End of the Traveling Salesman?

COVID-19’s impact is global and wide-ranging. When I first started writing about the coronavirus about three weeks ago, I thought it would, among other things, bring about more remote work and remote consumption of more enterprise software services in China. At this point, there’s no doubt that some version of that future will become reality in the rest of the world too.

While the discussion of remote work technology tools and management is now a hot topic, what’s less discussed is whether this public health crisis will fundamentally change the way the software products that power remote work are sold too.

No Place to Meet

It’s no secret that a lot of business is done at industry conferences. Here’s an incomplete list of the big conferences in the mobile, developer, or enterprise technology space that have been canceled, postponed, or turned into virtual events. All these conferences have at least 5000 people attending.

• Strata Data & AI San Jose
• KubeCon EU, KubeCon China
• Google Cloud Next, Google I/O
• Mobile World Congress in Barcelona
• Facebook’s F8
• Saastr

While the cancellation of large music festivals and NBA, NHL, and other professional sports games are getting most of the media attention, these industry conferences are the conduits of lucrative business activities. I’ve personally attended many of these events before, as someone with something to sell. These are large events, where huge amounts of marketing dollars are spent and meaningful business relationships are supposed to be forged. Another type of events that have been canceled are the sales kickoff gatherings of large enterprise companies. These are internal events that usually happen during Q1 of each year to set goals and energize the entire sales and marketing team to kick ass and make sales for the rest of the year.

These are all elements of the complex enterprise sales and marketing ecosystem that generate billions of dollars of transactions every year. All of them have either disappeared or been virtualized due to the coronavirus.

And I haven’t even mentioned business travel. During the early days of the coronavirus, I’ve heard many tech companies still permit travel that was revenue-related (e.g. customer visits, negotiations, signing deals, etc.). Now, all travels regardless of their type and purpose have been halted, and so are the fancy steak dinners and drinking that typically flow through these trips.

How Are Tech Companies Selling During COVID-19?

As you can imagine, there’s a lot of video conferencing going on. Not only are tools like Zoom being deployed internally to stitch together remote work communications, client and prospective customer meetings are being done in the same way.

Is it working well?

Based on an article by The Information, so far so good. Even though the article’s main purpose is to report on how certain companies are adapting to remote work, it also provided some color on how these companies are keeping external business activities going.

Dave McJannet, who is CEO of Hashicorp, a commercial open source multi-cloud infrastructure startup recently valued at $5.1 billion USD, shared that he did Zoom calls with two potential customers who are both Fortune 50 companies. These are definitely customers he would normally travel to visit in person given their size and importance. Both calls apparently ended positively, resulting in contracts being sent over that could result in business deals. While he admitted that it’s difficult to build trust over video calls, McJannet also wondered if customer meetings can be done effectively via video, so much so that business travel will be permanently reduced after the coronavirus pandemic is over.

“What Zoom will prove to us is I probably didn’t need to travel that much anyway.” -- Dave McJannet, CEO of Hashicorp, The Information, March 16, 2020

This is of course anecdotal. Slack’s most recent earning call told a slightly different story. Despite Slack, being a workplace team communications tool that is very much at the center of the remote work culture, its business future depends on selling into large enterprises, which typically require the rituals of business traveling and in-person visits that I mentioned above. Because its future earnings guidance did not match Wall Street’s expectation, its stock tanked, and one of the reasons cited was how the reduced business travel could limit Slack’s ability to close large enterprise deals. Its conservatism was further illustrated by its CEO Stewart Butterfield sharing his own anecdote, where the CTO of a new large customer told him buying Slack is the last purchase order he will sign for quite some time, until the uncertainties caused by the coronavirus settle down.

To be clear: if enterprises stop spending on technology products, it will be more because the coronavirus has negatively impacted the broader economy in significant ways, not because the makers of those products are not flying in and selling them in-person.

Who Will Benefit?

Well, in the world of technology products at least, I believe this shift will help companies with the best technology!

That may sound like a silly, obvious point, but we all know the best technology doesn’t always win in the market. Developers and technologists lament this reality. And so do business operators; no one enjoys selling inferior products.

In a possible future world, where more customer meetings, demos, and negotiations are done virtually, it will be more important for the technology and product to speak for themselves.

This does *not* mean the soft skills of selling will be less necessary; in fact, quite the opposite. It’s more difficult to explain and demonstrate how a new technical product works over video than in-person. There will be more demand for sales people with technical aptitude, or engineers with strong communication skills. The type of people less in demand will be your stereotypical traveling salesman, whose forte is wining, dining, and smooth-talking with a winning smile.

We are already seeing this shift with news of Amazon Web Services (AWS) expanding its sales team to compete with Microsoft’s Azure, in the competitive and lucrative cloud computing space. What kind of sales people is AWS looking for? “[S]alespeople who have deep technical knowledge in areas like cybersecurity, artificial intelligence and data analytics…”

As COVID-19 deepens its impact in the enterprise business world, this trend will only accelerate.

Trust Building in the New Normal

One common argument justifying in-person sales and marketing activities is “trust building” with customers. It’s valid. Any financial transactions require trust to be in place first. With enterprise technology products, it’s extra important because deals can cost millions of dollars spanning multiple years. It’s almost as long (and costly) as a marriage!

Yet, more transactions with increasing complexities are being done with trust and without in-person interactions: e-commerce, vacation rentals with Airbnb and VRBO real estate with OpenDoor, and even life insurance with Ethos.

Can that happen to enterprise technology products? Yes.

In many ways, it’s already happening before the coronavirus. Most cloud computing purchases are done virtually with a sign up form and a credit card. Many self-serve software products are doing well and growing quickly, e.g. Zoom, Slack, Atlassian’s suite of products. But the large deals with big companies still require elbow grease and face time to build trust and familiarity, for now.

So will the coronavirus pandemic be the beginning of the end of the traveling salesman?

I believe so.

Just like more remote work and more remote consumption, it won’t happen overnight, and it won’t be 100%. But it’s a real, secular shift.

And it’s ultimately a good thing. Technology and product-driven companies will be rewarded. Sales-driven ones will not.

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