B2B is unsexy, and I know it

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When I tell people I do B2B software I get some very interesting reactions.

“Why do B2B? It’s so unsexy.”

And that’s true. B2B is unsexy in that I don’t build things that my college friends want to use. But that doesn’t mean it’s unsatisfying, or somehow inherently less valuable than a social/consumer product. In fact, I’d argue that the opposite is true. Spending every day making someone’s life easier is awesome. Especially when that someone actually wants to pay you for it. 

So here are a few reasons why I do B2B:

Nobody ever went out of business making a profit

If you truly solve a business’s problems they’ll want to pay you for it. If you solve a consumer’s problems, in many cases, they need to be dragged kicking and screaming to open their wallets. Writing B2B software makes it easier to make money from day one. That means that it’s much more likely to generate a sustainable revenue stream than a social product which requires massive scale.

You don’t need to win the lottery to succeed

The kind of scale required to generate a real return from a social product is pretty staggering. And certainly skill, experience and an understanding of social dynamics plays a large part in a company’s ability to reach scale with a social product. But as far as I can tell, luck also plays a large part in creating something viral and sticky enough to succeed.

When we built WhereMyFriends.Be we had some idea that it would be a cool product. But the real reason it blew up probably had little to do with our incredible entrepreneurial foresight. We got lucky enough to hit on a small product that resonated with people, and a Mashable writer happened to like the sound of it.

We’ve had about 50,000 signups so far, but other than that very little to show for it except a sizeable hosting bill.

B2B requires no voodoo or midnight incantations

Chris Dixon and others have commented that B2B entrepreneurs seem to be much more likely to string together successful companies than other types of founders. I think that’s because there’s a lot less voodoo involved in creating a successful B2B software business than a social one.

Like everything else, it’s hard as hell. But it’s a problem that you can get your arms around and pin down. If you only need 10, 100 or 1000 customers to generate a small profit, it makes things a lot easier than needing 1 million.

“Are you making something that solves a problem for a business?”

“How do you sell it to them in a scalable way?”

“Who’s making the buying decision on this problem within the organizations we’re trying to target? Is it the same person who’s experiencing pain?”

“How long does the sales process take?”

Those are some questions you get to ask yourself when you’re building software for businesses. When you’re building a social product it’s a little less clear how to proceed. Most people I know end up building their product and hoping to get covered in Techcrunch or Mashable so they can go viral.

As my dad would say: hope is not a plan.

The biggest opportunities probably aren’t in social anymore

There are only so many different types of location-based, photo-sharing apps that can be built. Certainly, the unprecedented amount of data being generated by social products brings with it huge opportunities for future businesses, but the vanilla “share more easily with your friends” social model seems to be rather played out.

None of this is to say that building social products is inherently a bad idea, or that social products aren’t valuable. It’s just a small explanation for why, as a college-age entrepreneur, I’ve chosen to go down a different route.

My name is Dan Shipper, I’m a junior at UPenn, and this is my blog. Follow me on Twitter at @danshipper. Or check out my (B2B) startup Firefly.

3 Aug 2012, 7:57pm | 16 comments

  • Ben Werdmuller

    Entrepreneurs who care about building something sexy over building something viable aren’t really entrepreneurs. It’s a symptom of this startups-as-the-new-rock-and-roll culture, and if you can make a better, more sustainable business using a b2b model, then more power to you.And you’re absolutely right. Hope is not a plan. Don’t play the lottery; build an engine.

  • fourmojo

    Well said Dan,B2B is sexy, don’t let anyone tell you otherwise. Sure, enterprise sucks, but that’s why the opportunity exists, and you’re absolutely bang on with regards to the user count translating into a workable profit.The fact that it’s hard is what makes it sexy. (pun intended?)

  • JasonWesbecher

    Dan – good post. There is a TON more glass to be broken in B2B in the next 5 years than there will be in B2C. Breaking glass = FUN. (BTW, I am a WUG’97 – let me know if you need any help).

  • Michael

    Great post Dan.In addition to your arguments, my opinion is that B2B is more profitable in the long term since the relationships with customers and channel that you build tend to help you start your next business. In B2C, you rarely have close relationships with customers that you can leverage in 5-10 years.

  • TiagoTAlbuquerq

    Two years ago, We decided to start up a b2c business, a task manager for small law offices. We are always thinking about make people’s life easier but after turn the focus to the b2b side and reaching the first big customers we discovered the higher grounds!It’s the place where we can invest on the features’ ROI with more freedom and thinking less how to create something amazing using the less resources possible to avoid make your product expensive to the community.Now we are looking for make things that are most expensible but with the biggest ROI possible.We started developing a Legal Agenda, now we are developing algorithms of optimization to allocate lawyers in hearings with the minimal cost possible. Now we are pretending increment our algorithm with traffic information/estimations.Our Team is much more proud, feeling itself more motivated like being fully (really) challenged.

  • rishtal

    Great post Dan!I’m a 23-year old entrepreneur who likes building b2b/enterprise applications. There’s so much opportunity to make that space better by improving the way others do business. My older brother who just moved down to SF has a much more consumer oriented view and we have this discussion all the time. At the end of the day, you’re going to work on what you naturally gravitate towards. It just so happens that I gravitate toward the more b2b side.Keep up the hustle!

  • Rob

    Great post!Having been in B2B for a decade, doing everything from engineering to product management to marketing (including lead generation and some cold calling), I can tell you that B2B can be sexy! Especially the older you get. Not to sound like an old codger at 31, but when you’re 19, and it seems especially if you’re west coast (Boston has more B2B type than B2C AFAICT), your friends’ reactions are going to be much, much different than when you’re older. My friends are parents, doctors, lawyers, MBAs, and my current company sells primarily to pharmaceutical companies like Merck, Novartis, Eli Lilly, etc. To them it sounds much more impressive in that crowd than simply writing an app!Also, I completely agree with you that it’s much easier to hit a double in a B2B business. So many B2C companies feel like they’re either everything or they’re nothing. Even if you look at an awesome product with awesome backing and tons of hype like Path it’s still unclear that they can really make it. I’ve got an account, and so do 2 of my friends, but almost no one else I know uses it, so I uninstalled the thing. The chicken-and-egg “you must be everywhere to be valuable” is a tough, unpredictable game to play. Much better to sell something today to someone that finds it useful.Keep at it!

  • Evan Samek
  • Tyler

    Interestingly, our CEO just did a post about the same topic: “Resist the Allure of the Sexy Startup Idea” http://techli.com/2012/07/resist-the-sexy-startup/. As a former multiple B2C founder I’ve got to admit it’s a bit awkward telling folks about this new startup I’ve joined, “it’s a b2b startup that helps businesses get paid by blah blah blah” at which point people tune out (unless they’re other business owners). Sexiness helps with work satisfaction, even though it might not pay the bills for a long time (or ever), and when you’re putting in 60 hour+ weeks it’s important.

  • baus

    Call me old school, but, Tyler, getting paid sounds pretty sexy to me.

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  • Tyler

    @baus – you be ol’ skool! 😉 Yeah, I think it’s sexy too, but there are plenty of folks who think they’re sexy and would never have a problem collecting on an invoice (and then they’re out of business a year later).

  • Erica

    Great post, Dan! As someone who also works in B2B, I love being able to help business on both sides. B2B success means great connections for everyone involved.

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