

Ask HN: How to Successfully Handle Fortune 500 Companies? - LargeCompanies

My team and I have been working on our start-up for about 20 months.  Our strengths lie in tech and creativity and ATM we severely lack business acumen.<p>I wonder if others here have dealt with massive companies who were extremely eager to work with you and your technology, but the deal fell through.  Specifically, because your contact( for us a VP of Tech) you were working with did not want to be bothered by any legal document that protected years of work.  His company would greatly benefit from our non-public patent-pending technology at the event and overall their entire bottom line.<p>Though now this great opportunity is gone, I&#x27;m wondering maybe we should have rolled the dice and just RAN with it.  Is business more important, then protecting your IP and not having any legal contract between you and a Fortune 500 company?  We thought a short page &amp; half legal document was fair, but overall it killed the deal.<p>This would have been our first real customer and a massive one at that.  The VP was going to use our event technology an upcoming conference full of the CEOs of this massive company.  Our technology is currently in private closed beta.<p>What has your experience been?  All our advisers said they must sign the document.
======
codeonfire
My experience as an observer is that people at big and small companies will
try to get free stuff as long as possible, then they'll negotiate forever,
then they will never pay until threatened. Some big companies have as part of
their business plan to put their smaller partners out of business just as a
product is delivered or project finished.

I feel you made the right move wrt the VP. Working with F500 companies
requires a long time commitment and your company needs some weight. You need
something that forces the F500 to re-engage and pay up after their first
attempt to screw you.

Secondly VPs don't typically go looking for technology to buy. They tell
people below them to do that and then just sign off. In your case the VP
literally wanted some free tech to show off at a conference. You need to sell
to someone lower level who is not going to be a man child. Imagine someone who
went through childhood and then just...kept going. Next time offer some free
on-site consulting and then get the low level managers you meet to buy in to
the project and actually pay (to impress their vp, of course!)

------
yurisagalov
The bad news is that they're probably not as interested in you as they made it
seem, and you never had a real opportunity with them. I know it's
disappointing to hear, and I assure you everyone has made that mistake
themselves -- myself included.

Big companies do a lot of outbound R&D -- conversations, PoC's (proof of
concepts), and so on. Sometimes these conversations are a 30 minute call.
Sometimes they're a series of meetings. Sometimes they even try your product.
In almost all cases, when they become serious about trying your product (e.g.
outside of a sandbox), they'll want a legal agreement.

NDAs don't count here, they're generally vanilla.

What they'll want is a trial agreement (sometimes called a Pilot Agreement,
Software Evaluation Agreement, and so on). This agreement will almost
certainly protect them more than it will protect you, but it can be
negotiated. They're quite easy to generate, particularly for larger Fortune
500 companies that generally have entire procurement departments dedicated to
this process. The agreement will cover your IP, situations where you might
infringe on IP, general indemnification, and so on. Sometimes the procurement
guys really won't want to negotiate it -- their job is to protect the interest
of the company, and they almost act adversarial to the person trying to bring
you into the company as a "check-and-balance" since the person bringing you in
may have already fallen in love. In those cases the person requesting the
evaluation can sometimes apply pressure as well.

So, when a VP at a large Fortune 500 company tells you they won't do a trial
agreement with you, or won't be bothered to discuss it at all, it largely
tells you that they're just not that interested in it. We've dealt with
companies where even a non-manager can generate software evals.

There IS one caveat here: They haven't seen/tried/etc. your product. If you're
over-protecting by, for example, expecting them to sign an NDA or a software
eval agreement without them first seeing a demo/trial, it's quite likely
they'll usually just turn away. It doesn't sound like that was the case here,
but something to keep in mind.

~~~
LargeCompanies
So at a recent hackathon we used our framework that syncs up all devices in a
room and created another/new audience engagement app. We pitched the app and
immediately after a VP of X company said I have to use this at my year end
board meeting. For the next week and half he was sending us resources (images
and other documents) and during that time we were speaking with our
advisers/lawyers creating a Beta Evaluation document. The VP was extremely
eager all the way until he received the document where his excitement waned.
Thereafter he sent two emails end of last week and then today said he was
going in a different direction :-(

Overall this isn't our first encounter with a massive company. But our
experiences and efforts thus far have not yielded any such clients.

Do you mind if I ask how you and your company finally sealed your first big
deal and was it with a mid to large sized company?

Really appreciate your insight. Thanks!

~~~
yurisagalov
Sure, I have two separate stories here that might be relevant:

The first company we dealt with was a massive Fortune 50 company early in our
existence. They were very interested in our technology, and we were both young
and naive. Still, we've been warned so often about dealing with large
companies that pretty early into the process we insisted on signing a paid
Software Eval agreement. In retrospect, it was a pretty small amount of money
(five digits), but at the time it felt like a huge win. From the moment they
said "we'd like to try your software", the procurement department was involved
-- NDA, software eval docs, etc.

The software eval was "successful" (in fact, we even presented to the CTO, the
President, and VP of Engineering of the company), but it wasn't truly an eval.
It was a very custom-tailored version of our product for their deployment. And
yet it still didn't really go anywhere. Things fizzled out with them for a
while and then about 12 months later they came back once again asking to do
another evaluation. This time we insisted on success criteria that required
them to commit to a set number of seats if the evaluation was successful. The
evaluation was successful, and they bought the seats, but even now the
deployment is in a state of "proof of concept" \-- they bought ~1,000 seats
from us, but at their organization size it's just not that material yet.
Seriously.

Another company we dealt with was a ~15,000 employee company. They too were
very interested in our technology. They emailed us and convinced us to come
and do a demo in person. Having liked the demo they told us they wanted to
pilot the software. This immediately kicked off the conversation with the
procurement department. NDA, software eval, success criteria, etc. This time,
we did need to do some additional work, but we were very diligent in making
sure that _any_ custom work that we do was applicable to all customers. They
too have now bought ~1,000 seats, and are now in the process of rolling AeroFS
out to the rest of their company, but as a benchmark, it has been ~12 months
since they bought their initial 1,000 seat license. In some ways, even for
them the 1,000 seat license was a continuation of their PoC.

Enterprise sales are slow, but the resulting contracts can be quite lucrative.
Just make sure you qualify your customers. It sounds like you only lost ~2
weeks on this deal, and that's really not the end of the world :)

~~~
LargeCompanies
As east coasters with a small size network finding advisers who have dealt
with Fortune 500 companies(they surreptitiously reach out to us) has proven
challenging. Two months into building our Bluetooth over the web type
framework we were invited out to the valley to demo to an entity.
Unfortunately, we had no one to turn to who may have said, "Ummm, you might
not want to go as they are just fishing," as we learned they were. It would
have been great to have heard the same warning you received via your network.

I do wonder if maybe YC and or some founders could write a joint post about
their stories and pitfalls in dealing with large to massive companies? I would
think this would be extremely helpful to those not in the Valley or within YC.

Well I really appreciate you sharing your experiences in this regards
(helpful) and if interested in the app that prompted this post I've sent you a
link to your email :-)

