Margins are falling and Wall Street's hollering and the salesmen keep dropping their pants. The hawkmeisters of shrink-wrap are scrambling to save everyone's ass from the Reaper.
In the official history of the software industry, there is no chapter on selling. The idealized entrepreneurial life cycle begins with an idea; ideas become products, products become start-ups, and if a start-up can grab a few early-adopter beta users, it gets bought out for millions. End of story, back to hunting for the next idea. Let whoever acquired the company ramp up the customers.
Bill Kellinger is a career salesman. He was at Oracle in the late '80s, he was at Netscape since back when it was Mosaic. Now he's landed here, on just another arterial street in Santa Clara, California, inside just another ordinary office park at just another very ordinary high tech start-up on the verge of facing the Reaper.
Most entrepreneurs scurry around this industry totally in denial of the fact that one day, the Grim Reaper will be at their company's door. They can be the buzz of Internet World and send everybody home with a pocket full of decoder rings, but still the Reaper knocks. They can float a public offering and create a balance sheet so top-heavy with cash it wants to stand straight up in the air, but still the Reaper knocks. They can pay Yahoo! millions to get their share of eyeballs, but still the Reaper knocks. The time has come.
Someone has got to move units.
One of the first 30 employees at Manage.Com, Bill Kellinger was brought in to ramp up his firm's sales organization. According to the business plan that is about to get its second round of VC financing, he is supposed to bring in US$1.5 million in sales this year, which with a $3,000 price point breaks down into 500-plus closes. The average sales cycle will be 30 to 45 days. He gets to hire one telesales rep and one field rep, both of whom will be coming over from Netscape when Bill gets the OK.
Kellinger offers me a media-savvy menu of product explanations - the Wired level of detail, the Information Age level of detail, the MIS Journal level of detail.
"I'll take the Wired level of detail."
In the Wired level of detail, the new firm he's just joined, Kellinger says, "is a plane up in the air." And this plane has been flying around for nine months - basically, completely removed from society. The programmers had to build the plane, and the system engineers are the air-traffic controllers, and it's his job just to land the plane.
You can read that explanation again in case it was too technical for you.
The only problem with this is that Bill Kellinger's firm doesn't officially exist yet. It won't announce its existence for three more weeks. There's not even a Web site to produce leads for him. Founded by engineers, the company has been paranoid that if it announces its existence and idea, its product will get copied by someone else. They've been up in that plane refusing to identify themselves on the radar screens. His colleagues are actually quite nervous just having Bill Kellinger around; they eye him suspiciously over the rim of their cubicles. They've asked him to only come in half-days. "They're terrified of me," he says. He's too high energy, talks too fast, and they're afraid he will sell their wine before its time. Their product is basically 98 percent done. To a salesperson accustomed to selling vapor, 98 percent done is 100 percent saleable. But engineers are perfectionists, and to them saleable is a far cry from shippable. This is the x axis of the psychic space that divides engineers from salespeople: technical elegance versus pragmatic compromise.
So Kellinger has to get started on his $1.5 million without any product to sell, without even a company to announce. This doesn't seem to bother anyone but him, and to tell you the truth, it doesn't seem to bother him that much either. The reason is, his product has a clear niche for an established need. Basically, over the last few years, all these Fortune 1000 companies bought way too much intranet software, primarily from Netscape, and now can't manage it all. Kellinger's new company (which doesn't yet exist) is selling software (which doesn't yet exist) that manages the logistics for department-level network administrators. It's sort of a real-time CAT scan for the bloated body of network systems.
Maybe this is just the Wired-level-of-detail explanation, but it sounds to me like Bill Kellinger oversold a bunch of customers some intranet software when he was at Netscape, and now he's come to another firm to sell them a solution to the problem he helped create.
Kellinger insists, though, that it would be unethical to raid his old client list from the Netscape days. No argument from me there.
Just in case any of this seems out of the ordinary, I should explain how this company that doesn't exist got its annual quota of $1.5 million, progressing to $8 million next year and $20 million in year three. Bill says, "The marketing director looked at the business plans of 10 other start-ups. And the common denominator for all 10 was that their first year expected sales were 1.5 million, then 8 million, then 20." Then Bill takes another peek at the cover of my novel, which I set down before him at the beginning of the interview. Its title is The First $20 Million Is Always the Hardest. It's just a novel, but Bill looks at it and says, "Yeah, $20 million. That takes about three years, doesn't it?"
It is the cold-hearted imposition of top-down/product-indifferent quotas like this that makes engineers so distrustful of sales. So deep is this collective distrust that the sale of the new machine is routinely kept hidden from the general public. We never hear about the salespeople. The bias is so entrenched that a recalcitrant coder with purple hair, nose ring, and hands heavily callused from his punk guitar is considered a more acceptable public figure - he better represents this industry - than an overfriendly family man in a Nordstrom suit who carries the company bag. What's going on here?
The guardians of the official history suggest that the real brilliance in the software business is in strategic decisionmaking. It's all about cutting the right deal - reserving a crucial right in the contract or partnering with the company that's on the cusp of becoming the protocol standard. Product. Marketing. Deals. These are all cunning solutions that demonstrate virtuoso brainpower - and there is nothing more esteemed in this industry than virtuoso brainpower.
But sales is not about brainpower. Sales is about manpower. While chip speed has been doubling every 18 months, an average face-to-face sales call still costs around $400 and takes half a day. It's labor intensive. The methodology of sales is still fairly much trial and error - you knock on 50 doors, you find five good leads, you close one sale. Don't like it? Go hide in your cubicle.
Dare you do more than peek over the cubicle rim? Dare you risk learning what really saves the software industry's ass, quarter after quarter? Can you stomach confirming your worst suspicions, all of which have to do with sales being sleazy, in order to go where you're only unofficially allowed: into the soul of the sales machine?
