Death of a Salesforce: Why AI Will Transform Sales

Host: Plugging into anywhere that customer feedback comes in, and that could be your email, that could be Slack, that could be Zendesk. System of records can now have much more context, and context is what human beings use to make decisions. There's insatiable demand right now, a demand, frankly, in which I've never really seen. In 1999, some 25 years ago, Mark Benioff started Salesforce with a vision to build, quote, a world-class internet company for Salesforce automation. Now today, in 2024, there are thousands of Salesforce partners and hundreds of thousands of certified professionals all around the world. Not to mention other multi-billion dollar companies like HubSpot or Zendesk that are fundamentally built on the concept of a system of record. And selling is a strategy as old as time. But the latest iteration gave sales teams the ability to track, to assign, and to reward sales more effectively, all through better technology. And the good news is that technology is not done progressing. So that's what today's episode is all about. The intersection of sales and artificial intelligence. So how will AI change selling as we know it? What workflows can be automated or redefined? And better yet, what can the integration of AI do to fundamentally change the way that selling is done? Just as we saw in the last era of the CRM. We discuss all this and more together with investing partners on the A16Z Apps team. Joe Schmidt and Mark Andrusko. This is also part of a wider series on how AI is disrupting the enterprise. So if you're interested to hear more about how it's reshaping everything from marketing to accounting, head on over to our A16Z YouTube channel. Oh, and one more thing. This episode was actually based on a long form article co-written by Mark. So we'll link that in the show notes. It's called Death of a Salesforce. Okay, let's get started. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16Z.com slash disclosures. We are constantly being sold to. It feels like all the time. Selling is a constant. But maybe what has changed is the way that we're being sold to, and specifically technology's role in that. So tell me a little bit about that. How has sales changed over the last few decades?

Joe Schmidt: Sales is maybe the oldest profession that there really is. And sales has been going on since prehistoric times. Like as long as people have been doing something with the act of trade, there has been the need to record who is my customer, where are they, what do they need? What do they bought from me? So like that act is not necessarily new. I'd say the first tracking mechanism that you might've had would be like someone writing that down on a piece of paper. Maybe that evolved into like a Rolodex in the 1950s. You think of Mad Men, but then like the modern kind of CRM really came around in like the eighties with ACT or maybe even the nineties with Siebel Systems. And these were the first digital CRM. But at the end of the day, it was always the same exact act as that prehistoric time. It's like, there's a salesperson, they're doing some active selling, they're recording that information, and they're putting it at a certain place. Salesforce then comes in at the turn of the century in 99 and says, hey, let's move this into the cloud. Let's actually create an easier way for that sales rep to enter that information and have access to it on the go. So now you can go and log into your system and have all that information wherever you might be. At the end of the day, though, it's always been a sales rep or whoever that might be with a relationship with a customer that wants to record that information. What's interesting about this moment in time is that the way that that information is being captured, there's an opportunity to do it in an entirely different way. There's been this tectonic shift in the way that technology works. And so now, instead of a human being sitting down at their computer and entering something in we now can have basically AI always on and recording that conversation in real time or frankly having that conversation And so you start to think about all of the legacy systems whether it pen and paper Siebel Systems or Salesforce that have been dependent on a human And now you starting to see an AI native system that can have these conversations and really start to capture that information at the source rather than waiting for the human.

Host: For the companies who are using these tools, compared to the alternative of not having tools or pen and paper, like you said, how reliant are these companies on these tools and how embedded are these systems?

Marc Andrusko: They're extremely embedded. I mean, I think there's a reason that all venture capitalists and technologists are obsessed with this idea of the system of record. It's because historically systems of record have benefited from tremendous moats and that they are really hard to rip out. And the reason they're really hard to rip out is they have the source of truth data about some of your most important parts of your business. In this case, we're talking about who your customers are and who your prospects are. And so you wrote this article that's literally called The Death of a Salesforce, which is a pretty strong statement. But you are talking about some pretty fundamental shifts of structured to unstructured data. So tell me more about that. How does that shift potentially reshape the sales cycle? Or in this case, like you're saying, the death of a sales force.

Joe Schmidt: One of the concepts I've loved for a very long time is like don't focus on activities, focus on achievements. and the problem with historical sales software is so much of the activities that you track as like the leading indicators of success of whether or not you're doing a good job of whether or not you are, really come down to like these like very fallible activities by the rep or by the team manager or whoever it might be. And so insofar as you can get rid of that and basically have what is the core piece of truth, what is happening with the customer, what's really going on, you know, in the field and basically using that to power your Salesforce, like that's when this gets to get really interesting and you can start to focus on, okay, what are actually the core pieces of activity that do lead to achievement rather than the things that, you know, you intuitively think are right or may anecdotally think are right. It's like, what is the cold heart data? I mean, how do we make better decisions?

