Scaling Up: How Do Startups Work with Corporates?
How should startups approach large enterprises? How can they sell-in? How should entrepreneurs turn long and endless discussions into actual sales when working with corporates?
Having spent approximately 20 years with Corporates such as CapGemini, Motorola, and Microsoft, I see a number of similar challenges and opportunities that face startups when they approach large organizations. Provided startups manage the challenges well and capitalize on the opportunities, there is a vast potential for scaling one’s business via big businesses.
Probably the biggest challenge for a startup approaching a large enterprise is being taken seriously. There are hundreds of thousands of startups popping up around the world every year, and most technologies and products are easily replicable or replaceable by competitors and substitutes. How do you stand out from the crowd? Furthermore, how do you sell to a corporate? It starts by making yourself and your product ‘loved’…
The best way to stand out in the crowd and make your corporate counterpart love you is to make life easier for him or her. What’s her scorecard? What are the metrics he has to show ‘green’ every quarter? Who are the stakeholders she needs to get along with? If you can understand these drivers and speak the same language (i.e. measure your business with the same metrics--such as revenue or ROI--adopt the same product features and terminology), your partners will start listening to you. If you can align their incentives with yours, you will no longer be noise or another action item that keeps getting postponed on someone’s very long to-do list. So ask simple questions like “what do you get measured on?” or “what keeps you awake at night?” You’ll be surprised at what people will tell you.
The best way to stand out in the crowd and make your corporate counterpart love you is to make life easier for him or her.
Once you have aligned with your corporate partner’s drivers, make them love you even more by executing well and becoming irreplaceable. Always be professional and reliable. Be obsessively disciplined on follow up, meeting deadlines, and sending ‘thank you’ notes. Dress for success -- even your clothing should match (or at least be acceptable for) that of your corporate partner. In short, deliver on your promises in a timely manner and “speak their language” in every way you can think of.
Another important area to scale successfully with a corporate partner or customer is by networking well. You will most likely need buy-in from multiple stakeholders in the organization. Not only will your counterpart probably change during the sales cycle, but other ‘approvers’ and business units involved in the decision will, too. The earlier you can familiarize with the ‘stakeholder’ and ‘influencer’ maps, the higher your chances of succeeding (or avoiding failure) will be. Also, try to find mentors and allies higher up in the chain. Such ‘board members’ or executives can not only unlock bottlenecks for you but can also encourage mediation should things go wrong along the way. Finally, if you happen to be a startup that is eating a corp’s lunch or doing something better than someone at the company, tread carefully. Manage the tension well so as not to be eaten without even realizing it. For better or worse, it is not surprising that people can be very protective of their jobs, projects, or, in short, their ‘territory.’
In addition to loving you, corporates need to love your product, too. The easiest way to make your product loveable is by sharing it early on with your corporate partners and to keep improving it in line with the feedback – which you keep seeking, of course. I often get questions about whether to share products early on or not. Understandably, startups often have concerns about whether their idea or product will be copied. There is little to prevent this from happening, in most cases anyway, unless you improve your product faster than others and your product becomes absolutely fantastic. As such, it is best to help your partners and customers help you in the process early on.
Even if your product is perfect, a common challenge in selling to a corporate is getting paid. Long sales cycles, endless contract discussions, and inflexible billing systems are just a few areas that can have fatal impact on a startup’s scaling efforts. Start charging early on. Pilots should not be free or ‘expense-able,’ if at all possible. This way you get on the radar of the right approvers, register on the right billing systems, and have an opportunity to iron out onboarding issues early on while you work on your product. As for contracts, use your own contract template wherever possible to avoid wasting time on unnecessary clauses. This allows you to proactively propose your own terms (as opposed to having to negotiate on what you are given as part of the corporate template). More on contracts in a future blog post!
Finally, it is worth being aware of what you, as a startup, offer to corporates. Startups are an effective source of innovation for large enterprises, regardless of where the company stands in its innovation progression. Working with startups enables corporates to extend their R&D, have sensors in the market, build constructive strategies in time for disruption, and develop faster cycles to market as well as more sustainable, cost-effective solutions.
Startups can also inspire corporates to see startups as peers and to change employees’ attitude toward work. I have been fortunate to see many corporate cultures--from those of clients, partners, and customers--transform from one with ‘speed bump’ attitudes where employees react to new ideas with “why it cannot be done” or “why it did not work in the past” to one where employees start feeling creative and empowered. They enable positive change by bringing out-of-box thinking, suggesting “how this could work better” when met with challenges and new ideas. Being aware of the values you can add for your partner or customer will enable you to convince your stakeholders about your contribution and to scale faster.
In summary, make sure you are: loved by aligning incentives, speaking your customer’s language, networking well, sharing your product early on, and ensuring your company is successfully on-boarded in the billing systems. Complement all these efforts by offering better value to corporates depending on their innovation needs or pain points. Best of luck and success!
Following her Electrical Engineering and Management studies at the University of Pennsylvania, Didem started her career with management consulting at CapGemini in Boston, MA. She then contributed to the disruptive growth of mobile industry in EMEA during her eight years with Motorola. After graduating from Columbia Business School in 2005, Didem continued her career at Greenwich Consulting and British Telecom.
Her passion for the convergence of online, mobile, and digital media led her to join Microsoft’s Information & Content Experiences Group. She signed hundreds of partnerships with leading media companies across 57 markets during her first few years at Microsoft. As part of the Microsoft Accelerator team, she currently works with Corporate, Government, and VC/Accelerator partners to scale out Microsoft's impact on the global startup ecosystem.
Follow Didem on Twitter @didem_un_ates and make sure to check out her last post, Business Development 101: What You Need to Know for Your Early-Stage Startup.