Field call
The most notable characteristic of Mars Garro is his voice: It has the resonant pitch of a television sports announcer, quick to lend exuberance to ordinary dramas. Sometimes he does his own play-by-play commentary, offering observations to the other half of his broadcast team, an imaginary presence whom Mars addresses as "Jim." If you are one of the worker bees deep in the honeycomb hive of a downtown city, a visit from this human bumblebee will take the lull out of your day. His love for life is infectious.
Mars, a pseudonym I'm using to preserve his anonymity, is a field rep for Oracle. In the last week before he was to leave town for another region, we called upon a division of Wells Fargo. Rep territories are always being divided and repartitioned, and reps are frequently moved around so that they don't have to live with the consequences of overselling an account. There is an opportunity for Mars to do that today - to load up Wells with software it could go without. He blew out his annual number three months ago, so he'll earn a triple commission on any orders taken today. When I ask him what his income is, he replies, "Tasty." I do know that he's been looking at open houses on Sundays, and a mortgage is an option, not a necessity. Last week, he went house shopping one night, found something he liked, and put an offer in at 10 p.m. The next day, he drove by to take another look, and with the benefit of daylight discovered that the trim and siding he thought was slatted wood was really plastic. He had the realtor on the phone right away.
This division of Wells Fargo I'll call the Commando Finance Unit. They are Green Berets who wear green eyeshades. They report directly to the CEO. What they do is independently verify all of the department reporting that gets sent to the CEO to make sure some department isn't covering up red ink with cooked books. They need a safecracking tool that can penetrate the internal network and raid all of these wildly divergent types of databases scattered around the firm.
Mars is going to demo just such a tool that Oracle has ready. Well, kind of. It's almost ready to ship. Really, quite close. Give or take a little time. Close enough to suggest to the Commando team that it is safe to put their order in now, before the end of the quarter. Well, at the very least we can say that it's ready to demo, which is more than we could say three weeks ago, when Mars failed to get it working in front of this same audience. The point here is that the unit has been begging for this tool for years, and if Mars can make it look like it works smoothly and handle the supervisor coolly, the rest of the sale should be easy. The Commandos so want this tool to exist that at 7:30 a.m. on a Friday morning the conference room is full. There are no stragglers.
There seems to be a slight problem though. Mars is trying to dial in to the Wells network through a phone jack, but his laptop can't establish a connection. He tries another jack, and then another.
"Murphy's Law seems to be prevailing, Jim," Mars laughs anxiously.
Mars is pretty sure that it's a problem on Wells's end, but it still looks bad for him. People head out to refresh their coffee and check email. One of the unit supervisors scratches his head. He tries to call the sysadmins, but can't reach them, so he puts out a page. In the meantime, Mars trolls cubicles fielding technical questions from the Commando team about other software he's already sold them.
One of the things that makes Mars such a great rep is he came out of tech support at Oracle. This taught him all sorts of practical, hands-on solutions to the everyday problems users have with software. Since buyers can never possibly understand all the technical issues that distinguish one software package from its "me too" competitor, at some point the deciding factor shifts to some entirely different proxy variable. That proxy is the rep. Which rep would you rather do business with? Which rep would you rather have chatting you up every month, taking you to lunch, troubleshooting your system, and bothering your staff? The Commando team has been happy to have Mars, and he'd like this to be their lasting impression - that he was helpful.
At 8 a.m., one of the sysadmins finally calls back. "Oh yeah," he says, "It looks like some bozo turned that network machine off last night." He powers it up, and in no time Mars is able to dial in without problems. He fires up the screen projector, which blasts a picture of his desktop onto a dry-erase whiteboard that covers the wall. The unit supervisor calls his entire team back into the room, someone dims the lights, and we're ready to go.
Except ... another tiny little problem. Mars goes to the dry-erase board to wipe away all the formulas that have been written on it, so he has a clear surface to project on. The red ink won't seem to come off. Some bonehead has accidentally written all over the board with indelible red ink. Suddenly this room full of semiprogrammers attacks the problem. The only thing that seems to work is a ton of elbow grease. One of the Commando guys uses a blue dry-erase pen to draw a matrix over the board, and he orders everyone to take their square and start rubbing. Fifteen guys, burnishing a wall.
"Talk about drama!" mocks Mars.
It takes about five minutes, and most of the ink comes off, except where the blue dry-erase pen crisscrosses the red - that chemical combination seems truly indelible, leaving the whiteboard pocked with these purple hash marks. Everyone's palms and thumbs are bright pink.
Except for those 40 minutes of minor inconveniences, the demo goes smoothly. The software works beautifully. Unfortunately, the team has to meet with the CIO at 8:30, so Mars is cut short before he has a chance to really let the program show off. The programming team at Oracle that wrote the software would abhor the oafishness of this scene - the lack of precision, the shortage of time, all the cool features that go unshown. But the team is nevertheless impressed. The unit supe says what he always says: "Why don't you send me a free copy to evaluate?"
Mars gets maybe 12 minutes in and could squeeze in another three, but he wants time to find a proper good-bye. The unit supervisor breaks the ice for him: "Well, guys, some of you may know this, but Mars is moving to a new region and this is his last visit to us."
One of the guys brings in a cinnamon roll festooned with a lit birthday candle. Nobody knows what to sing, so they just applaud a little. Mars, who is a natural showman, croons in a Frank Sinatra voice a few lines of Cole Porter's "I Get a Kick Out of You," then breaks down in embarrassment. He tries to cover up his unwanted exhibitionism with forced chuckles, saying, "Aw, shucks, hold your applause, please." Then watches are glanced at - OK, token moment over - and the room clears. It's just the unit supervisor and Mars (and me). What about the sale?
