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Business Insider
5 days ago
- Business
- Business Insider
AI is raising the bar for sales — and Microsoft's layoffs prove the 'relationship guy' is out, says a software investor
The VC saidMicrosoft's recent layoffs are a sign of what's to come. Microsoft began culling less than 4% of its workforce, or about 9,000 employees, earlier this month, many of them generalist sales reps. That move reflects a broader shift: Salespeople who rely on soft skills may soon be replaced with solution engineers who know the product inside out, Lemkin saidon an episode of the "Twenty Minute VC" podcast published Thursday. "My rough sense is 30% to 40% of one-to-two call sales reps are going to be replaced by AI," he said. Microsoft is doing what other companiesare only thinking about, he added. "We're not going to have a guy that doesn't know our product in the age of AI show up to big deals," Lemkin said. "I would rather have a solution engineer that knows this cold, that partners with somebody, or is less good in sales." "You better be worried if you're a generalist sales guy that thinks being a relationship guy wins today. That's Microsoft's point," he said. Lemkin also said AI has raised the bar for customer expectations. Companies would want to "replace folks that don't know my product with folks that do," he added. Rory O'Driscoll, a longtime general partner at Scale Venture Partners, said on the episode that Microsoft's layoffs weren't framed as the company replacing employees with AI. "It was couched as a 'replace with better people' story," he said. "It's hard to argue with that." "It's always impressive to me that these companies with 40% operating margins are still willing to grind another point out of it," O'Driscoll said. "It's just so capitalistic." Lemkin and O'Driscoll did not respond to a request for comment from Business Insider. A representative for Microsoft declined to comment. Microsoft rewires its salesforce Microsoft's latest round of layoffs comes as the company revises its strategy for selling AI tools amid increasing competition from OpenAI and Google. The job cuts targeted traditional salespeople that the company intends to replace with more technical salespeople, Business Insider learned earlier this month from sources familiar with the plans and internal documents. Microsoft confirmed it's replacing some specialist roles with solutions engineers to deepen the technical and industry understanding among its salesforce, and that it plans to hire more salespeople outside its headquarters to get more sellers out in the field. The company has received feedback from customers that they had to engage with too many salespeople before getting down to the technical details and demos. "The customer wants Microsoft to bring their technical people in front of them quickly," one of the people said. "We need someone who is more technical, much earlier in the cycle." In an internal memo viewed by Business Insider, Microsoft's sales chief, Judson Althoff, said he is revamping his unit to make it more AI-focused.
Business Insider
5 days ago
- Business
- Business Insider
AI is raising the bar for sales — and Microsoft's layoffs prove the 'relationship guy' is out, says a software investor
The traditional "relationship guy" in sales might be on the way out in the AI era, said Jason Lemkin, an investor in software startups. The VC said Microsoft's recent layoffs are a sign of what's to come. Microsoft began culling less than 4% of its workforce, or about 9,000 employees, earlier this month, many of them generalist sales reps. That move reflects a broader shift: Salespeople who rely on soft skills may soon be replaced with solution engineers who know the product inside out, Lemkin said on an episode of the "Twenty Minute VC" podcast published Thursday. "My rough sense is 30% to 40% of one-to-two call sales reps are going to be replaced by AI," he said. Microsoft is doing what other companies are only thinking about, he added. "We're not going to have a guy that doesn't know our product in the age of AI show up to big deals," Lemkin said. "I would rather have a solution engineer that knows this cold, that partners with somebody, or is less good in sales." "You better be worried if you're a generalist sales guy that thinks being a relationship guy wins today. That's Microsoft's point," he said. Lemkin also said AI has raised the bar for customer expectations. Companies would want to "replace folks that don't know my product with folks that do," he added. Rory O'Driscoll, a longtime general partner at Scale Venture Partners, said on the episode that Microsoft's layoffs weren't framed as the company replacing employees with AI. "It was couched as a 'replace with better people' story," he said. "It's hard to argue with that." "It's always impressive to me that these companies with 40% operating margins are still willing to grind another point out of it," O'Driscoll said. "It's just so capitalistic." Lemkin and O'Driscoll did not respond to a request for comment from Business Insider. A representative for Microsoft declined to comment. Microsoft rewires its salesforce Microsoft's latest round of layoffs comes as the company revises its strategy for selling AI tools amid increasing competition from OpenAI and Google. The job cuts targeted traditional salespeople that the company intends to replace with more technical salespeople, Business Insider learned earlier this month from sources familiar with the plans and internal documents. Microsoft confirmed it's replacing some specialist roles with solutions engineers to deepen the technical and industry understanding among its salesforce, and that it plans to hire more salespeople outside its headquarters to get more sellers out in the field. The company has received feedback from customers that they had to engage with too many salespeople before getting down to the technical details and demos. "The customer wants Microsoft to bring their technical people in front of them quickly," one of the people said. "We need someone who is more technical, much earlier in the cycle." In an internal memo viewed by Business Insider, Microsoft's sales chief, Judson Althoff, said he is revamping his unit to make it more AI-focused.
