Head of Investment
We’ve been told time after time that large corporates working with startups is a match made in heaven, right? Corporates access innovation that’s almost impossible to nurture in-house, whilst startups gain an instant credibility boost and access to gargantuan distribution networks. It’s a win-win. Why, then, do both sides go out of their way to make it so damn difficult?!
Having worked in a corporate and with startups, and being part of a corporate accelerator that focuses on precisely these relationships (though my thoughts are my own!) I’m sharing some 101 experience for startups looking to sell into a big multinational.
Winning an industry top 5 client may seem like it will answer all of your prayers. You’ve hit the big time, right? You can stick that famous logo on your website and soak up the cash! Happy days.
Perhaps. It does happen. Most of the time though, this takes much longer and it’s more challenging than many founders appreciate. Ask yourself:
Depending on the answers, it might well be a better start to win multiple smaller contracts that you can acheive more quickly in order to sustain your cash position, build up traction and therefore credibility before going after the giants. The additional learning you build up and the extra cash you have to iterate through doing this may help you in the long run, making it easier to onboard future clients.
Be prepared. You will need to answer the question, ‘So what if we succeed?’ Can you scale? Will you need to make additional hires? Do the unit economics make sense? Plan for the eventuality.
If you insist, research the firms moving the fastest up industry rankings; these are likely to be the most innovative and willing to adopt new solutions as opposed to the more incumbent big 5. That’s not to say the industry leaders are not innovative per se, but they’ll often go to overly great lengths to protect the success and multimillions of revenue they have already built up. You can understand why. Loss aversion and making the decision to disrupt yourself before others do is a gut-wrenching, psychological minefield.
Given the lengthy sales cycle, the reasons for which we’ll see below, start the process early. You don’t necessarily need to wait until you have the final product to network. Strong relationships, based on trust, take time to build up and a proactive approach to this can really pay-off down the line, especially within those incumbents that tend to be more relationship-based.
You shouldn’t look at each interaction as a transaction to begin with, it’s fundamentally about developing trust.
Many corporates host a ton of events and open evenings. Others tend to be very open to exploring new tech solutions within the ecosystem and each company has its own evangelists who may be present at startup pitching events. Many can be particularly helpful. Networking within these groups can deliver a valuable return if strategically planned. A good referral works far better than a cold call.
With pitching, practice makes perfect. Keep iterating. Whenever pitching in public, make sure to include a clear ask and even name target clients who you know are in the room. Check out a previous post for this.
Finally, get good at public speaking! Speaking can scale much better than 1:1 networking, though make sure to measure return and don’t do it for the sake of it.
If you proceed, you need to understand that corporates and startups are fundamentally different beasts and the output is a varied profile of risk appetite, decision-making processes, speed and more. Without understanding the context, it’s all to easy to simply become frustrated and unfairly apportion blame to individuals.
An organisation that can fit everybody in it around one table is diametrically opposed to a multinational with hundreds of thousands of employees spread across half the globe. It doesn’t take Sherlock Holmes to work out that this has ramifications!
In a corporate, communication becomes a challenge:
Furthermore, a corporate has the ‘curse of abundant resources.’ The cash position of a startup applies an incentive to move fast. Six months more, and you could be dead. There’s a ‘do or die’ urgency to move. In a corporate, annual and recurring budgets do not have the same effect; the consequences of postponing that meeting a month are far less severe. The fact that a founder owns their company versus a salaried employee is also non trivial.
Speed is the victim. Clearly cut ideas can be changed and warped into ambiguity in a chain of conversations. As a startup, the consequence is that you need to prepare yourself for a long ride.
Culture makes changing any of the above in a big company seriously tough. Behaviours become ingrained en masse; it takes real leadership and sustained, committed action to change.
Size unintentionally breeds silos and different interest groups. One of the best examples I ever saw as to whether silos exist in a firm was the corporate laptop — watch out for it! Corporates pay a huge amount to hire somebody in terms of an often hefty salary, office space, benefits, company car etc. They then go and give them a painstakingly slow, often barely functional laptop that becomes the single largest barrier to their productivity just so that the procurement department can save a few hundred pounds on each.
It’s therefore not enough to assume your contact will buy your solution simply because it’s valuable to the company holistically. You need to understand their own personal rewards and incentives, and incorporate these into a sales strategy if you want to effectively influence them. It’s also far less daunting to see a huge company as the sum of much smaller parts. Answer:
Demonstrate how you can help them and their department through hard data and case studies. Make it as relevant as you can. Tailor your pitch accordingly; it may be that your pitch is never the same for any two different clients.
