The Most Disastrous Sales Cycle in the World

The Rise of Mission-Driven Startups in Disaster Response

Frequently, startups emphasize a mission-focused approach, but the sincerity of these claims can be questionable when the primary objective appears to be financial optimization. However, a fresh wave of startups is emerging, tackling significant global issues with the same dedication, operational efficiency, and technical expertise typically reserved for profit-driven ventures – endeavors that have the potential to save countless lives.

A Focus on Climate Tech and Disaster Response

Climate tech, as a whole, has greatly benefited from this shift in focus. Within this sector, a specific niche is gaining prominence: disaster response. While software services for this area have existed for some time, a new generation of entrepreneurs is now addressing the challenges with renewed determination and energy.

The disaster response sector is currently experiencing rapid growth, often described as a “hockey stick” trajectory. The year 2020 presented unprecedented challenges, extending far beyond the COVID-19 pandemic. It also witnessed a record number of hurricanes, devastating wildfires in the western United States, and numerous severe storms globally.

The Convergence of Factors Increasing Disaster Risk

A combination of factors – including climate change, increasing urbanization, population growth, and inadequate response strategies – has created some of the most perilous conditions in human history.

To understand the future of the disaster response market, extensive research was conducted. Over the past few weeks, interviews were held with over 30 founders of startups, investors, government representatives, and utility executives to gain insights into this evolving landscape.

This analysis will be presented in a four-part series exploring the future of technology in disaster response, published over the coming weekend and next week. The series will cover the sales process within this market, the increasing availability of data for disaster response, the challenges faced by utilities and telecommunications companies in maintaining internet access, and how communities are redefining disaster management.

The Challenge of Market Entry

Before delving into the technological advancements in disaster response and resilience, a fundamental question must be addressed: Will solutions be adopted if they are developed? The consistent response from founders, investors, and government procurement officials was a clear “No.”

The emergency management sales cycle presents significant hurdles, repeatedly described as potentially the most difficult sales challenge a company can encounter. This perspective may seem surprising given the market’s substantial size, with aggregated procurement budgets reaching tens of billions of dollars across local, state, federal, and international governments.

Overcoming Obstacles and Finding Opportunities

Despite these challenges, successful sales are achievable, and a new cohort of startups is breaking down barriers to entry. The strategies these companies are employing to overcome obstacles and achieve market penetration will be examined.

We will analyze the sales and product strategies that startups are increasingly utilizing to achieve success in this complex market.

Navigating the Complexities of Government Sales: A Focus on Emergency Management

It’s widely acknowledged that securing sales within the government sector presents significant hurdles. Founders of govtech startups consistently encounter protracted sales cycles, intricate procurement procedures, demanding verification and security protocols, and a general lack of urgency among contracting officers, creating a challenging environment for revenue generation. Recognizing these difficulties, many government entities have initiated programs specifically designed to facilitate the onboarding of startups, acknowledging the obstacles faced by innovative companies attempting to navigate their systems.

Unique Challenges in Emergency Management Sales

Sales within the emergency management field mirror the difficulties experienced by other govtech startups, but are compounded by an additional set of complexities that transform an already demanding sales process into a particularly arduous undertaking.

The Impact of Seasonality and Funding Cycles

A primary challenge lies in the pronounced seasonality inherent in emergency management sales. Agencies dealing with seasonal disasters – such as hurricanes, wildfires, and winter storms – typically operate in cycles of response and planning. Following a period of active disaster response, they transition into an assessment phase, evaluating performance, identifying necessary adjustments, and considering potential tool enhancements for the subsequent season.

For example, companies like Cornea and Perimeter, specializing in wildfire response, emphasize the importance of aligning product development and sales strategies with fire seasons. Bailey Farren, CEO of Perimeter, explained that their technology underwent beta testing over two fire seasons to ensure it effectively addressed the core challenges. They even adjusted their beta testing focus during the 2019 California Kincaid fire.

Parallels to Edtech Sales

This cyclical nature draws a comparison to the edtech sector, where technology purchases in schools are often synchronized with the academic calendar. Missing the critical window – typically June through August in the U.S. – can delay a startup’s opportunity for classroom adoption by an entire year.

However, disaster response sales are becoming increasingly difficult. Climate change is intensifying the frequency, severity, and impact of disasters, leading to agencies operating in a near-constant state of emergency response, leaving limited time for proactive solution evaluation and procurement.

Unpredictability and Budgetary Constraints

Furthermore, unlike the predictable academic calendar, disaster occurrences are becoming less predictable. Historically concentrated within specific periods, events like floods and wildfires now pose a threat throughout the year. This unpredictability impacts procurement processes, which can be initiated and halted abruptly based on immediate mission requirements.

Seasonality extends beyond the sales cycle to encompass agency budgets. While disasters capture public and political attention, funding often arrives in waves, unlike the consistent funding seen in other government tech areas.

A senior federal emergency management official, speaking anonymously, highlighted the limited consistent budgets and rapid spending capabilities during periods without active disasters. Agencies often rely on supplementary funding authorized by Congress or state legislatures, requiring them to have technological roadmaps ready for immediate implementation when funds become available.

The Influence of External Events and Emerging Technologies

Amir Elichai, CEO of Carbyne, a cloud-native platform for 911 call handling, noted that the COVID-19 pandemic triggered a surge in attention and funding for emergency response capabilities. This event served as a stark reminder of existing preparedness gaps.

The Promise of NG911

Consequently, next-generation 911 services (NG911) are poised for significant investment. President Biden’s infrastructure bill proposes $15 billion for upgrading 911 capabilities nationwide – funding sought for nearly a decade. A similar $12 billion bill failed to pass the Senate last year after gaining approval in the House.