Yahoo
03-06-2025
- Business
- Yahoo
Windsurf's CEO says big teams can kill new ideas
Having as many as 10 people working on an unproven idea can backfire fast, said Windsurf's CEO. Varun Mohan said on a podcast that it's "very hard" for big teams to "get alignment." Early-stage product teams should ideally have three to four people, he added. When it comes to building new products, a bigger team isn't always better. It might be what kills the idea altogether, said Windsurf's CEO, Varun Mohan. Mohan said on an episode of the "Twenty Minute VC" podcast published Monday that having as many as 10 people working on an unproven idea can backfire fast. "Everyone has opinions. Everyone has ideas. And nobody's ideas are wrong — because no one has proven anything," he said. "It's very hard to get alignment. It's very hard for people to work in one direction without causing communication issues," he added. Windsurf, founded in 2021 as Codeium, created an AI-powered coding development tool and has been riding the vibe coding wave. According to PitchBook, it has raised $243 million in VC funding. Mohan recommends keeping early-stage product teams lean — ideally just three to four people. It could be a couple of engineers and a designer — or if it's a pure systems problem, just engineers, he added. A small, "opinionated" group moving fast to prove an idea is "actually really good," he said. Even a "crappy" version of a great idea is "already amazing," he said. "Once you've proven the crappy version has legs, you can then go and resource more people on the project to actually go out and and pursue it more deeply." Windsurf isn't the only startup espousing small teams. Some of AI's biggest names have built upon tiny teams, such as Anysphere, the maker of coding copilot Cursor. The advent of AI has also enabled startups to do more with less, prompting some founders to maintain extremely lean teams. "We're going to see 10-person companies with billion-dollar valuations pretty soon," OpenAI's CEO, Sam Altman, said in February 2024. Mohan also said that Windsurf doesn't set specific budgets for these early-stage projects. "We're in an unconstrained market," he said. Technology that could accelerate software development "is so valuable" to customers that the company doesn't approach new ideas with fixed budget constraints, he added. Instead, Windsurf evaluates progress over time and decides whether to keep going, hit pause, or shift resources elsewhere. "That's not a democratic process," Mohan added. "It's a little bit of a top-down process." Windsurf did not respond to a request for comment from Business Insider. Read the original article on Business Insider Sign in to access your portfolio
Business Insider
03-06-2025
- Business
- Business Insider
Windsurf's CEO says big teams can kill new ideas
When it comes to building new products, a bigger team isn't always better. It might be what kills the idea altogether, said Windsurf's CEO, Varun Mohan. Mohan said on an episode of the "Twenty Minute VC" podcast published Monday that having as many as 10 people working on an unproven idea can backfire fast. "Everyone has opinions. Everyone has ideas. And nobody's ideas are wrong — because no one has proven anything," he said. "It's very hard to get alignment. It's very hard for people to work in one direction without causing communication issues," he added. Windsurf, founded in 2021 as Codeium, created an AI-powered coding development tool and has been riding the vibe coding wave. According to PitchBook, it has raised $243 million in VC funding. Mohan recommends keeping early-stage product teams lean — ideally just three to four people. It could be a couple of engineers and a designer — or if it's a pure systems problem, just engineers, he added. A small, "opinionated" group moving fast to prove an idea is "actually really good," he said. Even a "crappy" version of a great idea is "already amazing," he said. "Once you've proven the crappy version has legs, you can then go and resource more people on the project to actually go out and and pursue it more deeply." Windsurf isn't the only startup espousing small teams. Some