As the COVID-19 pandemic continues, it’s easy to give into the hype and lose hope. As its impact on the market unfolds and we continue to monitor the true reality of what will happen, one thing is clear — nothing is clear. We don’t know how long this will last, but it’s important we prioritize health and safety above all else.
With that said, I want to share some tactical tips on how enterprise startups can weather the storm.
I worked in IT at Morgan Stanley during the tail end of the 2008 global financial crisis and see many parallels between market reactions and resulting opportunities, then and now. I’m writing this post to share my perspective on those parallels, which should give some hope and focus to enterprise startups everywhere.
For those unfamiliar, Wall Street IT is the earliest and largest adopter of enterprise software. At Morgan Stanley we had a $4B IT budget and worked with hundreds of enterprise startups. Banks have the sophistication and talent to evaluate, purchase, and implement enterprise startup technologies and they do so in order to stay competitive in the market.
When I was at the bank in 2010, I’ll never forget the Town Hall where a senior exec of the firm slashed our IT budget.
“IT spend as a percentage of Revenue needs to decrease from 18% to 10%”
In true corporate form, we were expected to do more, with less.
The firm went through several rounds of layoffs, and in addition to usual “run the bank” activities, there was the whopping integration of Smith Barney onto our platform. The future of the firm was dependent on this successful integration, and people were already working nights and weekends to make it successful.
The Inflection Point Where Legacy Vendors Lost Their Stronghold
With the bleak news from upper management, it was easy to assume that we were stuck with our current legacy vendors and would ignore the startup community.
However, the complete opposite played out.
During this time, commercial activity with enterprise startups actually increased in order to support the efficiencies and new capabilities we required.
It was the legacy vendors like IBM, Cisco, and EMC who had bloated, multi-million dollar contracts and weaker capabilities that we actively sought to negotiate down and do less business with.
The early 2010’s saw the rise of data center consolidation, the early days of cloud, the beginnings of big data, and new security paradigms. My team’s focus was on meeting hundreds of startups a year to see which could give us an edge to generate new revenue, cut cost, or drive new efficiencies and automation by leveraging these latest technology innovations. I saw firsthand the adoption of startup solutions up and down our tech stack, and the money (and Morgan Stanley endorsement) helped catapult these startups into great success.
Enterprise Startups in the Time of COVID-19
While recognizing that this environment isn’t good for anyone, we expect that enterprise software companies as a category will be relatively protected — unlike travel and consumer goods, which have taken massive hits.
So understanding that the Fortune 500 will be busy and moving slower due to travel bans …there is still hope!
Given this backdrop, enterprise founders looking to navigate these treacherous times should:
1. Listen Carefully
Be extra mindful when you actually secure calls with prospective Fortune 500 buyers. Listen to the buyer and do extra diligence in understanding their true pain points.
Not only does every dollar of budget count more than ever, but these individuals are so resource strapped at work (and probably so hectic at home) that every minute they give you is stolen time. So make the most of it!
2. Make Deployments a Cinch
You need to invest extra resources to make your product as seamless to implement as possible. This may come at the expense of other roadmap features that customers want, but if you want to weather this storm and close new business, you have to make it as easy as possible for a buyer to say “yes.”
The second that your implementation becomes complex, it means they need to rope in other team members. This in turn means internal meetings need to get scheduled, people have to use serious political capital to ask their colleagues for more of that “stolen time” that isn’t going to a core task for that other person, and in reality it’s going to add weeks or months of delay to your roll-out (if it doesn’t block a deal outright).
3. Give Your Buyer Superpowers
While oftentimes it is hard to sell automation or orchestration capabilities that can literally remove jobs, these types of products are exactly what the market needs right now. If you can remove headcount or free up time for existing resources, that’s an immediate boost to productivity that everyone desperately needs right now.
Figure out how to show this quickly and wow them in a demo. You need to reduce actual time to value and perceived time to value so that people can make the bet on you.
4. Over-Deliver On Your Promises
Enterprise tech has always been about relationships and trust. Especially for early stage enterprise startups, someone is taking a career bet on you. Without in-person being an option for many folks, do whatever you can to build that trust with your champion, and then make sure that when you get the green light, you over-deliver on your promises. That means making sure you’re appropriately resourced and giving white glove service so that when the inevitable hiccup occurs during roll-out or as the client is using your product, you’re there with timely effort and a solution. This will go a long way and build you sticky, referenceable clients for life.
To “yes, and” all the tweets out there about all the incredible startups that were founded during past downturns, great leaders will find a way to persevere and scale their early stage enterprise startups during these dark days and break out from the pack.
It is tough out there, so of course be careful with every dollar you spend and manage your budget and collections like a hawk. But don’t let this environment hold you back from selling!
Best of luck! And everyone stay safe out there.
If you’re an enterprise startup in need of guidance during this time or a corporate wondering how to navigate the startup landscape, please reach out!