Comments on: Selling to enterprises

By: chris dixon

chris dixon — Fri, 12 Feb 2010 16:56:57 +0000

Good test. What's the best way to figure out what is CEO level (besides asking CEOs)?

By: Roman Giverts

Roman Giverts — Fri, 12 Feb 2010 09:53:21 +0000

One of my mentors always asks “is it a ceo level problem?” i.e. are you solving something that the CEO of an enterprise is thinking about on a regular basis? If it is, then you have a chance of being one of the 1-3 solutions they buy that year.

It's a surprisingly simple, yet very accurate test for the potential of any enterprise software.

By: dantinpa

dantinpa — Thu, 11 Feb 2010 19:43:33 +0000

Absolutely agree. People will happily spend money to make make. I have found that sales leaders are the BEST possible prospects. They are always looking for an edge, can sell it to get approved and can always fall back on the “I need it to hit my numbers” argument.

By: dantinpa

dantinpa — Thu, 11 Feb 2010 19:39:25 +0000

Great point in your post. No matter how great the ROI on your product, how important is this relevant to other priorities in the prospect's business? This is often the real “competition” – other initiatives that are more important than yours.

By: Yaniv Nizan

Yaniv Nizan — Thu, 11 Feb 2010 00:40:20 +0000

Great post Chris. One thing about the “valley of death” is that since SAAS model evolved it allowed companies to effectively sell (mostly by phone) products in the range of $5K-$100K and justify the cost of sales mainly due to the recurring nature of the revenue in SAAS. For example – you can buy 10 salesforce licenses at less than $10K (annualy) but the sell is still being done on the phone mostly.

You can read my take on channels –
http://www.yanivnizan.com/2009/08/referrals-res...

By: Mario

Mario — Thu, 11 Feb 2010 00:29:58 +0000

One of the best examples of this is SolarWinds, whose network management software included a free version that has received this type of grass-roots adoption in the enterprise, and has in turn driven enough business to yield a $1.3 B market cap. Not bad for a company whose revenues were only in the $30-40 M range just a few years ago. Having client employees doing the sales for you shows up in the economics as well; I think you'll have trouble finding another SAAS company with 50% EBITDA margins on only ~$120 M revenues. A truly remarkable success story.

By: Yaniv Nizan

Yaniv Nizan — Thu, 11 Feb 2010 00:29:47 +0000

You can read my take on channels –
http://www.yanivnizan.com/2009/08/referrals-res...

By: dbv

dbv — Wed, 10 Feb 2010 16:45:04 +0000

@ mark i larosa & david (one day ago)
Yep, that's been my experience. It really is rubbish to talk about an enterprise 'valley of death' and that a product/service has to be priced in the six figures to get going.

Btw, my understanding was that the word “enterprise” had evolved to include any organization – for-profit, non-profit, government, startup to smb to large corporations. Could be wrong!

By: Scott

Scott — Wed, 10 Feb 2010 12:08:00 +0000

Another couple of truisms from the Trilogy world:
1. if your product requires culture change, the price has to be high enough that important people lose their jobs if it fails. You want heads to roll and not just your own software.

2. you'd rather have a small number of very profitable deals at very high price points for exactly the reason @cdixon mentioned: companies only buy their top 2-3 priorities each year - when you find yourself being in the top 3 for a company, you want to capture as much revenue as possible. The higher margins allow you to reinvest in your product.

3. you have to tackle something difficult and valuable (both) to defend your price-point. Its easy to find difficult problems with no value, and its easy to find valuable problems with lots of solutions or lack of difficulty.

By: Erik Ahlin

Erik Ahlin — Wed, 10 Feb 2010 02:25:37 +0000

Or ... reduce cost of sales. Now, a few precentages won't make a difference, you will have to rethink how you sell completely. I like the concepts around sales 2.0 (even if I am not so fond of the name itself). Patrik von Bergen concluded the main points in a few slides here: http://tinyurl.com/yd3y282