Startup: understands enterprise organizations

By Yossi Carmon
July 29th, 2013

My professional life has varied between positions in enterprise organizations and startups. While being part of a startup was natural for me, I needed to learn how to function as a director in enterprise organizations. Throughout the years I have never stopped to think about the insights I have learned by functioning in two different types of organizations, until two years ago.

In 2011 I helped an interesting startup that developed and sold a product to enterprise organizations. Two of its struggles were:

  • How my product can be unique in the eyes of the enterprise?
  • What would be the sell approach and what will be the target price?

I think that these are some of the struggles of almost any startup that focuses on enterprises, and it hit me, because I never gave it any attention until this startup asked me these questions. For over two decades I have functioned at different times on both sides of the table and the answer was very clear to me.

Disruptive technologies are the competitive edge for enterprises that help them reduce expenses or (and sometimes 'and') increase performance. But as exciting as they can be, they as frightening as to the organization, and I'm sure you understand the reasons why. The way to overcome it is to be disruptive but not too disruptive enough to shake the enterprise foundations.

Bipul Sinha, Lightspeed Ventures' partner, has expressed it beautifully in his interview with TechCrunch: "Technology coming from a startup is very risky and they (enterprises) don't want to take the risk. Understand how your solution fits into an existing framework that the customers (enterprises) already using. The best startups are the ones who provide a disruptive solution but extremely none disruptive in the way into the enterprise".

For the second struggle, well ... the sell model has changed over the years. Ten to twenty years ago the people who are made the buying decisions usually never used the products, but today that changed. Users are the ones who decide which application or technology more suited for them.

Generally there are two approaches: top-down and bottoms-up.

The "Top-Down" approach

The "Top-Down" approach is suitable for products with high target price such as $50K and above. The sell will usually be closed at the director's layer of the enterprise and afterwords will get to the end users. Some of the most successful enterprises still use this model, such as Oracle and IBM.

The "Bottoms-Up" approach

The "Bottoms-Up" approach is for products with lower target price or the one's I call "the affordable price for a single user". Bipul Sinha, in the same interview explained it like that "People are selling products to the end user and they are going bottoms-up. So, they are finding sells guys, line of business users and they are selling it to them and that how they get their initial distribution and then they go up and they start selling the enterprise solution".

Summary

Neither of the approaches is easier, you need to understand your own personal strengths in order to decide your approach. Today with crowd wisdom, taking the second approach can help you modify your product and make a more disruptive solution, but not disruptive enough to disrupt the enterprise itself.