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The advice I'll give is based on my experience as cofounder of an early online banking technology company back in the mid-90s. We started with three people in r
by markbnj 7y ago
The advice I'll give is based on my experience as cofounder of an early online banking technology company back in the mid-90s. We started with three people in rented class-C space and over seven years did high six-figure deals with large and small banks including Fleet, Bank of America, Citi and others.
There's not really a "how it works" for this. If I had to tell you how it works I'd say: it works by you making friends inside a corporation and convincing them to buy your product. Did that help? :). Probably not, so here's a little more: you preferably start with a member of your founding team who is articulate, outgoing, amiable and enjoys meeting and talking with people. That person needs to know the product and competitive environment cold, and it helps if they are passionate believers in the value prop. They need to have an identified list of target companies. They need to start calling and emailing and working contacts to get meetings. Eventually, if you actually have a value prop, one of those meetings will result in a relationship with someone who is willing to champion the product internally.
You then work outward from that contact, meeting with their colleagues, eventually identifying decision makers who control actual budget that can be used to pay you for something. If you do all this skillfully then you may get them to commit to a purchase. They will then have to shepherd you through a potentially long series of internal policy and legal hurdles. You may need to get on a qualified vendor list, or meet certain business stability criteria. You will likely need approvals of the deal from different departments, and their legal team will review and try to negotiate any agreements you request them to sign. You can see why developing internal champions is absolutely critical. In every single successful deal we did, by the time we got to the second or third round of meetings our internal champions were doing most of the selling.
The last thing I'll say is that it can be powerfully tempting to think you can purchase success at this by hiring the right magic person who can work their little black book and make sales happen. I tend to doubt it, and it definitely never worked for us. A founding sales person can make this happen. That's the person I'm talking about above. But just bringing in a hired gun is unlikely to result in success imo. I think you need to believe in your own thing enough, and be good enough at talking about it, that you can land your first few deals. Then when you do bring aboard professional sales people you'll have some actual idea of why people buy from you and how to systematize the approach. Good luck with it!
- sk5t 7y ago> But just bringing in a hired gun is unlikely to result in success imo. A thousand times, this is right on. Hired gun sales folk are generally going to follow the path of least resistance--they will try to get other people at your startup to do the boring/hard work they themselves ought to be doing. Or try to push through deals with lousy margins to get their revenue commission, or a dozen other pathological things. Plus, if you (founder) can't sell the thing, it's going to be super, super tricky to identify someone else who is even capable.
- jimnotgym 7y agoQuick point. If you set commission based on revenue then make sure you attach a minimum margin condition. Otherwise set margin based targets...
- goatherders 7y agoWe tell our clients that they will always provide the last mile sales function (actually closing the deal). I say "people will always buy from the heart in the business over the hired gun outside the business. And the 'heart' is you." If you are hiring for lead gen or biz dev then that's an investment like PPC or SEO...someone inside the building has to convert the sale.
- siruncledrew 7y agoThis is all good advice. A note jumping through the legal/paperwork hurdles with large companies: be prepared for it to take a long time. A very long time in some cases. It all depends on who you’re working with, how big the company is, and how much money the deal is worth.
- goatherders 7y agoYes, this. I've had large enterprise deals that were 'closed' in days or even hours that then took weeks or months to get through legal.
- brey 7y agoI've been through deals with large financial institutions that have taken 2-3 years from an initial incredibly positive demo and PoC and strong buying signals, through to a signed contract. IMO going through that successfully is also sending a signal that you have sufficient endurance - there's a large risk for a corporate to sign up for a long contract with a startup, they don't know how long you're going to be in business for. If the startup doesn't have the appetite to spend 2-3 years to get a contract over the line, then they aren't going to be a stable partner for the long term. You need to also have sufficient numbers of small/medium scale deals so you're not 100% relying on elephant hunting.