Great article -- both in terms of the general message and the specific story about the bully.
One thing that helps a lot in a situation like that is having advisors (or board members) you can trust to talk with in situations like this. If they all also say "you don't know the Way It Works", then it's worth listening. More likely, though, they'll say something more along the lines of "Wow, that guy's an asshole. Look, you're confident about your business model, and here are some other examples of companies who don't offer bulk discounts. He's just being a roadblock. Here are some sales techniques that might help in a situation like this."
At my startup back in the 1990s, we had gotten to verbal agreement on a $200K deal. The paperwork hit a snag and our CEO headed off on vacation to a place with no FAXes or FedEx, but no problem: I was a naiveish techie, but I wa also founder/CTO and had signing authority. So we agreed that I'd fly to their ___location onsite, sign the contract, and get going. Once I got there, surprise: a couple of new terms! And no, we couldn't get started without a contract.
I said, y'know, I'm not comfortable with this. They said "but that means you'll just have to turn around and fly home." The deal was pretty key to our success and I didn't want to let it go but you have to draw lines. So I called up one of my board members, who agreed. They said "stick around for lunch, let's talk this through." After lunch they decided that the new terms didn't have to be there after all. Funny how that worked.
It seems like part of the problem with procurement was not clearly illustrating that a discount had been applied after all.
PM: Well I’m going to need some kind of discount. How about 30%?
Me: As it says on our website, we don’t discount.
PM: But I’m buying 400 seats!
Me: Yes, and we already provide a nice discount for bulk orders, which is already included on the invoice and documented on the website.
I.e. he was wrong to say 'we don't discount'. The answer is actually - 'yes, I've already applied your discount. Because you are buying so many seats, you get our discount of x%. If you bought another y, you'd get z%'. Sounds like it could have been communicated better.
It's a cognitive dissonance issue. People will perceive more value in a discount when they are clearly shown how much they would have paid without the discount, versus how much they are paying with the discount.
Think about how good it makes you feel when you paste in a coupon code during the last stage of a checkout procedure and watch the price drop to half what it was before. You can't quite believe that it has worked correctly, its that satisfying.
If you want to really milk it, write a checkout pathway with some javascript that makes the digits of the price spin round like an odometer, preferably with the sound of a slot machine paying out.
While this is true, it may not have placated that person. They may be evaluated on how much money they "save" by getting explicit discounts from vendors. If the discount is already baked into the price, then it may not count towards the metric the sales guy is evaluated on.
It's possible the sales guy was a jerk. It's possible the sales guy is a rational actor working inside broken incentives. It's also possible that both are true.
>Me: As it says on our website, we don’t discount.
Should, like you say, have been "we've given you an X% discount to reflect the size of your order, if you buy Y more then that will increase to Z%; how do you want to pay" ... or something like that, no?
Most likely the PM feels the need to get discounts above and beyond the standard rates - he always wants to feel that he was able to get a better deal than anyone else. You'll find people like this everywhere.
It isn't necessarily a matter of personal entitlement issues. Asking for discounts is Standard Operating Procedure. Literally. It is his job to ask for discounts. That's all the procurement department is there for: achieving a pile of requests for internal customers at the lowest possible total price. Asking for a discount never causes the price to go up. It is a totally defensible business decision to always ask.
Studious readers may note that what's good for the giant meganational corporation is also good for the individual: you don't get something if you don't ask for it.
This is the root of that whole 'rejection therapy' business that was so cool a few weeks ago.
Strongly agreed, I started asking for discounts as par for the course for my tiny company on everything. Usually of the form "we'd really like to stretch the budget on this one, can we get an extra..." and it's working a third of the time with nothing more than that.
I read that article more as being about dealing with jerks, which I don't have a good strategy for.
That's an interesting point about it never making the price go up. If there were a non-trivial chance that it caused the price to go up, do you think the haggling would be less common?
Since haggling vaguely offends my sense of how the world should work—even though I know that has no bearing on how it does work—it kinds gives me the warm fuzzies to imagine some random procurement person's expression as the price goes up every time s?he asks for a discount.
Real life constraints cause this to occur every now and again and when it does, I'm just as tickled by the spectacle as you imagine.
An example I recall was in the bad old days of CD-ROM duplication (when even small orders were still replicated in big plants because CDR's were $40 each). Prices were set by the replicators based on how full their queues were and how fast you wanted the job done. That means prices changed daily. A not so savvy PM type spent three days making a general ass of himself waffling and niggling for an additional 10% discount (beyond our regular volume discount) only to find when the order was actually entered, the replication price had doubled.
