When Enterprise Software Sales Becomes Corporate Espionage

After working an enterprise account for over two years, we had finally garnered the attention from one of the largest potential buyers in our space. They invited us to corporate headquarters to present our software solution to their team with "all the right folks in the room".

We prepped like mad, for weeks. Mock presentations, my very own demo environment configured just for them--you know, the works. We poured our heart and soul into this because it felt like that moment we were all waiting for and we committed ourselves to being fully prepared, flawless.

Their team was comprised of roughly a dozen people, a mix between development, technology, business unit leaders and more. Their goal was to see how our technology might fit into their stack, and boy was it a complicated legacy tech stack.

We had just won a major deal with a manufacturer as the backbone to their new manufacturer-owned showrooms. Excitement was high since this would be the second major win which would solidify us as the market leader.

Things were a little different for complicated ERP software like ours back then: implementations were still a mix of on-premise servers, custom configuration, Citrix for remote administration and a ton of onsite training.

But this deal: my goodness. It was a lot bigger. Although concerned about our ability to deploy at that scale, visions of leapfrogging our way through sugarplum-enterprise accounts danced in my head.

Some Quick Context

If you're remodeling your kitchen: before you start the design effort with an expert, you'll be guided into a brand you know little to nothing about so a kitchen designer can bring your kitchen to life.

Each manufacturer has their own catalogs, own product codes, own custom rules and more.

Once the designer starts designing your new kitchen, cabinet manufacturers are hoping for that famous concept of "lock-in". It's going to be very painful to switch brands later because the design choices made in one brand don't translate exactly to another brand, resulting in hours of lost design time and a ton of frustration for the consumer.

Our ERP software solved this with a technology we called brand mapping. It created a level playing field where you could design your new kitchen generically, then "map" into any specific brand later. The technology hot-swapped similar SKUs that didn't match when switching from one catalog to the other: lazy susan not offered in that brand? No problem, here's a 3-piece combo from the alternative brand that works just fine as a substitute.

Don't ask me for another example, it will make your head hurt when you factor in cabinet colors, modifications and all sorts of other customizations to both the carcass (body) and door of the cabinet. I still have nightmares about it. It's a big behemoth of a configuration challenge and each year, as consumers demand more choices in their kitchen, the challenge grows exponentially.

For example, if you were Oracle trying to load all the product codes of possible configurations into the software for just one cabinet manufacturer (real story), in 2007 you would have needed 18.5 quintillion master records. That's slightly "less than" the number of grains of sand on Earth.

Our configuration engine solved this problem by "configuring" the combination of things that come together for your order then it would price and cost that configuration on the fly. Instead of quintillions of master records, we developed a business rules engine that could perform at scale. Our software also offered all the functions an operation would need: CRM, sales, purchasing, scheduling, shipping, receiving, and more.

Customers still run the software today with CLTV's approaching two decades. Once it went in, it basically never came out.

The Meeting

I developed a wonderful relationship with a key player on the prospect's team. We really bonded, the way you do when you both know you have a good human on the other side of the table.

That's why I was surprised when she leaned over before we went through security and whispered in my ear, "Be careful, they are going to try to copy your software. Make sure to take everything with you when you leave."

I stopped, tilted my head sideways and tried to come to grips with what I just heard. I was confused and still trying to register it when my cofounder, all grins, stepped through security to meet me.

"What's wrong?" he asked as I slowly walked down the hallway.

"They're going to try to copy our software," I said, dumbfounded.

"Haha, let them try," he said. He really thought it was funny.

I didn't.

In sales, when a customer thinks they can recreate what you did, you learn quickly that they always estimate the effort low. Worse yet, once they start, they rarely toss in the towel years later.

I knew we were dead in the water, we were about to be locked out of this account for years. I wanted to leave, every part of me was screaming to turn around and tell this company to go pound sand.

But then the part of me that overrules emotion with logic took hold, it sort of combined itself with my optimistic views at the time and I was able to get myself in to a position where I was at least partially convinced we could still win them over.

We didn't.

"We did it at Hooli all the time. You schedule meetings with companies so they would explain their technology and we’d use their ideas in our products…It’s like when somebody says they want to go birding with you but really they just want to get you alone in the woods so they can take your binoculars." -Jared, Silicon Valley TV Show

During the meeting I watched them take notes. I looked to our internal confidant who would nod her head now and then to move on past screenshots of our software. Then I saw one older individual in product management literally draw an outline of our screen, where buttons were and the presentation of the information we had spent the last year perfecting with customers, product and engineering.

I was so idealistic, so stunned, all I could do was watch as the events unfolded in the conference room that day. I didn't have time to feel the disgust of that moment because my world view was so rocked.

How could anyone rationalize being okay with stealing like this?

Companies like these emerge after years of regressive behaviors that go unaddressed. And while this is always disappointing to witness, it's actually good news because the signs are easier to spot than you might think because they've been so normalized--nobody tries to hide them because they don't see anything wrong with it.

Over the years of watching our ethical competitive intelligence function operate, here are some counter-intelligence techniques to consider in the hopes that your team will avoid a similar fate than what I experienced.

• Clearly mark private information. Don't forget to make sure your agreements cover oral information you share during more detailed presentations--you can also address this verbally.
• Copyright your product and sales documents, even if they are publicly facing.
• Don't be afraid to use mutual NDA's in your sales process. It's an extra step, yes, but it's more common now, especially for enterprise software where you'll likely need additional information for a proposal anyhow.
• Train your sales force first on counter-intelligence techniques. New salespeople are typically the first to be targeted by unscrupulous firms deploying mystery shopping techniques against you (note that mystery shopping a competitor, where someone misrepresents themselves as a buyer to obtain information, is a violation of the US Espionage Act and Trade Secret Act and falls under unfair and deceptive trade practices which can triple damages and include awards that return legal fees).
• Pay attention to leads that emerge in unusual ways or buyers whose story lacks important details or lacks specificity. These are signs the story could be fabricated. Be careful when buyers have a wide range of broad, searching questions well beyond their use case, especially those requesting multiple price points.

For more general behavior on the sales lines:

• Pay attention to disconnects over multiple calls. For example, if a buyer mentions there are three competitors you are up against but then in a subsequent call mentions there are only two, pay attention. While this isn't espionage, it is a sign of a fabricated story--one that may signal that you aren't the favorite or, worse yet, that you're being used to supply a price point.
• When you approach is part of your solution you are proposing, pay attention if later the competition suddenly changes their bid to match your approach. If that happens, the prospect is likely sharing details of your proposal with the competition to give them the inside track with decision makers.
• If you use an online proposal system, check IP addresses of those viewing the proposal to see if they match with competitor domains if you are suspicious.

And always keep your legal team updated on anything suspicious.

For even more ideas, check out this great eBook: https://softwarepricing.com/lp-ethical-competitive-intelligence-in-software/