Jason M. Lemkin breaks down why selling to startups beats selling to enterprises: founders make fast budget decisions and if your product works, it becomes embedded and hard to replace. Bigger companies have more money but slower sales cycles and legacy systems get in the way.
Chapters
Jason M. Lemkin. We've seen a long history of YC companies be very successful in selling to startups initially if they're selling key components that if they work, they will not be ripped out. If your payment system works, you're not going to rip it out. Also, when you sell to startups, you're often pitching a founder. Founders have the ability to control budget and make decisions quickly. So there are pros and cons of selling to startups, but I'd argue that it's been extremely successful within YC. And it's a great way to essentially build a brand as being an innovative tech company that you can then use to sell to larger customers later. What I will say though is that there are some advantages and disadvantages to not selling into an early-stage startup. The advantage is clear. They have more money. And less likely to churn, it's more likely to be a real business. The disadvantage that some people don't realize is that if you're selling to a larger company, you're often selling into an executive. And you don't know what their power, what their budget, what their decision-making ability is inside of the company. Also, you don't know the products that that executive used previously that they might be inclined to continue using in their new role. So this is something you should always consider. When is it better to enter into a company? If you can get in early, it often is better, and you can often grow with the company. But if you're not solving a problem that an early-stage company has, you have to go later, unfortunately.
