The Successful Startup and Enterprise Partnership with Greylock Partner Sarah Guo | Greymatter

Hi, everyone. For those of you I don't know, my name is Sarah Gore. I've been an investor looking at enterprise stuff at Greylock for the last five years. And recently in the last quarter, we did this big survey of a bunch of our enterprise companies and a bunch of the customers that we work together with closely. So thank you for those of you that participate in this. And what we found is that people are running into the same issues repeatedly across the portfolio and across customers in terms of the gaps that they have to cross to work together. Young companies and big companies trying to consume technology. We didn't really hear from anyone. I don't want to innovate or I don't want to serve the largest customers that have all of the users. But the hazards are real. And so what we did was draw a map of the ones that we kept seeing. And everybody's trying to get to this place, the golden fields of innovation. But we see them get lost in the swamp of marketing fog. We see them get pushed back by the gale winds of cost and risk, unable to cross the gap of the four S's, security, scale, spend and supportability, and often get bogged down in the quicksands of customization. I don't think anybody in this room really likes the desert of procurement and approvals, but that's a place where people, you know, they try to cross and they're running out of resources getting across. And we see that companies don't necessarily build the strong enough ship and crew they need to cross the ocean of early execution. So one thing I thought we'd do is just preview a little bit of what we heard in this survey. So I'm a customer and I've got real problems to solve. It's really confusing and I'm overwhelmed by it. And what we got from our ecosystem in terms of suggestions were sort of three ways to break through that marketing fog. First was shine a bright light in terms of just getting people to know who you are. And our customers told us that who they pay attention to are the startups that get introduced by their VCs, by their peers, people who have already one or two customers that look like them in terms of industry and scale, and people that had positive analyst and PR coverage. The second was a frustration that people really couldn't figure out what some of these startups were doing and what problem they were solving. And this is a journey that a lot of our companies go through in terms of articulating their true value to the business user. And so we had people Like Jim say, yeah, I'm actually really happy to invest in working with startups because I need the innovation, but I'm only going to do that if I believe that they are offering me something that I need that's very different than the options that are safer. Right. And so just getting in that mindset of being able to articulate that clear path out of the swamp, and then one other thing we heard was there's a whole bunch of different stakeholders you need to engage to get the message to. So CIOs might be the right channel into an organization for some of our enterprise companies, but what they also told us is that often they're not the decision maker. That could be one of their direct reports, could be the person who runs infrastructure application development, it could be somebody who runs a BU or a functional lead, or it could be an end user. So, and for structural reasons, most of those users are actually quite a bit more aggressive in terms of their technology adoption. And it's just something that we have to be aware of or take advantage of in this room. So you made your way out of the swamp, but then you're blown back by the gale winds of cost and risk. The thing that we heard was we want startups to really think about not just the benefits they're offering, but what it would cost an enterprise, a company, to, to adopt the technology. And one thing we also heard from our CIOs was the value of personal relationships in getting past those initial barriers. And so an example to me was that in multiple of our survey calls, people said, yeah, I feel much better about taking a risk on a company if I have the CEO's cell phone number, if I have the senior technology leadership team's cell phone number. Because if I'm going to try to roll this out to 20,000 users or all my infrastructure, I, I need to be able to call somebody who's going to make it right if it doesn't go perfectly. And it usually doesn't go perfectly. The final thing we heard around making sure that value overwhelmed cost and risk was that costs are more expansive than startups often think they are, and there are a lot of hidden costs. So implementation, integration, administration, the cost of training a large workforce on a new tool, and the costs of even vendor management. So. So, for example, one of our friends said, this $100,000 contract, it sounds really attractive to a startup. It's actually a drop in the bucket to me with my budget, but you know why I'm not going to do it? The vendor management Makes it actually twice the real cost to me. And that's just a function of how large my organization is. Okay, so let's say you've gone through these first two obstacles and the value actually overwhelms the cost and risk to the enterprise of what you're doing. You still need to answer the question of is it actually feasible? In my environment as a customer, we repeatedly heard four concerns raised. The first was scale. And this seems like trite to say, is it going to scale to a big company? But it's a different thing in terms of scaling. Oh, these couple thousand users in this really big Fortune 100 company are using it is different from the most effective productive way to use file and storage in a very large company in terms of manageability and security controls. And so we heard user scale, infrastructure scale, and also geography and manageability. The other thing that was top of everyone's list was security. So three different themes here. The first was that it's a real concern that we need to protect our data as a company, but it's also regulation driven, right? I have no Choice. I need SoC2, I need GDPR, and if you want to serve me, you got to do that too. The second theme was that