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For technical founders, building out a successful enterprise sales motion and team can be one of the most daunting tasks. After all, the skills and culture of enterprise selling are typically very different from the engineering and product culture that these founders come from.
a16z co-founders Ben Horowitz and Marc Andreessen and Databricks co-founder and CEO Ali Ghodsi – three technical founders who have been through this before – discuss hiring challenges, failure modes, the dynamics between sales and marketing, and more. This is an edited excerpt from the third episode of “Boss Talk”, a new weekly Clubhouse show hosted by Ben and Ali – you can listen to this whole episode (and others) on our new podcast feed, a16z Live.
On hiring the first VP of Sales, how founders can effectively support and manage them, and common mistakes to avoid…
Ali: The biggest mistake people make is they’ll try to use their own logical way of thinking, and the way they are constructed, in analyzing how this salesperson thinks. And then there’s a clash of cultures. And then usually they arrive at, I don’t think that was truthful, what he said here, or this thing that he said didn’t logically follow from the other statement, and so on. I don’t think we should hire this person. I’m a no.
So, then they pass on all these people, and then they say, you know, I finally found the salesperson that’s really awesome. And then it’s an engineer type, who’s like them, super cerebral, maybe even introverted. But guess what, they’ll probably suck at sales. Because you basically hired yourself in a role where you actually need a different culture to succeed.
Ben: I definitely agree. You know, a really interesting thing that I find with engineers trying to hire salespeople is, if you ask an engineer a question, the engineer will always ask himself, “okay, what’s the answer?” Salespeople never do that. “Why are you asking this?” That’s what they want to know. And they’re kind of suspicious by nature, if they’re good. You roll an engineer into an account, and they say, “Hey, do you have this feature?” And the engineer will go, yes or no. But the sales guy will go, “Why is he asking me about that feature? Which competitors have that feature? I need to know that before I say anything.”
And they’ll do that to you in the interview. And this makes CEOs who are engineers really uncomfortable. Because they’ll ask them a question, and they won’t tell them the answer. They’ll get a question back.
Ali: We had a sales guy. At that time, we’re trying to figure out a pricing model, and pay as you go was a thing, you know, elastic pricing and all that. So we asked this sort of sales candidate, “What do you think about pay as you go pricing?” And he just looked at us and said, “I like when it goes up.” We all laughed, but then we said, “Okay. But when it goes down?” He said, “Don’t like it then.”
He didn’t want to answer the question. And actually, he was smart, because that question had divided the founders. There was a right answer and a wrong answer. And he knew it. And he’s like, “I’m not going to tell you. Because if I say this, who knows? Is that the right answer or the wrong? So I’ll say I like when it goes up, I don’t like when it goes down. What do you guys think?”
Ben: Yeah, yeah. Definitely, definitely. And then once you get them on board, what are kind of mistakes that you see? What are the things that you had to figure out when you brought on Ron [Gabrisko, Databricks CRO]? Because he was really different than everybody you had in the company at that point.
Ali: One of the skills that most great sales leaders have, they’re really good negotiators. So they’ll be negotiating with you. So, you’ve got to be prepared for that. If they’re not doing that, I think there’s a problem. Like, for instance, with Ron, it started with completely obnoxious, outrageous demands on compensation, which meant he’s a good sales guy, he’s going to get big deals for us. But then that continues, when you’re setting the targets for the year, when you’re setting up the plans for the year. If you have an amazing salesperson, you’re basically negotiating with a person who loves negotiations. And that’s what he does for a living from 7am till 8pm, 9pm every night. Can you get comfortable doing that, or do you think as an engineer, “I can’t deal with this, and this other guy seems much more of a straight shooter or logical.”
