Bursts of Color - Whale Hunting, Part II (Guest Interview)
I previously posted about Whale Hunting: when startups seek a landmark deal with a big company. For those who are lucky enough to harpoon such a whale, now comes the hard part… as there are any number of things that can go wrong in the years to come. Here’s a recent example I encountered:
Our biggest customer represents almost 50% of revenue. Our champion at the company is an executive who has been happy with our product for two years. Unfortunately, just before signing our renewal, he got fired. The renewal is due in a few weeks and we haven’t yet met his successor.
Yikes. While there are no easy answers to this immediate problem, we can do some things to improve our odds over the long term.
Mike Ghaffary is a business development expert who is better than anyone else I’ve known at building long-term corporate partnerships. This week he joins us to share some tips and tricks about what to do after you land the big account.
Any advice *before* we sign the big deal?
MG: Not all revenue is created equal. It’s nice to get a huge account that doubles your ARR, but be careful what you wish for. If you ever need to go back to the capital markets, everyone will be acutely focused on that big customer. If they churn, that will be the kiss of death. So you actually might be better off without this one giant account if they are not going to stick with you.
How can we gauge their commitment level?
MG: Just like signing a job offer: once the big company makes a specific offer, you can turn the tables and interview them before you sign. Remember it’s not about this deal: it’s about the renewal. What’s their plan for how this is going to work in 1, 2, 5 years? Who is your champion internally? Who else influences the decision? How big is this purchase relative to the company’s budget? How many other spending items do they have that are this size?
How many relationships do we need at the company?
MG: Since people constantly change jobs, there is a greater than 50% chance your champion is going to leave in the next 2-3 years. To manage this account over time, you need to know at least 5-10 people at this whale customer at any given time. This is a mix of both top-level senior folks and the individual contributors who will work on your product.
How do we meet these 5-10 other contacts?
MG: Every once in a while you’ll be asked to do a large dog-and-pony show with a group at the company. Hopefully your champion can help you prepare for this. When you get to that group meeting, get every participant’s name and contact information, and then follow up with them individually afterwards. Look them up and and mention things like “I noticed that we have X in common.” Remember that most of the work gets done in a 1:1 or 2:1 setting – the big group meetings are mostly window dressing.
Now I’m in contact with these 5-10 people, what’s next?
MG: Over time, each of these people will need to like you personally AND they will need to believe in your product. As you’re getting to know them, ask questions to understand how each person and department thinks, what products they care about, what their goals are, and try to build a shared language for how they think about your offering.
Can I build these relationships over Zoom and phone?
MG: There is no substitute for steak dinners. Okay, lunches or sporting events or family events or whatever the client is into can work too. The point is that, even in this hybrid world, there’s no substitute for in person contact. And yes, you can back it up with phone calls and zooms in between the in-person meetings.
How do you get these folks to come out and meet?
MG: Just get out there and invite people to things. For partners in my same geography, I would sometimes get coffee 2-3 days a week near the partner HQ and text someone when I arrive to see if they want to hang out or have me bring them a coffee. For a customer who is across the country, don’t be afraid to hop on a plane or to line things up prospectively by saying “it looks like I’m going to be in town next week, are you around?” Also yes, go to the conferences and trade shows where these folks are planning to be.