We make our way to the elevators.
Normally, the timespan from demo to close takes a month, during which the product is evaluated and contracts are negotiated. Going for the close so soon after the demo is a procedural faux pas, an awkward unseemliness in a timeworn, step-by-step exchange designed to make buying and selling pleasantly unsleazy. Also, Mars doesn't want his very last impression to be forced. But hey - Mars is a salesperson. I'm not sure he can help the words from coming out of his mouth.
Mars tries what is known as The Reverse Close. I'd heard that the reverse close is a very dangerous pitch line, not many can pull it off, but it works fast if it's the last day of the quarter.
He says, "Look, this is my last week, I don't have time to close you. And if I did, you've seen all my techniques. So let's not jockey each other that way. I know you need this new software as soon as you can get it, and you know I need the letter of intent this week. So the question is, how much room do you have in your budget? You tell me. I'm going to give you the CD. How many seats can we write now, and how many will we just wait until next quarter for?"
The unit supe pushes the elevator button. "Well, I'd like to take a look at it."
Mars throws the next line out jokingly, but it rings with wishfulness. "Not feeling like giving me a little going-away present, huh?"
And the elevator arrives. Time's up. They return to the comfortable ritual of highly starched male barbing.
"Go get 'em out there," the unit supe jousts, plugging Mars's shoulder with a softly thrown fist.
"Work on that golf swing," Mars parries. "Next time we play I don't want to take all your money."
The doors come together.
I look at Mars and he's a little sweaty. He shakes his arms out and rolls his shoulders. "Oh boy," he says. He's giddy. He's helium. "Last time in this building, Jim."
"Too bad about the sale," I say, steering him back to the topic.
His mind is elsewhere, but he still responds. "No worries. He's a good guy. He'll buy as soon as the software's ready. I'll call him."
He hits the front doors at a clip. "Oh boy," he says again. The bumblebee is free.
Motivation
Salespeople are motivated by money. They'll admit this right up front, which is quite refreshing - it's not taboo to them. They don't fabricate some cockamamie motivational flow chart to imply that, after all, money is just status, or how it's in the best interests of the firm for them to pursue their own personal self-interest. They want money so they can buy cars and houses and private-school education for their children, and maybe a sailboat or a trip to Tahiti. It's not an equity game - they want "W-2 money." Cash. They don't want promises. Income this year, right now. They don't have the net worth of company founders, but their take-home pay makes up for it.
Money is also what pulls them through the bad days, the days when customers are reneging and the sales manager is carping about why more deals that were rated last month as "85 percent likely to close" haven't closed by now. To drown out this chatter, they singlemindedly focus on hitting their number, and once they hit it, the lure of double or triple kickers spurs them to blow it out.
Their number is their quota. Most software salespeople have quarterly numbers, but some are monthly, and in the real chop-house atmosphere of a regional reseller it's "put out or get out" on a weekly basis. The quotas come directly from the business plan, which is to say they may have no discernible relationship with reality. When a salesperson meets quota, every additional sale above that quota can pay double, then triple, the commission. Quotas are skewed down intentionally, so salespeople feel good about themselves averaging 120 percent of their number.
The dollars earned determine your career. Walk into a pre-interview and hand over your résumé and the first thing some headhunter will do - the first thing - is get out the HP 35 calculator and add up the running totals of two figures: how many years you've sold, and how much money you've earned selling. It's that simple. As soon as you've made $50,000 for qualifying leads, you'll have job offers in telesales for $90,000, and a year on the horn will land you in the field, working face-to-face for $140,000, minimum. If you prove you're any good, expect double that.
So if it's all about numbers, do salespeople really believe in what they sell. "Do they," to restate the question in their own terminology, "drink the Kool-Aid?"
If it were a multiple-choice question, the answer most frequently checked would be: n/a, Not Applicable. I encountered the complete bell curve of optimism, from bitter cynics to earnest evangelists, but nobody pretended that this was essential. What salespeople need to believe - and all they need to believe - is that they can sell the product. Not necessarily that it works, just that they can sell it. Before you roll your eyes at that, consider that selling unworkable software is far less common than the inverse - being given a quota on software that works fine but that nobody needs. That's the salesman's migraine. Just give 'em something they can sell.
Listening
Jim Yares is a rover, a specialist who targets crucial strategic clients for the Vantive Corporation, which sells high-end customer databases. His average purchase order, combining the basic software and the seat licenses, runs in the mid-300,000s.
By now, you are probably expecting Hades himself. The guy who sells Fuller brushes to the wife of the guy who sells Florida swamp real estate to the bedridden. But Silicon Valley is in Northern California, after all, and the Glengarry Glen Ross sell just doesn't go over well here. We need our touchy-feely. So a majority of the most successful salespeople are ones who create a touchy-feely buying process, who can make you feel comfortable and reassured with your purchase decision.
Yares used to be a goal-oriented Machiavellian, but he burned out on that and has learned to turn sales into a process. He's 36 - for men, an age of introspection. Before he came to Vantive, he took seven months off with his wife to sail around Mexico.
Now he's got a baby who's walking but not yet talking, and his daydreams as he drives up and down 101 are mostly about being on that sailboat again. He recently reread Zen and the Art of Motorcycle Maintenance and considers its author, Robert Pirsig, one of his heroes. What makes Jim Yares so Northern Californiaesque is that he grew up in the South, where congeniality is so nurtured it seems natured. Jim Yares is touchy-feely, but he's not sticky. He doesn't ooze any vibe. He is a porch, a wicker chair, and a summer breeze.
