Why don't developers get commissions then? There are plenty of papers out there showing monetary reward does not improve people's performance. I have no idea how sales should be paid though
In sales is relatively easy to measure performance. A sales guy's commisions should be a factor of the value they add to the company based on how much they sold.
Obviously, they'll be slightly loose cannons (lying to get sales), but that's part of the cost of having them.
You could just hire sales guys and not pay them a commission, but ... their intrinsic motivation will be close to zero (would you want to do their job?) and it's too hard to manage them without incentives.
sales commissions will forever drive a wedge between sales and engineering. I have a few gripes about it
1) engineers should get a similar form of compensation, in my experiences 'bonuses' don't come anywhere close to what commissions do.
2) how can sales get commissions AND a salary. should be one or the other
3) commissions incentivise sales to sell ANYTHING they can get a commission on, not necessarly the things you want to sell or are good at making. one needs to be very careful in what sales is allowed to sell.
4) how can a product or service be returned or canceled and the commission still paid! insanity! no clean sale and the corrections fall through the cracks...
I'm with you on this. I'm not a fan of any sort of salary bonus scheme. I hope if we ever hire a sales team we can avoid doing that. We have so far. I'd prefer to make your nX factor something that you prove to the rest of the team and that is rewarded by increased equity. Doesn't matter whether you're an amazing developer, member of our customer support team, doing hiring, or working on partnerships. What matters is that you're hacking the status quo for your role in a big company and helping us be more exceptional.
3) commissions incentivise sales to sell ANYTHING they can get a commission on, not necessarly the things you want to sell or are good at making. one needs to be very careful in what sales is allowed to sell.
Yeah, incentives for sales people can be a bit whacky. For one, they're rarely encouraged to do what's best for the company (and therefore their colleagues) in the long-run, but rather wind up taking a very self-centered, short-term view.
There was an interesting article I saw a while back (can't remember if it was here on HN or not), about paying sales people salary only, no commission. From what I remember, at least one company tried it and found that it worked really well.
I'm wondering why commissions are structured the way they are. For example, in a SaaS company with a subscription model, I'd imagine that it would align motives of sales people better if the commission would be paid from each monthly payment instead of as a lump sum when the deal is closed.
That's a good point. I'd be curious to learn what the variance across the average corporate sales team is.
I think there are basically 2 forms of distribution at start-ups that multiply together. The distinguishing factor seems to be whether relationships can make a real difference ie talking to people (partnerhips, PR etc) or are not needed (growth hacking). There is a ton of interplay e.g. you could do all sorts of smart stuff to hack a big social platform, but propriety early access to new platform features via a great relationship with one of the platform team will give you a differentiated toolbox.
For the first type of distribution a great salesperson who is also highly intuitive about product, growth hacking, scalable systems etc, can have even more impact than if they are just selling as part of a traditional sales team.
Want to stir up controversy among a group of business owners? Ask them what's the best way to compensate salespeople. It's like throwing raw meat into a den of lions. You can just sit back and watch them go at it. Over the course of 25 years in business, I've developed my own system for handling sales compensation. I've also become convinced that the way most companies do it is a recipe for trouble.
I'm referring, of course, to the practice of paying sales commissions. Unless you're very careful about how you use them, they almost always have the effect of undermining any sense of unity and common purpose in a business. How? By putting the salespeople in a separate category, by making them stand apart. Granted, sales commissions aren't the only culprit. It doesn't help that most companies put the salespeople in separate offices, hold separate meetings for them off-site, and treat them far more gingerly than other employees at performance review time.
But commissions play the largest role in distancing salespeople from other employees. The result is a lot of animosity and resentment, leading to inevitable conflicts. The accounting people complain that the salespeople make special deals with customers and then don't inform the people who do the billing. The operations people complain that the salespeople make unreasonable demands. As the owner, you're constantly having to mediate between departments while resolving disputes among the salespeople themselves over who has which territory, who handles which customers, and who gets the leads coming into the office.
You also have to cope with the great fear all owners have that their salespeople will leave and take customers with them. That's actually more likely to happen with a commissioned sales force than with a salaried one. For salespeople on commission, the customer represents security. As long as they have that connection, they think they have a means of earning a living. Consequently, they have a strong interest in making sure the customer belongs to them rather than to the company. They resist letting anyone else have a relationship with the customer.
To protect themselves, owners come up with all kinds of mechanisms aimed at preventing salespeople from getting too cozy with customers. One approach is to transfer every new account from a salesperson to a customer-service rep, who handles the relationship from then on. Another technique is to reduce the commission over time. Such systems may or may not weaken a salesperson's hold on a customer, but they don't address the underlying problem. The salespeople are still not members of the team. Their focus isn't on making the company successful -- it's on looking out for No. 1.
