His business cards were barely dry when Ben Werther, CEO and founder of Platfora, a Big Data analytics company, got a phone call from a large media corporation. The caller had read about the startup in a trade journal. "Within months of forming the company, we were in their offices pitching them a technology we hadn't even finished building yet," says Werther. Since its 2011 founding, Platfora has signed on many large customers, including Disney, Comcast, Citigroup, and Hewlett-Packard.
Of course, not all enterprise startups have new customers lining up so soon after launch, but Platfora's story illustrates how much the once stodgy world of enterprise technology is changing. "Enterprise CTOs are sitting on huge budgets, and they're now willing to talk with emerging, innovative companies," says Ravi Belani, managing director of the Alchemist Accelerator, a program for enterprise tech startups. "That used to be impossible."
In the first half of 2014, VCs poured $5.4 billion into these startups, according to a TechCrunch database. That's just short of the $5.5 billion invested in all of 2013. "What I like about enterprise is that the customers have plenty of financial resources," says Josh Stein, a partner at DFJ, which has invested in Box, Yammer, and Twilio. "If you can solve a problem for them, they'll happily pay you for that. While consumer tech tends to be more winner-take-all, I think the batting average is higher in enterprise." Still, landing a big corporate customer requires plenty of homework and legwork.
1. Find the Decision Makers
A growing number of enterprise-focused accelerators--including Acceleprise, Alchemist, and Work-Bench--tout their ability to connect startups with top executives of large companies. But you can hack your way to these decision makers on your own. "Lots of larger companies have really innovative people actively seeking out new technology," says Cameron Campbell, business development director of the New York City-based Work-Bench. He suggests looking at Twitter, tech conferences, and your LinkedIn network to find forward-thinking corporate techies. (Hint: They often have the word innovation in their titles.) "You want to try to bypass the gatekeepers," says Campbell.
Often, decisions aren't made at the top. Jeff Lawson, co-founder and CEO of Twilio, focused from the start on a grassroots sales approach, winning over developers--not just suits--to his cloud communications platform. "We built the best platform for developers and reached out to them where they were," he says. "Developers have a strong say in what gets built in their companies."
2. Keep Innovation in Context
Unlike consumers, large corporations don't generally buy new stuff just to be the first on the block to have it. They want to solve real, well-defined problems in areas like security, workflow, process automation, and Big Data analytics. "There are lots of problems that haven't been solved for businesses," says Justin Hyde, an entrepreneur and senior associate at Acceleprise, which has programs in San Francisco and Washington, D.C. "There's a huge amount of value there."
Rather than merely trying to prove how disruptive you are, you need to show enterprise customers how well you understand their problems--and how you can solve them faster, better, and more cheaply than your competitors. Enterprise customers also want to know how seamlessly your solution fits into their way of doing things. By focusing on the right selling points, "startups can unseat established competitors," says Campbell.
3. De-Risk Your Business
While big corporations are increasingly willing to take chances on startups, they still want assurances that you'll be around a few years down the road. A big company could spend more than a year doing due diligence on a new tech vendor. "We always say they're not buying the product, they're buying the company," says Campbell. "And that's really about being comfortable with the leadership of the startup and their vision." Having someone on the management team with a history at large corporations isn't a must, but it can certainly be a big plus.
An enterprise customer may also want to check some numbers--mainly, whether you have revenue coming in from other customers or adequate venture funding. Much more so than in consumer tech, a VC stamp of approval carries a lot of weight with potential enterprise customers.
Once you get the green light, these clients are supportive of your continuing success. "If a Fortune 500 company is taking a risk on you," says Campbell, "they want you to grow to ensure you'll be around for a while."
4. Play the Long Game
Courting large companies is a lengthy process. It can take 30 to 60 days just to get on an executive's calendar, and timelines for making decisions can be much longer than you might expect. In heavily regulated industries such as financial services, it can take 12 to 18 months from the time you talk with someone to get a final deal. Many startups need to raise bridge funding or start with some midlevel clients to provide cash flow while they chase one or two marquee accounts to build brand recognition, says Campbell.
But it's probably best to have more than one big customer, anyway. It helps you be certain you're creating a product that serves a larger market, and not just one company. "Of course, it's important to get GE or some other big account up on your webpage," says Campbell. "But you can't sell your soul for that." If you make a product tailored to just one company, and the deal goes south, he says, "you're left holding a bag of crap."
How to Break In
These four founders snagged large clients by being more attentive--and more nimble--than the competition.
Listen to the customer. "Product development and selling go hand in hand. Don't build a product in a vacuum. Instead, keep your feet on the street and interact with all kinds of would-be buyers. In the end, that will make your product stronger and future customers happier." --Ben Werther, CEO and founder of Big Data analytics startup Platfora
Speed it up. "The implementation cycle for enterprise used to be long and complex. It's much easier now. In one of our first big sales, our developer had a prototype up and running days after we met with the client. They thought it would be a nine-month process." --Jeff Lawson, CEO and co-founder of Twilio, a cloud communications platform
Break it down. "Your message has to be about real business value. We mostly deliver software to the IT department, but we explain why our product matters outside of the data center. Retailers want better customer engagement and loyalty. Manufacturers need more predictable outputs from their supply chains and factories." --Mike Olson, co-founder and chief strategy officer of Cloudera, a Big Data analytics company
Give it away. "Most businesses we're talking to already have pockets of users who like our free product, so the conversation naturally starts at a much higher level, around topics like enterprise-grade security and workflow. If freemium makes sense for your product, it's an amazing way to build awareness and demand." --Aaron Levie, co-founder and CEO of cloud storage company Box, and Inc.'s 2013 Entrepreneur of the Year