By MacLane Wilkison, Co-Founder of ZeroDB
When startups mix with corporations we see an oil-and-water effect. There’s often a gap in work practices, organizational structure, and managerial outlook, not to mention the fundamental differences regarding the appetite for risk and experimentation.
For companies selling to financial services, however, it’s even tougher. While startups are
enthusiastic and nimble, established financial institutions are understandably conservative by nature. Large organizations have correspondingly large responsibilities—to their employees, management, stakeholders, customers, and regulators. It takes time for them to evaluate and sign off on the services that startups hope to supply—especially when it comes to matters of data security.
As such, it’s crucial that startups selling to financial institutions are prepared for this reality from day one. Here are three lessons I’ve learned founding a big data security startup and selling to large enterprises.
1. Expect delays, talk to customers, and be transparent
Focusing on that one “killer” deal is probably a big mistake. Large contracts need approval from multiple departments in the same organization—and that means undergoing security reviews, talking to legal, negotiating with procurement, and securing a sponsor from the relevant business unit, all of which have the potential to turn you down.
Enterprises tend to take their time when it comes to making decisions; startups should be
prepared for long sales cycles that can range from three to 18 months. To appropriate John
Maynard Keynes’ famous quote; the enterprise can stay undecided longer than you can stay solvent.
So what can you do to hasten the process and ensure success?
When you are establishing yourself in any market, it is extremely important to nail your problem statement and value proposition. The way to do that is by spending lots and lots of time talking to your customers. If you think you’re talking to a lot of them, times that amount by ten, and you’re getting close.
Make sure that you speak to your customers as early and as often as you can. This will help
build the deep understanding you need to have of the problem you are trying to solve and will increase the likelihood of your value proposition being accepted and the contract signed. The last thing you want is to spend six months in endless meetings that end up going nowhere.
Be sure that potential clients are made fully aware of the Return On Investment (ROI) that they can expect. That means quantifying your value proposition and nailing the pitch. Speaking in economic terms can increase the business unit’s urgency and help speed up the process.
2. Look beyond the established corporate market to other startups
If you run a great service, you can be sure that you will attract a huge client and your big,
vindicating payday will come. However, as I’ve explained above, selling to well-established
companies and multinationals is a slow and complex process.
In light of this, managing your cash flow requires a delicate touch and needs to be supported by other opportunities.
Don’t get tunnel vision. Large banks and enterprises are far from the only clients available to data security providers.
Financial Technology—also known as FinTech—is booming on a global scale; bank spending
on new technologies in North America is projected to reach 19.9 billion by 2017. The startups and businesses pioneering this sector also need protection from potential data breaches and attacks on sensitive information.
It makes sense to target smaller businesses in parallel with working through the enterprise sales cycle. Not only can these businesses make decisions far more quickly than huge institutions, but they will be more sympathetic to the startup reality. Supporting other startups will allow your business to get earlier traction with smaller customers and contracts.
3. Be in the right market at the right time
It’s a great time to be in the business of data security. The volume of global data is growing
exponentially. By 2020, “about 1.7 megabytes of new information will be created every second for every human being on the planet,” according to a study cited by Forbes.
As a result, companies are increasingly dumping all their data in vast “data lakes.” While a
a practical solution to data growth, these repositories present a great temptation for hackers that seek to steal sensitive information.
With many high profile hacking cases and data breaches in the media, responsible
corporations–especially those which carry highly sensitive client information–are getting serious about tackling the problem.
Luckily, most of the banks and financial institutions we talk to have a good understanding of the risks they face. While this puts us in a good position, simply explaining the benefits of stronger measures for data protection won’t cut it. You need to clearly explain how your product is different, why now is the right time to implement a solid security solution, and why you are the best choice given the plethora of other vendors vying for their business.
So how should you pitch your solution?
It’s all about timing. Data security is not just about the here and now; it’s about being one step ahead of the game. Large institutions have the potential to sign lucrative contracts that last for many years, so you must be able to have the flexibility and foresight to provide a clear solution for today’s challenges, as well as to outline your plan for tomorrow’s threats.
Be patient and flexible, make sure you have a strong understanding of the problem you’re
solving and the reality of enterprise sales cycles.
On top of that, make sure you’re spending your time and effort in a growing market. In startups, a rising tide doesn’t necessarily lift all boats, but it does lift the ones that are solving the right problem, at the right time, with the right solution. Our journey at ZeroDB has led us to discover that the sheer scale of Big Data – the volume, the threats to its security and those who would try to steal it – is more enormous than we could have ever imagined. It will take a global effort from startups and innovators all over the world to ensure that sensitive data is kept safe from theft, leaks, and breaches.