Executive summary of what I found when accompanying Jim: Selling is all about listening. Listening is a euphemism for keeping your trap shut. When you walk into an account, what you're asking for, at the very least, is a meeting - which better go well. Customers' satisfaction with a meeting will be directly correlated to how much they get to speak. (It is the tendency to interrupt that hinders engineers who try to sell. Even when they try to listen, engineers turned salesmen give in to the irresistible desire to impress the client with their brainiac ability to anticipate needs through logical deduction rather than allow clients to spell out their needs themselves.)
Yares uses a highly empathic conversational method that is much like echoing or mirroring. He merely repeats the essence of what he hears, resisting all temptation to ask leading questions. The dialog that ensues sounds more like marital counseling than a sales call. Yares often ends up moderating the bureaucratic grudges between technical engineers and their department managers.
Technical Engineer/Husband: She thinks I'm lazy.
Department Manager/Wife: He ignores what I ask him to do.
Jim Yares: It sounds like what I hear you saying is that you agree you need a better customer database, but you have some differences about how difficult it is to implement such a database.
Yares can see where they're headed, but it's important he let them voice it. It's sort of like a 12-step program: They can't solve their problem until they publicly admit they have a problem. That's why it's very important that Yares meet with more than one person. In private, people will always confess their problems to salespeople. At that point, it's still a personal issue. But to get them to confess in front of a coworker is to make the problem an organizational issue.
Jim Yares (facing the woman): It sounds like you have some staff who might be resistant to change.
Department Manager/Wife: Well, yes ...
Technical Engineer/Husband (interrupting): Can your system work on PalmPilots?
In the afternoon, Yares finds himself in a tough jam with a tiny department of a very large engineering conglomerate. I promised to disguise their name, so I will call them Colonel Electric. The Boss Hogg of this Colonel Electric divisional subdepartment just purchased from Yares a very limited module of Vantive's software with a very limited number of seat licenses, a baby system. Now he hopes to get the system customized by Vantive "consultants," i.e., programmers. Software consulting normally runs about $1,500 a day. Yares would love to sell Colonel Electric a month's worth of consulting, but he can see that's not going to happen - this Boss Hogg doesn't have that kind of money to spend in his budget.
Boss Hogg tries his own kind of sell. He explains that if the system is adapted to run well in his department, it will probably be adopted by some of the other dozen relevant departments. The subtext of what he's saying is, "Why don't you give me the consulting for supercheap, i.e., free, invest in my system, and it'll pay off with more seats in due time."
But is this just a bluff? What if he actually has very little influence in all those other departments?
How to refuse the Boss's request for free consulting without just saying no - that's the question for Yares. If this were a one-on-one exchange, it might be easier for Yares to bury the request in the bureaucracy: "Why don't you put that down on paper and my managers will consider it." But unfortunately, Boss Hogg has brought his entire engineering staff with him - there are seven men in the room, all now serving as witnesses. Yares can't expect him to back down in front of his boys.
This is a situation that an engineer turned salesman probably would blow. Engineers are notoriously too fast with the solution to the customer's problem. They don't show empathy. Making the problem seem too easy to fix makes the customer feel stupid for not having fixed it earlier.
What Yares does is very delicate. If he can't draw the huge consulting fees out of the Boss, he'd like to encourage all the Colonel Electric staff to enroll in the cheaper Vantive training classes where they can learn to customize the system themselves. But if he offers the training classes outright it will sound like a blunt, "No; you're not getting any free consulting." Also, Yares senses not to address each of them directly, since their boss is running the show.
So Yares starts mirroring Boss Hogg, counselor-like, with the deep focus of a hypnotist: "It sounds like you personally have some system needs you'd like to be met." In no time this gets him to cough up a complaint: When the system prints out a certain report, the layout doesn't include fax numbers.
"I got nuthin' without those fax numbers," Boss Hogg admits.
Yares gets out his laptop. He intends to train the Boss, right then and there, how to customize the layout to include fax numbers. If the Boss can do it, then the staff will follow. This is a very high-risk maneuver, because if the boss embarrasses himself in front of his staff, Yares will never be forgiven. As Yares had said to me in the car (as sweetly as if he were quoting Robert Frost), "To sell software is to ask people to willfully become temporarily incompetent" - and men hate to look incompetent.
Yares demonstrates, but Boss Hogg is reluctant to risk making a fool of himself. It's dawning on him, though, that he's not going to get that free consulting.
Now, this is what is known in closing as The Wait. The Wait often transpires with a letter of intent in one hand and a fountain pen in the other, poised to secure a signature on the dotted line. But The Wait can take any form, over any issue. The salesperson has to simply sit there and outlast his client. The skill of waiting is in being stubborn without betraying any of the confrontational chin-thrusting of stubbornness. The salesperson can't provoke his customer to defiance.
Yares, the expert listener, is also a terrific lingerer. Minutes pass. The conversation in the room veers toward other issues, but Boss Hogg and Yares are hanging in there, mute. Yares is still that wicker chair, he's not leaving that porch. Yares could spend days watching grass grow.
Eventually, Boss Hogg just can't stand not doing anything, and his idle hands turtle-creep toward the keyboard.
Leads
It is raining bad leads in the software business. The hurricane of shitty leads is 10 miles off the coast and bearing down. Every software firm's 800 number rings off the hook, but it's always another grandma in Arizona with the wacky idea of selling hand-knit baby socks over the Web, and she figures she can spend $49 before her second husband steals the checkbook again. Every firm's Web site is being dented with a barrage of email from rogue developers angling for a free trial copy of the software. Every convention yields a fishbowl crammed with business cards, most of whom want to sell to you, not buy from you. Every direct-mail house has a catalog of brokered lists, compiled by housewives in Omaha who poll 10 million businesses with such micromarket-defining queries as "is your company A) 1 to 50 employees, B) 50 to 1,000, C) 1,000 to 10,000 ..."