I was privileged to deliver the news. I assure you it felt every bit as good as you'd imagine.
I think your framing is better, but there's nothing wrong with saying "we don't negotiate beyond the published rates" as long as you don't mind some customers walking.
Running a startup rarely makes sense. You are pushing on and on despite all warning signals telling you not to.
You barely have money left. Most of your friends have been reduced to ghosts and memories, You can't recall the last time you saw some of your family and you are constantly working. Working instead of eating, working late into the nights and beyond, working when you're supposed to be taking time of and resting. It's so easy to get tunnel vision and descending down the rabbit hole if you are not careful. Easy to forget to check if you're doing the right things properly. Easy to ignore or rationalize having blown every single deadline and budget you made.
When you compare startups with usual 9-5 salary work, it's actually amazing how much risk founders take and how incredibly hard they work. And people wonder why startup founders - the very few that actually make it - get so much more money than the employees.
A similar quote I remember: "Nothing is ever as good, or as bad, as it first appears." I don't have a source for it; it may even be a misremembered version of a misquoted version of that quote.
True, although he may still feel like giving up in that moment, which is what I think the post was about. There will always be moments as an entrepeneur where one feels like giving up, but the wind of desire and ambition returns to fill the sails.
One of my co-founders quit during the past recession, when our sales dipped to zero in no time -- we actually had zero sales for 9 months straight.
I think he simply couldn't accept the failure, even while it obviously wasn't anything wrong from ourselves. He started resenting any minor annoyance as an act of sabotage. If I came late to the office (I've always, always came late for the past 20 years; I hardly pass the door before 11AM if not for a serious reason), if the sales guy failed to close a sale (well, good luck with that...), he lived that as a personal offence and a deliberate attempt to annihilate his own efforts.
What the article didn't mention is that this emotional burden can alter relationships and literally make the atmosphere poisonous. It's quite incredible, but an 8 persons group can be filled with petty politics, resent and conspirational talks. As a result we had a near complete reset (the team went from 8 to 2, then back to 8 in 6 to 9 months).
>> even while it obviously wasn't anything wrong from ourselves
Don't take this as belittling your efforts or your results, because I'm not trying to, I'm simply stating what is probably a fact of life. When you have 0 sales for 9 months straight, eventually somebody has to take responsibility. Preferably, that should be everyone pitching in to make one last charge up the hill, but it doesn't change the fact that someone needs to and eventually will take responsibility and blame for what happened (or did not happen, rather). This is the founder's blessing and curse, huh?
Under normal circumstances that's probably true, but in the middle of the worst financial crisis since the Great Depression, where uncertainty rules and everyone is cutting back purchases of everything until they see whether the govt will bail out the economy and how effective it will be, you can probably cut yourself some slack if your erstwhile customers are hesitant to buy from a new startup.
Despite having thoughts about quiting due to the reasons discussed in the article I actually quit due to a lack of communication, or to put it better, due to a large amount of miscommunication.
I believe good communication is the key to any relationship. Where there is no communication or a lot of miscommunication (where the parties involved do not really understanding what it is being said) problems will arise.
What I learned is from now on to talk through everything and never let things pass by. Is there something that bothers you? Talk. Is there something that seems a bit odd? Talk. Do you think your partner is bothered by something? Talk.
Startups are definitely emotionally draining, and while I would like to believe in my resiliency, if I didn't have two awesome co-founders there in the trenches with me, I'm not sure I'd still be fighting the good fight (Thanks Ricky and Mark!).
I can't seem to find all of the details about Smart Bear, but it sounds like it was a bootstrapped, solo founder operation (not sure how quickly he hired those 4 people). That amazes the hell out of me. Solo founders in general seem like magical Django ponies with how they're able to juggle and prioritize product, customers, etc. But the hardest part of being a solo founder must be not having the emotional support of a team working till all hours of the morning with you. I know Ray of Ginzametrics has said that his family is a huge help almost to the point where his wife is almost like a cofounder. Any solo founders out there, I'm interested to hear how you recharge/support yourself emotinally.
Ugh, another frivolous down vote. Why do people do this?
Anyways, experience certainly can strengthen us and give a soothing perspective to the hardships we are enduring. IMHO this makes it all the more important that you're really into a startup because you are passionate about it and have a more solid motivation factor than just money or, even worse, desperation.
Malice and incompetence seem like too narrow of a spectrum. I voted it down because I found it unhelpful for the purpose of further discussion. Saying "there is no quit" strikes me as pap, and merely a meme friendly way of saying that self-doubt is never productive.
