Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Infallible Formula to Create a Money-Making Startup

diegobasch.com

Post reply on HN
Print view View original

11–17 of 17 posts

Re: Infallible Formula to Create a Money-Making Startup

#11

Post by akg »

It's a great method to get inspiration for potential problems in the B2B space. The challenge however, after you've come up with a solution is the sales. Enterprise sales are notoriously difficult especially due to "big business" culture that creates inefficiencies to solve in the first place.

PG has this to say in his essay (http://paulgraham.com/start.html) :

"Start by writing software for smaller companies, because it's easier to sell to them. It's worth so much to sell stuff to big companies that the people selling them the crap they currently use spend a lot of time and money to do it. And while you can outhack Oracle with one frontal lobe tied behind your back, you can't outsell an Oracle salesman. So if you want to win through better technology, aim at smaller customers."

Re: Infallible Formula to Create a Money-Making Startup

#12

Post by tptacek »

mbesto wrote: post #6

Heed warning - it's not this simple. The only way to properly do this is to build a strong network with the stakeholders who buy this IT software. Mainly the CTO/CIO (or CFO). That's the only way to make money in the enterprise. Sales cycles are long and arduous, so be prepared for the long haul.

In most companies, the CTO or CIO comes nowhere near the kinds of purchasing decisions made by the kinds of companies started by a process like this. There are many tens of dir/it or dir/ops people in almost any Global 2000 company that routinely make six-figure purchasing decisions.

Many of those decisions do percolate to the CIO/CFO level for approval, but there is a world of difference between "purchase approver" and "decision maker". Directly targeting the purchase approver is often a very bad sales strategy.

Re: Infallible Formula to Create a Money-Making Startup

#13

Post by netvarun »

"Before I started IndexTank I already knew that people would be willing to pay $$$ for such a service because I'd been making money with search consulting for a while."

I started off the in a similar manner, doing lots of consulting work. I know there is demand (in my case, its selling structured data), but however I am not too sure on whether the same demand would exist if I were to 'productize' my consulting work (ie. launch an api for structured data).

As one of the commentors, mentioned its really hard targeting the big companies and most small companies simply don't have the technical expertise to use an API (as in my case).

Re: Infallible Formula to Create a Money-Making Startup

#14

Post by eigenvector »

tptacek wrote: post #12
mbesto wrote: post #6

Heed warning - it's not this simple. The only way to properly do this is to build a strong network with the stakeholders who buy this IT software. Mainly the CTO/CIO (or CFO). That's the only way to make money in the enterprise. Sales cycles are long and arduous, so be prepared for the long haul.

In most companies, the CTO or CIO comes nowhere near the kinds of purchasing decisions made by the kinds of companies started by a process like this. There are many tens of dir/it or dir/ops people in almost any Global 2000 company that routinely make six-figure purchasing decisions. Many of those decisions do percolate to the CIO/CFO level for approval, but there is a world of difference between "purchase approver"…

I agree. Solutions pushed downstream from the executive level (usually from someone who happens to play golf with the bosses) really succeed, because they aren't usually what we actually need.

Re: Infallible Formula to Create a Money-Making Startup

#15

Post by mbesto »

tptacek wrote: post #12
mbesto wrote: post #6

Heed warning - it's not this simple. The only way to properly do this is to build a strong network with the stakeholders who buy this IT software. Mainly the CTO/CIO (or CFO). That's the only way to make money in the enterprise. Sales cycles are long and arduous, so be prepared for the long haul.

In most companies, the CTO or CIO comes nowhere near the kinds of purchasing decisions made by the kinds of companies started by a process like this. There are many tens of dir/it or dir/ops people in almost any Global 2000 company that routinely make six-figure purchasing decisions. Many of those decisions do percolate to the CIO/CFO level for approval, but there is a world of difference between "purchase approver"…

Good point. A VP of Operations/Infrastructure (of IT) who would report to a CTO/CIO would be more suitable. I guess I should have clarified that a bit better. It's also, as you allude, not as simplified as this.

Either way, my point was more about the fact that working day to day-to-day IT work won't give you the edge unless you have some sort of in with the guy/girl who ends up actually making the purchasing decision. It's also not as simple as this, as IT/Business organizations can be muddied with politics that don't always serve the IT personnel's productivity interest.

It also doesn't hurt to also get in with procurement. Which is another barrier I've found in "BigCo". Many large (Global 200) companies have a shortlist of companies they will work with and won't even entertain a conversation unless you are a certain size or have a pre-existing contract with them.

Re: Infallible Formula to Create a Money-Making Startup

#17

Post by facorreia »

eigenvector wrote: post #8

As someone who works (not in IT) at a government-owned BigCo (2000 employees), let me tell you: building the software that will solve our problems will be the easy part. Navigating the bureaucracy of BigCo's procurement processes will probably take you more time, skill and money than actually building the product. And it's not enough to have a product that solves a problem. BigCo never fixes things all at once. So wh…

Not to mention BigCo's managers are highly averse to risk and won't put their bonuses and careers on the line by vouching for a small company that may or may not be around in a few years in case they need support or maintenance.
Post reply on HN