Salespeople have an inextricably snarled love-hate relationship with leads. On one hand, the Number One complaint of salespeople is that they don't spend enough time actually selling, and spend too much time doing the bullshit - writing contracts, begging engineering for fixes, and chasing bad leads. I found this complaint voiced across all price categories. Too much downtime.
On the other hand, most salespeople insist on seeing all the leads, on the off chance one of those droplets falling from the sky might be a diamond, a lead that's worth working.
The dilemma in the software business is lead qualification. A good system screens all those rinky-dink leads then traffics the good ones right away to the sales force. The problem is, nobody wants to get on the phone and do the dirty work. With all the jobs open in Silicon Valley today, anyone who can speak in full sentences has got better offers. Calling people - it's just so damned low tech, it's antithetical to why people join this industry in the first place. Telemarketing services can do the job, but small firms don't have the volume to meet the contract minimums.
So the El Niño of crappy leads continues.
Quarter end
I hate the silence. There is something wrong. There is something evilly wrong. I am on the road again this morning with a salesman from a major software firm. I hooked up with him in the parking lot of the McDonald's on Bowers Avenue in Santa Clara, got out of my Jetta and got into his Porsche, and now we are on the way to a major bank to close a sale. He is silent. He has never been silent before. There have always been words coming out of his mouth. His silence is a wall I am afraid to climb.
Caffeine dizzies. The subtle noxia of rush-hour traffic exhaust. A whisper of carsickness from my stomach. His cellular jars us with its ringing. He doesn't look at it. It rings six times then cuts off. A moment later, he reaches to his belt, removes his pager, and sets it on the dashboard.
We have found a mutual respect, he and I. In my mind, I have nicknamed him The Burn Artist. From our first meeting I always enjoyed him for his excessive character, in the way one has a sick fondness for John Malkovichian villains. After that first meeting, I wrote this description of him in my notes: The Burn Artist drapes over his seat like a casually tossed leather jacket, other places to be. His face is stubbled weekend ruffian, and his wrist flashes a $7,000 Rolex. He is of medium build, but his ego, which rises up behind him, wears a 46. What that description doesn't convey is how much I have come to respect his cunning.
I'm beginning to see what he has done. I told him I wanted to learn about sales, and he told me some sensational stories about deals he has closed. Example: He sold seat licenses to regional divisions, when he knew that the customer's headquarters had already bought enterprise-wide licenses for that region - idiotic bureaucracies make such double-sales possible. (He also sometimes manipulated his commissions - he sold software but turned the purchase order in for consulting services, which paid triple the commission of software.)
Let me tell you how a salesman gets into this position. If you're a public company, you can be a growth company or a mature company. A growth company trades at a very high multiple of earnings, and the Street will ho-hum losses as the natural consequence of heavy investment in growth. A mature company trades at a very ordinary multiple, and if there's a loss the Street executes the CEO. All the tech companies that want to be growth companies have a powwow with their stock analysts every quarter, and the analysts look at last quarter's revenues and say, "Well, if you still want to be a growth company, this quarter you've got to get your sales up to here." And the analysts give them an exact figure. Meet it or watch your stock drop by half.
It's a treadmill that a firm can't get off. Grow grow grow, every single quarter, every salesperson's got their share. A firm is under intense pressure to make sales.
"Sometimes a product that we know doesn't work very well should be dropped," I had got him to say at our second meeting. Might this be the situation today? The Burn Artist is expecting to close a sale of an e-shop merchant system. It will be an enterprise-wide sale, thousands of seats. He is going to drop his pants from $15 million to $10 million to make the close. He's already over his quota for the quarter, so the commission he's expecting would be two points, $200,000.
We arrive at the parking lot of our destination. His cellular rings again, in vain.
He seems uncomfortable. He tells me to wait in the car. "Why aren't you answering the phone?" I ask him. "That's my boss calling," he says. "All year I've been telling them we should drop this product. It will burn the customer, and it will create support nightmares for us for years. Now that I'm on the verge of closing the deal they've finally woken up to the idea that I probably shouldn't sell it. But I'm going ahead anyway."
After he goes in, I sit alone in the car for a while. The phone rings twice more, then I get out of the car and go for a stroll. I think about my friend in marketing who put me in touch with The Burn Artist, and about the baby boy she had five days earlier, who is still under the sun lamps in an incubator at Mount Zion Medical. I walk into a Denny's and sit at the counter and drink decaf. In the booth behind me, there are two young guys in suits, one of whom is playing with a laptop and saying, "You remember last quarter, at Orange County? God, that was something."
Sales stories are always funnier afterward. On the way to a sale, salesmen tell little Aesopian parables, reminding themselves what to do and not to do. They're like little red pills, these stories - pick-me-uppers. The time I almost didn't chase that lead. The time I almost asked for too low of a price, et cetera. On the way home from a sale, the stories take on satirical dimensions. There is no lesson. The client was always ugly as Godzilla or dumb as a stick. Moments of agony become moments of high humor. "Boy, what was with her? The look on her face was like, 'How much more of my time are you going to waste, because I don't want to be late for my doctor's appointment at four o'clock to get this broomstick pulled out of my ass.'"
I walk back to the Porsche. In some time, The Burn Artist returns. His first six words all start with f. He stashes his laptop, and we are on the road again.
"All I had to do was drop my pants," he says. "They were expecting it, I was expecting it. But I didn't do it. My boss would have kicked my ass. But he can kiss that 10 million good-bye." (A few days later, The Burn Artist told me that his firm had officially stopped selling the product.)
"I gotta get out of this business," he says, aggressively downshifting as the Porsche hits standstill traffic.
