This is a guest post by Metamarkets’ CEO Michael Driscoll

Consumer startups like Facebook, Twitter, Pinterest, and even DropBox are built by founders who wanted to “make something cool” for their own benefit. Their teams intuitively understand what works because they are their own target audience: young, tech-savvy people looking for better ways to connect, share, and organize their digital stuff.

When it comes to buyer psychology, corporations are not people

By contrast, the challenge for enterprise startups, is that corporations are not really people (their legal personhood aside) — and certainly not our people.

When you’re hungry for lunch, you go and buy a sandwich for a few dollars. When an enterprise is hungry for lunch, it solicits bids from multiple catering companies, negotiates for weeks to months, and signs a contract for a few million dollars.

This gap between the psychology of enterprises and the startups that sell to them is a challenge that consumer startups do not face. Worse, early team members in startups have limited enterprise experience; they are a poor fit to the process-orientation and risk-aversion (or to put it more kindly, risk-balancing) that is rewarded at the higher levels of corporate environments.

Less Goldilocks, More Dunder-Mifflin

Lacking this enterprise DNA, younger startups often build their sales processes in the image of how startups buy rather than how enterprises buy. When startups seek to purchase a software solution, they favor simple, scalable pricing: click a box, swipe a credit card, and start running. Hence the canonical three-column SaaS pricing page (call it Goldilocks pricing) that you see at many SaaS companies—where the middle column invariably feels “just right.”

But large enterprise buyers are less adventure-embracing Goldilocks, and more The Office’s Dunder Mifflin. They require more than three sizes of self-serve, they don’t do click-through contracts, and they rarely pay with credit cards. The reasons are both economic and cultural. Economically, as buying decisions grow larger, the cost of sales — product customization, negotiated contracts, and invoicing — become marginally small. Culturally, Fortune 500 companies expect to have a relationship.

As Box CEO Aaron Levie recently told me, “Look, when Coca Cola writes you a big check, they want to meet you in person.”

Silicon Valley IT is not enterprise IT

Startups also often underestimate the importance of professional services and training for enterprises. They believe every company has a cadre of engineers smart enough to set up and tailor an application accordingly, and business users who can quickly figure it out — whether it be Google Analytics, Hubspot, or Expensify — and get up and running.

But this is not the case in most enterprises. The success of firms like RedHat, MySQL AB, and more recently, Cloudera, testify to the enormous value lies in integration and support, even when that software – whether Linux, MySQL, or Hadoop – is free and open-source.

Seasoned sales executives: The “growth hackers” of enterprise startups

As the venture investing pendulum swings back towards enterprise technology companies, founders and venture capitalists will need to augment their teams with sales executives who can nimbly step around the often woolly, sometimes mammoth challenges of contract negotiations, channel partnerships, and client services engagements. These experienced leaders will be the “growth hackers” of the enterprise realm.

Michael Driscoll (@medriscoll) is the CEO & Co-Founder of Metamarkets, and a founding partner at Data Collective.
photo credit: omnia_mutantur via photopin cc

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Cloud storage startup Box has announced its plans for the coming year as it readies for a 2014 IPO – and these call for international expansion.

The company intends to open new offices in Europe, Asia, and Brazil and is planning to fortify its enterprise sales team in those regions. This follows on the heels of healthy growth in 2012: Box experienced a near 150 percent jump in sales from the previous year.

The cloud storage market is flooded with competition: Google Drive, Dropbox, Egnyte, and SugarSync rank among the companies jostling for dominance in the sector. But Box has emerged as an investors’ darling (it raised $150 million in a recent over-subscribed funding round) for its knack of winning over enterprise customers.

Box has announced a new program called the “Box Partner Network,” which formalizes its relationship with channel and platform partners. New partners include Autodesk, Marketo, and Tidemark, which are using Box Emded (the HTML5 embeddable framework) in their applications.

“What we’ve done is taken existing partnerships and brought them under a program,” said Whitney Tidmarsh Bouck by phone. The former chief marketing officer at EMC was brought on to carve out an enterprise sales strategy and land big-name customers like The Gap and Volkswagen.

Bouck points to growth in several areas as proof that the strategy is working: Sales in construction and engineering services grew 103 percent; education grew 119 percent; manufacturing grew 233 percent; and media and entertainment grew 200 percent.

She said the company will refer to itself as an “enterprise content collaboration platform” to emphasize that the technology is used by businesses as well as consumers. In addition, Box wants to promote its open API to third party developers. About 17,000 developers use the platform to build custom applications, approximately a 300 percent increase from 2011.

In recent interviews with VentureBeat, Aaron Levie said that the role of the chief information officer is changing, and startups have an opportunity to compete with legacy vendors like Microsoft and Oracle. “In 2007 when we looked more into the enterprise, even Silicon Valley didn’t think we could win,” he said.

In the coming year, Box will continue to grow its 700-strong team in the U.S. and in international markets. In Europe, Box will hire 100 employees by the end of the year, primarily in sales, support and marketing roles.

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Dropbox has had no trouble convincing consumers to use its tools, but it will need a dedicated sales team to reach large enterprises. To bolster its sales and support team, it has brought on Kevin Egan, a vice president at Salesforce.com, and Kim Malone Scott, who ascended the proverbial ladder at tech giants like Google and Apple.

Kim Malone Scott

The San Francisco-based company develops software to help businesses and consumers store files, photos, and more. The market is full of competition from the likes of Box and Google Drive, but Dropbox is the undisputed king of cloud collaboration, and it hit the 100 million user milestone in November. The company has two offices — in San Francisco and Dublin, Calif. — and a burgeoning staff of about 250 employees.

