Why I Don’t Sell to New Startups
Confession. I have become bored with most startup entrepreneurs.
Lucky me. I have the benefit of meeting a wide array of business owners and stakeholders. Getting to speak with these folks is one of the great joys of running a software consulting company.
…but I have a confession. I have become bored with most startup entrepreneurs.
A decade ago, you could find me enamored with a budding startup founder’s vision. I would be enthusiastic about most of their projects. So many innovative ideas were getting pitched, started, and built.
Reflecting back, I am reminded that most of those businesses no longer exist. I still have a lot of admiration for those who were taking a huge risk, though.
Now, I find myself dreading a call with a budding startup entrepreneur. They’ll share their great idea and will say, “we intend to become the (insert ‘successful’ app/SaaS name here) of (insert niche industry).”
- “We’re going to become the Instagram of HIPAA Compliance”
- “We’re building the Tinder of Linux IT Security.”
- “We’re making a better Uber for Halloween Costumes.”
Oh, is that so? Cool. (sigh)
I’ll often respond with a, “who will be your first customer? …and how will you meet them?”
If their response is something like, “we’re going to invest heavily into content-marketing and SEO,” …I get cynical.
Note: an ideal answer would be, “we’re going to track down a few target customers, introduce ourselves, and begin building a relationship with them.”
While I see a lot of value with content marketing and SEO, I strongly believe that these should be how you attract more customers; not your first ones.
These startups are trying to solve problems for hypothetical customers. They’re investing in an experiment. They’re not running a business…at least, not quite yet.
While I do enjoy experimenting, I prefer focusing on incremental improvements these days. (I suspect this has a lot to do with where I find myself, as a business owner, these days. Iterating on an existing set of systems is completely different set of challenges)
Contrast this with having an established business call upon your team’s skill-set. A company that needs you to help them solve focused problems that they’re currently facing. A company that has been butting their head against pain points and need a fresh set of eyes on the problem.
This is where I get excited. I love getting to understand how different businesses operate.
- How did they get to where they are today?
- How do they make decisions at an organization?
- How do they measure success?
- How do iterate on their business model?
- How do they sell and market themselves?
- What has and has not worked for them?
During every prospective client’s sales cycle, I will ask myself the following question:
“What can we learn from their business that might help us with our own?”
There are a lot of lessons to learn from startups but they don’t seem to interest me in the same way anymore. I’ve become cynical of the startup culture over the last decade. Unfortunately, I’m not capable of faking excitement when it doesn’t exist.
Another important reflection on our past client portfolio. For several years, we’d see startups launch and go out of business within 2–3 years. Money would run out and the founders would go onto their “next big idea.”
It’s hard to maintain enthusiasm about building a portfolio that might resemble a graveyard five years from now.
A decade ago our average client relationship might last one-to-two years in length. We now find ourselves celebrating clients who have been with us 3–4x times that.
If you’re a consultant and rely on building longterm relationships — selling to a fresh startup is a bit of a crap shoot.
Dear Startup, I admire your gumption and wish you the best with these next steps. Let’s reconnect in three years. Perhaps we can help you with the next phases of your business. Love, Robby.