

Infallible Formula to Create a Money-Making Startup - nachopg
http://diegobasch.com/infallible-formula-to-create-a-money-making-s

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akg
It's a great method to get inspiration for potential problems in the B2B
space. The challenge however, after you've come up with a solution is the
sales. Enterprise sales are notoriously difficult especially due to "big
business" culture that creates inefficiencies to solve in the first place.

PG has this to say in his essay (<http://paulgraham.com/start.html>) :

"Start by writing software for smaller companies, because it's easier to sell
to them. It's worth so much to sell stuff to big companies that the people
selling them the crap they currently use spend a lot of time and money to do
it. And while you can outhack Oracle with one frontal lobe tied behind your
back, you can't outsell an Oracle salesman. So if you want to win through
better technology, aim at smaller customers."

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eigenvector
As someone who works (not in IT) at a government-owned BigCo (2000 employees),
let me tell you: building the software that will solve our problems will be
the easy part. Navigating the bureaucracy of BigCo's procurement processes
will probably take you more time, skill and money than actually building the
product.

And it's not enough to have a product that solves a problem. BigCo never fixes
things all at once. So whatever your product is, it'll have to work with
innumerable poorly-documented legacy systems. Integrating with BigCo's
existing, proprietary systems might take longer than developing the core of
your actual product.

But the upshot is that BigCos are used to dealing with BigSoftwareCo that is
just as slow and unresponsive in its development processes as BigCo itself.
BigSoftwareCo doesn't want to fix our problems, they want to sell us an off-
the-shelf product at a price tag that implies thousands of hours of dev work.
So if you can show them that you can accommodate their needs quickly and
without the usual obstructionism, technology dogmatism and nickel-and-dime-ing
practices of BigSoftwareCo, there's definitely an opportunity to build a great
relationship.

~~~
facorreia
Not to mention BigCo's managers are highly averse to risk and won't put their
bonuses and careers on the line by vouching for a small company that may or
may not be around in a few years in case they need support or maintenance.

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mbesto
Heed warning - it's not this simple. The only way to properly do this is to
build a strong network with the stakeholders who buy this IT software. Mainly
the CTO/CIO (or CFO). That's the only way to make money in the enterprise.
Sales cycles are long and arduous, so be prepared for the long haul.

~~~
tptacek
In most companies, the CTO or CIO comes nowhere near the kinds of purchasing
decisions made by the kinds of companies started by a process like this. There
are many tens of dir/it or dir/ops people in almost any Global 2000 company
that routinely make six-figure purchasing decisions.

Many of those decisions do percolate to the CIO/CFO level for approval, but
there is a world of difference between "purchase approver" and "decision
maker". Directly targeting the purchase approver is often a very bad sales
strategy.

~~~
mbesto
Good point. A VP of Operations/Infrastructure (of IT) who would report to a
CTO/CIO would be more suitable. I guess I should have clarified that a bit
better. It's also, as you allude, not as simplified as this.

Either way, my point was more about the fact that working day to day-to-day IT
work won't give you the edge unless you have some sort of in with the guy/girl
who ends up actually making the purchasing decision. It's also not as simple
as this, as IT/Business organizations can be muddied with politics that don't
always serve the IT personnel's productivity interest.

It also doesn't hurt to also get in with procurement. Which is another barrier
I've found in "BigCo". Many large (Global 200) companies have a shortlist of
companies they will work with and won't even entertain a conversation unless
you are a certain size or have a pre-existing contract with them.

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PhrosTT
BigCo will refuse to buy your software purely because you ARE a startup.

Until you have a decent amount of employees and cash reserves, building any
dependency on your product would be deal killing risk.

The assumption is you are likely not going to exist in 2 years.

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netvarun
"Before I started IndexTank I already knew that people would be willing to pay
$$$ for such a service because I'd been making money with search consulting
for a while."

I started off the in a similar manner, doing lots of consulting work. I know
there is demand (in my case, its selling structured data), but however I am
not too sure on whether the same demand would exist if I were to 'productize'
my consulting work (ie. launch an api for structured data).

As one of the commentors, mentioned its really hard targeting the big
companies and most small companies simply don't have the technical expertise
to use an API (as in my case).

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smoyer
True ... the alternative is to stay where you are and actively look for
problems. They're not limited to BigCo and if you have the entire breadth of
human suffering in view, you're bound to find at least one idea that can be
sold (for money ... not users) _and_ excites you.

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rmc
Basic idea is that there are lots of problems in BigCo that can be solved with
software.

~~~
ChuckMcM
I think more clearly it is a suggestion to find a problem that needs solving,
and then solve that. This is solid advice.

Many people will 'dream up' a new product/idea/concept, fall in love with it,
and then try to build a company out of it. This has a much much lower chance
of success. (great for including in a work of fiction, less useful when you're
trying to convince people they need something they never heard of before). So
don't do that.

But it also works for life, the 'Just Landed' app is a good example of
something that I do infrequently, FlightAware made better (you can watch as
the plane comes in) and this could be even better. But you have to have to
consciously make the step of stepping outside 'living' your life and look at
like as a process to be improved.

Some people do this naturally, others have to work at it, and some never get
it. Diego's advice to talk to people and find out their pain points (everyone
loves to complain) is a good way of seeing the process outside of that actors
implementing that process.

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zeemonkee2
Sounds like a good idea, however to sell at BigCo:

\- you really need contacts. As the OP points out, this involves working with
them some time (in the inside, as contractor, selling to them, whatever). If
you haven't, find a salesman who has the right contacts and experience: "don't
call X, he's retiring next year and doesn't want to rock the boat with a new
purchase. He'll just string you along. Call Y instead, he's new to the company
and wants to prove himself - I play golf with him next Saturday".

\- decision making at BigCo is at a frustrating, glacial pace. If you're used
to the instant feedback of throwing something up in an app store or HN or
whatever, you'll be disappointed.

\- lots and lots and lots of meetings. Incredibly inane and the lead times are
ridiculous.

\- once you've proven yourself, it can be a real gravy train.