Schmoozing
It doesn't happen very much. This industry is a sorry sad-sack bunch of no-funners. Oh, sure, field reps do some dinner and drinking, and if Macworld's in town you can stand outside the all-nude Mitchell Brothers O'Farrell Theatre and watch conventiongoers unpin their hologram badges and slip their wedding rings off their fingers, but the stories I've heard and scenes I've seen are mere cardboard cutouts of the real thing that goes on in more established industries. Where are the reps who racked up three Gs on the AmEx in one night, renting a limo by the mile to go night skiing in Reno, where at the baccarat table around 2 a.m. they met the Princess of Albania, who took them to her chalet to pet the polar bear chained up in her backyard?
People are working too hard on such short sales cycles, grinding away in their cubicles, trying to save their firms - they don't even know how to boondoggle a golf game now and then. The mock-casual eloquence of sales is largely missing. Everything these days is Solution Sell, meaning every bit of sales karma is invested getting customers to like the product. And that's a smart strategy, because in the Valley of Revolving Doors, both the seller and the buyer are likely to be employed elsewhere soon. Big schmooze budgets, the crowbar of the Relationship Sell (always cracks clients open), aren't very common here.
Firms do have entertainment budgets, but that's allocated for marketing, not sales. Marketing usually blows 90 percent of it on a big party at a trade show, the success of which is carefully measured against the industry-standard Tylenol Index - i.e., the severity of one's hangover. The money is spent on the party because there the CEO can see where it goes ("Gosh, look at the size of those defrosted prawns!"), as opposed to when it's spent by reps in the field.
And one of the main reasons money isn't thrown at clients is that it doesn't have to be. Geeks are patsies for a baseball cap. Even if you're selling software to, say, the Plumbers Union, you're still selling to a geek who works in a closet in the back of the Union Hall, and he'll drool over a T-shirt. What pushovers! I have seen so many coffee mugs passed out I can't help but roll my eyes - this is the best you could come up with!? I'm astonished to watch how greedily these cheapo mugs are taken in, and by the long faces that appear when there haven't been enough mousepads for everyone in the room. Like they don't already have a mousepad, or a drawer full of mousepads, or enough mousepads to wallpaper the hallways with tiled cushions.
The drift-off moment
It's time to answer the really big question on everybody's minds, in regard to the technology industry.
Can it keep growing so fast?
Because it seems, sometimes, that these high tech firms are just selling their stuff to each other.
And they are. When I was with Jim Yares at Vantive, he'd been having trouble breaking into 3Com, which his firm had determined would be a key account. Yares couldn't get anybody at 3Com to return his calls. So how did he finally get a meeting? He did some hunting around his own company and found that Vantive regularly buys a lot of 3Com network equipment. So he called that salesman at 3Com and in the nicest, sweetest, most low-pressure way possible implied, "Hey - buddy! Scratch my back and we'll keep scratching yours!"
Four different sales reps told me a version of the embarrassment of walking into Dell Computer carrying a Compaq laptop, or vice versa. They never got away with it. There's a loyalty test: We'll only buy from those already buying from us.
So it is very important that when Paul Mann walks into Oracle to sell the software giant a service called SurveyBuilder.com, Mann is running SurveyBuilder on an Oracle database back in his Sausalito office. It is the first question out of the Oracle team's mouth, and it is also questions two through four. "Are you running Oracle 8? Good. Are you a partner? Oh, you're not. Why aren't you? You'll want to correct that before you make a pitch to Corporate."
Meanwhile, Paul Mann gives a truly fascinating demo to Oracle. SurveyBuilder.com is a tool for webmasters to get feedback on their Web pages. For every 10th browser of a Web page, a little pop-up balloon asks them to take a survey. The answers help improve design, but more important, this gives a clearer profile of the average user, which Web advertisers are insisting upon. In order to get users to take a minute to fill out the survey, what Mann has found works the best is to offer to make a donation to one of 22 charities, such as the World Wildlife Fund or the American Cancer Society. Fill out the survey, a donation will be made.
How big of a donation does it take? For an average visitor, it takes a donation of $2 to arouse good compliance. But if they are trying to poll executive types, it usually takes a donation of $50 to make it worth their while. I don't know if that makes the executives more stingy or more generous.
So selling SurveyBuilder.com is a real joy for Mann. He made a huge bundle in the headhunting business when he sold his partnership in a firm that had grown in three years from eight people to 40 offices. He's deeply at peace now, and he's found a niche where he thinks he can really help people, since so many webmasters are being hammered on by their bosses to justify why so much money is being sunk into ecommerce. His product is cool enough and engineered so well that he could easily be sprinting for the quick acquisition/embrace, but he's not giving in at all to that 100-yard-dash mentality. He's got a staff of only nine, has turned away venture funding so far, and doesn't want to push SurveyBuilder on clients who aren't ready for it - even if that means he'll get copycatted by other entrepreneurs willing to play the game at burnout speed. He motors down from Sausalito in his old Porsche Targa, wearing film producer clothes, and the mood is more Sunday drive than sales call.
When Mann gives a demo, what he's waiting for is what salespeople call "the drift-off moment." The client's eyes get gooey, and they're staring into space. They're not bored - they're imagining what they could do with SurveyBuilder. All tech salespeople mention this - they've succeeded not when they rivet the client's attention, but when they lose it.
The beauty of Mann's sales call is that he saves the donation part until about 20 minutes in. He makes no mention of it. And then, right about when the client is expecting to be told what SurveyBuilder costs, he pops the donation thing on them. I watch this happen with the Oracle team. In an instant, their internal monolog shifts from "I bet this is pretty expensive" to "Wow, think how much money we can give away." And this juicy, soulful idea is incredibly appealing to the average philanthrope stuck in a misanthropic cubicle ecosystem. That the $2 donation makes the cost to them $2 more expensive per survey result doesn't faze them. What Mann is really selling here is the opportunity to be altruistic while still doing one's job.
