something the salesperson cannot provide on their own. And it's hardly the only means of funding the initial development. Selling promises about a future product isn't the only aspect of "ensuring I get a paycheck", at least not for very long. The sales/product delivery equation obviously balances back towards the 'doers' after that initial development phase or salespeople would be perpetually selling themselves out of a job.
    - orangethirty 14y ago
      This is a very important point to understand. Sales people not only make sure you get money for your product, but they also get you the data to build your MVP.
- TWAndrews 14y ago
  I've never met a sales person who could close a deal without help from some or all of: sales engineers, product management, sales management, engineering, support/services.
  - tptacek 14y ago
    Every tech person I know thinks this. I used to think it too. But good account managers do well regardless of who their SE is. SEs who get promoted to sales often flounder. Sales is a very different job than tech. As for needing marketing and engineering, so what? Good account managers are hard to find. They more or less have a license to print money. Also, their job performance correlates with their own avarice; what's rarer than a good account manager is a good account manager who's in it for love not money. All you accomplish by docking their pay is ensuring that you get the most adverse selection. The good ones will just print money somewhere else. This is just a small part of the reason why we've foregone salespeople in this company entirely. :)
    - orangethirty 14y ago
      Agreed. Plus good account managers are too busy making money on their own. I know I am...
    - TWAndrews 14y ago
      I don't disagree with any of that, but I've never met a rep who could go from lead to close on a deal of significant size without an SE. In contrast, I have seen very significant deals closed by executives without a direct rep on the account, but with appropriate technical support.
- ucee054 14y ago
  "Why should they be treated equally?" In terms a salesperson would understand: Negotiating Power See how long a company lasts without its engineers. Then make sure to pay the engineers what they want to prevent that from happening. Or they'll find a job with someone who will. Oh yeah, how much engineers want is : More than the sales spivs Clear?
  - to3m 14y ago
    I wish I had two upvotes to give, on account of the classy and non-divisive way in which you've made your point.
  - orangethirty 14y ago
    Re: The bubble is warping your POV. Go back in time and see what happened when the last one burst.
    - ucee054 14y ago
      The last time the bubble burst, a lot of the devs I knew moved into banks and hedge funds. They stayed employed through 2007-now, and two of them are running their own portfolios now. And demand for Quants with C++ is hotter than ever right now, because there's huge demand for risk management after the Credit Crunch. Your point was?
      - orangethirty 14y ago
        Your point was? My point is that you (like many others) seem to think the gravy train will last forever. It won't.
        ucee054 14y ago
        Well no, there is no gravy train. And there will not be as long as technical people internalize the low value that people like you put on them. Instead they should ignore people like you. It's not like your sales "superstars" are a rare breed. Every unemployable schlub from humanities can apply for a sales position. But a dev is a rare breed: you have to suffer through years of math and C++ to become a dev. The ROI isn't worth it if devs play and get treated like glorified janitors. They can get a job for somebody who will pay, like a hedge fund, or they can start their own businesses, or they can change field to something where they are rewarded for their talents - financial engineering is an example, IP law is another. But playing by your rules is a losing game. The only way to win is to walk away.
- Geekette 14y ago
  The sales person is the one making sure everyone else gets a paycheck. Why should they be treated equally? They are the stars of the show, not the developers, or management. If people get fed up, then let them. Code does not sell itself. Actually, everyone in the company is involved in ensuring a paycheck happens. Bundled into every sale is: the branding (trust, demand, anticipation/expectations, etc) that the marketers created, the product that the builders (developers, designers, QA, etc) created, the steadiness of cashflow that accountants/finance people ensure, etc. All are important moving parts which deserve consideration when sharing the company's incremental success.
noonespecial 14y ago
Also, if you're a software product company, you end up with the "doers" (software people, support, etc.) earning far, far less than sales-people, which causes them to get fed up and leave. I find the opposite happens. Managers become uneasy as the best salesmen approach their salaries and the either find a way to stiff them on earned commissions or outright force them to leave. As a doer, I was always flabbergasted at just how much sales guys could get for the stuff I made (which I wouldn't have felt comfortable selling for 1/10th the price).
- theorique 14y ago
  As a doer, I was always flabbergasted at just how much sales guys could get for the stuff I made (which I wouldn't have felt comfortable selling for 1/10th the price). That is why they are in the profession of sales, isn't it!
amirmc 14y ago
Red Gate Software is another company that eliminated sales commissions (back in 2009 [1]). Nice write-up by Dan Pink on this too [2]. [1] http://businessofsoftware.org/2009/09/are-sales-people-different-from-you-and-me/ http://businessofsoftware.org/2009/09/are-sales-people-diffe... (discussion in comments is good - Neil Davidson is cofounder) [2] http://www.telegraph.co.uk/finance/yourbusiness/business-thinking/7752986/Forget-carrots-and-sticks-they-dont-always-work.html http://www.telegraph.co.uk/finance/yourbusiness/business-thi...
ABS 14y ago
Indeed that FogCreek post is linked by Martin as well. I'm sure there are plenty of examples and plenty of companies no one knows about that do this as well. One of the differences here I think is in size and distribution: ThoughtWorks has 2000+ people in 27 offices across 11 countries.

