Since I left SAP for a small startup 8 years ago, I’ve seen incredible innovation in the enterprise software business. There’s been innovation in development, driven by open source frameworks on public cloud infrastructure. There’s been innovation in delivery, driven by “as a service” and “mobile first” application delivery. There’s been innovation in pricing, driven by freemium & subscription models.
But we’re just starting to feel the impact of these innovations on the black art of how enterprise software is actually sold. The disconnect is jarring– like running into famed used-car salesman Cal Worthington at a local Tesla Dealer.
Freemium signups are treated as merely a new source of leads for the sales team. Online, inbound marketing results in highly educated prospects, but we still subject each other to the same lengthy sales process. Inside sales means less travel, but often the same fundamental selling motion. Marketplaces are great for physically distributing your product, but haven’t been effective in the enterprise for discovery and decision. Even if you distribute via the App Store or AppExchange, you’ll need to hire a traditional, expensive sales team to grow.
The result? Early stage startups struggle and die because they run into walls with a traditional go-to-market strategy (representing one side of the “series A crunch”). And the S1s of the enterprise software startups that break through these walls show that they still spend upwards of 50% of their revenue on sales and marketing.
I know this pain firsthand: Over the last year, I spent 80% of my time as a seed-stage CEO trying to hustle customers. I built lists, I created content, I sent cold emails, warm emails, nurturing emails, “checking in” emails… and I picked up the phone as often as I could stomach it. I knew that my competitors were doing exactly the same thing. None of it felt very efficient.
The buyers of enterprise software are changing in ways that enable a better way. More and more technology spending occurs outside of IT. Online distribution now make highly vertical markets profitable to serve. High growth geographies present new go-to-market and channel opportunities. Even the employee/employer relationship is changing, which is redefining what enterprise software even means. There is latent demand for innovative business technology from people around the world that never make it into the rolodex of a Silicon Valley salesperson.
This make me wonder why I’m not seeing the same sort of innovation in enterprise software sales that I’ve seen in the way I buy things in my personal life: Why don’t we have a Kickstarter or a Product Hunt for enterprise software? Why don’t I get automated recommendations that “people with your type of job use this type of software”? Why aren’t more enterprise startups “pulling a Tesla” and eliminating commissioned salespeople altogether?
These are the types of ideas that I’m excited to explore here at Foundation Capital. I’m interested in meeting enterprise startups with an innovative go-to-market approach. I’m interested in helping startups with great products take them to market more effectively. And I’ll be looking for opportunities to reinvent the way that enterprise software is bought and sold. Drop me a line at rnichols@foundationcapor @rynnic… I’d love to hear what you think.
Ryan joined Foundation Capital as an EIR in January 2015. Ryan is passionate about using technology to improve how businesses work– he has been part of 4 startups and 2 industry leaders focused on that goal. Ryan’s background includes product strategy at SAP, product management at Intuit, and consulting at McKinsey & Company. He holds an MBA from Stanford and a degree in Economics from Williams College.