As a founder of multiple software startups, I’ve seen this time and again. Taking your software startup from inception to profitability while selling into an enterprise market demands a different approach. Enterprises are often slow moving, process-oriented, hierarchical beasts. As I addressed in yesterday’s post, startups must understand their enterprise customers’ unique characteristics and needs in order to gain a foothold.

This doesn’t mean assessing the overall market size and talking in the abstract about faceless corporations. It’s about understanding the intricate and complicated components of your target customer and requires much more thought and effort than simply building a product, putting up a website and hoping people show up at your door. In this post, we’ll look at the key questions startup founders must ask of themselves and the enterprise market.

Know yourself and your market

1. How are you perceived in the market?

Most companies are risk averse when it comes to dealing with and buying from enterprise software startups. If you’ve ever sold into an enterprise, chances are you’ve been asked about your funding and financial viability. Or buyers are worried that they won’t get the handholding they deserve, because you don’t have the staff to support them. They don’t care about your other customers, except in terms of how financially stable that makes you, and who they are (if marquee customers are already using your product, that serves as a form of “social proof.”)

Think of this issue in terms of innovation versus status quo. You don’t want to pretend you’re running a big, old school company, but you also don’t want to look like one half of a two-person startup in a garage. Some ways to do this?

• Offer a 1-800 number for customers to call (Grasshopper and other similar services will do the trick.)
• Use press releases to market in a more traditional way
• Build thought leadership through a corporate blog and guest blog writing on other sites
• Publicize news about your company that indicates stability such as the addition of a quality advisory board, raising capital, acquiring customers, etc.
• Get customer case studies as soon as possible

You want to present yourself in a manner that will simultaneously let enterprise customers know that you mean business (and have the wherewithal and sophistication to service them) and at the same time have the innovative technology and scrappiness of a startup.

2. What are your distribution channels?

You should never outsource responsibility for sales until you absolutely understand how your sales work, whom you’re selling to, pricing, sales cycle, etc. Once you’ve gone through the sales process a bunch of times, and you’ve nailed down a fairly repeatable process, you can start outsourcing the responsibility. Until then, spend all of your time in sales learning as much as you can directly from your customers, and keep those one-to-one relationships close. After you’ve developed a sales process that works, then you scale.

A good option for scaling is through distribution channels. Distribution channels give small enterprise startups much more reach into the market. There may be partners with pre-existing customer relationships that you can leverage. Often these partners won’t have your technical sophistication or innovation capabilities, but they will have a larger sales force and greater market access.

3. What are the key market buying cycles?

Companies plan their budgets well in advance for future purchases. They set year-long strategic goals that impact what they look to buy and how much they’re willing to spend. You want to be top-of-mind during these market-planning phases. There will always be discretionary spending and freedom to experiment with new technologies, but don’t miss out on injecting yourself into these key budget cycles.

September to December is usually a good time for enterprise software companies to make a lot of sales. Departments have unused budget and they’re trying to move fast. Summers are often pretty quiet, and so you need to be making a lot of noise in the spring to carry you through the summer into a great buying period in the fall. However, because patterns vary, you must determine your own customers’ purchasing cycles as quickly as possible.

4. What are the nitty-gritty pitfalls?

This is a catchall bucket for me when it comes to knowing your market. If you’ve done your homework and answered all of the questions outlined in this and my previous blog, you probably have already identified the sneaky little details — such as adequate customer support, training and understanding customer buying patterns — that can trip up the sales process. Knowing these allows you to tackle them in advance and adjust your strategy. It also allows you to change how you sell your product into the market. Maybe you have to go up the food chain to someone with more buying power, maybe you have to change your pricing structure. The more you know about yourself and your market — including the types of companies you’re going after, the departments and the individuals in those departments and companies — the better prepared you’ll be to build faster traction.

With more than a decade of experience managing and building software startups, Jevon MacDonald is an authority on co-browsing Web technologies. His company, GoInstant, delivers a patent-pending technology that provides “shared” Web-browsing capabilities.

Image courtesy of Flickr user Rojer.

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As a founder of multiple software startups, including my current company, GoInstant, I’ve learned a few lessons about selling into this singular market. While my companies have achieved success and were able to implement strategic alliances with large enterprise companies, such as IBM and Jive Software, it didn’t happen overnight. In my experience, if you’re looking to sell into the enterprise, there are two golden rules: know your customer and know yourself.

