Deepak Jeevan Kumar of General Catalyst Partners wrote a pretty good overview piece on TechCrunch describing his point of view of how to launch a F500-focused enterprise software company. Many parts of it ring true based on our experiences at Mediafly and my previous experiences:
CIO offices in Fortune 500 companies are trained to play it safe. Many companies stick to Oracle, VMWare, EMC and Cisco not because their products are the best in the world, but because no one got fired for selecting one of them.
That’s so very true. Often this is driven by their own experiences, but just as often it’s driven by internal politics. We heard recently from a customer (who was discussing another part of their business, thankfully) “if we don’t go with Microsoft for [terrible product A], our prices will go up on [pretty good product B used somewhere else], and we can’t have that.”
Do not use unpaid PoCs even if you have to wait one to two months to get a paid PoC.
This is very important. Customers that don’t put money behind a proof of concept simply don’t have enough skin in the game. We’ve been on the wrong end of this story before:
- Prospect says “well, if you have feature X, I’ll be willing to buy then.”
- You spend days/weeks/months building feature X, in hopes of securing their business
- You show feature X to prospect
- Prospect says “Great! Now, if you have feature Y, I’ll be willing to buy then.”
Customers who are not willing to engage in a paid proof of concept are not worth it, no matter how large.
Some parts of Deepak’s perspectives don’t seem right:
Second, power and influence in the early days can come from public silence for enterprise startups (unlike consumer startups). Your competitors, the media and your customers like a game of treasure hunt to find out what you are doing.
In reality, as a “stealth startup”, no one really cares what you are doing. And the last thing customers want to do is to spend time trying to dig to learn your secrets. They are usually too busy running their business.
As you are selling to a select group of Fortune 500 customers, there is no point in announcing to your powerful enterprise tech competitors (e.g Cisco, Oracle, IBM, HP) what you are up to. Convince your design customers first before you open up the kimono.
Again, even if your largest competitors figure out what you are up to, it’s highly unlikely that they will try to usurp your untested, unproven ideas. They are busy running their businesses and executing on their product and company vision, to bother trying to knock you out. Of course, all this changes when you start to generate real traction and, more importantly, win deals from under their nose. But you are not at this stage yet, pre-customer startup.
That being said, I do agree with the general premise that you shouldn’t spend time talking about the product too publicly. But for these reasons. I believe that’s the case because you should be 100% focused on executing on delivering your product to these large companies that are taking a chance on you. Spending time engaging in PR is a waste of your time, as you haven’t proven anything yet.
Overall, this article is definitely worth a read for anyone starting down this road.