There is also a huge (multi-Billion dollar) "industry" for corporate level software that is under serviced in many areas (i.e. the software is churned out by large development houses and is below par).
Yet very few startups seem to target these areas.
We took a product into a badly serviced industry and were wildly profitable within about a year on minimal funding. I always worry that there is a growing amount of speculation on "great teams"/social media and less focus on creating useful stuff that companies/people want/need (and, damn, there is a lot of it).
My boss always moans when I talk to him about startups and VC's, he usually says "if you give me $100,000 and 6 months I could come out with at least 5 profitable pieces of software and sales to return your investment by the end of the next year".
"Yet very few startups seem to target these areas."
Perhaps you're seeing an artifact. Generally the startups you hear about on HN and elsewhere are trying to generate 'buzz' and 'raise awareness' to get to 'closing a funding round.'
As you yourself demonstrate when one starts a company to solve a problem for which there are already customers in pain (and thus willing to buy the product), they can generally, if they execute well, get started and get profitable early on and then grow organically by expanding out from their customer base to adjacent markets. All without any big funding round or 'buzz gathering.'
Solving known problems well, gets you a steady paycheck, its not 'sexy' and its not usually 'disruptive' and it is very very rarely even brought up in places like this.
Because the problems are known it also means are are usually several players trying to get to the same dollars and margins are limited right from the start as people compete to be the chosen solution out of a variety of solutions.
Disruptive changes on the other hand, take a market with a reasonable capital flow and shift it all to a single player. Depending on how long that shift lasts, the return on investment for that player is 10, 100, even 1000 times higher.
The other problem here is that if you are a VC fund you can't leave the money you've raised in T-bills forever, you really really do need to invest it. So there is pressure to put it out there and get it working for you, and if its been getting 2 - 3% in T-bills and your clients were expecting 20 - 30% then the longer its been sitting the bigger a pop you want to spend it on. A very strange but measurable forcing function.
Selling software to large corporations however requires significant support effort and bending over backwards to make the sale. I seem to recall an article about hunting elephant versus deer that covered the issues quite well.
Dealing with just the development side of it in my day job, no way does dealing with them on my own or in a small startup team appeal.
It depends which industry you pick - but often the problems are over-hyped. It's true; I had the same trepidation you talk about when first having to face doing sales... and at the start it can be a disaster ;) but you can soon pick up the tips & tricks needed to sell to corporates.
In fact; as hackers we are actually at an advantage selling to corporates, so long as you "get" the process, because they tend to be "attuned" to the sort of tactics employed by sales types. Often you can cut through that using feigned ignorance and a little simple social engineering :)
And at the end of the day... once you have a little traction hiring a dedicated sales guy is easy :) Many startups do exactly that when completing the first major round.
I may well be somewhat jaded because my job is coding for the financial side of things. When you're dealing with money and banks things... suck. A lot.
There's no real secret to any of it (that's the first pointer).
The few things that spring to mind:
Be polite but persistent
Procurement people at corporates are used to really pushy sales people; so if you barely make any effort you won't get through at all :)
Judge who you are talking too
Most people you talk to won't be able to give you a "yes", get past them as fast as you can (I usually just ask straight out to speak to their superior/boss etc.), they are there mostly as a filter. Also consider what sort of firm you're calling - in a 50+ person company it is likely to be a specific department who buy things (even if it is just an individual), below that the person probably has a different day-to-day job. I've had a lot of success, when talking to smaller firms, with the line "lets just drop all the corporate nonsense, we're both small firms and there is no need for me to make this the normal pain in the neck".
Forget all the marketing nonsense
You'll see a lot of "marketing best practices"; I mostly ignore them, they are designed for a company with a number of sales people to normalise the sales routines. You're hacking the sales routine, so take it naturally.
I particularly advise avoiding the template emails that you stick a name in front of... keep the templated stuff to short paragraphs in your emails & material you attach (i.e. PDF's) and try to write an honest "personal" note.
Honesty does get noticed BTW, it can set you apart from the usual inundation of marketing they get.
Be open to adaption, but have a firm limit
I once committed us to a normal sale but "with a few tweaks", it took me the best part of a month to get the tweaks in place. :) Accomodating companies requirements gets you a good name, but really consider if it is worthwhile, and be happy to say no.
Be prepared to walk away
You can't sell every time. And if you are desperate to sell then they can take advantage of it! Either by getting impractical modifications (see above point) or drumming down your price. Either that or they are just not interested, and you end up sounding desperate and silly.
Invest in CRM
Biggest piece of advice IMO; it is so so so so so easy to forget who you contacted & about what. It might take you weeks to find the right person to talk to at a firm, but in 6 months when you try to upsell them the new product you don't want to have to do all that work again :) Plus I had a silly incident a while back where I kept emailing the same introductory email to a poor CEO; I think he got it about 86 times before calling to ask me to stop :)
Call the CEO
Doesn't work all the time, but sometimes (particularly in smaller firms) you can get things moving (and seal a sale) by calling the CEO. It takes a bit of balls and a fast pitch (or social engineering) to stop them hanging up :)
My favourite line was "X suggested I call you about this product, Y, we're selling you so you can have an idea of how it will improve your business"
Where X is someone in the middle of the food chain who has, at some point, said "you need to talk to my boss". :)
Yet very few startups seem to target these areas.
We took a product into a badly serviced industry and were wildly profitable within about a year on minimal funding. I always worry that there is a growing amount of speculation on "great teams"/social media and less focus on creating useful stuff that companies/people want/need (and, damn, there is a lot of it).
My boss always moans when I talk to him about startups and VC's, he usually says "if you give me $100,000 and 6 months I could come out with at least 5 profitable pieces of software and sales to return your investment by the end of the next year".