So yeah, commissions cause their share of problems as well...
I like the way you use that post as a way to recruit the person you just described. But I agree with PaulHoule that the 10x isn't meant just for developers.
i thought it was worth a try. one thing i realised when i made a list of people who really fitted this description is that in most cases they came inbound vs being recruited. as a result i've been prepping a series of posts on distribution/partnerships to see if I can get the attention of the white whale.
For me, Hustler has always had a negative meaning, one I would hesitate to self label, or be proud if someone else gave me the label. I'm sure it was that way for the 'hacker' label for those on the outside looking in before hacker no longer had a negative association.
I'm a developer by training and I always felt the same way about the term hustler. I think people who self-describe as hustlers are often not what I describe in this post. I just couldn't think of a better descriptor.
For me, Hustler has always had a negative meaning, one I would hesitate to self label, or be proud if someone else gave me the label. I'm sure it was that way for the 'hacker' label for those on the outside looking in before hacker no longer had a negative association.
It's funny, "hustler" definitely has a couple of meanings in American pop culture that would have negative connotations for most people. To a lot of people, it means something sorta like "con man" or "pool shark" and the connotation involves conning people out of their money. To other people it's synonymous with "drug dealer" which has it's own connotations.
BUT... "hustle" also has a pretty positive association in other contexts. For example, being a fan of (American)football, you often hear players described as "having hustle" which basically means "good work ethic, doesn't loaf on plays, always gives full effort until the whistle, etc."
And now we're seeing this startup related use of the word hustler which, to me, basically means "entrepreneur with hustle" or "entrepreneur who has great work ethic, works his butt off to find a way to achieve his goals, has pigheaded determination, etc." This almost strikes me as combining a bit of the connotations of the "drug dealer" thing with the football player example. Not exactly, but you can see elements of both... Anyway, used in this context, I don't see the problem with "hustler."
In my experience, somehow everybody in the money chain of posession manages to grab some of it. Never mind the logic; people can't help but wet their beaks. Socially we rationalize it. It doesn't really make any more sense for a sales person to have a commission, than the guy that boxes up the product and mails it.
Engineering is transparent … It is fairly easy to evaluate how good someone is. Are they a good coder? An ubercoder? Things are different with sales. Sales isn’t very transparent at all. We are tempted to lump all salespeople in with vacuum cleaner salesmen, but really there is a whole set of gradations. There are amateurs, mediocrities, experts, masters, and even grandmasters. Peter Thiel
Not sure I understand this. I think it's very hard for engineers and other Silicon Valley types to evaluate salespeople.
However, in the rest of the business world, a salesperson is about the easiest potential hire to evaluate. Ask them to pitch the product they will be selling and then ask to see their past two year's of W2's with their commissions earnings to see what they've done in the past.
May be in part because the parent is paraphrasing, ie, its from another context, and missing the original frame. Worth checking out, though, original discussion i believe is here.
@OP: your site is utterly UNREADABLE for me! The Inconsolata font looks ugly-to-unreadable on Windows browsers at the font-size you use! (Maybe the Mac OS antialiasing does some wonders or maybe you have Retina display, but PLEASE, either substantially increase the font size or change the font: on Windows machines, Consolas is readable at this font-size, so you can just do `font-family: Consolas, Inconsolata, Monaco, monospace`).
I'm on OSX/Chrome21, and it is quite hard to read for me as well. In addition to exploring other font options, I would recommend you play with the `line-height` css property to give the text some breathing room!
In the article "Secret Symphony: The Ultimate Guide to Readable Web Typography" [1] the author covers `line-height`, line width, proportions, and stresses the importance of getting typography right for to your readers. The article then goes into some golden ratio stuff, which may be a little more than you are interested in, but give it a look!
29 comments
[ 4.9 ms ] story [ 86.9 ms ] threadIn sales is relatively easy to measure performance. A sales guy's commisions should be a factor of the value they add to the company based on how much they sold.
Obviously, they'll be slightly loose cannons (lying to get sales), but that's part of the cost of having them.
You could just hire sales guys and not pay them a commission, but ... their intrinsic motivation will be close to zero (would you want to do their job?) and it's too hard to manage them without incentives.
So?
You pay people to get them to work on what you want them to do.
http://paulgraham.com/wealth.html
It's worth a read, esp. for anyone who hasn't read it yet. The part under the heading "Working Harder" is especially relevant.
1) engineers should get a similar form of compensation, in my experiences 'bonuses' don't come anywhere close to what commissions do.
2) how can sales get commissions AND a salary. should be one or the other
3) commissions incentivise sales to sell ANYTHING they can get a commission on, not necessarly the things you want to sell or are good at making. one needs to be very careful in what sales is allowed to sell.
