7 Failure Modes of Enterprise Tech Sales

Why companies won't buy your product, even if it's good

After speaking to many founders, I realized many have misconceptions about how enterprise sales works, especially when selling to the really large (Fortune 2000) enterprises.


In fact, I have found most sales motions fail for reasons not related to your product, features, sales package, pricing, etc, but for seemingly random externalities that seem baffling at first.

I myself shared some of these misconceptions, so I wanted to share my learnings after partaking in almost a thousand sales meetings and strategy sessions at AWS (follow me on Twitter for more enterprise GTM & AI content).

In this post, I will:

• describe some of these non-obvious failure modes for enterprise sales

• some ideas for avoiding some of these traps

Failure Mode #1: Out of sync with planning cycles

First, your sales motion may fail because you simply pitched them at the wrong time of the year. What do I mean by that?

Most large enterprises operate in yearly planning cycles (which they iterate using quarterly business reviews), where they set a bunch of priorities and deliverables for the next 1-4 quarters. These planning activities take 2-4 weeks of meetings, over which the company’s senior leaders will come up with some heuristics for what and what not prioritize, etc.

So if you are approaching these companies after they have already created their annual plan, then two things could happen:

• your product is too disruptive or unrelated to the plan, which causes cognitive dissonance among the company’s leaders, which is a headwind, or

• your product fits well within the context of the company’s strategic plan, which serves as a tailwind for your sales motion

For example, say the company you are selling to has already decided to self-host their databases, and you are selling them a managed vector database.

• Since vector database is not something they are familiar with, they will spend at least a few months internally debating whether vector databases should or shouldn’t be an exception, etc. These types of delays are extremely wasteful from the startup’s perspective.

On the flip side, if your product is completely non-competitive to the company and can be easily ripped out (and even better, free), then enterprises may adopt it on their own. Case in point - Langchain - which seems to be adopted by many Fortune 500 enterprises already, and evangelized by Azure, GCP, AWS, etc.

Failure Mode #2: Lack of senior level sponsorship

Simply put, don’t waste too much time selling to non-decision makers at companies.

When you are selling to enterprise, you are selling to some part of the org chart. Thus, it’s important that you are selling to the leader of that org, or ideally at least VP-level, to ensure that company buys your product.


Even if you are AWS, GCP, or Azure, I have seen many account managers and solutions architects make the dumb, rookie mistake of spending months trying to convince some Senior Manager or Director about a product, only to get shot down by the VP.


Being “led-on” by a non decision maker is probably the most insidious and harmful time waster, because:

• Talking to a senior manager or director makes you feel like you are making progress in sales, but you really aren’t, in some ways.

• Directors of engineering often don’t call the shots in terms of vendor selection or purchasing 3rd party solutions, and there’s often an entirely separate set of hoops for them to overcome to champion your product.

Failure Mode #3: Internal compliance reasons

Even if you are speaking to the right leaders within your customer, your sales efforts may fall apart due to some quirks in internal compliance.


For example, say you are selling some analytics product to a hospital, and they have some internal policy on maintaining multi-region, active-active setups for their telemedicine setup.


Unfortunately, your product can only run within a single region (for some reason) and your database layer does not easily support cross region disaster recovery.


In this case, your customer may love your product but still can’t buy it, because of some internal rule, which is a major pain the neck to change.


And often, what’s maddening is that you can’t find out about all these random internal policies upfront in your discovery calls. That’s because the people you are talking to often don’t know their own policies until you try doing a proof of concept!


Over time, after you speak to maybe 20-30 customers in the space, you will see a “super-set” of compliance requirements in that specific industry, and try to productize some of these idiosyncrasies. But again, this is yet another hurdle to enterprise sales.

In that regard, working on LLM space for enterprise is a good idea in that the management is generally looking to do something with an aggressive timeline, but there will still be some hurdles due to compliance being sorted out to move beyond POC phase.

Failure Mode #4: Existing licenses

Existing licenses can be a hidden adoption blocker, especially if you are selling a product into an existing or competitive category.

For example, say you invented the best in class graph database, and tried selling it to a company that already has a small Neo4J deployment. Most enterprise contracts have some incentives for volume-based discounts, so the customer is incentivized to stick with existing technology - especially if they already paid for it and have sunk costs.


Of course, it sounds like a no-brainer to avoid selling to shops that already have a competing deployment, but it’s not always that obvious, because….. large enterprises with fragmented engineering leadership often tolerate multiple vendors for a single category (and let individual teams choose their own tech stack).


Thus, it’s important to find this out as early as possible in the sales cycle:

• Figure out whether there’s room for multiple vendors in the same category

• Whether the company is locked into some hostile multi-year license that they can’t get rid of

Of course, for some product categories such as data catalogs, it makes no sense for a customer to buy from multiple vendors, because the whole purpose of data catalog is to serve as a one-stop-shop for your company data.

Failure Mode #5: Needing to “check” other vendors (e.g. Azure, AWS)

I have waited till #5 to mention competition from the big cloud vendors, and for a reason: they aren’t always the main reason why startups fail to sell to the enterprise.



I have found large enterprises to be more than willing to give new technology a shot, especially if it 1) does something that cloud vendors haven’t copied yet (or can’t copy), or 2) if it’s 5x+ cheaper than existing solution (which is not that hard for a startup to deliver)

That being said, customers do often “check” their existing Azure, AWS, GCP rep to see if they are willing to counter with some discount, custom solution, and other benefits, basically to get a better deal for themselves (which is understandable).

That said, this is pretty random and infuriating from the startup’s perspective, because this just adds to the delay and sales cycle.

Failure Mode #6: Paradigm shifts

Sometimes, technology paradigm just shifts overnight (like with generative AI in 2023), and your product suddenly has a messaging and value prop problem - and basically derail your sales cycle.


Don’t worry - this happens to the big cloud companies, too. AWS and GCP had to re-write their annual plans after OpenAI dropped ChatGPT.


Paradigm shifts don’t happen too often, and is just the cost of doing business in tech, but worth mentioning.

Failure Mode #7: They just don’t like your vibe, or don’t care

Lastly, enterprise sales can be derailed if your point of contact just doesn’t like you, or just don’t care to champion your product.

• Your initial champion liked you enough to grant you a meeting, but that doesn’t mean they care enough to hand-hold you to signing that fat contract.

• Founders tend to over-estimate how much the average tech leader at large enterprises “care”. Spoiler alert: they don’t in many cases.

• It’s actually the rare that the person cares enough to help you all the way, even if your products great.

• Non-committal and lackadaisical attitude is not a reflection of your product, nor your pitch - so don’t take it personally. Their minds are probably somewhere else during your sales pitch.

From your startup’s perspective, you need to have a pulse on these “soft metrics” and immediately pivot to acquiring a different point of contact within the customer, or move on.