Scaling First Revenue: IT Infrastructure.

Enterprise IT Infrastructure has probably the most disciplined budgeting process and most rigorous procurement department. Not that they are always on target, but they have a very clear understanding of the different buckets, ROI, impact on operations, and necessary multi-vendor management. Enterprise IT infrastructure organizations know the percentage their enterprise wants to spend on IT to enable its customer care, sales, and operations. Very few enterprises can suddenly increase their IT infrastructure budget by 5%-10% just because you’re showing them something groundbreaking, new. Very few enterprises can suddenly change procurement processes just because there’s a different way to do IT Operations or IT Infrastructure. And almost no enterprise can break organizational barrier and setup of its IT organization. So how do you sell a transformational IT product, something that will create a new category, something that will change the way we think about IT Operations or IT Infrastructure?

Take Someone Else’s Money.

Startups who want to sell transformational IT products to enterprises have to take someone else’s money. They have to get budget from something that was originally intended to either buy something else or buy from someone else.

Have a Cost Center.

If your product, solution, or platform does not fit into a cost center you’re not going to sell. Good for you if you’re “breaking down organizational barriers” and “create massive opportunities through simplifying operations”. But who is going to write the check now? Are you getting the runaround: everyone wants your product but everyone hopes that someone else is going to pay for it?

Focus on Prospects with a Track Record in Platforms.

This one is a bit counter-intuitive. If it is much easier to sell a product then why bother with enterprises that have a track record in engaging with startups who sell platforms?!

Purchases of products are purchases for immediate value. Purchases of platforms is a purchase for future value.

Very few startup products will open new revenue or cut costs at a scale that would move the needle for a $50Bn enterprise in the first year. It is crucial to deliver meaningful value as early as you can. You should solve an acute pain. But the enterprise is not going to bet the farm on you. They’re going to start small. Platforms liberate future opportunities. You will have an easier time with upselling and cross-selling. If your prospects have a track record in buying into platforms, then they have a vision or aspiration to liberate future opportunities.  At that could be more valuable than selling a band-aid or quick fix.


Thoughts? Opinions? Comments? Corrections?