Which is exactly why Mann's own soul is so content - he's breeding altruism while simultaneously selling.
For the four Oracle staffers listening to his pitch, the gooey-eyed drift-off into daydreams of generosity and munificence was as instant as clicking on a TV.
Price
In today's environment, selling vapor is less common than the opposite problem: customers who want to pay vapor. So many software firms have given away so many valuable programs in an attempt to gain market share that it's really hard out there for the salesman who's still charging money. I'm not just talking free browsers and plug-ins; some big-ticket firms are giving away what they used to charge five figures for, trying to book revenue on installation fees and consulting hours attached to the fire sale.
One Netscape field rep was asked by Lockheed for those terms - free server software attached to a generous purchase order for consulting. His response: "Sure, you can have the software for free. Hey, by the way, can I have a free jet?"
Again and again, software firms have to convince customers that the work they do is Not Trivial, that their product wasn't just whipped together yesterday with a few JavaScripts and can't be customized to their liking by tomorrow with a few more. Salesmen defend the efforts of programmers. It does not help that the salesperson's efforts to substantiate the price are regularly undermined by his own firm radically discounting the software every six months, trying to clear inventory to make room for upgraded versions.
That said, there are a few standard price points in the industry which seem to hold firm, "The Magic $99" being the lowest. Below that figure, there's not enough margin to pay for direct mail, advertising, or telemarketing. Put it on a shelf or give it a half-page in a catalog and pray. There's hidden costs there, though. CompUSA might stick you with a "product testing" fee; the catalogs want advertising surcharges. Make no mistake: Retail selling is an expensive investment. A minimum three-across shelf-space for 90 days, supported by an end-cap display and a window poster, will cost $35,000 to $50,000, with no guarantees most of your product won't get returned.
The next category up is "Fits on a Credit Card," meaning somewhere in the upper-hundreds of dollars. There's enough room in that to cut resellers in on the action, creating a whole network of dealers who host open houses and give demos. This multitiered distribution infrastructure is called The Channel.
Above that, it's "Department-Level Discretionary," about three grand. At most Fortune 1000 firms, all purchases above three grand have to go through a purchase requisition manager, someone who has taken classes and been trained to sit on a department's purchase order until the very last day of the quarter, when he knows the salesperson will call back and offer an additional 20 percent discount just to make his quota. Just as salespeople are paid commissions, these purchase requisition managers get quarterly bonuses based on how much they save their firm. Keep the price under three grand and handle the transaction over the phone, a series of calls spread out over 30 to 45 days.
Then you get to the direct sale. Face-to-face. Category name: "Whatever the Market Will Bear." Or how long the salesman can bear: In the early days of Netscape, when the company had far more leads than sales reps to close the leads, they didn't bother negotiating. Salespeople were free to drop their pants as far as they had to drop them to make a sale, and in a slash-and-burn method that got their sales cycle down to three days, they would customarily quote a price one day, cut it in half the next. (Now they're on a shorter leash.)
All of this is to say that the price of software, according to those who sell it, has everything to do with what buyers are willing to pay, and nothing to do with what the software costs to develop.
The sale
Jonathan Harris had such fond memories of the extended-family feeling at Macromedia during its pre-IPO years that he recently jumped to become the senior manager of worldwide sales at another start-up, Cosmo Software, hoping to find that magic again. Cosmo makes very cool VRML software tools for building 3-D Web spaces.
VRML's been the next big thing since 1995, which is a kind way of saying it's never become the big thing. Cosmo's sole investor, Silicon Graphics, has hung in until now, but the rumor I heard is that SGI, which has its own losses to bear, needs to find a new investor for Cosmo by the end of the quarter or it will pull the plug. A new investor will only come in if they see actual hard sales - if there's proof the Web is finally ready for VRML. To make matters even harder for Jonathan Harris, Cosmo's flagship product, Worlds 2.0, only shipped two weeks ago. So he and the seven sales staffers who work for him now have a 10-week window to save the company.
Let me restate that more succinctly: The bosses have reluctantly let the programmers take three years to turn an idea into a shrink-wrapped product, but to turn that product into a market they're allowing the sales force 10 weeks. Not exactly that extended-family magic Harris was after. A seemingly soul-robbing situation, until we hit the road.
To check the pulse of VRML, Harris and I fly to Bellevue, Washington, to check in on NW Tech, a hardcore dealer that sells workstations and software to the real bleeding-edge user. When we arrive, we're sniffed out first by Mathilda, the office dog, and then by a Billy Bob Thornton look-alike dressed head-to-toe in black canvas named Big Dan. NW Tech is a family-run outfit, so also on staff are Mom, Big Brother, and Uncle Rog. This is strip-mall turf, the office equivalent of trailer-park livin'. Harris knows the family from his days selling at Macromedia, and when he and Big Dan greet, I half-expect Mom to holler at Big Brother, "Go skin one of the rabbits and drop it in a pot, our boy Jonathan's back." We plunk down right inside the front door with Big Dan, and rather than Harris hard-selling the virtues of Worlds 2.0, Big Dan is the one with his mouth flapping.
"Oh yeah, we get calls about VRML every day. I'm going to kick it. No problem. Worlds fits on a credit card - we love it. You're way ahead of your competitors. Win-win-win. Attach Worlds onto all my 3-D Max sales, make another 17 points? I want some of that. Hey - it's a chance to take someone's money. Yup. We'll make some bucks together."
