managementLet’s say, you are a startup founder, like myself. Try to hire a sales guy. Offer him a commission-only payment scheme. Listen to his reaction: he will demand that you pay a fixed salary too, on top of commission. Try to convince him that commission-only is a more reasonable and motivating setup. Goto 1. After a number of iterations you realize that the mission is impossible. Sales people are good at selling and the best thing they sell is the idea that their time must be compensated. Even if they don’t sell the product to your customers. If you don’t buy the idea, they go find another loser who will. Something similar happens when you try to pay programmers by result. They easily convince you to pay for their time. And you do.
A sales rep doesn’t know how to write code. Most of them don’t even know how computers work. However, he perfectly knows how to bullshit people. That’s exactly why we need him. Because we don’t know how to bullshit people and we don’t want to learn it.
Now, two strategies lie in front of him. He can use the skill against the prospects on the market and turn them into paying customers. He can also use the same selling skill against you, the owner of the startup. Instead of selling the product to the market he can sell himself to you. He can sell the idea that even if he fails to sell the product to the customers he still deserves a decent weekly paycheck.
What do you think, which sale is easier to make? What would you do in his shoes? The answer is obvious. The customers are far away and they have no mercy. If they don’t like the offer, they simply hang up on him and that’s it. You, on the other hand, sit next to him in the same office and can’t hang up. You are the low-hanging fruit. You are the weakest prey he can reach out to.
A customer is an external obstacle that he must overcome in order to get paid, as a sales commission. You are an internal obstacle, which he may also overcome to get a fixed weekly payment. You need him to fight the external obstacle. However, he is free to choose the easiest path.
In order to make him focus on external obstacles, you should make internal ones harder to overcome. Joseph Stalin once said that “in the Soviet army it takes more courage to retreat than advance.” This war-time concept seems relevant to the sales guys you hire. It must be harder for them to talk you into paying them a fixed salary than to convince a prospect to buy your product.
Emotionally, for you it may be rather challenging to constantly push him back. Just like it’s often hard to say “No” to a vagrant begging for a dollar at the corner. Beggars, unless they are physically disabled, also, just like sales people, have two possible life strategies. Either find a job or beg at the corner. The begging strategy, for the vagrant and for the sales rep, is easier to pursue.
Programmers are not much different. They also have two strategies. They can solve technical problems by merging qualified pull requests. They can also persuade you that you must pay for their time, not their pull requests. Which obstacle is going to be harder for them to overcome depends on you.
First, you set up a formula for measuring their contribution. Second, you bind their paychecks to it: they get paid not by you, but by merged pull requests. Finally, you taboo the very possibility of discussing time-based compensation.
What you get is a technical team focused on resolving external problems. The team will advance because it will be pointless to retreat. You simply won’t pay them for their time. No matter how many times they repeat “I was working hard the entire weekend.”
Incentives shape behavior. If you reward excuses, you buy excuses. If you reward results, you get results. As a founder, your job is to eliminate the temptation for your team to sell you anything other than tangible artifacts.
