6 Lessons learned from funding startups with long sales cycles
A few tips on building enterprise startups — healthcare, big co. tools, etc.
📈 The sales uptick won’t come until year six
🙄 Don’t be a subject matter snob
🤝 Everyone has to sell
📜 Pick VCs with long track records
🧑🎓 Prepare to teach
🐌 Move slowly and get buy-in
One of my portfolio companies has recently hit its stride, and it reminded me of how counter-cultural enterprise sales are in the current tech market. NB: by “enterprise,” I mean high ACV, slow sales cycle, B2B-focused startups, no matter which vertical they serve.
As B2C founders race to see who can “earn” unicorn status fastest, B2B, specifically B2E startups, often have to hustle for half a decade before they know if they’re on the right track. All the time not confident if they’re pursuing an IPO-worthy market or a local maximum.
Selling to enterprises is tedious. It’s time-consuming. It’s also lucrative and sticky. The tantalizing lure of the enterprise is that once you are in, you are *in*. Do your job right, and you’ll earn an annuity for decades.
So, if you are considering taking the leap and building an enterprise-focused startup, here are a few of the lessons I’d offer:
📈 The sales uptick won’t come until year six
Can you wait that long? Unfortunately, one of the maddening aspects of building an enterprise startup is that the inflection point often doesn’t come until half a decade has passed.
It can be tough to measure progress during this time — are you getting traction or just spinning wheels? Are you able to get enough “wins” to keep morale, including the founder’s, high for the long-term?
🙄 Don’t be a subject matter snob
After you’ve spent the better part of a decade immersed in a market, you begin to believe that no one could possibly get up to speed quickly enough, and you start searching for domain experts. This attitude is folly from a hiring POV.
Domain expertise is straightforward to teach compared to the vague and often intrinsic skills that make for a good salesperson or engineer. New hires can gain a functional level of market knowledge in 30 days of intense training; technical skills take decades to hone.
🤝 Everyone has to sell
More than 50% of enterprise success comes from distribution. Product is important, and product-led growth is a viable strategy, but everyone on the team needs to think about “sales” as a core part of their job description.
“Build it, and they will come” is a doomed strategy in this arena. Strategy divorced from front-line product or sales experience is useless. More than any other area of the startup ecosystem, commerce and code need to be fully integrated.
📜 Pick VCs with long track records
Newly minted VCs can be after quick mark-ups to help raise their next funds. As a result, they’ve often not directly experienced the punctuated tedium that is the hallmark of enterprise sales and product development cycles.
By all means, get fresh thinkers on your cap table, but be sure to balance them with seasoned investors who won’t shrink when Salesforce starts competing with you, or a big deal dies on the vine after a two-year courtship.
🧑🎓 Prepare to teach
Unless you are replacing an existing product in a well-understood category, you will need to educate the market. This is a slow, grinding, and often frustrating process.
Moreover, you need to educate everyone — your team, your customers, their employees, and perhaps most importantly, the analyst who manages or will put you in a Magic Quadrant. You need the heart of a teacher and the cunning of a sales leader.
🐌 Move slowly and get buy-in
Enterprise sales is the art of asking for permission. So first, you need senior-level leaders to sign contracts. Then you need to get buy-in from managers. Then you need to train every line worker.
Nothing happens quickly or easily in the world of enterprise sales. Every victory is hard-won. Fortunately, the process isn’t easy on the buy-side, so your wins tend not to churn after six months. Still, strap in for a long haul.
Serving enterprise customers requires a vanishingly rare combination of skills and personality traits. Relentless execution paired with a zen-like approach to the passage of time. Technical proficiency married with diplomatic poise.
I don’t want to paint enterprise startups unfairly. No startups are easy. B2C, B2B2C, SMB, and every other path to market is fraught. Still, forewarned is forearmed. And no matter what shape your startup takes, we’d love to hear from you at Founder Collective!
