Good stuff, and I agree with almost 100% of that. The only thing I take exception to is the (seemingly) implicit suggestion that "sexy" is defined by what college kids like:
And that’s true. B2B is unsexy in that I don’t build things that my college friends want to use.
Nah... if you're doing sexy technology, it's sexy even if not a single college kid has ever heard of it.
I'd encourage everyone to NOT buy into the HN echo chamber mentality... there is a LOT more to the business world than consumer facing geo-local-social-mobile-photo-sharing-cat-picture startups.
Do cool shit that solves problems for people, charge for it, and make money... that's not a half-bad formula.
(disclosure: I'm a founder of a very sexy B2B enterprise software startup).
I completely disagree with this, this isn't an echo chamber, and no-one's buying into that ethos.
Let's be frank, b2b is boring as shit.
It's not even vaguely interesting.
The only challenge to setting up the ultimate competitor to Sage/Quickbooks is that it's so mind numbingly dull. B2B programming is an utter pile of mind-numbingly boring crap. It's not sexy because it's incredibly simple with a colossal amount of edge cases. B2B is mindbogglingly complex simple software.
B2B is just the edge cases.
It's not in the remotest bit interesting to most people. It's often bound by the most ridiculous laws and covenants.
But it'll make you a lot of money.
Do you want to read about it? No, because it's so ridiculously shallow and dull. That why no-one talks about it.
(disclosure: I am also writing b2b software)
EDIT: There was a very recent post by Intuit about the 10 million lines they've written for Quickbooks and how they manage it. That says it all to me really. 10 million lines means something has gone very, very, very wrong to me. Would you want to write a 10 million line essay about accounting? Think about your average words per line programming, that's nigh on a 50 million page essay. Just to do accounting.
I agree with your point. I based my definition of sexy on what tends to get media coverage - which are generally ideas that college kids want to use. But I certainly agree that sexy companies exist that no college kid has ever heard of.
The problem is how to get exposure to B2B processes as a software developer. Unless you have previous work experience as a sales guy/marketing/inventory procurement/etc. or a MBA or already developing B2B tools, how can you learn about the needs and opportunities?
B2B can incredibly interesting once you have a grasp of the problem space. My last two companies are B2B and I've loved every minute of if. But to outsiders it's usually not that exciting.
The one type of B2B I won't touch is that which has a lot of external friction in the value chain. Health care and government come to mind.
I wouldn't ever consider building a product for consumers.
Why?
* Businesses are used to paying for services.
* Businesses can typically make judgements about the ROI of software (X saves Maggie 5 hours a week. That translates to $200 in pay. Sure, $100/mo is worth it.) Consumers can't.
* Businesses pay thousands of dollars a month for each person on staff. If you can eliminate the need for a position, a business will probably willingly pay 3 to 4 figures for your software.
B2B is also very dysfunctional. You almost have to operate in a different reality to survive there.
diskdoctor answered with "Marketing and selling software to enterprises is the most dysfunctional cycle of decision making you will ever see in business. In almost all cases the individuals in the business who actually derive value from the technology are entirely disconnected from those who make the purchasing decisions. Many times those purchasing decisions are made based on "perceived" synergies with other software systems already owned from the same vendor, having never been vetted by the actually consumer in the business."
This is probably the biggest difficulty in B2B.
Steve Jobs even said something similar "What I love about the consumer market, that I always hated about the enterprise market, is that we come up with a product, we try to tell everybody about it, and every person votes for themselves. They go ‘yes’ or ‘no,’ and if enough of them say ‘yes,’ we get to come to work tomorrow. That’s how it works. It’s really simple. With the enterprise market, it’s not so simple. The people that use the products don’t decide for themselves, and the people that make those decisions sometimes are confused. We love just trying to make the best products in the world for people and having them tell us by how they vote with their wallets whether we’re on track or not.”
Interesting case study that was able to buck the trend is Atlassian software. I have personally seen bottom up influence in 3 large publicly traded companies land Atlassian very nice (and well deserved I might add) license and support agreements.
They built a product that would usually be sold at the VITO level, gave it away for open source projects so it became defacto to developers and viola Jira is now replacing IBM products in many enterprise software development shops as we speak.
That's a poignant quote, and also one of the biggest pain points in selling to enterprise / federal customers.
The less spoken, easier way around is to target smaller companies. The people making the decisions have more direct influence on the purchase, and are also a lot more likely to be involved in the actual use of the software. This has worked out well for FogCreek, 37Signals, et al.
Well put. No one has heard of the company I work for, and we do some seriously cool B2B stuff. We're 100% employee owned and are #1 in certain segments of our customers.
No, we're not "sexy", we're not media darlings, and "social media" is really not in our genes. But our products are really awesome. :-)
I'm unsure the perception of B2B among VC's is as bad as commonly thought.