4) how can a product or service be returned or canceled and the commission still paid! insanity! no clean sale and the corrections fall through the cracks...
yeah... I'm a little bitter.
Yeah, incentives for sales people can be a bit whacky. For one, they're rarely encouraged to do what's best for the company (and therefore their colleagues) in the long-run, but rather wind up taking a very self-centered, short-term view.
There was an interesting article I saw a while back (can't remember if it was here on HN or not), about paying sales people salary only, no commission. From what I remember, at least one company tried it and found that it worked really well.
I think there are basically 2 forms of distribution at start-ups that multiply together. The distinguishing factor seems to be whether relationships can make a real difference ie talking to people (partnerhips, PR etc) or are not needed (growth hacking). There is a ton of interplay e.g. you could do all sorts of smart stuff to hack a big social platform, but propriety early access to new platform features via a great relationship with one of the platform team will give you a differentiated toolbox.
For the first type of distribution a great salesperson who is also highly intuitive about product, growth hacking, scalable systems etc, can have even more impact than if they are just selling as part of a traditional sales team.
http://www.inc.com/magazine/20030501/25416.html
Excerpt:
Want to stir up controversy among a group of business owners? Ask them what's the best way to compensate salespeople. It's like throwing raw meat into a den of lions. You can just sit back and watch them go at it. Over the course of 25 years in business, I've developed my own system for handling sales compensation. I've also become convinced that the way most companies do it is a recipe for trouble.
I'm referring, of course, to the practice of paying sales commissions. Unless you're very careful about how you use them, they almost always have the effect of undermining any sense of unity and common purpose in a business. How? By putting the salespeople in a separate category, by making them stand apart. Granted, sales commissions aren't the only culprit. It doesn't help that most companies put the salespeople in separate offices, hold separate meetings for them off-site, and treat them far more gingerly than other employees at performance review time.
But commissions play the largest role in distancing salespeople from other employees. The result is a lot of animosity and resentment, leading to inevitable conflicts. The accounting people complain that the salespeople make special deals with customers and then don't inform the people who do the billing. The operations people complain that the salespeople make unreasonable demands. As the owner, you're constantly having to mediate between departments while resolving disputes among the salespeople themselves over who has which territory, who handles which customers, and who gets the leads coming into the office.
You also have to cope with the great fear all owners have that their salespeople will leave and take customers with them. That's actually more likely to happen with a commissioned sales force than with a salaried one. For salespeople on commission, the customer represents security. As long as they have that connection, they think they have a means of earning a living. Consequently, they have a strong interest in making sure the customer belongs to them rather than to the company. They resist letting anyone else have a relationship with the customer.
To protect themselves, owners come up with all kinds of mechanisms aimed at preventing salespeople from getting too cozy with customers. One approach is to transfer every new account from a salesperson to a customer-service rep, who handles the relationship from then on. Another technique is to reduce the commission over time. Such systems may or may not weaken a salesperson's hold on a customer, but they don't address the underlying problem. The salespeople are still not members of the team. Their focus isn't on making the company successful -- it's on looking out for No. 1.
So yeah, commissions cause their share of problems as well...
I'll do my best to keep an open mind on Hustler.
It's funny, "hustler" definitely has a couple of meanings in American pop culture that would have negative connotations for most people. To a lot of people, it means something sorta like "con man" or "pool shark" and the connotation involves conning people out of their money. To other people it's synonymous with "drug dealer" which has it's own connotations.
BUT... "hustle" also has a pretty positive association in other contexts. For example, being a fan of (American)football, you often hear players described as "having hustle" which basically means "good work ethic, doesn't loaf on plays, always gives full effort until the whistle, etc."
And now we're seeing this startup related use of the word hustler which, to me, basically means "entrepreneur with hustle" or "entrepreneur who has great work ethic, works his butt off to find a way to achieve his goals, has pigheaded determination, etc." This almost strikes me as combining a bit of the connotations of the "drug dealer" thing with the football player example. Not exactly, but you can see elements of both... Anyway, used in this context, I don't see the problem with "hustler."
However, in the rest of the business world, a salesperson is about the easiest potential hire to evaluate. Ask them to pitch the product they will be selling and then ask to see their past two year's of W2's with their commissions earnings to see what they've done in the past.
http://blakemasters.tumblr.com/post/22405055017/peter-thiels....
In the article "Secret Symphony: The Ultimate Guide to Readable Web Typography" [1] the author covers `line-height`, line width, proportions, and stresses the importance of getting typography right for to your readers. The article then goes into some golden ratio stuff, which may be a little more than you are interested in, but give it a look!
[1]: http://www.pearsonified.com/2011/12/golden-ratio-typography....
On a side note, the USV piece you referenced (from 2006 - on bus dev via APIs) was interesting in the context of where Twitter is now.