The advice I'll give is based on my experience as cofounder of an early online banking technology company back in the mid-90s. We started with three people in rented class-C space and over seven years did high six-figure deals with large and small banks including Fleet, Bank of America, Citi and others.
There's not really a "how it works" for this. If I had to tell you how it works I'd say: it works by you making friends inside a corporation and convincing them to buy your product. Did that help? :). Probably not, so here's a little more: you preferably start with a member of your founding team who is articulate, outgoing, amiable and enjoys meeting and talking with people. That person needs to know the product and competitive environment cold, and it helps if they are passionate believers in the value prop. They need to have an identified list of target companies. They need to start calling and emailing and working contacts to get meetings. Eventually, if you actually have a value prop, one of those meetings will result in a relationship with someone who is willing to champion the product internally.
You then work outward from that contact, meeting with their colleagues, eventually identifying decision makers who control actual budget that can be used to pay you for something. If you do all this skillfully then you may get them to commit to a purchase. They will then have to shepherd you through a potentially long series of internal policy and legal hurdles. You may need to get on a qualified vendor list, or meet certain business stability criteria. You will likely need approvals of the deal from different departments, and their legal team will review and try to negotiate any agreements you request them to sign. You can see why developing internal champions is absolutely critical. In every single successful deal we did, by the time we got to the second or third round of meetings our internal champions were doing most of the selling.
The last thing I'll say is that it can be powerfully tempting to think you can purchase success at this by hiring the right magic person who can work their little black book and make sales happen. I tend to doubt it, and it definitely never worked for us. A founding sales person can make this happen. That's the person I'm talking about above. But just bringing in a hired gun is unlikely to result in success imo. I think you need to believe in your own thing enough, and be good enough at talking about it, that you can land your first few deals. Then when you do bring aboard professional sales people you'll have some actual idea of why people buy from you and how to systematize the approach. Good luck with it!
> But just bringing in a hired gun is unlikely to result in success imo.
A thousand times, this is right on. Hired gun sales folk are generally going to follow the path of least resistance--they will try to get other people at your startup to do the boring/hard work they themselves ought to be doing. Or try to push through deals with lousy margins to get their revenue commission, or a dozen other pathological things. Plus, if you (founder) can't sell the thing, it's going to be super, super tricky to identify someone else who is even capable.
We tell our clients that they will always provide the last mile sales function (actually closing the deal). I say "people will always buy from the heart in the business over the hired gun outside the business. And the 'heart' is you."
If you are hiring for lead gen or biz dev then that's an investment like PPC or SEO...someone inside the building has to convert the sale.
This is all true, but tbh, OP is not going to make this happen.
Backing up a bit, companies have to pick their targets: smb, midmarket, or enterprise (say over $1.5B/annum). There is a vastly different sales motion required for each. Further, there are different sales motions (and different salespeople) even in the SMB vs midmarket world depending on price points: under $5k, under $50k, etc.
But the high level problem is actually really simple. Salespeople who are good at this -- really good -- can easily earn $1m/year in cash comp. That is not an exaggeration. A standard comp plan will have a commission north of 15% with accelerators after meeting quota. So they basically aren't hirable. They may be willing to be a cofounder, but most likely, they will want to work for a big existing company... because see the cash comp above. And unfortunately, to be the first salesperson, you need someone really good. Because they're going to be doing their own prospecting as well.
It is possible to strike it lucky with a salesperson looking for a break, but how do you evaluate that person? That requires sales skills. Just like you would never ask a salesperson to evaluate an engineer, an engineer is going to have a shit time evaluating a saleperson.
I've been through deals with large financial institutions that have taken 2-3 years from an initial incredibly positive demo and PoC and strong buying signals, through to a signed contract.
IMO going through that successfully is also sending a signal that you have sufficient endurance - there's a large risk for a corporate to sign up for a long contract with a startup, they don't know how long you're going to be in business for. If the startup doesn't have the appetite to spend 2-3 years to get a contract over the line, then they aren't going to be a stable partner for the long term.
You need to also have sufficient numbers of small/medium scale deals so you're not 100% relying on elephant hunting.
Sometimes you can do a deal for a smaller dollar value, less intense legal / financial hurdle. Get on the approved vendor list, receive income while you negotiate a larger more complicated approval process for a larger deal.
