Philip Delves Broughton - The Art of the Sale: Learning from the Masters about the Business of Life

ALSO BY PHILIP DELVES BROUGHTON

Ahead of the Curve:

Two Years at Harvard Business School

The Art
of the Sale

LEARNING FROM THE MASTERS
ABOUT THE BUSINESS OF LIFE

PHILIP DELVES BROUGHTON

THE PENGUIN PRESS
NEW YORK
2012

THE PENGUIN PRESS

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First published in 2012 by The Penguin Press,
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Copyright Philip Delves Broughton, 2012

All rights reserved

LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA

Broughton, Philip Delves.

The art of the sale : learning from the masters about the business of life /Philip Delves Broughton.

p. cm.

Includes bibliographical references and index.

ISBN 978-1-101-56174-4

1. Selling. I. Title.

HF5438.25.B7467 2012

658.85dc23

2011040209

Printed in the United States of America

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DESIGNED BY AMANDA DEWEY

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ALWAYS LEARNING

PEARSON

For Margret, Augie, and Hugo

You can get all As and still flunk life.

WALKER PERCY

You call yourself a salesman, you sonofabitch?

DAVID MAMET, GLENGARRY GLEN ROSS

Lifes a pitchand then you buy.

BILLY MAYS, THE INFOMERCIAL KING

I imagined when I went to Harvard Business School to study for my MBA that sales would be part of the curriculum. But it wasnt. In fact, the subject is absent from most MBA programs. If you accept the idea that business is about selling things and making things, and that everything else is secondary, then this absence makes no sense. When I asked one of my Harvard professors to explain it, he told me that if I really wanted to study sales, I could pay for a two-week evening course somewhere. You could say the same thing about a lot of what the school taught, but no one was suggesting we go and learn strategy at night school.

In his book Birth of a Salesman, the Harvard Business School professor Walter Friedman observed that while business schools have continued to offer some type of sales management instructionusually within a larger marketing coursethey do not offer courses in salesmanship skills. The topic remains, just as it was in the 1910s, more suitable for popular how-to books and memoirs of successful salespeople than for academic classes. Economists, for their part, still tend to ignore the role of salesmanship in the economy. Part of the problem is institutional. In order to get tenure at a business school, you need to be published in a handful of journals, which focus on finance, marketing, strategy, and operations, leaving little room or serious consideration for articles on selling. So for reasons that have nothing to do with the relevance of selling in business, selling is an orphan in business academe.

The effects of this omission are grave. Many supposedly well-educated people in the business world are clueless about one of its most vital functions, the means by which you actually generate revenue. The absence of knowledge about sales has opened a class division between salespeople and the rest of business. Salespeople are often seen as operating by different rules and needing different motivators from other employees. They need conventions in Las Vegas and complex commission structures. They need to be goaded to perform and reined in when they sell too hard. They are patronized as feet on the street by those who prefer to imagine that business can be conducted by consultants with dueling PowerPoint presentations. Salesmen themselves use terms that diminish the complexity of what they do. IBM salespeople used to talk of pushing metal (mainframe computers), and Xerox salespeople of slamming boxes (photocopiers).

When Bank of America rescued Merrill Lynch from imminent bankruptcy at the depth of the financial crisis in late 2008, Merrill Lynchs brokers derided Bank of Americas retail bankers as toaster salesmen. Bank of Americas chief executive, Kenneth Lewis, was similarly described as a former shoe salesman, in contrast to Merrill Lynchs Harvard- and Goldman Sachstrained boss, John Thain. Lewis had indeed sold shoes while he was in high school; he had been paid a commission of 36 cents per pair. Hed also sold Christmas cards door-to-door and while in college worked at a municipal bond firm and as a reservations agent for United Airlines. Good for Lewis, one might think, to have risen up the hard way. So why reduce him to a former shoe salesman? Anyone who has actually started, bought, or run a business knows how absurd such pejorative perceptions of salespeople are. Selling is not a sideshow, a pesky obligation apart from the real business of finance, law, or accounting. It is business in gorgeous Technicolor.

Richard Perry, the founder of Perry Capital and one of the most successful investors in America, put it very simply to me: Its all about sales. If I have sales, I can create profit. Perrys offices are in the General Motors building on Fifth Avenue in the heart of Manhattan, a building that weaves together many strands of contemporary American business. It was completed in 1968 as an expression of the might of the U.S. car industry, sheathed in glass and white Georgia marble, and occupies an entire city block. These days, its main tenants are hedge funds, law firms, and, beneath its street-level plaza, an Apple store. In 2008, the New York developer who owned the building had to sell it because of the credit crunch to a group of investors led by Goldman Sachs and assorted Middle Eastern sovereign wealth funds. The buildings evolution, from the symbol of homegrown manufacturing power to a home for hedge funds and iPhones runs parallel to that of the broader American economy.

Perry began his career at Goldman Sachs before striking out to found his own firm in 1988. Perry Capital has proved to be one of the most enduring and successful of the many hedge funds founded in New York over the past two decades, moving from investment strategy to investment strategy, from buying equities to issuing credit, fighting shareholder battles to betting big on mergers and acquisitions, making fortunes at every turn for its investors, employees, and Perry himself. During that time, he has met salespeople of every stripe, in financial services and beyond. As he sat back in one of his firms many hypermodern conference rooms, he told me, If you arent selling, you arent part of the world.

Perry possesses the supreme self-confidence required to surf the treacherous financial markets as adroitly as he does. Its a style shared among any number of successful financiers. Bruce Wasserstein, the late chief executive of the investment bank Lazard, was famously gruff and unkempt. But if you were thinking of buying or selling a company, and you could afford him, he would be the first man on your team. You were happy to ignore his brusqueness because no one knew the M&A (mergers and acquisitions) game as well as he did. His success sold his services. The great salesmen have the facts. Theyre the anti-sell, says Perry. They dont have to do anything. You just want to buy from them. Its like choosing between surgeons. Do you want the one with the tidy office and the ironed shirt? Or the rude slob who has performed 100 successful operations in a row? In some ways, this is the ideal. You have a product so irresistible that selling it is simply a question of placing it in front of the slavering prospect. No need for the artfully prepared bid, the tickets to the game, the winning smile. The salesman floats his pitch and the hungry buyer slams it over the bleachers for a home run. Everyone makes money and we all go home. But even in investing, where performance can be measured in the unforgiving digits of a risk-adjusted return, the selling goes on. Perry himself is a tall, athletic man, physically imposing and fashionably dressed. His offices are starkly white and dripping with modern art that emphasizes the firms wealth from the moment you enter. There is no false modesty here. Even after so many years, and such an extensive track record, Perry Capital remains dressed for success.