Just Because You Know a Few Allocators, It Doesn’t Mean You Can Sell to Them
Selling is something we do for our clients — not to our clients.
- Zig Ziglar
The Long-Term Investors (also known as allocators) constitute an elusive and potentially large market opportunity (i.e., think every Family Office, Endowment, Foundation, Pension, and Sovereign Wealth Fund -in all 30k+ entities controlling over 70 Trillion of assets, as proposed by some) for all technology firms.
The Investec landscape (a subset of FinTech) is littered by firms of all sizes and maturities, from startups to public firms, to formerly public (and now PE-owned); From a two-man shop (w 4 developers in Estonia) to those with hundreds of local employees. All but few are considered wide successes, many chugging along in fits and starts (and pivoting), many more struggling.
In observing several dozen of these companies, and having had dialogues with over 200 LTI each year, I have noticed how these firms have been approaching this market with a disadvantage: they often have produced technology that is misdirected, misrepresented, or mispriced. It is unclear who has been skilled and who has been lucky.
What are some of the common mistakes these firms make? Here are my observations.
First Common Mistake: Underestimating “Trust”
This is the most fundamental of concepts when attempting to sell solutions to the LTI. Trust Marketing can only be achieved if your purpose is clear, the usefulness of your product is demonstrated, your intentions are transparent, and your history is consistent. Remember, LTI have been perceived as a golden goose by all providers and have matured in their dealings with the vendors significantly. Nowadays, they know what they don’t know. They will sniff out the issues and weaknesses of a product while putting you through their due diligence process. Establishing trust is an exercise that takes a long time, and can be lost very quickly. In one case CalPERS team would not meet me with me for over 2 years after I held a meeting with a colleague that they later described as a “snake-oil salesman.” Most vendors, especially the startups, believe that LTI are…