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Saturday, October 23, 2021

Selling into the enterprise: How Slack and other startups get it wrong – TechCrunch


When building a startup, you’re making what feels like a million decisions on timing — when to launch to time the market, when to hire that key role, when to raise another round. But one of your most important timing decisions might be one you aren’t even considering yet: When to approach the enterprise. If you aren’t debating that now, chances are you’re overlooking a big opportunity.

I saw this time and again while working with dozens of startup CEOs while at Greylock Partners. Approaching the enterprise can feel daunting for early-stage teams. Many founders would push back when I suggested it, and I get why: It’s uncomfortable and maybe even counterintuitive. A commonly heard refrain was: “We’re not ready. We’re too early. We want to optimize our product more first.” They were afraid that if they talked to large enterprise companies too soon, they’d blow it.

In my experience, the opposite is true. At a startup, you’re constantly trying to maximize learning in the tightest loops possible. The earlier you start, the more valuable the knowledge and iterations you accrue. Your go-to-market is no different.

I’m here to tell you it’s possible to be both a product-centric company and woo the enterprise at the same time.

A short history lesson

Take Slack, for example. A darling of startups across the Valley and beyond, Slack grew into a can’t-live-without technology for many teams. It’s a success by nearly anyone’s standards, and yet, it is a company that didn’t survive as an independent public company. Why? Because it couldn’t quite break into the enterprise on its own timetable.

I’m here to tell you it’s possible to be both a product-centric company and woo the enterprise at the same time.

Slack enjoyed hypergrowth among startups, but it got beat out by Microsoft Teams on the big deals. Microsoft used its enterprise credibility, deep distribution channels and raw muscle to block Slack from signing big companies that had to work within established protocols and existing infrastructure. Teams might not have had the same stellar user experience, but it met enterprises where they were and played by the buying rules they understood.

The result? Slack got acquired by Salesforce for $27.2 billion 12 years after it was founded.

To be clear, Slack’s acquisition — the largest in Salesforce’s history — is not a bad outcome. Lots of startups dream of such an exit, but it’s probably not the one the company was seeking given its darling status and enormous popularity. It was a catch-up move, a way to use Salesforce’s weight to get a shot at competing with Teams.

The question is, if Slack had considered selling into the enterprise sooner, could it have survived as an independent public company?

A bottoms-up approach to growth, like Slack famously championed, is fantastic, until it’s not enough. Having helped dozens of portfolio companies approach the enterprise at Greylock Partners and now as a startup CEO myself, here’s some advice on how to avoid common missteps:

Start sooner than you think you should

Some of the most commercially successful companies in the world today engaged with enterprise customers before they even had a product. The purpose is to gather intelligence about what a customer would want, what they’d value or how they’d evaluate their product. Startups can gain important information that may help shape their trajectory and get the product enterprise-ready much faster.



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