Let’s say you have a startup idea for enterprise software. To make a sale, you have one of two options. You can make (and sell) a product for either:
- an existing market, or
- a new market for which there is no competition.
In scenario A, success is predicated a product that competes successfully head-to-head with current offerings. For a pure startup that is tackling complex problems, this is a heavy lift which requires time and money not just to build the product, but also for marketing and sales.
On the face of it, Scenario B seems to offer a higher chance of success. After all, once you introduce your product to market, the lack of competition will translate to smooth sailing and untold profits, right?
Two immediate issues with being unique:
Maybe you’re wrong. There might be very sound reasons why no one has successfully pursued your idea before. In fact, for many investors, a lack of competition is a red flag.
And, even if your idea is sound, there’s this tidbit: establishing a market for a unique product is not without its challenges.
Here’re a few of the obstacles you will face when selling your unique solution in enterprise markets:
First: you need to navigate to the right person in the organization who will benefit from your product. While this is a truism of all enterprise sales, conversations are harder when there isn’t established vocabulary around products and vendors.
Next: the person who feels your pain is, quite often, not a decision-maker who has the authority purchase software. If you have the world’s best solution to make Bob in Accounts Payable more efficient and happier, you’re just getting started. You really need Bob’s boss, and maybe her boss, to support the purchase. And, as mercenary as it sounds, at each level, there’s a higher level of scrutiny as the organization weighs just how much Bob’s incremental happiness is worth. A lot of times, it turns out the value assigned is very, very low.
Finally: once you’ve convinced Bob, and two layers of bosses, that this is a worthwhile purchase, you’re at the mercy of the budgeting cycle. Be prepared to hear that there are no funds available. After all, why would there be? You’re selling a solution that the company couldn’t even contemplate when budgets were made the previous year. The good news – sort of – is that, if your unique solution is really valuable, they company will make room in the next budgeting cycle. Just come back next year….
A startup’s business success is about more than ideas, the right team, or even product-market fit. These are only consequential if they translate to meaningful revenue in a realistic time frame.