how startups can do business with corporates
DESCRIPTION
Challenges in dealing with large companies- How you make it happen. Sanjay Swamy of AngelPrime (and earlier, mChek) shares some great insights.TRANSCRIPT
DOING BUSINESS WITH LARGE COMPANIES
@theswamy
@angelprimeone
Challenges in dealing with large companies
• I can’t find the right person in the organization• They just don’t get it -I have to keep running behind them• I keep travelling to Mumbai & Delhi – I can’t afford this
They don’t appreciate what I’ve done
• They want a free pilot• They want exclusivity – without commitments• They want to brand it with their own name and sell it
Complex sales cycle & terms
• They want me to have 10 customers• They want me to have 2 crores of existing revenue• They want my source code
They don’t trust me
• They never pay on time• It’s a long sales cycle• They suddenly want to roll it out to 1000 field offices
They are a pain to deal with
Challenges in dealing with Small Companies
• Startups provide simplistic solutions – no knowledge of our business• Small companies don’t follow-up in a professional manner• I have an approved vendor list
My business needs are unique!
• Their pricing model is unacceptable• I don’t want to pay to build their brand• What if this becomes big and I ignore it
Neat stuff but…
• Will they be around? What if they go out of business?• How can I trust them with my customer data?• Assuming it works - can they scale to my 1000 field offices?
Who are these guys?
And Yet
• Large Companies routinely do business with Small Companies very successfully
• Small Companies do successful on the back of Large Companies
How does this happen – is there a magic formula?
Most definitely YES!
• You have to systematically address their perceived concerns
• Deal with the Egos a little bit!
• Because when you make it work – the pot of gold could be significant!
First ask yourself…
Do I really need the large company as my customer to
launch?
Am I providing them a service or a
product?
Is the product adding to their top line or bottom line
or both?
Is my product going to create a revenue stream/differentiator
for them?
What do I have that is unique? No, its
not price!
Let’s discuss some key topics
• When & Who
• Pricing & Exclusivity
• Payments & Support
• Newer approaches
When & Who?
• MUST be excited by what you are doing• Strong desire to make his mark internally• Company with a reputation and track record of innovating
Find an upcoming star in the company
• They must feel the ownership• They must be willing to stick their necks out for you• Get them to sign an NDA very early – why?
Get them involved VERY early
• If someone wants you to build the perfect product, you’re dealing with the wrong person• Has to be a paid pilot
Get to a quick pilot launch
• Its all about Ownership & Success! - don’t try to be sly and take all the credit• Don’t talk to the press about what you are doing• Don’t rush to other customers – but have a plan B
Make someone a hero – win their trust!
The Pricing/Exclusivity Challenge
• I’m your first customer – helping define the product• I’m giving you access to my customers• I don’t want you to work with my competition
Free & Exclusive
• Your success is important to them• You are flexible about pricing but deserve fair value• You’re open to discovering fair value• Exclusivity is a two way street – what are you doing for me and
how do we measure it• Be transparent with them – blame your board
Establish your point of view early
• I’ll give you a great deal no doubt – but it won’t be free since I need to pay the bills - let me see what best I can do recognizing that you are really a partner more than a customer
It has to be a partnership
But will you be around?
• I will do XYZ, then raise capital• I have investors ready to fund me – but I’m waiting until we can
validate a few things with you
Have a clear plan on how you will capitalize the company
• Source code escrow arrangement• Support obligations
What if my competitor buys you out?
• Nobody will buy you!
Never accept a Right of First Refusal on your contract
Payments & Collections
• Proof that you have the right champion
Paid pilot – establishes the payment cycle
• Send the first invoice on time, even if for Rs. 100
Establish the collections process early
• Don’t wait expecting your business guy to work it outt
Meet the purchasing guy early
Upfront payment that is adjusted towards future services
New Media & Approaches
• Find the right people• Research your customer well• Find the right person in the organization
Leverage LinkedIn & Twitter
• Launch products that people use• Works mostly for tools• Free trials – Fremium models
Consumerization of the enterprise
Questions?