Becoming Enterprise Ready
In our latest session co-hosted with Google for Startups, we had a phenomenal conversation with Yousuf Khan, a career CIO (and sometimes joint CISO) at numerous enterprise companies (Pure Storage, Qualys), who recently joined early-stage venture capital firm Ridge Ventures as Partner. Drawing from his deep technology expertise and operating background, Yousuf shared his perspective on early-stage innovation trends and lessons learned with respect to buying enterprise and IT solutions. We discussed how early-stage startups should begin paving their paths for enterprise-readiness including designing a product roadmap, building go-to-market strategy, and working to land and succeed with their first customers.
Check out the full session here or you can read a full recap of the conversation below.
From a CIO or CISO’s persepctive, what does it mean for a startup to be enterprise-ready?
Yousuf: It’s a long checklist and not every startup is going to be able to check all the boxes. Houses are built on good foundations. The structure needs to be absolutely solid, no matter what the design and look of the house ultimately becomes. The first thing is the product vision needs to be solid and solve a real problem the CIO cares about. It sounds basic, but people often forget that problems change over time. So is your solution solving a problem for the long-term. Will it be sticky over time? User experience and cybersecurity has to be table stakes as well. These things need to be built foundationally. Cybersecurity talent acquisition is super hard so CIOs want to know how startups are thinking about cybersecurity to make their job easier.
The business relationship is also really important and startups often don’t think about it as much. Most enterprise-grade products have a customer experience component to them and there needs to be total alignment between the sales/support and C-suite of the solution to that of the CIO on the customer side. That alignment includes the vision, etc. CIOs need to be able to advocate and sell the solutions they buy to themselves and the rest of their organization.
When is the right time to start selling to the enterprise? Is it too early to start talking to CIOs?
Yousuf: The most important piece of this is to a certain extent, timing is irrelevant. If you’re building a company of scale, the first 5–10 customers are critical to your long-term success so your relationship is crucial. You are asking them to take a big leap in engaging with you even with an incomplete product. So it never hurts to start asking early, because that feedback is important. The worst that is going to happen is you don’t get a response or someone says no. That’s really not that bad. Are you identifying the right type of customer fit? Which ones are forgiving, want to engage and are motivated to do so with you.
You also don’t need to connect with the company’s CIO. Many startups think they always have to be selling. This isn’t the case here — your product is barely there you have nothing to sell. So is there really any harm to reaching out to solicit feedback? There’s a lot of people within the organization beyond the CIO that can do that and are probably open to doing so. Direct reports under the CIO are looking for/owning innovation projects.
Many startups wait too long to reach out to get feedback, but qualifying early customers is critical to success. So what are the best ways for founders to reach out? Who does it right and who does it wrong?
Yousuf: The software industry by its very nature is imperfect. Products are always being developed over time, so when you engage with customers, walk them through what a product development partnership looks like over time. In terms of methods,
- Reach out to people directly. Don’t just connect with them on LinkedIn, add some personalization and context to it. VPs and Directors of IT are the best people to reach out to — they are the decision making gatekeepers.
- Use your VC partners. They are some of the most well-connected people and it’s a value add they should be bringing to your relationship
- Use your network actively with a good degree of context. If you secure one or two design partners, you should be tapping into them to see who of their peers would be a good fit for you as well.
- Create collateral to make the connection effective. Cold LinkedIns or emails get responded to sometimes, but the hit rate is far less. Do your homework and figure out who is actually a good fit and will be attracted to the story you are telling/selling.
How do you ensure it’s a successful engagement between you and your first design partner as a founder?
Yousuf: The most successful companies are the ones that are fundamentally transparent about who they are as a company, what they are building and where they are going. You need to be rigorous about what you do well and what you don’t. Be as transparent as possible. If you’re a CIO, you are buying a solution from a very specific vantage point so you have a certain feature or use case in mind because you’re an operator. If you’re a startup and you’re not building that, then you need to be transparent about that. CIOs understand that software is a work in progress at all times and so they’re not expecting you to have all the answers and all the problems solved when you first engage. It’s ok. You also need to define what the success metrics are at the beginning of the engagement. Why are we doing this and what are the results that we want to achieve?
Invest time in telling your story. If you want to engage with a CIO, think about the context of what you are providing in the time in which we live in right now. Spend time and effort getting out there and telling your story and creating content. People want to know about you and your story and that is harder given the lack of physical interaction these days.
What happens when you are on a certain journey to build something that fits multiple customers, but the CIO asks you to build something geared more specifically for them? What do you do if that request isn’t on the roadmap?
Yousuf: If you’re not building whatever that thing is, you need to state why you’re not building it and talk about the rigorous focus you have on what you have built and the vision you have going forward. But also be aware that if someone is asking for something, there is demand there too, so take it as a piece of feedback to consider moving forward. But also realize that perhaps that particular customer may not be the best fit for you right now.
The pandemic has obviously shifted priorities for companies across the board. So how are the changes in prioritization and expectation impacting the landscape for startups selling to the enterprise?
Yousuf: Number one is the prioritization of investments has happened. Nice versus necessary is a conversation happening at every organization. Second, there is a focus on being able to make sure that companies are set from a customer experience standpoint. So now you have to think about transactions in a way you never did before. So since you can’t sell in a physical environment these days, you need to make sure that you are delivering a product that drives revenue and eliminates time to revenue. Cybersecurity remains critically important too. The best products going forward are the ones that are going to make teams as efficient as possible and are prescriptive in nature. How do you enable a team to do their best work when they are so widely distributed for the foreseeable future? You must think about customer experience with that in mind.
What other areas/trends do you think will stick post COVID?
Yousuf: One of the reasons I joined Ridge was because of its rigorous focus on enterprise. Within “enterprise” we have a large variety of domains, so everything from construction and facilities management, to cybersecurity and data residency solutions are things I’m pretty excited about. Automation is everywhere and built into everything, and I think will continue to be pretty hot moving forward. I’m also excited about data infrastructure and new ways of streaming data that legacy systems will not be able to handle as more and more data gets piped into businesses.
What is the best way for startups to think about building an advisory team and get social capital/validation?
Yousuf: You absolutely have to do this, but you have to structure it. There’s no time commitment to this or anything but you have to be deliberate and thoughtful about how you engage potential advisors and get an ongoing feedback loop. If you just want one-off feedback, that’s not an advisor role. Set the expectations and what you want to get out of it. Then you need to make sure your advisors can tell your story and know your company inside and out too so they can also advocate for you and give you the most applicable and actionable advice they can.