The Painkiller vs. Vitamin Dilemma

In sales, the distinction between providing essential “painkillers” and beneficial “vitamins” is crucial. One might assume that disaster response agencies seeking system upgrades would prioritize immediate solutions to critical needs.

However, the reality is often different. A govtech venture capitalist, requesting anonymity, explained the reluctance to portray a world perceived as “scary and dangerous.” The focus shifts towards emphasizing “safety” rather than “danger,” as safety represents a more consistent and pervasive need than sporadic emergency response.

Prioritization Challenges and Evolving Requirements

When funding is approved, agencies face the challenge of prioritizing needs. Josh Mendelsohn, managing partner at Hangar, emphasized the difficulty in narrowing the focus, determining which problems are most deserving of attention. These priorities can shift rapidly as mission requirements evolve.

Building Trust and Addressing Reliability Concerns

Even with aligned priorities and available funding, a significant obstacle remains: establishing trust with government agencies.

Reliability is paramount in emergency response. Frontline responders often rely on traditional methods like paper and pens due to their unwavering dependability, unlike potentially unreliable technology. The “move fast and break things” ethos of Silicon Valley is fundamentally incompatible with this market’s demands.

A Complex Landscape

Seasonality, fluctuating funding, limited attention, procurement complexities, and stringent reliability requirements collectively make emergency management sales exceptionally challenging. This doesn’t account for typical govtech hurdles like integrating with legacy systems, the fragmentation of emergency response agencies, and a general resistance to change within many organizations. As one industry professional noted, some government employees anticipate retirement before needing to address these technological challenges.

Navigating the Challenges of Sales Cycles in the Public Sector

Despite the notoriously difficult sales cycles within the public safety sector, venture capital investment continues to flow into companies addressing this market. Recent examples include RapidSOS securing $85 million and Carbyne raising $25 million, alongside numerous early-stage startups receiving seed funding.

A consensus among industry experts highlights the necessity for founders and investors to abandon conventional private-sector sales strategies and adopt a fundamentally different approach tailored specifically to public agencies. This requires the development of novel strategies and tactics to achieve revenue generation.

The Importance of Deep Customer Understanding

A crucial initial step involves prioritizing comprehensive understanding of the field before even establishing a company. Disaster response differs significantly from typical professional environments.

The inherent chaos, dynamic conditions, and collaborative nature of multidisciplinary, cross-agency teams demand a unique perspective. Empathy is paramount; responders may rely on potentially life-saving devices that could fail, and 911 operators may witness critical events unfold in real-time.

This underscores the importance of thorough customer discovery and development. While similar to enterprise sales, success in the public sector demands greater patience. Achieving market fit can take considerably longer – potentially two to three years compared to six months in the enterprise world.

Michael Martin of RapidSOS emphasizes, “There is no shortcut to doing customer discovery work in public service.” He points to a disconnect between the “arrogance of the Silicon Valley tech community” and the realities of public safety, a gap that must be bridged for startups to succeed.

Defining Entry Points and Minimizing Disruption

Founders must address fundamental questions during the discovery phase. Mendelsohn of Hangar asks, “Ultimately, what are your entry points?”

Identifying solutions that require minimal behavioral changes while delivering immediate impact is key. Cornea, for example, had to undergo a rigorous customer discovery process to determine the most effective approach.

This dedication to understanding customer needs is highly valued by agencies. A federal emergency management official noted, “everyone has a solution, but no one asked me about my problem.” Aligning the product with the unique demands of the market is essential.

Overcoming Procurement Hurdles

Even with a superior product, navigating the procurement process presents significant challenges. Strategies for addressing this vary widely.

RapidSOS opted to offer its services free of charge to government agencies. Martin explains, “In three years, we went from no agencies using our stuff to all agencies using our stuff, and that was based on not making it a procurement problem.” Their business model relies on paid integrations from corporate partners seeking to enhance 911 center safety.

MD Ally employs a similar strategy, securing a $3.5 million seed check by integrating telehealth referral services into 911 dispatch systems. CEO Shanel Fields focused on generating revenue from the physician and mental health provider side, bypassing government procurement.

Leveraging Partnerships and Building Trust

Beyond offering services for free, establishing partnerships with established and trusted brands can provide credibility. Stirton of Responder Corp notes that capital alone isn’t sufficient for success in this space.

Building private-sector partnerships allows startups to offer a joint solution, leveraging the reputations of companies like Amazon Web Services and Verizon to overcome procurement obstacles. Carbyne’s Elichai highlights the value of integration partners, particularly in the fragmented U.S. market, to avoid direct sales to thousands of agencies.

Partnerships can also address the issue of localism, where agencies favor vendors within their geographic area. A local presence, combined with a national footprint, can be a compelling advantage.

Furthermore, recruiting experienced, retired government executives can lend credibility and leverage existing networks. Trust and collaboration are vital within emergency management, and a positive recommendation from a trusted colleague can significantly influence a sales conversation.

Expanding into the Private Sector

Increasingly, private sector companies face similar challenges in protecting their operations and responding to disasters. Many organizations have distributed workforces, field teams, and physical assets requiring protection.

Startups can potentially bootstrap in the private sector while simultaneously cultivating relationships within the public sector. This dual approach offers a viable path to market.

The Potential for Impact and Profitability

The effort required to penetrate these agencies can yield substantial rewards. Significant funding flows through these organizations, and agencies recognize the need for improved technology.

Tom Harbour of Cornea, formerly national director of fire management at the U.S. Forest Service, notes, “These are billions of dollars we spend … and we know we can be more efficient.” While government procurement isn’t always straightforward, founders willing to persevere can create impactful, profitable, and mission-driven companies.