Sales and Bad Business

Sales thinks they rule the roost, and in some ways they do, but Product Management knows how to do maths, and we can figure out what it will cost

The Dude is going to rant about sales. Again.

Our sales dude (really, he is a biz dev manager) has a couple of smallish customers who want this thing. He wants it badly. So he paired up with a product manager in a different team (think professional services) and he wants me to build a product to help these customers.

The sales dude has hit the Dude up over and over on this, and even a casual back of the napkin calculation of the business model makes this a clinker. As in, if the Dude green lighted this, he should be fired for wasting money.

Sales dude pow-wows with the services product dude, and they dream up this amazeballs forecast. We are gonna sell SO MANY OF THESE that you would be an idiot to say no.

But, in reality:

  • The solution is targeting tiny to mid sized customers in this domain (admittedly there are a lot of them)
  • There aren’t that many that we can sell (as in, a very small number of sales per each)
  • It will cost an insane amount of money to build out a solution to address this small pool of sales.
  • Our standard model of costing the equipment we buy is off by about 100% (in the wrong direction) and that makes the numbers even worse.
  • This solution has a limited lifecycle, like in 18 months there will be no more need for this.

So, it is a slam dunk to say no.

I bet you can figure out how the call he set up (and included the Dude’s boss, and the boss of development) went…

We said no. We said that even if you delivered 100% of our capacity, every week we can, that even in 5 years, we wouldn’t make up the cost for this. We said that if the business unit wants this, they can gift us gear (the BU isn’t asking or pushing for this, so of course they aren’t going to gift us a million+ dollars of gear, at COST for this.)

So, we said no. In no uncertain terms this is bad business.

Of course, the sales dude still thinks he can convince us.

Le sigh.

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