Ben: Yeah, yeah. And what I always say is, you have to learn to manage diversity. And there are different kinds of diversity. And probably in an enterprise software company, the sales person is going to be the first person who gets hired coming from a really different way…
Ali: Yeah, sales in pretty much every company is actually a distinct culture from the rest of the company. Just start with something as simple as compensation. You’ve changed the culture by saying, these guys get paid completely differently from everyone else in the company, in a radically different way. You know, very little equity, and they get huge packages, and they might make millions of dollars, but most of it is variable, and they have to earn it.
Ben: Yeah, there’s a lot of CEOs that don’t want to pay commission, which is crazy in sales. I remember I had this conversation with one of my CEOs. I said, “Tell me this, do you have any engineers that ever on a weekend, will actually write some software or do something like that?” And he goes, “Yeah, I have people like that.” I said, “Well, I guarantee you, you don’t have any sales people who sell software for fun on the weekend.”
It has to be competitive. There has to be a president’s club, there has to be commissions, because it’s a prize fight. And no prize, no fight.
- All Things Sales: 16 Mini-Lessons for Startup Founders
- Hire a Head of Sales
- Managing a VP of Sales: It’s Not Supposed to be Easy
- Why Must You Pay Sales People Commissions?
- Sales Compensation: Beware, You Get What You Asked For
- When Sales Isn’t Just Selling: Advice for Founders in Early Markets
On hiring the first marketing leader: the right profile, the right time, and the right match on go-to-market strategy…
Ali: Marketing and sales, especially in a B2B company, go hand in hand. So, if you already have a sales leader, it’s really, really important that that person gets along with whoever you’re going to hire in marketing. In some sense, sales is the customer for marketing. Marketing generates the leads and delivers those leads to the customer, which is sales, sales then runs with it. And if sales says, these leads are crappy, then it doesn’t matter. Or if they say, “hey, this message you gave me is useless. Like, I’m not going to use it. I’m going to come up with my own.” Then why do you have a marketing department? And that happens. It’s very common. So if you already have a sales guy, make sure that he or she is a really integral part of that search process when you’re getting the marketing leader.
Ben: Yeah. Right. Because if they hate each other, then you’re breaking up that fight all the time.
Ali: Yeah. And it has to match… Different companies have different go-to-market motions. A company like Tableau was selling desktop licenses for $2,000. A company like Palantir, I suspect, is selling contracts that are always at least seven figures or maybe eight figures. The kind of leads you need and the kind of marketing you need is different. So make sure that the marketing leader you’re getting fits what you have on the sales side.
Ben: Yeah, that’s a really good point, in that, when you hire an executive, you’re paying a lot of money and equity, and you’re buying knowledge. And so if you bring in a head of marketing, and you’re a B2B API SaaS company, and that head of marketing is from whatever, Palantir, then you’ve screwed up, because you need somebody who’s from a company like yours, because you’re buying that. You just paid them for knowledge they don’t have. And that’s insane because what you’re really doing with these executives is you’re accelerating the entire company’s time to learn how to go to market.
And this is a mistake people make. They’re like, well, do they really have to come from the domain? Yes, they really have to come from the domain. Do they really have to know the customers that I’m selling to? Yes, they really have to know the customers that you’re selling to, because that’s what you’re buying.
Ali: Yeah. The other mistake a lot of companies do, and I think Databricks did in the early days, which is, you sit down and say, what kind of go-to-market would I want? Oh, I’d like to have million dollar deals, or I’d like to have $10,000 deals. So at Databricks, we made the mistake early on, where we said, “oh, we don’t even want to have salespeople. It’s better if it’s super automated, and people just swipe a credit card, and it just grows like that. That’s the one we pick.” As if it’s a choice you can just make.
Ben: Yeah. I’ve got this product, I’m selling it to that customer. What kind of channel do I need to connect the two?
Ali: Yeah. In Databricks case, we take massive amounts of data and do machine learning on it. And if we improve by 1% some metric, that could mean a $100 million of improvements for some company. But that means we need to work with companies that have lots of data, and where 1% improvement matters a lot to them. That happens to be big enterprises. And the channel you need to talk to those are enterprise sales. And that’s a different game than if you’re selling to startups.
