Thursday, August 11, 2011

Startup Sales and the Dangers of Whale Hunting

“From hell's heart I stab at thee;
for hate's sake I spit my last breath at thee. Ye damned white whale.”

Every early-stage startup founder wants to harpoon a whale. A whale is a huge corporate customer that can feed your startup for months and that will build immediate credibility. But whale hunting is dangerous. Many large corporations move painfully slow. They take years to make decisions, and they’ll tax your resources to the limit. If you’re not careful, you could get trapped in a costly and never ending sales cycle, so you need to weed the slow ones out. They’re like Ahab’s dreaded “white whale,” chasing them will drown your startup.

How can you tell if you’re hunting a white whale? Here are 5 signs:

  1. The prospect refuses to pay for a pilot. This usually occurs for one of two reasons. One, he isn’t confident your product is valuable, or two, he doesn’t have the authority to budget for a pilot. Either way, this should set off alarms.
  2. Your product isn’t core to their business. In any company, the people core to the business have the most clout and get the biggest budgets. A VP of Engineering in a software company is more influential than his real estate agency counterpart. If you want your sale (and startup) to move quickly, you’re better off solving problems for the money makers in a company. They have the budgets and power to get deals done.
  3. Your main contact isn’t a decision maker. If you’re new to sales, it’s easy to get excited the first time you find an enthusiastic employee at a prospect company. However, if he isn’t a decision maker, you should be careful. You could lose months of your life selling to someone who doesn’t have any authority. Before you invest too much time, learn who is making the purchase decision. Whenever possible you’ll want to meet the decision makers and validate that they’re just as enthusiastic as your contact.
  4. The company always rolls out new technology slowly. Most big companies are not early adopters. For a variety reasons, they roll out new technology slowly. When the time is right, ask the prospect about the last few technology rollouts.
  5. Another department is promoting a different solution. If competing groups are promoting different solutions, you may end up in a hairy political battle and your project will get killed because you’re on the losing side

I could go on, but I’d bore you and myself. Instead, I’ll highlight the common thread: if the decision maker doesn’t feel an urgency to deploy your product, you’re probably chasing a white whale. An early-stage startup can’t waste time on these clients. Come back after your series B.

What if all your prospects seem like white whales? That’s a sign that you haven’t found product-market fit. You shouldn’t have to force the product down your customers’ throats.

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