Sales in Startups

(This is an amalgam of two essays originally posted to Hacker News.)

Paul Graham has pointed out, numerous times, that the way you make a lot of money is to a). have very high performance, and then b). go into an industry where your performance can be measured. He is quite correct in this supposition; if the top performer does ten times better than the average performer, it doesn’t matter unless someone can measure it. However, it is interesting that he ignores the fact that this particular class of the economy- making a lot of money by measuring very high performance- is utterly dominated, not by nerds, but by salespeople.

What is sales, exactly? We all at least know what sales *is*, in the most basic, literal sense: trying to convince a person to buy your product. But what sorts of skills go into sales? What makes a good salesman? Within a given team, sales seems to depend mostly on effort. If you don’t make a sale on Monday, and you do make a sale on Tuesday, then, assuming the sales are of equal difficulty, the largest reasons why you failed on Monday are probably effort and luck. Hence, it would seem that being a “good salesman” is just identical with working hard and being determined.

However, I think there is a critical factor here, which many computer people overlook, which you wouldn’t necessarily see just from lots of experience selling things yourself (or with the same team). Sales, I think, depends primarily on social skill. Now, by “social skill”, I don’t mean being a good friend, or trying to help the other person. In sales, actually trying to help people is usually an optional extra. Is a jewelry store salesman really helping someone by selling them a useless $20,000 rock? Not really, but jewelry stores still do fine. It’s nice to help people, certainly, but if you’re just trying to make money, it’s not necessary.

No, by “social skill”, what I mean is the ability to manipulate your body in very precise ways, to create feelings of happiness, trust, loyalty, etc. in the other person. Most people don’t primarily communicate through words. The real message is in things like their body language, facial expressions, and tone of voice; their words mostly don’t mean anything important. And if you send the right nonverbal message, you’ll have a much higher chance of making the sale.

I think most, say, car salesmen are familiar with this. It doesn’t really matter what you tell the customer, which is why we call it “bullshit”, as opposed to “lying”. It’s not that the salesman is trying to deceive or trick the customer, in most cases, so much as he just doesn’t care. What he does want to do is create feelings of friendship, happiness, and so forth which are associated with him, the car, and the dealership, so it would seem like a terrible thing to do to not sign on the dotted line.

I’m not describing all people, certainly. If you’re selling to, say, a car geek, who knows all about the eight dozen different features and the engine and the tires and the fuel usage profile and so on, it may be a better idea to focus on those. But most business people, as Paul Graham has pointed out, don’t really care about the quality or the features of the software they’re buying, since they’re probably not the ones who’re going to use it.

Now, what can you do with sales skill? Well, what are the highest paying jobs in the United States? Some might say “corporate lawyer”. But what is the job of a top corporate lawyer, really? It’s to sell stuff- the legal services of his firm- to corporate clients. All the lower-paid people, the associates, are the people doing the real work. The higher-paid people, the partners, mostly do sales and manage their corporate clients. If you want to make a lot of money as an attorney, selling ability is the key skill to have. Working hard is also important, of course, but it’s your sales skill that will really let you stand out.

Some other people might say “financier”. But what, exactly, is the job of a financier? Wall Street is divided into two “sides”, the “sell side” and the “buy side”. What the “sell side” does should be obvious: you sell stock to people, or whole companies, like investment bankers do. But what the “buy side” does is also really about sales; in order to get money to make investments, a hedge fund or private equity firm needs to sell their company to institutional investors. The way you succeed in the business, with a very few exceptions (like Renaissance Technologies), is by being a good salesman, not by achieving good returns. (It’s the same for venture capital, hence the cluelessness of most investors.) This is readily demonstrated by how these funds perform: Warren Buffett has bet that the S&P 500 will outperform hedge funds over the next ten years, and it looks like he’s going to be right. Yet, people (until the finance crash) continued to invest trillions in them, because they were such good salesmen.

What about startups, the main topic of Paul Graham’s discussion? It appears that, even in startups, programming has become a much less important skill relative to sales. Bill Gates couldn’t sell anything to save his life. Yet, when Graham and many others talk about the most successful founder they’ve funded so far (out of more than a hundred), Sam Altman, the key thing that gets mentioned is his ability to talk to people and do deals. Sam is smart, driven, technically capable, and hard-working, to be sure, but then, there are dozens of founders that fit that description. What really sets Sam apart are his superior social and people skills, which allowed him to get Loopt off the ground, even though he had to partner with some of the largest companies in America.

So, if anyone doesn’t really have a passion for technology, but just wants to make a lot of money in the startup industry: my recommendation is to go quit your job as a programmer right now, and get an entry-level sales job to help hone your people skills, because nothing will help get you there faster.

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s