Ben: Yeah, it’s amazing how many CEOs will make that mistake. And it always comes in the form of, well, you know, I don’t want to hire a Rolex wearing salesperson or something like this. And it’s like, well, because you don’t like Rolexes? It’s kind of like if I’m taking a trip to Australia, and I’d like to get there on a motorcycle. It’s like, well, you can’t get to Australia on a motorcycle.
Ali: I want to have really, really low CAC, customer acquisition costs. That’s what I’m going to go with. Who wouldn’t? But maybe that doesn’t get the job done for the product we have and for the market you’re trying to reach?
- a16z Podcast: Stories and Lessons in Enterprise Sales
- The “$20M to $500M Question”: When to Add Top Down Sales
- a16z Podcast: Getting Sales Right
- a16z Podcast: Product-Market Sales Fit (What Comes First?)
On the dynamics between sales and marketing, common reporting structures, and how to avoid finger-pointing (or, even, should you?)…
Ali: One thing that’s weird [about that] is, actually, the finger pointing can be good. I actually always preferred not having a COO or someone between me and all these different functions reporting to me, because then I would actually find out what’s going on. Like, the salesperson would say, “Hey, these leads are not great.” And I would say, “Why not?” And I could dig into it. And then the marketing leader would say, “Yeah, he says the leads are not great, but actually, they’re not spending their time on the leads, because they’re actually focusing on this other thing, which makes them more money right now.” That helps you configure it.
Now, maybe you have an amazing leader that can do that instead of you, but that’s a lot of power in someone’s hands. And if you just started your company, and you get one COO, CRO that owns all of go-to-market, that’s a lot of trust in one person. But more often than not, they probably don’t understand your product as well. And they don’t know what kind of company you’re creating.
Marc: Yeah, the other thing that’s really important to think about here is, basically, the two functions operate on very different clock cycles. Sales is typically executing against quarterly targets, and then ultimately, annual targets, and so forth. And marketing has some of those, but marketing generally is playing a longer game. They’re trying to do long-term brand development and corporate communications. Sometimes lead gen plugs straight into sales, but they’re doing a lot of other stuff that maybe is a little bit more amorphous, or high level around long-term demand creation.
And so the metaphor that gets used a lot is marketing is air war and sales is ground war. And it’s a little bit like the Army and the Air Force. If you talk to Air Force officers, they may say, “I don’t know why those guys are always running around with their boots in the ground… Why can’t we just bomb from the air?” And the army guys are like, well, “these Air Force guys, they’re literally up in the clouds, and they actually don’t know what’s going on. They’re not at the point of contact with the enemy.”
There’s a similar dynamic that can develop between marketing and sales, where the marketing people think the salespeople are kind of the grunts and the salespeople think the marketing people are just, like, out to lunch. It’s a real cultural difference.
And so, they do naturally go together in the sense of there’s a direct connection, which is they’re all about go-to-market. But they also don’t go together in these really important ways. I would say typically in a company, if marketing reports to sales, typically you have very weak marketing. If sales reports to marketing, typically you have no revenue. And then if they’re peers, they generally argue a lot. And I think those might be the three choices.
Ali: And I agree if you put marketing under sales, and it’s really sales driven, it’s going to end up being very short term. Your sales leader will look at all this stuff marketing is doing, and they’re going to only fund the stuff that is really guaranteed ROI in the short term. So, it ends up being lead gen, and programs, and events, and those things that immediately turn into revenue. They’re not going to invest in the long term branding stuff that you need, and the thought leadership, and the things that over time actually are more important that you need to do.
- Growth+Sales: The New Era of Enterprise Go-to-Market
- On Combining Bottom-up Adoption and Enterprise Sales
- a16z Podcast: B2B2C
- a16z Podcast: Creating a Category, from Pricing to Positioning
- Going to Market When No Market Exists