orangethirty 14y ago

Also, if you're a software product company, you end up with the "doers" (software people, support, etc.) earning far, far less than sales-people, which causes them to get fed up and leave. I don't understand this point. The sales person is the one making sure everyone else gets a paycheck. Why should they be treated equally? They are the stars of the show, not the developers, or management. If people get fed up, then let them. Code does not sell itself.

mindcrime 14y ago
I don't understand this point. The sales person is the one making sure everyone else gets a paycheck. Why should they be treated equally? They are the stars of the show, not the developers, or management. If people get fed up, then let them. Code does not sell itself. Your take on this sounds just as wrong to me, as the one you quote. Wouldn't it be better to take a more holistic view and realize that both the "sellers" and the "makers" are equally important? Sure, code doesn't sell itself, but a salesperson with no product to sell doesn't do anybody any good either.
- tptacek 14y ago
  This would be true if there were good salespeople languishing for lack of decent products to sell. There probably aren't.
  - orangethirty 14y ago
    Exactly. That's why I have a line of other engineers waiting for me to teach/show them how to sell the product they built. Being a hybrid between a software engineer and marketer does give me a perspective that few here get to see.
  - mindcrime 14y ago
    There probably aren't. Right, but somebody made those products. If that had not happened, those sales people would be useless. My point is that you simply can't disconnect one side of the equation from the other. No products == no sales No selling == no sales product + selling == sales
    - tptacek 14y ago
      crappy product + great sales = $$$ great product + crappy sales = :( It always depends, of course. There are great products that sell themselves. But then, for those products, you don't need commissioned sales to begin with.
  - bane 14y ago
    Very true, finding good products to sell is much much easier IMHO than finding a half-way decent sales person. The number of resumes I've seen of professional sales-types who've bounced around companies every year is astonishing. Many companies give new sales people about a year to perform and replace them after that. I've seen entire careers of failed sales people who've lived the no consequence life of this year at a time roaming sales guy. It's a huge red flag. Once they leave a company, they simply flood their sales network with resumes until they land someplace for another year. Rinse and repeat. Likewise if the sales person is good and they're printing money, they're likely to stay at that place and keep the fat commission checks coming unless they get a killer offer someplace else. Being a shitty salesperson is ludicrously easy, being a good one is unbelievably hard.
monochromatic 14y ago
You might as well say that the accountant is the most important person, since he's the one who makes sure people get paychecks. Or even the employee who literally hands out the checks, if you want to go even more ridiculous. Truly the star of the show is the paycheck delivery boy.
- tptacek 14y ago
  Most businesses can easily replace their accountant without significant cash flow hits. A lot of companies would die if they lost their whole sales team.
  - vacri 14y ago
    A lot of companies would die if they lost their whole accounting team. A lot of companies would die if they lost their whole design team. A lot of companies would die if they lost their whole support team. Picking and choosing your industry and your company sample gets you all of these.
    - tptacek 14y ago
      I do not think a lot of companies would die if they lost their accountant.
      - vacri 14y ago
        I like how you stack the deck - when it's accounting, it's just the one staffer, but when it's sales, it's a whole team. If you're large enough to have an accounting team, you're going to hurt if they disappear all at once.
        tptacek 14y ago
        Losing a good accountant is unlikely to have an impact on revenue. Losing a good account manager is very likely to have an impact on revenue.
tcbawo 14y ago
Fog Creek might be a special case. Over the years, Joel has amassed a good deal of goodwill and has probably done a better job of selling his product than any salesperson.
sgift 14y ago
There are many software companies selling software without dedicated sales people. There is not one which has sales, but no developers to build the product.
- GFischer 14y ago
  "There is not one with sales, but no developers to build the product" I wish. You've never sold software to the state then... I've seen a lot of vaporware being sold (and if they win the bid, then they scramble to get the lowest common denominator made).
- jasonlotito 14y ago
  You ignore the reality that one does not need to own or run a software company to sell software. You cannot sell something without sales and marketing. You can, however, sell something without a product. It happens all the time.
- theorique 14y ago
  Sell something, then find the lowest-bidding code monkey team from a freelancer web site to throw something together that approximates what you have just sold.
evilduck 14y ago
The sales person is the one making sure everyone else gets a paycheck. It's a symbiotic relationship and should be treated as such. What value does the salesperson offer without a product?
- jasonlotito 14y ago
  The ability to get money for something that does not yet exist. This money can then be used to build the product. This happens all the time in the real world, especially in our industry.
  - Evbn 14y ago
    Does that money stick if the product never shows up?
    - mindcrime 14y ago
      No, if the product never shows up, you haven't done "sales" you've committed "fraud". A lot of people in this thread are really bending definitions and stretching logic to try and make an argument that sales can exist without a product, but it can't do so in reality, at least not sustainably.
  - evilduck 14y ago
    But even now, you just stated the goal is selling a product, something the salesperson cannot provide on their own. And it's hardly the only means of funding the initial development. Selling promises about a future product isn't the only aspect of "ensuring I get a paycheck", at least not for very long. The sales/product delivery equation obviously balances back towards the 'doers' after that initial development phase or salespeople would be perpetually selling themselves out of a job.
  - orangethirty 14y ago
    This is a very important point to understand. Sales people not only make sure you get money for your product, but they also get you the data to build your MVP.
TWAndrews 14y ago
I've never met a sales person who could close a deal without help from some or all of: sales engineers, product management, sales management, engineering, support/services.
- tptacek 14y ago
  Every tech person I know thinks this. I used to think it too. But good account managers do well regardless of who their SE is. SEs who get promoted to sales often flounder. Sales is a very different job than tech. As for needing marketing and engineering, so what? Good account managers are hard to find. They more or less have a license to print money. Also, their job performance correlates with their own avarice; what's rarer than a good account manager is a good account manager who's in it for love not money. All you accomplish by docking their pay is ensuring that you get the most adverse selection. The good ones will just print money somewhere else. This is just a small part of the reason why we've foregone salespeople in this company entirely. :)
  - orangethirty 14y ago
    Agreed. Plus good account managers are too busy making money on their own. I know I am...
  - TWAndrews 14y ago
    I don't disagree with any of that, but I've never met a rep who could go from lead to close on a deal of significant size without an SE. In contrast, I have seen very significant deals closed by executives without a direct rep on the account, but with appropriate technical support.
ucee054 14y ago
"Why should they be treated equally?" In terms a salesperson would understand: Negotiating Power See how long a company lasts without its engineers. Then make sure to pay the engineers what they want to prevent that from happening. Or they'll find a job with someone who will. Oh yeah, how much engineers want is : More than the sales spivs Clear?
- to3m 14y ago
  I wish I had two upvotes to give, on account of the classy and non-divisive way in which you've made your point.
- orangethirty 14y ago
  Re: The bubble is warping your POV. Go back in time and see what happened when the last one burst.
  - ucee054 14y ago
    The last time the bubble burst, a lot of the devs I knew moved into banks and hedge funds. They stayed employed through 2007-now, and two of them are running their own portfolios now. And demand for Quants with C++ is hotter than ever right now, because there's huge demand for risk management after the Credit Crunch. Your point was?
    - orangethirty 14y ago
      Your point was? My point is that you (like many others) seem to think the gravy train will last forever. It won't.
      - ucee054 14y ago
        Well no, there is no gravy train. And there will not be as long as technical people internalize the low value that people like you put on them. Instead they should ignore people like you. It's not like your sales "superstars" are a rare breed. Every unemployable schlub from humanities can apply for a sales position. But a dev is a rare breed: you have to suffer through years of math and C++ to become a dev. The ROI isn't worth it if devs play and get treated like glorified janitors. They can get a job for somebody who will pay, like a hedge fund, or they can start their own businesses, or they can change field to something where they are rewarded for their talents - financial engineering is an example, IP law is another. But playing by your rules is a losing game. The only way to win is to walk away.
Geekette 14y ago
The sales person is the one making sure everyone else gets a paycheck. Why should they be treated equally? They are the stars of the show, not the developers, or management. If people get fed up, then let them. Code does not sell itself. Actually, everyone in the company is involved in ensuring a paycheck happens. Bundled into every sale is: the branding (trust, demand, anticipation/expectations, etc) that the marketers created, the product that the builders (developers, designers, QA, etc) created, the steadiness of cashflow that accountants/finance people ensure, etc. All are important moving parts which deserve consideration when sharing the company's incremental success.

