Small companies with limited resources spend far too much time and effort attempting to “win” marquee accounts way too early – and it often kills them.

Within enterprise technology, society has been built based on misguided perceptions of success, which died the way the Soviet Union did, but are perpetuated in the current climate despite being an almost sure way to death.

VCs have long viewed Wall Street as the bellwether indicator for the success of their portfolio companies.  Wall Street IT has long been considered the best of the best, so if you can sell there, you can sell anywhere.  Wrong.  Stupidly, arrogantly, and ignorantly wrong.

As a result of this continuing fallacy being shoved down the throats of entrepreneurs, companies spend all their time, money, and effort attempting to satisfy a prospect who does not represent the real market.  Instead, they are almost always the exact opposite of the real market.  They are, by their very nature, what we call “corner cases.”

The real market does not have the “best” IT department known to man.  It doesn’t pay top dollar and invest an astronomical proportion of its revenues back into IT technology.  The real market has real IT people – with real problems.  Lehman Brothers had huge pockets and huge egos.  Lehman Brothers, like the Soviet Union, was thought to be invincible.  Oops.

The real market wants a real problem solved – not cold fusion.  It doesn’t care about how you spent all of your last round of financing sleeping in Morgan Stanley’s data center completely re-architecting your solution to meet  specific needs for interplanetary replication.  It wants idiot-proof solutions to the problems smacking it in the face every day, not some pipe dream that will never matter.  The real market doesn’t buy a titanium jaw replacement when it needs a root canal.  Worse, it will suffer the pain until it can’t take it anymore.  The goofy market will have you develop the jaw.  Then just when you think it is going to actually pay you for it, it will instead make you chew for it.

The real market can’t afford science projects.

The real market does not act like a puppeteer to a vendor simply for sadistic sport – to see just how far it can make you jump or how loud it can make you bark.  The real market has no time for that.  The goofy market has plenty.

The goofy market has people, in very senior positions, whose entire role in life is to make you perform unnatural acts just to screw with you.  I swear it’s true.  In the same way psychotic experimentation has occurred throughout history, the modern manifestation have appeared as IT executives in some of these prestigious institutions.  And they don’t just abuse startups – they are horrific abusers of even mainstream vendors.  Power corrupts people.  Power and sociopathic tendencies are a brutal dynamic – so welcome to Big Bank IT.

The false market will wrap you up so tightly in designing a custom thing for its own use, that even if you are successful in taking its money (after two years of never ending abuse), the mass market will not value what you have done.  It will have either already solved the real problems it had by buying from someone else, or decided the problem wasn’t real enough to merit solving.

All your tales of how great it was that you sold $2,000,000 worth of your product to Goldman are as valuable as the reference you get – that’s it.  Even then, it’s fleeting value, as, like the mob, you owe them a favor.

Assuming you can get your VCs to take their heads out of their backsides for a few minutes, you will find that the only way to ever really be successful selling to corner case elephants is to violently limit the amount of investment you are willing to make.  If you truly have something they want and need – fantastic.  They can come to you.  If you are trying to force your way into their world because you were told A: their name is critical for your success or B: they have all the money, so if we can sell to Goldman, then Morgan will buy a billion from us, I can assure you that statistically, you are screwed.

Companies blow up after spending zillions of dollars and years because it takes that to get A DEAL in one of these goofy, pre-internet economy establishments.  They either bleed out or  end up with a product with a market of exactly one. You don’t have much leverage in either case.

Whether from an engineering, sales, or marketing perspective, you are always better off focusing on solving the most myopic problem with the most ubiquitous demand.  Solve the problem 80% of the world is willing to pay to solve, and you have a hyper-market opportunity – even if it’s an “easy” problem.  Solve a wicked hard problem that only a handful of elephants really care about and you will not succeed.

If you are lucky enough to have some magic elixir that Wall Street truly needs, good for you.  Then you can become Sybase, make a pile of money for a while, and then manage yourself to the grave.  Remember Stratus?  Tandem?  If you aren’t broad market, you aren’t going to live forever.  Oracle or Cisco sell tons to Wall  Street – but they aren’t developing their products for Wall Street.  Au contraire, they are so mainstream successful that Wall Street has to buy from them, lest it put itself into a support nightmare.

So the lesson today, kids, is while there is absolute appeal in the glamor and glory of the fantasy of hooking up with Giselle, you have much better odds of succeeding in your true quest if you set your sights on a more attainable target.  You might be a great looking guy, but you are going to be spending a lot of time on self “introspection” while the mainstream masses are frolicking all over the place.  Go forth and frolic.

Happy New Year!

Related posts:

1. Fail Factors – Why Startups Die: The Golden CEO
2. Fail Factors – Why Startups Die: Revenue versus Valuation
3. Fail Factors – Why Startups Die: The Money Is In The Problem, Not The Solution
4. Fail Factors – Why Startups Die: Launch Now!
5. Fail Factors – Why Startups Die: Running Backwards

Tags: Cisco, Goldman, Oracle, Wall Street