YC
The Better Customer–Startups or Big Enterprise?
@ Y Combinator
08/27/22
Takeaways
MS
Michael Seibel
08/27/22
@ Y Combinator
It's a good idea to sell software to startups when you understand their specific needs and can provide a solution that addresses those needs effectively.
MS
Michael Seibel
08/27/22
@ Y Combinator
Many successful Y Combinator companies, like Stripe and PagerDuty, started by selling to other startups, demonstrating that this can be a successful strategy.
BF
Brad Flora
08/27/22
@ Y Combinator
Founders sometimes mistakenly believe they should sell to startups just because other successful companies did, without understanding the unique challenges involved.
BF
Brad Flora
08/27/22
@ Y Combinator
Selling enterprise-grade products to startups can be problematic, especially if the product is designed for larger companies with different needs.
BF
Brad Flora
08/27/22
@ Y Combinator
It's a misconception that selling to startups is easier than selling to enterprises; startups may not have the problem your product solves, making sales more difficult.
BF
Brad Flora
08/27/22
@ Y Combinator
Just because a startup is willing to talk to you doesn't mean they are a good fit for your product; they may not actually have the problem you're solving.
BF
Brad Flora
08/27/22
@ Y Combinator
Startups often churn as they grow, meaning that acquiring early customers doesn't guarantee long-term retention.
BF
Brad Flora
08/27/22
@ Y Combinator
Companies like Stripe succeed because they can scale with their customers, while others may struggle if their product is not adaptable to changing needs.
BF
Brad Flora
08/27/22
@ Y Combinator
As startups grow, their needs change, and products that worked for them initially may no longer be suitable, requiring a complete redesign or new product.
YC
Y Combinator Cast
08/27/22
@ Y Combinator
Startups often choose lightweight CRM systems, but as they scale, they tend to switch to Salesforce, which can be a challenge for founders to understand.
YC
Y Combinator Cast
08/27/22
@ Y Combinator
Sales tools like HR and CRM scale with the number of people in a company, while payment systems do not scale in the same way, which can lead to early-stage product churn.
YC
Y Combinator Cast
08/27/22
@ Y Combinator
Founders with a product background may avoid sales, mistakenly believing they can run their startup like a game without engaging in selling or influencing potential customers.
YC
Y Combinator Cast
08/27/22
@ Y Combinator
Many startups think they can rely solely on self-serve flows and ads for sales, but this approach often overlooks the need for direct sales efforts and effective messaging.
YC
Y Combinator Cast
08/27/22
@ Y Combinator
Building a great product is important, but startups must also focus on how to acquire customers effectively; a self-service interface alone is not a sufficient strategy.
YC
Y Combinator Cast
08/27/22
@ Y Combinator
Selling to startups can be a powerful strategy, as demonstrated by Gusto, which started with startups and successfully expanded into the broader SMB market.
YC
Y Combinator Cast
08/27/22
@ Y Combinator
AWS initially targeted startups to build relationships and gain traction, which later helped them penetrate the enterprise market, showcasing the effectiveness of a bottoms-up sales strategy.
YC
Y Combinator Cast
08/27/22
@ Y Combinator
Understanding the game you're playing is crucial; selling to startups can be beneficial if you aim to grow with them, but it can be detrimental if your goal is to sell to large companies.
YC
Y Combinator Cast
08/27/22
@ Y Combinator
Startups can learn from successful companies like Gusto and AWS by studying their strategies and adapting them, rather than reinventing the wheel.