Startups Selling to Other Startups

As much as we like to think that we’re bringing our new product to the old-guard businesses, the reality is that a number of startups sell their product to other startups. At Pardot, most of our early customers were other tech companies (more progressive and tech savvy) and many of them were startups. Over time, the market expanded and more non-tech companies became Pardot customers. Many startups start this way.

With so many startups selling to other startups, there are a few things to keep in mind:

• If we have another Great Recession, startups are more likely to be less stable customers
• When bartering one product for another (this happens often), sell the product to each other and pay full price in lieu of just swapping apps (this is important in the event one side isn’t living up to expectations but be careful as this is one of the reasons the Dot Com implosion happened so fast when the house of cards crumbled)
• Be upfront with investors the percentage of sales that comes from selling to other startups as well as the percentage from bartering deals
• When startups are a good type of customer, use a data source like MatterMark to target startups that are similar to existing customers

Startups selling to other startups is commonplace but still needs to be better understood. Not all customers are created equal and it’s important to be intentional.

What else? What are some other thoughts on startups selling to other startups?