In the world of small or young tech startups, many companies can find themselves paralyzed by the challenges involved with selling their product to large enterprise companies. While these difficulties can arise for a number of reasons, a key underlying issue for many startups is that they fail to understand what Enterprise CxOs want.
You are probably thinking, “Yeah, that’s why I am trying to beat their door down to get some time with them, DUH!” So unless you are a mind-reader (do they have a bot for that yet?), we are going to drop some knowledge on you that the CxOs from one of our sponsored panels shared with us at Boulder Startup Week recently.
The panel featured five innovative CxOs at major Colorado companies, including Level3 Communications, Vail Resorts, Boulder Valley School District, DMC Global, and National Cinemedia. Here is a collection of the advice they shared:
- CxOs Are Incredibly Risk-Averse, So Find a Solution that Isn’t Their Core Application
Al Rosabal, the former EVP, COO & CTO at National Cinemedia (and who is now enjoying taking some time off and being “funemployed”) said that “some of the most risk averse people you will find in any company are sitting right here. We aren’t going to risk our data or inject chaos into our organization.”
Another risk for enterprises working with startups is the ever-present possibility that the startup fails (I know, it hurts to say) and vanishes along with the tech they implemented. This scenario can cause major headaches for enterprise companies as they are forced to search for another vendor to replace your product (a rather tedious and time-consuming task). It is crucial for emerging startups to find a solution that sits on top of their core applications. An example could be an app that makes their ERP more streamlined and easier to connect between platforms. The main idea behind all of this is that unless their ERP is really dragging the company down, enterprise corporations do not want to take on the large amounts of risk that are present when dealing with a startup company. This brings us straight into the next piece of advice.
- Find Something that the Incumbents Aren’t Doing/Do It Better
"There's a way to do it better - find it." - Thomas A. Edison
Andrew Moore, the CIO from Boulder Valley School District, told a great story about getting a new VoIP system. He shared that working with a government entity poses a specific challenge for startups as they always must go through an RFP process before selecting any vendor. “This can be a barrier to entry for some,” Andrew said. Despite this, even in the process of selecting their new VoIP provider, they received 7 proposals. The startup they eventually chose to work with not only undercut every other incumbent by $1 per user per line, but also provided features that none of the others had.
Jeff Fithian, CIO at DMC Global said, “I am not going to work with a startup for my core applications.” Jeff later added that “when it comes to niche applications and doing something no one else does, that is where you get our attention.” So, like our good ol’ friend Edison said, go find a way to do it better… or enhance the existing technology so much that you cannot be ignored.
- Provide a Specific Business Benefit, but Don’t Go Around the Gatekeeper
Salesforce.com made a business out of going to the sales organization and bypassing the gatekeeper, but as Robert Urwiler of Vail Resorts said, “it’s a risky strategy.”
It is great to prove that you solve a specific business challenge, but going around the IT department means that they might end up putting the brakes on the deal once they find out about the solution. You still need IT to implement any new product, so make sure they and all other departments involved with your product are both informed and aware of the benefits it can provide them (department specific benefits are even better).
- Choose Investors Wisely
Mark Martinet, former CIO at Level3 and current CSC at DXC says that as an entrepreneur, you should “choose your investors wisely and make sure they can help you with important relationships in your industry.” All five of the CxOs echoed the same sentiment, offering that they would most likely work with someone who has taken time to build their industry network, research both problem and solution, and who operates under a realistic view regarding the problem(s) they are trying to solve. Mark also encourages startup CEOs to put themselves in the shoes of the buyer, and try to understand how, exactly, your solutions can benefit them.
In addition to offering insight into strategies for selling to enterprise, the CxOs also provided a list of things not to do when pitching to the enterprise. A few of the red flags discussed were lack of funding, hubris, and a refusal to sign data privacy agreements. Many of these startups, and enterprise companies in general, are the stewards to a large amount of private and valuable data. Because of this, enterprise companies will tend to stray away from handing the keys over to just anyone. This is partly why they value having some sort of relationship with the startup owner before they will even consider speaking to you. Lastly, hubris is a big turnoff for the CxOs of companies that handle millions of dollars a year. Our advice to you is simple: rein in that ego, make them your friend, and show them why your badass solution actually solves their problem.