I was chatting with one of my favourite new start-ups the other day in the common area at TheCodeFactory and the topic of selling on the Internet came up. They explained that they were consulting with a local Entrepreneur in Residence and the first question asked by the EIR was “Who is your first customer?” I am reasonably certain that the expected response was something like Big Red (fictional service provider), Big Blue (another fictional service provider) or Dancing Goats (yet another fictional service provider). However, that was not the response that they received.

The answer “if you give me $2.99 you will be my first customer.”

Fortune magazine annually produces a list of the top 500 companies in North America. This is known as the Fortune 500. These are large companies with likely thousands of employees and multiple locations.

The Fortune 5,000,000 is a term coined by David Heinemeier Hanson of 37Signals used to describe selling to small businesses online. The Fortune 5,000,000 is arguably that mythical Holy Grail we often hear referred to as SME’s (Small and Medium Enterprise). Selling online has opened an incredibly efficient channel for tapping into this vast market.

From a local perspective, as I see it, the challenge in Ottawa is that there is a significant paradigm shift from selling to the Fortune 500 (traditional telecom sale) compared to selling to the Fortune 5,000,000. If you are selling BIG ticket items to Big Red or Big Blue in a pre-millennium mindset it is quite a leap to selling web aps. The difference between channels, value chains, direct sales and other traditional sales is light years away from the virtual distribution and selling online.

If your first question to a start-up selling web aps is “who is your first customer?” You are likely coming from that Fortune 500 paradigm and don’t get it.

Next post will delve a bit into what are some considerations for selling online.

Cheers,

Ian Graham