[Related: Read more about how business-focused startups are putting off hiring a traditional sales team, and favor the "freemium" distribution model.] 

As Dropbox continues to grow its team and rumors fly that its readying for a 2013 IPO, it may struggle to keep its startup culture in tact. New hire Scott may be able to help with that; she recently taught professional development and management skills at Apple, where she wrote the curriculum on company culture. Prior to Apple, she spent six years at Google as a director, and has sales and operations experience with AdSense, YouTube and DoubleClick.

[Related: Read more here about how Salesforce and Intuit are working to maintain a startup-like culture.]

Dropbox has also poached Egan from Salesforce, where he spent a decade working in its sales and operations teams. In his current role, he works as a senior vice president of global recruiting.

This year, Dropbox has primarily focused on building out its engineering team. It lured the designer of the Facebook “Like” button and the creator of the programming language Python. It also boosted its engineering firepower through talent acquisitions; it recently acquired Audiogalaxy and Snapjoy.

I’m curious to see whether Dropbox is successful in selling its products to large companies, given the spate of high-profile security breaches. Competitors Box and Egynte are already making headway in the enterprise with a traditional sales push — it’s a massive market opportunity for any cloud software company.

Paper chain image via Dirk Ercken, Shutterstock 

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

When is the right time for a cloud computing or “big data” startup to bring on a full enterprise sales team?

Tablet productivity app CloudOn has been quietly growing its base to several million users over a period of three years. The company is set to reach the 10 million user-milestone by Q2 2013. The popular product is available to consumers for free, and lets people read and edit Microsoft Office files on tablet devices.

In recent months, CloudOn has recently begun receiving calls from large enterprises, but does not plan to execute on a formal sales push until its honed the product and reached 10 million users.

At CloudBeat 2012, cofounder and CEO Milind Gadekar offered advice to startups at a similar stage of growth. According to Gadekar, it’s not as making a few key hires. He revealed the host of new requirements that will need to be considered, including improved security, manageability and reporting.

Check out the video for more:

Video via livex.tv

The company, which first made its name a decade ago as a provider of Web-based customer-relationship management software to smaller companies for whom traditional enterprise software was unaffordable, has finally realized it is playing with the bigger dogs in the park. The company’s major competition comes from other customer relationship management (CRM) software providers like Oracle. They aren’t run-of-the-mill tech companies, they are behemoths with massive revenues that demand a little more attention than some of the other smaller CRM providers Salesforce has typically competed with.

Lautenbach was with IBM — another major competitor for Oracle — for 20 years, where he manned the company’s 1000-strong enterprise sales team. He’ll be responsible for pitching the company’s service major enterprises — like Dell, a current Salesforce customer, for example — rather than Salesforce’s traditional strategy of targeting business managers.

Salesforce looks like it has been building up its resources to attack the enterprise market in full force — including some targets outside of its typical CRM software market. The company has acquired three companies in just under two months. Salesforce dropped a whopping $212 million for Heroku to bolster its development tools for its web services and picked up Manymoon to expand into some other cloud services.

The company also recently launched Chatter.com, an enterprise-style social network that is free and open to everyone. Salesforce does want to convince Chatter.com users to sign up for the official Chatter service, and then Salesforce’s CRM service, but it’s still a bit outside of Salesforce’s enterprise activity. Salesforce initially launched Chatter as a Twitter-like service to compete initially with Yammer and make a splash in the collaboration space.

Salesforce also recently named former Microsoft government sales guy Matt Miszewski to head the company’s government sales team.

Apple could be making a move into the enterprise space after hiring five executives in the past year and a half that specialized in marketing Research in Motion’s BlackBerry phone, one of the most popular phones in the world for business professionals.

That shouldn’t come as any kind of surprise, as Apple has always been a bit of a silent powerhouse in the enterprise market. The iPhone has taken the lead in enterprise phone sales, if you discount RIM’s BlackBerry — which has a dominant share of the enterprise market and around 46 million customers. The iPhone 4 accounted for more than 30 percent of mobile device activations for enterprise purposes, and more than 10 percent of activations were iPads, if you discount RIM’s presence in the enterprise market.

The iPad, Apple’s tablet computer, is particularly popular among the largest companies in the world on the Fortune 100 list — about 50 percent of them are either using the iPad or are rolling it out. An analyst with Wall Street firm Piper Jaffray said Apple could probably sell 21 million iPads next year as a result of its presence in the enterprise space. Maynard Um of UBS Investment Research said earlier this month that Apple could sell up to 28 million iPads in 2011, as well.

Apple’s Mac computers are also becoming increasingly popular among enterprise users. Apple’s sales to government organizations grew 201 percent in the second quarter of this year when compared to the same quarter a year earlier. Its enterprise sales as a whole grew 50 percent in the second quarter when compared to the same quarter a year earlier – compared to an average 16 percent across all companies.

And it’s a good time to jump into the enterprise market. RIM is struggling a bit trying to comply with government requests for access to private corporate data. India, as well as a handful of other countries, threatened to ban BlackBerry services if RIM did not comply with demands to make enterprise email and messages available for government viewing in August. RIM has said time and again that it cannot physically decrypt the data. It then doubled back and said it would allow the Indian government to view that information.

So there could be some concerns about the security of the BlackBerry messaging service among corporate users that need to keep their email messages secure. Apple hasn’t publicly offered any kind of security guarantee — but there aren’t a number of countries ready to ban the phones, either. So the new hires come at a fortuitous time for Apple, when it has a chance to capitalize on RIM’s security woes.