Knowing your market is critical. Knowing how customers want to buy, how they buy, and how you can package your solution with the appropriate support, training and value proposition is critical for gaining success in the enterprise space. Enterprise companies are slow — and loathe — to switch out existing systems. Once you get into a company and it is using your product actively, this is an advantage. But as the underdog trying to break in, it’s a huge disadvantage.

In this blog post, the first of a two-part series, we’ll examine five key questions that need to be addressed to fully understand the enterprise customer in order to gain a foothold. In part two, we’ll look at the important questions you need to answer about your own business, as well as the overall market.

Understanding your customer

1. How much should you genuinely innovate versus the status quo?

The status quo or “good enough” is an extremely powerful force. Entrepreneurs clamoring to innovate don’t always realize that companies may actually like something we don’t consider valuable. But just because you would never use it in your startup, don’t assume something isn’t good for your customer. You need to carefully consider the purpose it fills for the enterprise organization. Because large organizations have different concerns and requirements, something that looks broken to you may still be serving an important purpose internally.

Additionally, too many enterprise startups identify top-level problems without appreciating the layers of complexity underneath them. They see a big “obvious” problem (for example: “recruiting top talent is hard”) and assume there is a technological solution that they can build. But look underneath one problem and you’ll find three others. There may be issues with how internal departments communicate, or who owns the budget for specific things, the sophistication of the staff, or something else that’s going to roadblock your great solution.

2. Who are you selling to?

Every company has a hierarchy. There will be gatekeepers (lower-level folks that are tasked with doing research on your market), mid-level managers with some budget but restricted on spending without higher up approval (probably around $5,000 per year), and then C-level executives. You have to be strategic in how you sell to enterprises and how you move up (or down) the food chain, and how the value proposition changes along the way.

One of the best ways to do this is to get engaged within the organization and be accessible. Today’s enterprise buyers have taken a proactive approach in seeking out great software. Your job is to be sure that you are easily available and can clearly and effectively communicate and tailor the value of your solution as needed to people of all levels you’re selling to throughout the organization.

When talking with C-level execs, you need to be able to communicate how your solution can contribute to their overall business goals at a higher level, including projected ROI. Connecting them with C-level execs in other organizations who have already adopted your product might also help. At a mid-level, your approach should focus more on solving a specific business problem within their organization and streamlining existing processes.

3. How are you training customers?

Even with relatively simple software, companies ask about training. Most enterprise startups can’t afford to do on-site training, so look for other ways to provide the necessary handholding and comfort level customers need. One option is to create a video tutorial library. Video tutorials are easy to do and very effective for training. They’re also helpful when your customers on-board new employees or want to introduce your product into other areas of the organization.

4. What level of customer support do you offer?

Most legacy software companies offer poor support (and it’s generally quite expensive), so this presents an opportunity for enterprise startups. However, because startup founders focus heavily on innovation and product development, they often believe that these attributes are also the most important for customers as well. This ignores the premium that enterprise customers place on support — a value that frequently supersedes the fact that your software may be free and offers tons of cool new features.

The value you deliver is in the overall solutions package that you can offer to enterprise customers. And key to that package is a quality experience that contributes to the customer’s own success. While your features may, in fact, be groundbreaking, if they don’t facilitate better work processes for the customer, if they cannot be easily implemented and adopted throughout the organization, and if they cannot offer guaranteed performance, they don’t provide the value that’s required.

5. What are companies’ buying habits?

Enterprises are accustomed to long sales cycles, approvals, demos, trials, more demos and so forth. Changing those habits is not always easy, and in some cases you’ll have to play by the rules to get a foot in the door. At the same time, customers can stretch things out forever, and you will lose momentum quickly.

As with all the aforementioned, this is a delicate balancing act. You need to push your agenda and your sales strategy as much as possible. But you also need to weigh everything with an acute understanding of how your customers like to buy things and the processes they have to go through internally.

As I mentioned earlier, gaining a foothold in the enterprise market doesn’t happen overnight. But without a consistent and laser-like focus on your customers’ needs, it won’t happen at all. In my next post, I’ll take a look at the questions that you need to ask yourself to make sure you’re on the right track.

