Can an 8-Person StartUp Sell to a CIO? Yes — If You Understand The Social Contract.

Screen Shot 2013-10-28 at 1.46.24 PMRecently Erick Schonfeld was kind enough to invite me to the DEMO conference to both serve as an Enterprise panel judge, and also to join a panel with 3 esteemed CIOs on how to Sell to Enterprise CIOs.  I was the Start-Up Guy on the Panel.

You can see the whole session below, with the CIOs of Dish, Workday and BDP.  It turned out to be quite excellent.

When you are getting your SaaS company going, you may Fear the CIO.  Or at least, want to stay away.  Isn’t it better to go around the CIO, with a sale directly to an operational group within a large company?  Sometimes.  Aren’t you going to fail whatever SecOps audit the CIO does in the early days?  Probably.  Isn’t it basically impossible to get the CIO’s attention anyway?  Yes.  Aren’t sales cycle incredibly long at the CIO level?  True enough.

I didn’t expect to sell to a CIO myself in the early days, either.

But we ended up selling to several in Year 1.   When our product was feature poor, and the team was tiny.

My uber-learning is this:  Don’t Fear the CIO.  Even in the early days, even if you have just a few customers — the CIO can be your key ally if you play it right. 

The panel was a good reminder of what so many CIOs are doing these days and have been for quite a while now:  looking to bring value into their enterprise.   And one of the best ways to stand out in the CIO’s office is to bring in some up-and-coming SaaS vendor that can provide huge ROI that same year, change a little bit of the game, and build a successful collaboration together.

And all three CIOs talked about very early stage start-ups they took risks on, using their SaaS products very early, in some cases serving as the very first customer for some SaaS vendors.

Key takeaways and reminders:

  • Cold calling doesn’t work well with the CIO.  Everyone cited 300+ in-bound pitches a week, with the number seemingly going up every week.  You probably have to get to the CIO through other channels — VC forums, someone on their staff, or a preexisting relationship.  And sometimes, they will find you.
  • CIOs are willing to bet early on a few SaaS start-ups (x) if the value proposition is unique, (y) if the app won’t bring down the business if it fails in a pilot or production — and (z) if they trust the founders.  No one is going to replace a proven enterprise solution with a start-up that is only 20% better than an existing, implemented, hardened solution.  But if you do something truly unique, and you aren’t mission critical on Day 1 at least (i.e., you won’t be a Career Ending Move for the CIO) … they’ll take a bet on you if it’s a potential game changer and they trust you.  All three CIOs citing key, trusted relationships with the CEO/founders.  I found this myself.  I had to build personal relationships of trust with all our early CIO (and other key) enterprise customers.  Trust is so key here.  And you (probably) will need to get on a plane.  Don’t fear the plane, either.  ;)
  • CIOs don’t expect perfection on Day 1.  They know you haven’t checked all the boxes in the early days.  You may well “fail” their security and tech audits at first.  What they need to know is you’ve got most of the boxes checked, and have a plan to address gaps and improvements here.
  • CIOs don’t expect you to build truly custom features.  Many entrepreneurs fear CIO and pan-enterprise level commitments because they’ll be taken down a rat hole with custom feature requests.  Yes, you’ll probably get these requests.  Even Salesforce still gets them.  But most CIOs understand you can’t build custom software in SaaS.  What they will ask for instead is some reprioritization.   A feature you might have planned to build 12-24  months out, they think they need now.  And they’ll ask you to pull it up in time.  Which may be absolutely fine if you were going to get there anywhere.

In the end, to me the key to closing the CIO’s office in the early days is just understanding The Social Contract you have with your champions and the CIO in these early, pan-enterprise deals:

  • The Social Contract is that the founders will be there — personally — for the CIO and the key sponsors.  Not someone on the team.  You.
  • The Social Contract is that you will be highly innovative — and the CIO gets input on the roadmap.  You will keep delivering great features and functionality at 4x the pace anyone else could.  And the CIO gets input — not control, but input — on the roadmap.
  • The Social Contract is that you will deliver a very high-level of transparency and honesty.  You will make mistakes.  Some big ones.  You need to be honest back when they happen.  Or that trust will be lost forever.
  • In return — the CIO will take the risk on you.  But it gets better than that.  Ultimately they will pay it back 10x.  As you’ll see on the panel, the CIOs are all willing to be case studies for the start-ups they took risks on that delivered for them.  They recommend you to other CIOs.  They became a super champion.  That can really make you in the early days.

I’m not saying you have to sell to the CIO.  Maybe you want to be 100% SMB, or focus on functional silos in the enterprise.

But be open to it.  Because closing 1 or 2 CIO-level, pan-enterprise deals in the early days — can really make your company.

And the CIO can also often write the largest checks as well ;)

3 comments

  1. Thanks for sharing Jason, valuable discussion and points for selling into the enterprise. Completely agree the social contract is key in building the trust and relationship needed specially for a small startup. It’s actually something we need to do with all our stakeholders (employees, customers, investors, partners). Once there is trust most of the challenges in making things work are surmountable and without it even small ones can kill you.

  2. Excellent post Jason. This summer for a NY Enterprise Technology Meetup event I organized a Sourcing panel focused on the topic of “Selling to the Enterprise” which took a complementary approach to many of the points you addressed here.

    Something I think most enterprise startups don’t fully appreciate is how much Fortune 500 companies need them in order to remain competitive in today’s environment. However — despite this need for new solutions, the startups must still play by the large corporations’ rules.

    You nailed it when you said “But if you do something truly unique, and you aren’t mission critical on Day 1 at least (i.e., you won’t be a Career Ending Move for the CIO) … they’ll take a bet on you if it’s a potential game changer and they trust you.” –> The reason this is important is because to take a financial services firm for instance, while they can’t trust any old startup to run a mission critical trading app for them, in a less critical function like perhaps running statistical queries faster/cheaper on increasingly large datasets, a startup is likely to have the most innovative solution + from a risk tolerance perspective, the organization can “try them out” without too many issues on the downside if they’d disappear.

    When I was previously at Morgan Stanley and one of my hats involved performing financial due diligence of our private company vendors, a key question we’d ask the potential users of the product was “What happens if you come in Monday morning and they’re gone?” This forces people to consider things like data, security, compliance, replacement costs, and other such issues, and ultimately helps assess the inherent risk of the service itself before even taking into account if you’re looking for a large public company or a startup to address your need.

    • Great points. Explaining to people why Morgan Stanley would really buy from a start-up is invaluable. Most 1st time entrepreneurs just write it off as Mission Impossible or at least Custom One-Off.

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