[theoryofx]

"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.

[lbotos]

> 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]

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]

> 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

[throwaway2037]

    > You think the quality of Anthropic’s salespeople had much to do with them crushing their numbers as Claude exploded?

This raises an interesting point. I think B-to-C sales for small amounts (ignore car sales for a moment) is very different than B-to-B sales where the amounts are normally 10-1000x larger than B-to-C. It is much easier to distinguish the great from good from mediocre, etc. To be more specific about Anthropic, the B-to-C sales team is probably more of PR & marketing to build hype around the product. However, the B-to-B sales team is trying to sell contracts to large corporations for 100s or 1000s of new users. Again: The scale of economic impact is incomparable, especially when deciding how to compensate staff.

Also, in my personal experience, the best sales really shine when there is an economic downturn, but they manage to outperform everyone -- existing and new accounts. Or, in the words of Warren Buffett: "Only when the tide goes out do you discover who's been swimming naked."

[jasode]

>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.

Is there a notable company with enterprise sales that's successful without sales commissions?

Companies in the past have tried a "flat salary no commissions" comp structure for salespeople before and it doesn't work even though intuition seems to tells us that it should. The thinking goes something like... "If salespeople are paid a good salary and therefore aren't under any pressure to meet any quotas to earn a high income, that mental freedom should allow them to sell."

What actually happens is that fixed salaries for sales positions attracts underperformers who can't sell and simultaneously, makes the job not attractive to "rainmakers" who know they're worth more than the fixed salary.

E.g. Pluralsight made the news in 2014 for not paying commissions to salespeople with a list of intuitive-sounding reasons: https://www.inc.com/aaron-skonnard/why-sales-commissions-don...

... But 2 years after that story, they changed their policy and had to pay sales commissions again. They eventually learned what previous companies already figured out: variable pay for salespeople works the best.

[theoryofx]

Yeah no doubt you have to have performance based compensation but that's exactly what equity and bonuses are for everyone else. Sales people are special in getting large amounts of cash comp in addition to equity.

[jasode]

>Sales people are special in getting large amounts of cash comp

Not sure what you mean by "getting large amounts of cash comp" as if it was a given. Co-founder clarified their base pay is lower. If they don't sell, they won't get large amounts of cash comp.

What's the alternative idea you have in mind for compensation? How does one re-divide the pie to be more "egalitarian" to the fixed-salary $200k non-sales employees that doesn't lower the compensation to salespeople and make the job less attractive to rainmakers?

[theoryofx]

Sales people that don't sell just get fired, that's the thing about being such a quantifiable role. So in practice at a startup with a hot product you end up with a team of sales people receiving huge amounts of cash comp.

Everyone in in a well run startup org gets performance based compensation in the form of increases in salary, bonus, and equity.

There's no reason sales people couldn't be compensated in the same way. The reason they're not is just that it's considered an 'industry standard' to reward instantly with cash.

Sales people have themselves a sweet deal they're loath to give it up whether or not it's in the best long-term interests of the company or even themselves. It's not a terrible thing but it does seem an anachronism that will go away.

[jasode]

>Everyone [...] gets performance based compensation in the form of increases in salary, bonus, and equity. There's no reason sales people couldn't be compensated in the same way.

There is a reason and it's based on the external market dynamics that the company itself can't control. The potential candidate salespeople can see/compare how other companies pay for sales.

Whatever principled stance the company wants to take on compensating salespeople in a different way than "industry standard" e.g. "same salary + same bonus as the devs" or "flat salary no commission" etc ... those idealistic plans still have to compete in the marketplace with other companies paying high sales commissions. Therefore, if the more egalitarian sales comp structure means the "rainmakers" are choosing other companies instead of yours, it's a moot point.

E.g. 0xide's comp plan for recruiting good salespeople still has to be competitive with everybody else such as: https://www.cbinsights.com/company/oxide-computer/alternativ...

Sales commissions aren't an "industry standard" just because they're an "industry standard" type of circular reasoning. It's an industry standard because other compensation methods for salespeople that pay them like all the other non-salespeople don't work so most successful companies converge on paying high commissions for high performers. A lot of non-salespeople don't understand this so it seems like paying commissions for sales positions is arbitrary and unnecessary and therefore, "unfair". As a dev, I used to think sales commissions that exceeded my salary were ridiculous but having attempted sales myself, it now makes perfect sense.

Salespeople don't want to be paid like devs with an annual bonus. You have to treat them differently: https://a16z.com/why-must-you-pay-sales-people-commissions/

[theoryofx]

"It's an industry standard because other compensation methods for salespeople that pay them like all the other non-salespeople don't work ..."

[citation needed]

I think it's more accurate to say that it's an industry standard because it works, not because nothing else can work. There's a lot of herd mentality and (much more reasonably) risk aversion when it comes to messing with revenue generation.

[bcantrill]

Do not walk by their lower base! Sales people can make more -- but they won't unless they crush their number.

[tg76402]

That's because the folks who are buying enterprise technology (aka the economic buyers) for a solution that can potentially cost millions of dollars know if the person attempting to persuade them to do so belongs in that room or not. That is a skill learned over years of negotiation, contracts and legal reviews and executive messaging.

You have to have been in those rooms to acquire the skills that make for successful executive salespeople, and their variable comp is a requirement or you wouldn't be able to staff the team.