Lean B2B: Build Products Businesses Want
In the last 10 years, there have been 56 IPOs in the enterprise space that have gotten north of a billion [dollars in market capitalization] and just 23 in consumer.2 – Jim Goetz, Sequoia Capital Venture Partner (View Highlight)
I’m a fan of B2B startups because the paths through success are clearer. They’re not easier, but they’re clearer: solve a very painful problem and charge people money to do so. In B2B, if you’re not solving a significant problem, you tend to know pretty quickly. – Ben Yoskovitz (View Highlight)
Unless these founders come from the enterprise, starting up will force them to get out of their comfort zone to complete the tasks required of them:
Problems worth solving are typically invisible from the outside. Your task will be to get inside the enterprise, understand how the company thinks and find the real problems. (View Highlight)
B2C consumers are accustomed to ‘what you see is what you get.’ They can choose to use it or not. Businesses have higher expectations (customization, integration, security, etc.). Startups need to entirely focus on what the business wants. – Richard Aberman, WePay Co-Founder (View Highlight)
There’s no luxury in B2B; there’s only profitability. It’s essential to know your ROI. Cost justification is a critical part of selling in B2B. – Martin Huard, Admetric Co-Founder and CEO (View Highlight)
Large companies are very risk-averse. The reason why sales cycles in B2B are often really long is because a lot of stakeholders need to get involved to assess the risks of the new technology.
In their minds, they were already interacting with customers, but with long 12-hour days of coding, Michael was hardly getting out of his building.
1.A. Building relationships with hundreds of users.
The key to succeeding in B2B is to learn to think like your customers; to think like an insider. It’s only by looking at the problems through the eyes of your prospects that the bottlenecks in their business become painfully obvious.
You’ll succeed if you’re able to understand the true motivations of the people that have influence over the purchase of your technology. You need to understand their objectives and what matters to them.
Along the way, you’ll need to watch out for these deadly B2B sins:
The only things that matter early on are P-M fit and not running out of money. – Fred Lalonde, Hopper Co-Founder and CEO (View Highlight)
The only thing that matters in the first 12-18 months of a company is figuring out how to get your product in the hands of the right people. A lot of people can build a product, but really figuring out what your market is and how to reach them is the biggest obstacle to getting a business off the ground.16 – Ranjith Kumaran (View Highlight)
In fact, a 2000 study by university professor and author Amar Bhidé reveals that more than 50% of the Inc. 500 got the idea for their company while working on a project at their previous employer18. (View Highlight)
Since the market is global, competitors are quick to copy features, ideas and products. Jason Cohen writes that the only real competitive advantage is that which cannot be copied and cannot be bought21.
Your vision should rarely change. Your strategy should occasionally change. Your tactics should regularly change.25 – Aaron Levie, Box Co-Founder and CEO (View Highlight)
Start a business where you can get access to customers easily. (View Highlight)
If we break that down, a market is made up of:
Entrepreneurs often underestimate the value and knowledge of the people that are successfully selling in an industry. There’s a lot of information that can be gathered just by speaking to salespeople and businesses already selling in a space. (View Highlight)
Visit VCs for fun, to find the influencers. These guys always know guys who compete in that space. VCs love giving their opinions. (View Highlight)
Entrepreneurs can talk to hundreds of people and learn everything about a market, but without driving assumptions, they’ll never get out of analysis paralysis. You must draw lines in the sand and make decisions. It’s common for entrepreneurs to start writing a business plan at this stage, but please don’t. As Steve Blank frequently says, no business plan survives the first customer contact. (View Highlight)
Soft benefits can’t be quantified. They’re harder to sell because customers must have experienced the pain before to realize how important it really is. Examples of soft benefits are ‘increasing employee happiness,’ ‘improving the user experience’ or ‘providing better service.’ If an entrepreneur can quantify a soft benefit, it can be turned into a hard benefit. (View Highlight)
Hard benefits can be quantified and lead to a clear ROI. They are the easiest to sell because there’s a built-in way to calculate the value (it’s predictable). Examples of hard benefits are ‘increased conversion,’ ‘increased sales’ and ‘cost reduction.’ Hard benefits are the most attractive to B2B buyers and thus are the focus of this book. (View Highlight)
Identify three to five markets to explore.