Enterprise sales for startups: Forget "quick experiments"
When a large prospect shows interest in your startup, it’s easy to jump on the bandwagon. But there’s one thing you should consider before exploring a future in enterprise sales.
Let’s say you plan to sell your product directly to consumers, but an enterprise prospect asks you to build on top of SAP, so they can use your software internally. What should you do?
Many founders, especially those with limited enterprise sales experience, might say, “Let’s try a pilot and see if companies who use SAP also have a need for our product.”
Here’s the problem:
You don’t know very much about the market. Is the prospect really worth abandoning your plans to sell to end-consumers or SMBs? Is SAP the best platform for your product? It’s hard to know the answers without first collecting data.
While it’s important to compare your options before committing to enterprise sales, it’s difficult for most startups to test the waters with a series of rapid-fire experiments. Why? Because experiments like this—even the quick ones—take at least 12–18 months.
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If you want to pursue enterprise sales, you need to be all in
Can you commit yourselves to enterprise sales—and only enterprise sales—for the next two years? This isn’t a market to dabble in. You can’t test enterprise and direct consumer sales concurrently, unless you have a big team with tons of experience.
Think about all the steps you'll take to determine whether this is the right course of action for your startup:
- Transition the prospect’s initial interest into a demo and/or paid pilot
- Convince the prospect to purchase your product (and sign a long-term contract)
- Implement your product
- Generate recurring value for the customer
- Conduct a case study—prove that what you’re selling solves an enterprise-level problem
Then you have to replicate this process over and over again to justify the switch to SAP-focused development. What works for one company might not work for others.
We’re talking about a massive task list and overall timeframe. It’ll be two years before you know whether enterprise sales is right for you. Can you risk that much time just to collect data? By the time you get your answer, it could be too late to pivot or put those insights into practice.
Enterprise sales is a big risk, but it can definitely pay off
Take Box, for example. They set out to make a product for end-consumers, but once that path closed, they committed themselves to enterprise. Their CEO, Aaron, read enterprise books, met with enterprise CEOs and executives, and soaked in all the enterprise knowledge he could to prepare himself for the transition. They’re doing really well, but they had to go all-in. They had to commit. It wasn’t an experiment. They didn’t dip their toes in the water.
Do your own 360-degree research
If an enterprise prospect wants you to build your product on top of SAP, don’t just take them at their word. Instead…
Talk to SAP employees
Tell them what you’re building and ask them whether they think your product is a good fit for their customers and platform.
Talk to SAP consultants
They’ll have a lot to tell you about implementation and customization. Ask for their advice, feedback, and pain points.
Talk to startups who have built products on top of SAP
Meet with successful and unsuccessful companies. Learn from their experiences and mistakes. What do they wish they’d known beforehand? What were some unexpected costs? Where’s a good place to start?
Talk to competitors
See what kind of response you get when you discuss your product. Show them what you’re trying to do and explore better opportunities for market-fit. Learn how they sell their own solutions.
Are you ready to make the commitment?
If you’re not sure, take the time to do more research. Don’t experiment just because a prospect showed a little bit of interest. Don’t commit just because one or two enterprise executives liked your presentation.
Ten years ago, at my first startup, we transitioned to enterprise because companies like Google, Intuit, and Oracle showed some interest. We gained early traction and I thought, “Man, this enterprise shit isn’t hard. What’s everybody talking about?” But it turned out to be very difficult. By the time we found out enterprise wasn’t right for us—15 months later—it was way too late.
We made a bunch of rookie mistakes following a path we didn’t understand. In the end, we wasted an incredible amount of money, energy, and time, which is the most critical resource any startup has.
If you’re ready for enterprise sales, there’s only one thing to do
Go all in. Dedicate the next 12–18 months to enterprise success. Commit fully to research, testing, and implementation on a large scale. After all, there’s no such thing as a quick experiment in enterprise sales.
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