Borrowing From Other Budgets
How to Position Enterprise Deals to Win In a Tough Macro
During this optimization cycle and macro climate, budgets everywhere are being scrutinized. There’s countless advice out there on how to approach winning deals in this time. A small sampling of successful ones that have worked:
Get multi-threaded sooner and deeper
Sales cycles will expand and the only way to fight it is get buy-in across more stakeholders across the org of the customer that way in the event of a reorg or priorities shifting in one team, you have others to rely on still
Close initial smaller land deals under budget threshold
Most orgs of a certain size have a threshold ~$100k of budget under which the GM or business unit lead can have sole discretion. Anything over gets kicked up to usually the CFO’s org for approval = longer sales cycles.
Reorient product and value around a different persona and business unit
There’s not tons of writing that I’ve seen here so this post will focus mostly on this topic
Borrowing from Other Budgets
So what does the above phrase mean. One thing that founders sometimes don’t study enough is where budget actually comes from. For example, there’s countless times I’ve heard founders say “we’re replacing millions of dollars of consulting fees”. That’s definitely high value….if it’s coming from the same budget. Often, the consulting budget is tippy top, high level C-Suite allocation (aka the good stuff).
Most of the time a startup is not tapping into “the good stuff”, but a smaller budget in either an org or subset of that tippy top allocation. And so, while that pitch helps the customer overall, it does not help that particular budget owner who is still losing budget in their allocation by spending on the startups’ product. It becomes quite personal especially when budget is tight. As whoever is excited about the product, is taking budget away from someone else who was excited about a different initiative.
So what to do?
This is where Reorienting the product or value/positioning can be huge.
In dev tools for example, a classic example is orienting a dev tools product so that it also benefits security. This enables the Engineering Director to “borrow” from the security budget (which is typically a lot bigger or at least more flexible) and make an easier case internally.
I’ve seen companies selling into HR budgets reposition to show value to IT and come out of that with exposure to a typically bigger and more stable budget.
Sometimes, this can be a fairly large product shift. Sometimes, this can be simply a messaging shift. Sometimes its a combo of the two: new product workflows and integrations need to be built that can lead to messaging that resonates and shows value to that new business unit that on top of existing users.
If done well, it can drastically change the outcome of a business.
What I’ve enjoyed this week:
This great post by Cole Grolmus on Palo Alto’s recent earnings and their product & gtm strategy across the cyber landscape
“Integrating security products is difficult and expensive. Being intentional about integrating the product up front instead of leaving it to customers to figure out for themselves is a game changer, even if the drudgery of systems integration doesn't excite you.
Integration is just the beginning. Unlocking the ability to solve security problems that aren't possible without an integrated platform is revolutionary. It's not possible to detect attacks reliably, and certainly not proactively, without a common data foundation and set of detections running on top of it. This is just one example — we're all still figuring out what's possible if we have an integrated platform to start with instead of chasing our tails trying to integrate everything.
Longer term, Nikesh Arora played out the impact of platformization even further, predicting the emergence of a standard security platform in the next decade:
...in the next decade, we will see sort of a standard platform for security out there, just the way we've seen platforms in CRM or we've seen platforms in HR, as you've seen platforms and financial sort of software.
We think it's time that in the next decade, we will see a security platform in our future, which just works for our customers, and the customers are not spending time integrating multiple vendors trying to stitch their own...that's the only way we're going to get to the future that we need for real-time and AI-based security.”
Software Snack Bites Pod had two awesome episodes the last 2 weeks, #18 diving into AI’s Impact on SaaS with Jake Saper of Emergence Capital and #19 covering Data Infra, Edge Networks, and SASE, Zero Trust, & Cloud Security with Muji of Hhhypergrowth
The Snowflake <> Instacart drama has been pretty insane. Interesting to see Snowflake publicly address the rumors on their blog.
This Stratechery Interview requires a premium subscription but was an amazing deep dive into the payments landscape and how different geographies and enterprise customers drastically affect the end product needed and the respective margins.
A very fun post that was trending on Hacker News randomly during the week talking about the history of coffee making equipment and showing the insides with CT scans. Oddly calming to flow through all of this.
