Blair Livingston, CEO of StreetContext, explains why selling to banks takes patience: products must be three years old before they'll even consider them, and sales cycles stretch two years, meaning deals close seven years after launch. His company quietly became the world's largest white-labeled email sender for capital markets, handling four billion emails for 150 major financial institutions.
Chapters
When you're selling technology to large banks and other financial institutions, you need to be patient. They are conservative. It takes time for them to make decisions. In this clip from The Startup CEO Show, Blair Livingston, co-founder and CEO of StreetContext, talks about their 8-year journey crossing the desert, slowly building customers before their revenue traction took off. I hope you enjoy this.
Yeah, I remember talking to one of our largest clients, which is one of the top 5 US investment banks, thus one of the top 5 global investment banks. And they said, they're like, listen, we don't use any product that's been in market for less than 3 years. And then usually our sales cycle is 2 years. So, you know, you, you have to get to the point where they want to use it, right? And then you have to sell them. So like, you're not closing that client probably anytime before 7 years in market, right? And so it just takes time. And their whole thing is, whatever you think we're paying for your software, double to triple it to add in all the soft costs on our end, right? And then there's political risk and social risk and, you know, what if this doesn't work well? And to your point, there's data sensitivity risk, you know. Uh, the fascinating thing for us at StreetContext is we were actually quietly the biggest issuer of email in capital markets in the world at the end, right? We were probably sending 4 billion emails on behalf of some of the biggest investment banks in the world. And they gave us permission to send as them, right? So there's a huge level of client trust where, you know, we're essentially the biggest white-labeled information provider to the biggest financial institutions in the world, right? You just think about that. You have 150 global financial institutions, probably all of which are on the, you know, systematically important or systemically important list. The magnitude of that, that's why it just takes a long time to build social capital and build rapport.
No, I totally appreciate that. And the— I'm still surprised no one tried this. Maybe people did, but like, when I think of this market, sure, it's defined, but like, it's rich. Like, they can pay. Like, very, very attractive market, you know.
Well, I think this is the fascinating thing about enterprise verticals in general, and I think the more enterprise the vertical, the more true it is, right? If you look at the difficulty of different verticals, finance would probably only be next to maybe healthcare and maybe the government right? It might actually be harder than the government, but maybe in line with healthcare. But the interesting thing is that for the horizontal providers, it makes no financial sense to sell to a challenging vertical. I remember talking to, uh, an enterprise rep at Salesforce, so they would sell CRM, which we were kind of tangentially related to, and we'd integrate into CRMs. And I was, I was fascinated that more firms didn't use Salesforce. A lot of them had, you know, off-the-shelf— sorry, in-house built solutions, not off-the-shelf, didn't buy Salesforce, et cetera, even though other parts of their firm use Salesforce. And the issue that rep, he was like, listen, I can sell 10 times the number of seats to a CPG firm, 10 times easier, and thus make multiples more on a commission basis than grinding it out to sell to an investment bank over multiple years for a small, relatively small deal size. And it's just so hard to sell to some of these industries. I don't know if you've ever watched Lawrence of Arabia, but the whole movie is premised around this taking of Aqaba. And it's this town on the water that's really important. And behind it is a desert and it's called the Devil's Anvil, if I remember. And essentially there's no defenses facing the desert because there's no way any army could cross the desert. And the whole story of Lawrence of Arabia is him working with the tribes in the area to actually cross the desert and take the city because there's no artillery weapons facing into the desert. And I think this is the whole thing. It's, because it's perceived to be so hard, no one does it. But because no one does it means if you can do it, you have a huge advantage. Yeah, yeah, yeah.
Hey, thanks for listening to The Startup CEO Show. If you'd like to connect with me, be sure to visit my website at markmacleod.me or follow me on LinkedIn @TheMarkMacLeod or Twitter @MarkMacLeod_. And if you want to tune in again next week, be sure to subscribe on YouTube, Spotify, Apple, or wherever you get your podcasts. We'll see you next time.