people should really think about who has access to what parts of the product in a big company. And that usually means building in sophisticated access control earlier on than you would expect. And the third theme was a set of questions that every startup should be able to answer about their company and how they treated customer data. So who has access to it? What protections does it have and where it resides now? And so those are sort of the parts of security that we repeatedly heard. And the last two pieces I think are not necessarily often thought about in terms of feasibility. But spend like is the pricing model that is appropriate for your first 30 developers or first app or 100 users? Is that the same thing that the enterprise is going to be willing to buy at 20,000 users? And then finally, supportability companies told us that they really wanted to understand whether a company had the rest of the organization in place. Do you have customer success? Do you have people who are going to be available to me 24,7 if I actually use this product? The message we wanted to bring to everybody in this room is you're going to have to bring on some of these capabilities if you want to serve large companies. And the best thing you can do is just figure out one step ahead. What are my customers really going to need that I'm talking to right now so I can build in parallel and be ready for that. The quicksands of customization are a tricky neighborhood, especially if you're a very customer oriented culture. Once you solve one problem for a customer and you're technically creative and capable as a team, you want to solve their other problems. And in reality they want you to solve those problems too. But this is dangerous because you have to sort of balance it with the strategic priorities of the company and your limited resources. 12 engineers should probably not be building the 18 different things that Walmart would like you to build that aren't really relevant to your product. And what was interesting to me was that we actually saw a lot of the CIOs recognize the same thing and say, like, we actually understand that you're not going to fulfill all of my feature requests and no is okay. Sometimes it can feel really risky to turn away business when your board's like, I want you to hit the sales goal or you need to show a certain level of traction to be an attractive company and continue that momentum is really important. But it's just as risky to try to do everything for everyone. The desert of procurement can be a bear for not just startups, but for CIOs as well. It's kind of a mirage because you feel like you have this commitment to work together and then like six months later you something is not done or you get stuck in finance and legal. Our advice here from both sides was just simply plan ahead so you understand these sales cycles and also put yourself in the economic buyer or the technology buyer's shoes, understand where they're going to have to go in their own organization to get a technology approved and purchased and arm them so that they can explain to those people in finance and legal and navigate those processes to make the case for why it's a risk worth taking and why you need to spend the money. One thing that we heard from some people was that you can actually, as a large company, you can and should create channels for more rapid adoption of startup technology because you need the innovation. And for these companies that are operating on 18 or 24 month cycles, if you have an 18 or 24 month procurement cycle, you're just never going to be working with them. The last and really the most important obstacle that we see is the ocean of early execution. Does the product do what it says and can your team deliver on the experience? And so a few tactical things that we heard from our ecosystem. The first was that lots of POCs are not structured for success. So designing them to be short, with clear criteria for success and then commitment from both sides, the customer and the company. These sort of more granular pieces of that timeline are really important. The second, as we saw from Dipanchu, was that if you don't actually execute, people will hear. It's a relatively small community of technology buyers. And this works both ways, Right. If people have a great experience and referrals are one of the strongest channels for young companies because it just requires a certain level of trust to take this kind of risk. And you may actually need to pace the size of company you go after for the kind of support you can actually offer them. The last piece of advice here we heard for everyone was a real interest in companies that could execute and extend, or as it's also commonly called, land and expand, start with one small piece of success and then figure out where the other use cases are in the company. There's a lot of upfront cost, as we just talked about, like all of these hazards you have to get around in order to be working successfully with a customer. And so nobody wants to go through that cycle continually with 1000 different vendors all the time for every problem. Right. And so while it's got to stay within the sort of strategic constraints of what makes sense for your company and your product line, if you can do more things for your customer, execute an msa, grease the internal adoption wheel, this is great for both sides. There's a lot more detail in sort of what we found in the survey, but we wanted to sort of highlight some of the hazards and also say, you know, we at Greylock with our companies love going through this quest and we do think it's a good analogy in terms of finding partners that you're building trust with and navigating these hazards together. There wasn't a single company in the survey that told us they don't want to innovate, that it's not like a strategic imperative. Right. And perhaps part of it is sort of like who we choose to interact with. There's a self selection bias here in terms of people who want to do things to enable their organizations with technology, but we feel like it's a pretty worthwhile goal to get to the golden fields faster. So we're just trying to figure out how to give people a little bit more visibility in terms of what they've got to be prepared for.