Use LinkedIn or otherwise to research the above as you put the deck together. Set up Google Alerts to discover events that may prove to be opportunities.
This also helps you to get creative. The most obvious path might not be the right one. For example, Human Resources might be a better way in than the department you are dealing with.
You also need to get the decision-making balance right. Speaking from personal experience, getting the green light from a very senior executive can feel like a win, but you also need buy-in from her subordinates who are tasked with actually executing the deal. You’ll want senior champions to promote you, but a ‘yes’ from the top doesn’t always translate. You’ll also need to continually chase them up as they tend to be ridiculously busy.
Conversely, if you target somebody too junior, you may end up with an unfortunate case of ‘decision ping-pong,’ where ‘asks’ go up and ‘decisions’ come down in a ladder of meetings.
You’ll want to maintain a mixed portfolio of relationships and use each for achieve different aims at different steps in the journey where appropriate; this also avoids ‘blockers’ where your future depends on one person.
“Don’t fear failure” has become a such a cliché of Silicon Valley that you see it on posters. And it’s true if you want long-term success. You’re never going to be truly original unless you accept failure as part of a natural outcome of experimentation towards a long-term goal.
Fearing failure is ingrained into the core of many corporates. And often rightly so. Should Boeing fear failure when building an aircraft? What about the NASDAQ? Or the NHS? It’s not so easy to say ‘don’t fear failure’ when the stakes are high. Innovation departments are separated to take on additional risk, though it can be that this attitude spills over from the core.
Furthermore, the old mantra, “Nobody ever got fired for choosing IBM” applies. Individual employees can take upon great personal risk when partnering a startup, an inherently risky construct. Hence, the due diligence required to make a decision may take longer than you think sensible, if, that is, they don’t choose IBM. The meetings build up.
“Fake it until you make it” has become a cliché to mitigate this, but there’s a fine line here; at the extreme, I certainly wouldn’t advocate extending your pitch into the realms of dishonestly. Like a marriage, trust is absolutely fundamental. However, you need to de-risk everything you can. You therefore need to be professional and convey professional. You need your contact to feel like they are in safe hands.
So polish that pitch, study your client, turn up on time for meetings, follow-up on time, do the basics like use your company email address, and sell your team’s experience in order effuse an aura of “you can trust me, I’ve got this.”
Large corporates will have well established brands and they will be protective of the customers that they have fought so hard to acquire and keep, especially in a marketing-intensive industry. If something ‘fails,’ it’s usually their brand and customer relationships that hurt.
You will forgive them then for not signing a distribution deal there and then. Fundamentally, it’s all about building trust and too many, more transactional entrepreneurs underestimate this.
Be prepared therefore to go through a series of trials before you achieve anywhere close to scale. It can be done, but it takes a huge amount of effort and time on both sides to scale to an entire distribution network; you can think big, but you’re usually going to have to start small with a series of smaller wins comprising the end result. This can be frustrating if you’re not prepared for it.
Mentoring can be a very effective way to get a foot in the door of a big company. Don’t be exploitative and don’t use them as a means to an end, but do be strategic in who you choose as a mentor. Again, it takes time and a load of trust for this to happen. Be patient, open, honest and use their expertise; as the relationship develops, this will work to your favour.
Equally, apply this to potential investors in your company. Wherever possible, seek investors who can add value through the same means.
Be careful with this one and do your research on the industry. Generally though, nothing speeds up the process greater than a target client seeing that you have worked with their competitors. If there’s any risk of losing competitive advantage, they will talk with you, if only through prisoner’s dilemma. Obviously, only do so where your anchor client is happy for this to be made public!
Name-dropping in a pitch or case studies can be miraculously effective and too often we see pitches where this traction is hidden or not sold to its full extent.
These can give you unfair, inside access to a network of a corporate. There may be dedicated business development teams to help you, corporate mentoring, or a ‘minimum viable process’ is in place to speed things up. There may even be the opportunity to explore a strategic investment if you’re startup is a fit and spending a chunk of time with the corporate.
Often these programmes hold Open Office sessions, which is a useful point of first contact.
Like any programme, do your homework. Do what is right for you given the stage you are at. Importantly, reach out via LinkedIn and ask alumni of the programme what their thoughts are.
Together, it can seem daunting to onboard the first few multinational clients and it can be a frustrating journey if expectations are not managed. But, if it does make sense, break it down into small chunks, keep the faith and stay strong; it can and often is a win-win for all involved.
Reach me at [email protected] for any questions. Good luck!
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