While this is broadly true, how you sell also depends on the buying persona you are selling to. If you are selling to IT you absolutely need to have a deep relationship. IT people are generally risk-averse and hence relationships matter a lot. On the other hand, if you are selling to some business units like marketing, you can actually pull off a sale by just marketing (not surprising) to them. A lot of marketing folks are young, have budgets and are used to buying things online with CC. And if you are lucky, they might be owning the website and can get things deployed without ever talking to IT.
This is the exercise you need to do. Understand your buyer persona very well. Accordingly, you need to decide to invest in hiring a traditional enterprise sales guy (high touch wine-dine selling) vs a marketing-driven sales process (emails, ads, inside-sales calling etc)
Interesting, this is also my experience. I would add that in addition to marketing teams what also worked for us is selling directly to innovation/digital teams, or even core business ones, because like you said young folks are used to buy SaaS online. The key is bypassing IT, because as soon as it goes through them you are in for that big sale process greatly described by the GP post.
Agree with this and it seems like a really hard process. How is it that every enterprise I have worked at then seems to have one of everything and so many redundant tools. Is it just accumulation of crap over time? Good relationships that cut short this process? Straight up corruption?
All of the above, plus vanity projects. If certain people want a system, in many enterprises everyone below will bend over backwards to get it for them.
I will give you an example. A few years ago every c had a BlackBerry. IT ran BlackBerry business server alongside Exchange. Everyone was happy. One day a non-exec got an iPhone from his other job and wanted his emails from your co on the same device. There is no way to resist these requests, they will have it. Need to upgrade Exchange? Do it then, need to turn on web services, do it then. Need to hire back that team from Cisco for the week to sort the router, do it then. Need to hire the compliance consultant to rewrite your policies...etc.
When senior people want a toy they will have it (as long as it doesn't upset the other board members toys).
I guess that suggests that being the toy is the way to shortcut the long enterprise buying pattern. That or being the missing link that lets an IT manager deploy said toy more easily.
In the case of non-execs, they are often insisted on by investors. They are seasoned board members to keep the execs in order, that kind of thing. They have little operational interest in the company, and instead bring 'corporate governance'. They have a part to play in managing the board, not the company. They make investors feel better about investing in a company run by some technology upstart with no track record. In the UK they would probably be senior (perhaps semi-retired) auditors or corporate lawyers. They may also be people with a track record in that industry, designed to open doors.
Institutional investors tend to be pretty conservative, and these are their sort of people.
For me it's unfortunately the case that I have lots of ideas and don't execute on them. Mostly, I think, because of doubts about getting to something profitable.
I've been there too. Lots of unknowns. The biggest jump for me was when a startup I was working for folded and I realized I didn't have to interview somewhere immediately because my side project at the time had enough promise and I needed the time to meet with people about it.
There's not really a "how it works" for this. If I had to tell you how it works I'd say: it works by you making friends inside a corporation and convincing them to buy your product. Did that help? :). Probably not, so here's a little more: you preferably start with a member of your founding team who is articulate, outgoing, amiable and enjoys meeting and talking with people. That person needs to know the product and competitive environment cold, and it helps if they are passionate believers in the value prop. They need to have an identified list of target companies. They need to start calling and emailing and working contacts to get meetings. Eventually, if you actually have a value prop, one of those meetings will result in a relationship with someone who is willing to champion the product internally.
You then work outward from that contact, meeting with their colleagues, eventually identifying decision makers who control actual budget that can be used to pay you for something. If you do all this skillfully then you may get them to commit to a purchase. They will then have to shepherd you through a potentially long series of internal policy and legal hurdles. You may need to get on a qualified vendor list, or meet certain business stability criteria. You will likely need approvals of the deal from different departments, and their legal team will review and try to negotiate any agreements you request them to sign. You can see why developing internal champions is absolutely critical. In every single successful deal we did, by the time we got to the second or third round of meetings our internal champions were doing most of the selling.
The last thing I'll say is that it can be powerfully tempting to think you can purchase success at this by hiring the right magic person who can work their little black book and make sales happen. I tend to doubt it, and it definitely never worked for us. A founding sales person can make this happen. That's the person I'm talking about above. But just bringing in a hired gun is unlikely to result in success imo. I think you need to believe in your own thing enough, and be good enough at talking about it, that you can land your first few deals. Then when you do bring aboard professional sales people you'll have some actual idea of why people buy from you and how to systematize the approach. Good luck with it!