Host: What's an example of something that you think could disappear completely with this new approach?

Marc Andrusko: Before I get to the things that will disappear, I don't think we want to get up here and say sales is going to disappear. I used to run a sales team in the job before this. Mark obviously sold. AI is not going to replace like a very high quality sales process. You need to figure out who your customer is. You need to figure out what they want and you need to build the best product and the right process around that to be effective. That human element is not going to go away. Now, I think parts of that process, to your point, will disappear and they will frankly change a lot. Something that we're seeing a ton of right now is like, all right, we call it intelligent pipeline in our post. But basically, how are you identifying prospects? How are you contacting prospects? How are you scheduling meetings and basically doing the qualification process that's normally associated with like an SDR? And so you start to think about, okay, what is the role of that human being? It's almost a rite of passage in sales. Like you kind of have to do it. It's a miserable existence. You sit on the phone all day. You make however many cold calls. You send however many emails. We've both done this. It's horrible. And it can be automated. You know, there are businesses out there like 11X or others that are in this segment that have basically figured out, okay, how do we package up this human being? that is really the beginning of any high quality sales process, at least in the enterprise. And how do we figure out how to, okay, we're going to identify these most interesting prospects. We're going to figure out like the right way to contact them and generate like a very persuasive outbound message. And then we're going to have an interaction with the client and try to schedule it for a more holistic and wholesome call with an account executive. Like we're starting to see that process basically disappear with certain customers, which is really, really exciting. and frankly like frees up humans to do the things that they're best at, which is like sell, right? And so I think we're going to see things like that start to disappear in this new world.

Host: Yeah, so then that leads to the second question, which is if you get rid of all of this early stage process that no one really wants to do, and like you said, it's kind of a rite of passage, and all of those people now have the ability to spend that time on new approaches, right? So what's net new that you think comes from this?

Joe Schmidt: Yeah, totally. We as a firm talk a lot about like voice agents. One concrete example of this is imagine you a rep on a call with a prospect Maybe it a Zoom call or just a regular phone call You can now be getting live coaching from an AI voice agent that is trained on all of the data that you have seen from prospects and from existing customers. And as your prospect is objecting to something, it kind of inserts the right answer into your ear and you can like say it on the fly. It kind of reminds me of old school when they're trying to take a test at the end and there's like guys in the parking lot telling them the answers to the test. It's the same thing. Right. But it's also like autonomous vehicles, right? You will have only so many miles and instead a car is trained on all of the different accidents that have happened to all of the cars that have been reported, right? So it's a totally different level of information. 100%. And then I think like the second order implication there is that everything can just become so much more personalized. Like if you think about a sales rep who has a really high quality, large lead that they're working, a lot of what they're doing to prepare to close that deal is like personalizing some sort of collateral or deck or something that's going to convince their prospect to buy their product. And now think about how easily you can do that at scale and really tailor to an individual human who's like, oh, some system picked up that this human was on our website. Let's customize a deck that speaks to this person individually today and do that with a click of a button instead of a rep spending five hours to put something together that's super custom. And now do that across every prospect that is in your pipeline. We're just talking about like a level of scale and personalization that hasn't been possible before.

Host: Yeah. And how are you seeing that market develop when you think of the fragmentation or the coalescence of it all? What parts of whether it's like prospecting or qualifying or later on in the process, you mentioned like personalization. How are you seeing startups start to show up and where are they showing up as well?

Marc Andrusko: So we think about the new types of companies we're seeing in the space in kind of four broad categories. We were deliberately broad because I think in sales software market maps of the past, things get hyper granular to a point where everything is sort of overlapping. And I think everyone kind of shares the same vision of spanning end to end. So thinking about it in the four broader buckets helps us do that more clearly. And basically we think about it as intelligent pipeline, digital workers, sales enablement plus insights, and CRM plus automations. And we've kind of already touched on each of these throughout this conversation. But I think now the question will be, okay, if you start with any of those four, is the wedge, which wedge best positions you to then earn the rest of that pie over time? And I don't think we have an answer to that yet. I think that's something that we're really excited to see play out. And I think as you talk to different founders, they have tremendous conviction and one being the right wedge over the other. And so we're still early in that journey. Where are you seeing the most adoption in terms of today, not future looking, but today you see different sales forces willing to engage with one of those four categories?