of AI's biggest names have built upon tiny teams, such as Anysphere, the maker of coding copilot Cursor. The advent of AI has also enabled startups to do more with less, prompting some founders to maintain extremely lean teams. "We're going to see 10-person companies with billion-dollar valuations pretty soon," OpenAI's CEO, Sam Altman, said in February 2024. No budgets set for new ideas Mohan also said that Windsurf doesn't set specific budgets for these early-stage projects. "We're in an unconstrained market," he said. Technology that could accelerate software development "is so valuable" to customers that the company doesn't approach new ideas with fixed budget constraints, he added. Instead, Windsurf evaluates progress over time and decides whether to keep going, hit pause, or shift resources elsewhere. "That's not a democratic process," Mohan added. "It's a little bit of a top-down process."
Yahoo
30-05-2025
- Business
- Yahoo
CEOs know AI will shrink their teams — they're just too afraid to say it, say 2 software investors
Behind closed doors, CEOs are saying what they won't admit publicly: AI means smaller teams. In public, they stick to the safe script — "we're hiring" — to soften the blow, one investor said. From Klarna to Duolingo, companies that touted bold AI plans have quickly walked them back after backlash. AI is a tool to boost productivity, not to take anyone's job, according to the script many CEOs have been using. Behind closed doors, it's a very different conversation, said two software investors on an episode of the "Twenty Minute VC" podcast published Thursday. "Public companies are trying to prepare their teams for it, but the backlash was too strong," said Jason Lemkin, an investor in software startups. Instead, CEOs fall back on the safer line: "In fact, we're hiring." "That seems to take the edge off," Lemkin said. "But I think they're just walking back the fact that everybody knows they don't need 30% to 40% of the team they have today. Everybody says this," he added. "It's too hard for people to hear. There's only so much honesty you can get from a CEO," he said. Rory O'Driscoll, a longtime general partner at Scale Venture Partners, said CEOs can't talk about job loss because employees will "lose their shit." He said what ends up getting shared publicly is a "very bland statement" full of "standard corporate speak for how you talk about AI." "No one is going to get fired. You're just going to do more interesting things," O'Driscoll said. "That's the current state of the lie." From Klarna to Duolingo, several companies have tested the waters with bold AI declarations — only to backtrack. Klarna' CEO, Sebastian Siemiatkowski, said in December that AI "can already do all of the jobs" humans do, and that the company has stopped hiring for over a year. But earlier this month, he walked it back, saying his pursuit of AI-driven job cuts may have gone too far. Duolingo's CEO, Luis von Ahn, also faced criticism after posting a memo on LinkedIn last month describing plans to make the company "AI-first." He later said on LinkedIn that he does not see AI replacing what his employees do and that Duolingo is "continuing to hire at the same speed as before." Lemkin and O'Driscoll did not respond to a request for comment from Business Insider. Lemkin said mass layoffs could hit in the next two years as companies come to terms with a new reality. He added that he expects overall headcount to "stay flat." There will be "efficiencies" and also "jobs that would have existed in the absence of this product that won't exist now," said O'Driscoll. "So there will be tension." O'Driscoll said he sees a gradual shift — more of a "steady grind" of 2% to 3% less hiring each year. Tech companies, in particular, will see "significantly reduced hiring", he added. Anthropic's CEO, Dario Amodei, said on Thursday that AI could soon eliminate 50% of entry-level office jobs. AI companies and the government need to stop "sugarcoating" the risks of mass job elimination in fields including technology, finance, law, and consulting, Amodei said. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