With more than a decade of experience managing and building software startups, Jevon MacDonald is currently the CEO and co-founder of GoInstant. The startup delivers a co-browsing experience for enterprise customers and consumers. Its patent-pending technology aims to help enterprise customers improve sales, customer support and problem solving processes.

Image courtesy of Flickr user Rojer.

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Here are three startups integrating hardware with mobile software to watch for:

Shaka

Surfers looking to quickly check wind speeds and share the information with friends should look no further than Shaka,  a startup developing portable wind speed meters that attach to the iPhone. The device allows surfers to measure wind speeds at their favorite locations, and upload those speeds and wind conditions to social networks. They can also plot the results or conditions on a map using the Google Maps API, which is then searchable by surfers waiting for wind at home. The device looks like a tiny fan attached to the top of the iPhone, and it’s easy to see how it would be useful to anyone whose livelihood depends on the wind — farmers, sailors, and construction workers, to name a few. The Shaka founders said they hope to sell the device for about $60, and said they could see it expanding beyond the surfer community, since similar devices tend to be much more expensive and don’t always connect to the web.

Kindara

Kindara is a startup looking to provide women with a simple way to track their fertility signs through an app for iPhone and iPad. But it’s not just about apps: The company is also developing a thermometer that is awaiting FDA approval that would sync with the mobile versions. The company uses a simple interface on the iPad and the iPhone where women can input a variety of data sets each day related to their fertility. Women can then display that data in a chart to better understand when they’re most likely to get pregnant. The company just launched its app in May, and had more than 1,400 downloads in the first month. It’s available in the iTunes app store for a free download.

Loccie

Loccie is a startup that comes from entrepreneurs in Croatia and seems like a good solution for the spontaneous traveler looking for things to do in a new place. Loccie allows users to input basic information about their likes and location and then gives them suggestions for things to do a new city. The hardware component then allows users to leave their phones at home and explore the city wearing a small GPS device that tells them when they’re close to their Loccie-suggested destination. The GPS device seems less interesting (who really leaves their iPhone at home when exploring an unknown place?) but the web version of the app seems like a fun way to find entertainment. The GPS might also serve as a welcome respite from the constantly-connected feeling that a mobile device usually brings. Loccie is still in beta, but users can request a trial here.

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Why did you decide to look to China for collaborators?

There are only three ways to acquire talent. Steal people. That’s basically what you do in the world of development — there are not good Python or Java or Rails developers sitting around with nothing to do. Number two, you acquire small companies, and number three, you go overseas and either hire people or more commonly, you contract to a contract firm. We’re basically employing techniques number two and number three, number three being unique in that we’ve built our own team of developers in Sichuan province, China.

How did you meet your co-founder?

We were introduced. I was looking for a technical co-founder. He, a fairly brilliant product developer in China, was looking for a partner, so it kind of was the perfect pairing where I needed a development team and he needed access to markets and relationships. IDG-Accel really gets the credit for marrying us together and giving us the capital to build some great products.

How many other team members do you have now and where are they located?

Right now we have about 15 people in China. Nearly everyone is in China at this point because it was easy to quickly hire and get our products developed in record time. Now I’ll backfill positions here in San Francisco, but our intention is to keep the majority of our development in China.

Why build your own team of employees rather than use contractors?

I don’t have any particular issues with contracting. I’ve hired contracting firms in the past. The challenge is, particularly when you’re developing sensitive software like security software, we need people that are committed to our product. With a contract firm you just never know what’s going to happen. You don’t have the ability to incentivize people to stay on a product. Generally, the contract firms don’t guarantee anybody on the team. So frankly we wanted the control that would allow us to build a team that could gel together, build a relationship and be committed.

One nice thing about having such a committed team in Chengdu is that while there’s a lot of burgeoning companies in China, there’s not nearly as many as in Silicon Valley, so I don’t have to worry about my developers getting poached by other software startups in the area. It can and will happen, of course, but not nearly at the rate it happens in Silicon Valley.

What other advantages are there to having a remote, cross-cultural team?

As much as I’ve always been impressed by developers in Silicon Valley, I’m thoroughly impressed with Chinese engineers’ level of commitment and willingness to work very difficult hours and perform superhuman feats. I did not expect to see the level of results I’ve seen and I can’t possibly overstate how dedicated and hungry these young Chinese engineers are to prove themselves and build great products.