Joe Schmidt: I think that we're seeing a ton of adoption in the intelligent pipeline category. Back to what I said earlier on like what is the job of like the thankless job that is being an SDR. It is very automatable to think about like, okay, for the companies that know what they're doing and know who they're selling to, how do I ingest all that information about who my ideal customer is? What's the right process? And then how do I basically run that contact mechanism? There is almost no difference oftentimes between a very well-trained AI agent and a very poorly trained 22-year-old who's hungover from the night before sitting in a crowded sales floor. And oftentimes you're going to get playbook adherence. You're going to get thoughtful follow-up. You're going to get a personalized outreach, whereas the other person is sending like a thoughtless LinkedIn request or maybe it's a half-hearted email. Yeah, I would like to connect. Right, yeah, to the wrong decision maker. And so now you start to think about what you can actually do with that. And that's why I think there's insatiable demand right now, a demand, frankly, in which I've never really seen for products in that intelligent pipeline layer.

Host: Yeah, and as some of these categories eat parts of the sales process, as you've talked about, how does that change a sales team? You've kind of alluded to this a little bit, but if you no longer have the young college kid who's forced to take all of the early stage calls and train that way, what does that person do? How do you actually train a sales team effectively in this new environment?

Marc Andrusko: Today there kind of discrete quotas systems organizational structures for marketing sales customer success and account management and customer support But if you take a step back that whole go organization is just trying to do what right by the customer and be the North Star of the voice of the customer. And so it's kind of silly that a sales rep closes a deal, has a quota for a new logo, and then a customer success or account manager takes over that logo and has a different quota and the relationship is different. I think these teams are just going to be able to work much more closely together and out of the same shared system. And I think they can even be comped together. Like everyone can just kind of reorient around the thing that matters, which is doing right by the customer at all times. And so I think the rosy take is that this will be a great outcome for customers because I think teams are just going to be much more coordinated, much more aligned. And the lines will be blurred between like who's generating the pipeline, who's closing the pipeline, and who's managing the relationship after. Everyone can be doing a little bit more of everything.

Host: So to date, most of these systems of record mostly have structured data. What I imagine as a non-salesperson is status of company and like contact, email, things like that. In this new world, what would that really look like? You've mentioned multimodal, but are we talking images, videos, and like how would that actually influence the workflow?

Joe Schmidt: Yeah, 100%. And it's like all of the above. It's basically plugging into anywhere that customer feedback comes in. And that could be your email, that could be Slack, that could be Zendesk. Those are obvious ones, but think about even the non-obvious ones, like customers might tweet about your product. You might send an NPS survey on Qualtrics. You might have offline meetings that you have to now record in this universe. And I think the key point to take away here is that system of records can now have much more context. And context is what human beings use to make decisions. That's one of the most compelling parts of the opportunities is you can replicate human judgment a little bit more as you get more and more context. And as you lack context, it's hard to trust AI agents to act autonomously on your behalf.

Host: Yeah, and I think that basically gets back to the point of what we were saying of what is the new system of record? In the past, it's just been like a UI to interact with a bunch of human-generated data. It is your interface to understand what's going on in the business. But if that information is no longer just being surfaced in this one engagement layer that a human being is creating and maintaining and whatever it might be, now you have all these other pieces of data, it would be almost impossible to actually have that all in one place and use it effectively. So how do you think about that data actually informing every part of your sales process, every part of your marketing process, every part of your customer success process. And then importantly, now you start to bridge into every part of your product and engineering process. Historically, product and engineering aren't really spending that much time clicking around Salesforce, but if you actually have this multimodal system of record that captures all of your customer feedback in one place, all of your prospect feedback in one place, what could possibly be a better tool to feed the input of roadmap planning and all the things that actually matters to product and engineering? And so now we're starting to talk about systems of record that could bridge different parts of the organization.

Marc Andrusko: Champ. That's super interesting. Yeah. Yeah. You're finally going to fix the whole product versus sales debacle. Remember, we fixed it in this room. I think it was actually this podcast that solved all the problems. But yeah, no, very exciting times. No, I think it's great. I mean, you use the term maintenance and it does feel like a lot of systems today are after the fact, right? You take something that's happened and you're maintaining your record of it. But as both of you are saying, it's really this idea of a true second brain where this information is working for you.

Joe Schmidt: Yeah, yeah, yeah. Or honestly, it could become the first brain before it gets to my second brain. And, you know, much more effective version of it. So, yeah. Awesome. Well, this was great. Thank you so much for talking through this.

Host: I guess this podcast is effectively sales, so it's everywhere. Yeah. I can't wait to use some of these tools myself. Yes. Thank you for having us. Yeah, thanks for having us. All right, that is all for today. If you did make it this far, first of all, thank you. We put a lot of thought into each of these episodes, whether it's guests, the calendar Tetris, the cycles with our amazing editor, Tommy, until the music is just right. So if you like what we put together, consider dropping us a line at ratethispodcast.com slash A16Z. And let us know what your favorite episode is. It'll make my day, and I'm sure Tommy's too. We'll catch you on the flip side.