NW Tech is legendary for its ability to move new technology. The office walls are smothered with plaques from various software companies honoring them as #1 Dealer, Million Dollar Club, Platinum Reseller, et cetera. If you live in the Northwest and you design Web pages or draw 3-D graphics for a living, at some point you have probably talked to Mom, and she hasn't forgotten a thing about you. She is around 60 years old, her name is Oma Kemmis, and because of a lifetime smoking Parliament 100s she's got one lung left, fights emphysema, and has a tube running from her nostrils down to a portable respirator at her side. She's got the hand-knit button-down sweater draped over the back of her chair.
Now here's something you are probably not expecting: Mom is known as the Number One closer in the software business. Software firms track this data - they pass on leads to dealers and track the percentage that end up in sales. Mom has a close rate of 80 percent, and what's particularly amazing about that rate is that NW Tech doesn't drop its pants to make sales. In fact, customers often pay a slight premium to do business with her.
Why is she so damn good? Because she's a mom. People trust her when she rasps, "Nope, nope, that's a hobbyist tool. If you're working for clients on deadline you need to spend some bucks." If Jonathan Harris kicks it, and Big Dan pounds it, then Oma Kemmis kills it. Oma says, "Young salespeople today ... [inhale], if the customer's shopping them for price ... [inhale], too many young guys give up ... get beaten up ... [inhale]. I think the problem is ... they enjoy the game ... [inhale] ... I only enjoy the kill."
Big Dan says he lives for the occasional pat on the back from Mom. He gets misty-eyed talking about her. It used to be that he couldn't close. Big Dan was just a demo-jock, and for the 12 years they'd been in business he'd left all the closing for Mom. He had the classic techie's disability: He couldn't ask for the sale. He could line up all the dominoes but couldn't tip that first domino over. He could talk about a product till the cows came home, but he just couldn't ask for their money.
Then a year and a half ago, Mom went into the intensive care unit with pneumonia. NW Tech got in debt and their investors were begging out. Big Dan had to make sales. He was nervous as all get out, but his first sale was for $400,000 at a 25 percent margin, and suddenly it was "Hey, I can do this."
"I'm not in Mom's league, but my close rate is up there," he says with tremendous pride. He talks with his hands, which are as big as hams. Last week he closed nine sales on the trade-show floor, standing right in the aisle - "They handed me their business card, but I took their credit card." He's gotten the hang of keeping his margin at a healthy 25 percent: "When I write up that invoice, one line's got the retail price, the next line's got a cool discount that makes 'em happy, but a third line for an install fee puts the net right back up there."
No matter how much sales lingo pours from his mouth, I can see that Big Dan's not doing it for the money, or for a promotion, or to take a vacation in Tahiti with the commissions - he's doing it for Mom's love.
Now he sells all the time. He loves it. He loves to help people. At lunch, standing in line at Boston Market, he'll just turn to the next person in line and say, "Hey, you having any troubles with your computer?" The answer is always yes. Last week, he did a career-day demonstration at Kenmore Junior High, and before it was over he was selling animation software to eighth graders.
Our conversation is cut off when the phone rings. Mom wants Big Dan to take the call. "Gotta go," Big Dan says. "Can't turn down a chance to take someone's money."
I listen in for a couple minutes as Mom and Big Dan work the phones.
Mom rasps into her receiver, "Sounds like you needed this yesterday and want it installed no later than tomorrow." Without giving the customer a chance to think twice, she follows this closely with, "So, does your firm use purchase orders? No? Good, then why don't I take down the delivery address."
On the other line, Big Dan is defending his price. "Yes, this sale is lucrative for me, but it'll be lucrative for you, too. Think of how much more work you'll be getting done." He meets a little more resistance, but nothing he can't handle. He works an angle on the reverse close - I know what it's like to be a buyer. "Listen, when I'm buying a product, I appreciate clarity and full explanation. I like to know what I'm buying. We'll see that you have the same." He reaches for the order slip.
As we depart, Jonathan Harris's mood is buoyant. An hour with the family has completely restored his faith in Worlds 2.0. "It feels real good," he says, unlocking the car. "Sometimes being on the road is so much more affirming than hanging around the office ..." His voice drifts off, then comes back. "Sometimes selling doesn't make you question what you're doing, in fact it's the very opposite: Nothing makes you truly believe more in what you're doing than watching a customer like Big Dan's eyes light up."
Postscript: The VRML market did not emerge in time to save Cosmo. In the second week of July, Cosmo was closed down.
Closing
You might think the hardest part of selling is asking for the sale. The unpleasurable transition from talking about the product to talking about the price. Coughing up the line, "Do you have enough money to get yourself out of this problem you're in?"
But that's not so hard. The lines are scripted, the staging carefully orchestrated. Selling can have its phony niceties and feigned kindnesses, but hey - I'd rather be nice than rude.
What's hard - what's really hard, the hardest thing - is, after you've closed a sale, to say good-bye quickly. That's when you have to be rude, you have to cut conversations short at the very time when the natural human reaction is to linger, to further make nice as a sort of flash penance for having just closed the sale. The longer you linger the more time you give the client to rehash the decision to buy, and the more chance your sale is going to kick out. Linger, and they will change their mind. Leave.
Oh, but it's so tempting to stay. So tempting to try to end on a good note. Good-byes are never scripted, always improvised - trolling for an authentic moment so that your customer's last impression is not a disingenuous one. The Long Good-Bye, this weakness is called: the unbearable temptation to seem, in the end, not like a salesman at all.
And I feel that urge, after spending six weeks with salespeople. I want to search for one last anecdote to share, one more moral quandary or one more standout character who demonstrates the nuance of selling.
Instead, I'll make my good-byes short: Give salesmen their due respect. They're keeping a lot of companies afloat and dreams alive. Sometimes we get frustrated that the version of the future we'd like to buy is never quite the version of the future they are selling. But at least they have it in stock. Or will soon.
PLUS