noonespecial 14y ago

Also, if you're a software product company, you end up with the "doers" (software people, support, etc.) earning far, far less than sales-people, which causes them to get fed up and leave. I find the opposite happens. Managers become uneasy as the best salesmen approach their salaries and the either find a way to stiff them on earned commissions or outright force them to leave. As a doer, I was always flabbergasted at just how much sales guys could get for the stuff I made (which I wouldn't have felt comfortable selling for 1/10th the price).

theorique 14y ago
As a doer, I was always flabbergasted at just how much sales guys could get for the stuff I made (which I wouldn't have felt comfortable selling for 1/10th the price). That is why they are in the profession of sales, isn't it!

amirmc 14y ago

Red Gate Software is another company that eliminated sales commissions (back in 2009 [1]). Nice write-up by Dan Pink on this too [2]. [1] http://businessofsoftware.org/2009/09/are-sales-people-different-from-you-and-me/ http://businessofsoftware.org/2009/09/are-sales-people-diffe... (discussion in comments is good - Neil Davidson is cofounder) [2] http://www.telegraph.co.uk/finance/yourbusiness/business-thinking/7752986/Forget-carrots-and-sticks-they-dont-always-work.html http://www.telegraph.co.uk/finance/yourbusiness/business-thi...

ABS 14y ago

Indeed that FogCreek post is linked by Martin as well. I'm sure there are plenty of examples and plenty of companies no one knows about that do this as well. One of the differences here I think is in size and distribution: ThoughtWorks has 2000+ people in 27 offices across 11 countries.