How Startups Can Do Business With Corporates

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?