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Selling software to big companies is a ‘baroque tribal ritual bloodletting,’ says investor

(12 Views) June 18, 2016 2:42 pm | Published by | No comment

Martin Casado

VMware

Andreessen Horowitz General Partner Martin Casado

When it comes to the inner working of the tech industry, Andreessen Horowitz general partner Martin Casado knows a thing or two. 

In 2007, Casado cofounded networking startup Nicira, which raised $ 41.82 million in venture funding before VMware gobbled it up in 2012 for $ 1.26 billion.

At VMware, Nicira’s networking virtualization technology became a $ 600 million business, before Casado left for Andreessen Horowitz just a few months ago.

The market today may be a little different than when Casado was a first-time entrepreneur, as the funding doesn’t fly as fast and as free as it used to.

Still, Casado says that there’s a tremendous opportunity, especially highly technical business-facing startups, to carve out huge chunks of what he says is the $ 4 trillion business technology market. It’s something that gets him very excited as an investor.

“How many $ 4 trillion markets are there?” Casado jokes.

That market-carving is only possible, Casado says, so long as these startups play to their core advantage: Not having to go through what he calls the “baroque tribal ritual bloodletting” that is the enterprise software sales cycle.

“I believe this disruption favors small, technical startups,” Casado says. 

‘A very baroque procurement process’

What’s so horrible about selling enterprise software? Well, when a big software company like Microsoft, Cisco, or even VMware wants to sell a product, they have to go through “a very baroque procurement process,” Casado says.

They have to romance third-party service resellers and consultants into offering their products, who then in turn wine and dine their customers’ CIOs and IT departments, taking them to expensive dinners and out to the golf course.

salesman salesperson sales manager

Chris Hondros/Getty Images

The whole process can take months, if not years, and it hinges just as much on salesmanship and professional contacts as it does on the products themselves. The big tech titans have gotten very good at it, to the point where it’s difficult for any kind of new startup to get a seat at the table in deals of any substantial size.

“I would say all of these large companies, their strength is selling to that sales channel,” Casado says. “I’ve always thought that was the most difficult thing for enterprise startups.” 

The cloud changes everything

Now, things are a little different. Thanks to the rise of on-demand cloud computing platforms like Amazon Web Services and Microsoft Azure, a company’s developers increasingly hold the purchasing power.

If there’s new technology developers want to try out, they can just punch in their credit card number and take it for a spin. There’s no dealing with the IT department, no procurement cycle, no nothing. They just find the tool they want, and use it. 

“Developers don’t care about that complicated sales process,” Casado says. 

florian leibert mesosphere

Mesosphere

Mesosphere CEO Florian Leibert

For instance, Casado says that tools like Mesosphere, an Andreessen Horowitz-backed startup that helps developers manage and maintain their cloud computing infrastructure, “captivates the developer.” 

There’s room for startups to captivate developers at every layer of the technology market, Casado says, from security to networking to storage. Any startup that can skip the traditional sales cycle and sell directly to developers stands to win in the long-term, Casado says, without the overhead of having to build those traditional sales channels.

As Casado gets up to speed after only two and a half months at Andreessen Horowitz, he says that helping find startups that stand to take full advantage, and counseling them on their way, is an exciting opportunity.

“It’s why I got into venture capital,” Casado says. 

 

 

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