What tools do you use to stay in touch and collaborate?

I wish I could say that we had some kind of special tricks and tools. The truth is, aside from the scrum methodology that many startups use to have people standing in a room for a couple of minutes reviewing a project, most teams even here in Silicon Valley are doing a lot of their collaboration using online tools. Long meetings sitting in conference rooms and reviewing project plans, people don’t do that anymore. With 37signals and some of these tools it doesn’t really matter if the person is in the cube next to you or thousands of miles away.

How do you handle the time difference?

It’s very interesting. Here’s kind of my routine. I wake up about 6:00am. It’s around 10:00pm in China and generally they’re still working. I have maybe a couple of hours overlap with them and then they go offline for eight hours. But then they come back online just about the time that my two-and-a-half-year old goes to bed, around 8:00pm my time, and we can review things together. The really neat thing is, I will go to bed, say, 10 or 11:00pm. I will have shot over some requests or some feedback and they then have seven hours to work on those deliverables, to prepare some things for me to review, so that when I get up and I grab my iPad at 6:00am I have an inbox full of messages.

The beauty of this is we operate 24 hours a day, and we have periods of being online at the same time to collaborate but we also have the benefit of these blocks of time where they can do what they do best without any interruption. During my workday I’m not getting all these emails, getting interrupted all the time. I can focus on the things I need to focus on. Likewise, when they’re cranking away, I’m asleep and I’m not bugging them and disrupting their flow. We each get seven or eight hours in which there’s no interruption. So it works really well.

Do you physically visit the office in China?

Yeah, I pop over there every 12-14 weeks.

Do you feel that face time is necessary for the smooth functioning of the team?

Honestly, I can’t tell you that it’s necessary because, Hugo, my co-founder, is there and it’s his team. He built this team. He manages this team and he has a great relationship with his team. I do believe that companies are built on people. I don’t care how good the technology is. I don’t care how great the market opportunity is. If you don’t have a good culture and a good relationship amongst the team, you will fail. So from a tactical perspective, me being over there isn’t necessary, but from a relational perspective I do believe it’s important that I spend time with them. We’re human beings. We each have our specialties but we have a relationship, and I think when I go over there, we are just strengthening our relationship in a way that you can’t do online via email or Skype.

You speak really highly of the talent in China. Do you think the U.S. should be letting more of these highly skilled people come to our country to work?

I think there are lots of people that are discussing this subject and I defer to their expertise, but we obviously have a problem of a shortage of developers in this country, and so we have a need for a near-term solution and a longer-term solution. Longer term we need to modify our educational system. There are several excellent startups that I think are going to upturn this antiquated, four-year college model and hopefully allow us to help the next generation to build great products. Near-term I do believe that it is in the best interests of our country to modify immigration laws and to allow us to bring in highly talented people to help us build our companies.

What are some of the educational startups that are shaking things up that you’re most excited about?

Obviously there are just the simple tools like Khan Academy. Khan Academy is a great thing, and now there are some games — I think Code Wars — that are specifically designed to help people have fun learning how to write code. One particular startup, New Charter University, comes out of Mitch Kapor’s incubator here in San Francisco.

Any other thoughts on the experience of starting a business remotely?

Just to really overplay the Thomas Friedman topic that the world is flat. We need to move away from this anachronistic way of thinking that there is us versus them. We are a global economy and we now have the tools in front of us to eliminate these geographic boundaries that have traditionally kept companies from growing and building great products. I think at some point in time we won’t just be thinking about country geography but also this whole concept around what does it mean to go to an office every day? This whole concept of driving to a box, sitting in a box all day and driving back is going to change. The way we look at a company is going to move away from being a physical building to being something much more virtualized. I think that this is going to be a growing trend and my kids will look back at it and ask the question: ‘Why weren’t all companies built that way?’

Image courtesy of BlueSprig.

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Ellison is most famous for co-founding Oracle, the enterprise software giant. But as evidenced by his regular appearances in such places as the Forbes list of the world’s billionaires, he’s just as notable for being an all-around mover-and-shaker in the business world at large. And it turns out, a number of the tech industry’s most accomplished people have been on Ellison’s payroll at some point.

SoftwareAdvice put together this handy infographic of Larry Ellison’s influence (click to enlarge):

Infographic design by Russell Pryor

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