Preselling to enterprise customers

I wrote previously about how you can’t just talk to enterprise customers about their problems. It was my belief that traditional startup wisdom and popular lean startup methodologies encouraging “talking to users about their problems” was not an effective practice if you’re targeting SMB or enterprise. Since then, I spoke with several people much more experienced than I am. The general takeaway is that enterprise customers require a real product just for table stakes to talk to them. No product means no conversation with target enterprise customers.

Your product as table stakes

I credit Glen Lougheed and Mike Derbyshire of Nodefly with teaching me this. I chatted with them earlier today, and they were very gracious with sharing their wisdom. I’m heavily summarizing their words here, but there are a few reasons why conversations with enterprise customers require some existing product.

First and most importantly, enterprise customers value their time much more highly than consumers. They have businesses to run, and they already have their processes in place which require all their time. You won’t be able to incentivize them with just coffee or other basic sales tricks to get a meeting with them. The only adequate incentive is the possibility that you can solve a major problem for them with a real product that you already have. Anything less than that isn’t worth their time.

Second, enterprise customers will know that their feedback will have more immediate feedback. Modifying functionality to an existing product requires far fewer cycles than creating a new product completely from scratch. There’s more immediate benefit to be realized for the enterprise customer when you approach them with product already shipped.

Third, you can’t get enterprise customers excited by just an idea, but you can with a real product. Any consumer will get excited talking about a business idea with you. An enterprise customer’s excitement isn’t so cheap.

A less minimal MVP

The average enterprise customer requires a more developed MVP than the average consumer. While wireframes might be enough for a consumer, an enterprise customer needs something less nebulous, more tangible. They want to see that you’ve invested more of your own skin into the product before investing their own.

At this point, Mike made a strong point. Yes, you need more functionality than the lean startup preachers say. However, you can still fall into the trap of building too much. It’s tough to define your level of “minimal” in MVP, but you have a lot to lose by getting your definition wrong and wasting time overdeveloping your product. It’s very easy to cross that line and go way too far.

Right now, I have the opposite problem and didn’t develop my products nearly enough before taking them to any potential enterprise customers. I’m far on the other end of the line. Any large delta from the line is costly, no matter which direction your missteps were in.

Validating the market vs. validating the product

I had previously called these concepts “validating the problem” and “validating the solution,” but Glen’s word choices of “market” and “product” are stronger. I never used these words to describe any of my recent endeavors since I was always so far away from product/market fit being a relevant conversation, but fuck my imposter syndrome, I’ll start using them now.

If I can’t validate an enterprise market by talking to potential customers, then I need to validate it some other way. One way is to look at other companies that are making money and make a product which addresses an underserved segment. Another is to conduct an Amy Hoy-style “sales safari”. In either case, this is a much less exact science than what the lean startup preachers advocate. You might have to settle for a hunch to tell if a market exists.

In validating a product, you still need to talk to customers. But, as mentioned above, you need a product to even talk to enterprise customers. So, when I get to this point, my new plan is to move forward and ship any product which is relevant. It might be off and maybe won’t secure any commitments to pay, but at least I’ll have my table stakes to have meaningful conversations with customers. I heard that Ben Horowitz, during a previous company, went to market with a product that he knew was wrong, but he did it anyway because the wrong product would allow him the conversations with customers to figure out the right product.

Derisking does not mean no risk

I feel like lean startup methodology and popular startup wisdom really bit my ass when it came to validating markets. I approached everything all wrong. I’m glad I started getting whiffs of my misdirection a few weeks ago, and I’m glad that more experienced entrepreneurs are confirming my suspicion, even smiling knowingly when I talk to them about my struggles just “talking to people about their problems.”

I bashed lean startup a bit in my blog the past few weeks, but I still believe the core philosophies of lean are sound. It’s about derisking as much as possible. However, actual prescribed lean startup tactics make it seem like you can derisk entirely. That’s just not so if you’re targeting enterprise customers. You’ll have to invest some cycles into developing a more fleshed-out MVP, even without product validation. You can derisk a little, but you can’t ever be completely riskless.

In the end, you can’t let smaller, manageable risk get in the way of getting shit done.

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