As someone feeling trapped in a business and searching for meaning and purpose, I preferred that top billing on the page be elsewhere. What do you particularly like about this response that makes you think that no one would intentionally vote it down?
Fine, I'll elaborate. Didn't have the time when I posted it.
Creating a family, one learns quitting is just not an option. No matter how bad things get, no matter how beaten down or frustrated you get, no matter how much you want out, there is no "quit". Contrasted with that the notion of quitting for lesser reasons, say because a customer's buyer is being a pain or because a long-term goal is draining, is relegated to pathetic. Doesn't mean there is never a reason to stop or change course, but "quit" is no longer a viable option in one's personal philosophy.
Enduring heart surgery puts a new perspective on life. Going to sleep knowing you really might not wake up, and being at peace with the fact, means anything else can be endured given some time and effort. Waking up knowing your heart stopped beating for several hours - to wit you've been dead - means you _have_ endured the worst that can happen. The pain (having had your chest pried open with a car jack) raises the bar way above where it was, so you know no matter how much it hurts you can get thru it.
I have a dependent family; quitting is not an option.
I've been dead; all frustrations pale in comparison.
So yeah: there is no quit.
What should be and what is are still unfortunately sometimes different things. Look at deadbeat parents, or worse, parents that just run off. Sad to say, there is such a thing as quit for families, even if it's not right.
Agreed that surviving anything painful/risky helps you to get through new pain; heart surgery must definitely rank up there.
As I said: "Doesn't mean there is never a reason to stop or change course"; this is different from "quit" in terms of the article. You don't quit a family just because frustrations mount. Leaving to escape abuse isn't quitting, it's survival. There's a difference, which I was assuming was obvious (nonetheless, I expected someone would call me on not including a volume clarifying the obvious and disclaiming all inane misrepresentations; I decided not to include all that until someone went there).
Quitting stops the issue, but it then would often create a new set of problems (eg. income). The right thing to do is become a better person, become the solution, not the problem.
I didn't up- or down-vote it; I agree that it isn't really useful in this discussion, but he did make the additional point that "quitting" is a wholly different matter when family or life is at stake.
Some of us try to concisely communicate. It can look like a meme or whatever. Its helpful when it provides context or perspective. Its useless when it repeats cliches.
That post inparticular passes the test - its from their own experience and surely puts business and life in drastic perspective.
Objecting to top billing on the page, I find it more useful to post a cogent response of my own.
I understand that feeling trapped can make anyone behave oddly. I'm glad that here, folks can then work it out rationally. It was brave to step up and admit the act amid criticism.
In the context of enterprise sales/consulting, this is all pretty standard stuff. One helpful investor told us early on that everybody always wants a discount, and you have to give out discounts, so you just bake that into your price. Anything else is wishful thinking and will harm your startup.
Thank you, no, really really thank you. Just got a call this morning for a negotiation round with a big pharma corporation. I would have not read this article yesterday, I would have been falling flat. So, I gave a bit, but definitely not as much as I would have if I had not read this article. Again, thank you!
I'd like to imagine that if faced with such a situation, I'd pride myself with being a good person who actually creates something of value in the world, he's just some jerk peon who's doomed to live the rest of his life treating people like shit, yada yada.
But I've never had to go through anything like that. After putting your heart into something and some guy whose job is to make you feel worthless makes you feel worthless, I don't know if I could. That kind of thing can break a man.
One thing that helps a lot in a situation like that is having advisors (or board members) you can trust to talk with in situations like this. If they all also say "you don't know the Way It Works", then it's worth listening. More likely, though, they'll say something more along the lines of "Wow, that guy's an asshole. Look, you're confident about your business model, and here are some other examples of companies who don't offer bulk discounts. He's just being a roadblock. Here are some sales techniques that might help in a situation like this."
At my startup back in the 1990s, we had gotten to verbal agreement on a $200K deal. The paperwork hit a snag and our CEO headed off on vacation to a place with no FAXes or FedEx, but no problem: I was a naiveish techie, but I wa also founder/CTO and had signing authority. So we agreed that I'd fly to their ___location onsite, sign the contract, and get going. Once I got there, surprise: a couple of new terms! And no, we couldn't get started without a contract.
I said, y'know, I'm not comfortable with this. They said "but that means you'll just have to turn around and fly home." The deal was pretty key to our success and I didn't want to let it go but you have to draw lines. So I called up one of my board members, who agreed. They said "stick around for lunch, let's talk this through." After lunch they decided that the new terms didn't have to be there after all. Funny how that worked.