My last startup was pure B2B, and during our valley runs I found most potential partners / vc's / workers were very excited (in part because of the opportunity, in part because of perceived market movements, and in part because B2B can be fun) at the prospect of growing in B2B.
B2B companies may not spawn a media darling, but it doesn't make the business itself unsexy.
The problem with B2B is that it doesn't follow the standard startup model.
In B2C, if you have 10,000 users, VCs will just start to look at you. In B2B, except in some specific instances, if you have 10,000 users you're already a million dollar company.
Thus, in B2C the risk/reward inflection point occurs much later chronologically than in B2B, and for a B2B business, I, personally, think that there is far too much ambiguity before that inflection point.
There seems to be an odd notion that B2B must be about accounting and such. Most B2B stuff I've been involved with the past few years has all been "social".
Because, like soylent green, companies mostly consist of people...
The business model can be as sexy, or sexier than the idea itself.
When we build something that is boring to some, I wonder if we forget the magic of what we do.
What is boring to us is magic to someone, stuck suffering with managing details. It's nice to see the maturation of developers who do for the world what's being asked of us: help everyone everywhere, with software.
About B2C or B2B:
1) It's a preference. A reality is, there is not as much B2C out there as we think. Too many consumer facing "successes" do not take money from "customers". Why? The users are the product that are sold to advertisers. They often ask businesses to pay, maybe by advertising, and it's a lot of work.
2) Consumers are quite fickle, irrational and emotional decision makers. They will often think about any decision over $5/month.
Small businesses, on the other hand, don't think about $50/month too much. They're fairly logical (a good fit for developer's tendencies), and very much understand and make decisions based on value -- saving them, or making them money. They'll also be more forgiving about understanding features-based marketing instead of benefit-based marketing if you can't dial in your copywriting. In short, there's more flexibility to learn and still do well enough to keep improving.
3) If you let a sliver of your talent tackle a B2B problem that customers will pay for, you get to keep the panacea much easier: Work on what you want every day without fear of paying the bills, or pursuing a swing for the fences idea without fear of failure or running out of money. Not everyone gets to live in the Valley. I'm sure I'd be open to other possibilities if I lived there, but I don't right now.
If you're out for the first success or two of your life, consider this: check any ego and immature thought habits to fit in. Exchange them with discipline, to learn what you need to about the fundamentals of building a business, it will serve you very well when going after the B2C ideas.
Almost everyone who tries to fit in, inevitably gets left behind. Do what others aren't willing to do to build a business that makes money, because it's worth way more, to customers, and VC's.
As every single person on HN gets older, they will have more responsibilities because of the other things in their lives they want, and cost money every month. There's a chance now to address those very easily and get some great business development experience. That doesn't sound like much to some, but startups are a longer haul game than anyone ever admits.
We're a B2B shop and have been profitable from day one. Sometimes it takes a while to get paid from the big guys, but once you're in, cash flow is great. There are some downsides (control, last minute BS, corporate things)--but it seems to be easier to get companies to part with their cash than your neighbor or suite-mate.
We're working since 2001 on a b2b software. While it might seem boring, it's not in the least (minus some rare low points, but you get these everywhere).
It's also very rewarding to see users be productive with the software and be grateful for making their lives easier. In fact, many of the end users are to this day computer illiterates and making great software they can use is a very interesting challenge.
Also the technical stuff. Just because it's b2b doesn't mean you can't make it interesting for you. Whatever new technology comes around, I make it a point to try it out and apply it in production where it helps.
We've done AJAX before it was called that. We've been running node.js since the 0.2 days and we've solved interesting scaling problems.
There is nothing we can't do that makers of consumer products can do. The difference is that we are getting paid handsomely ever since and that we don't have to deal with advertisers or, god forbid, VCs.
Thanks mainly to our product Switzerland was and still is one of the countries with the highest percentage of electronic orders among dentists (I only have numbers there. The restaurants numbers might be even bigger).
Combine that with the cool technical challenges to solve and you are left with a very interesting job that just never gets old.
In a nutshell, I think there's still a lot of value in creating web and mobile apps for consumers, it's just that there's been a glut in the market, especially for mobile. Too many apps that aren't very differentiated.
In the long run I still think consumer is a good play, though.
So I've done a B2B company before and am doing one now (current place isn't intrinsically B2B but that's our main focus. It's certainly not something normal consumers would use).
I think this understates what incredibly hard work selling B2B can be. Large companies will pay you a lot of money, but are ridiculously high maintenance - they expect custom work on your product (often of the "Can you integrate it into our ActiveDirectory/Exchange/etc" form) and the sales process to them is incredibly long.
Small companies on the other hand are often strapped for cash and have weirdly distorted views of the value of their time - If what you're selling them is something they can "do now" by spending 3 hours of an employee per day it can make it very hard to convince them to pay you at a rate you'll be able to sustain a profit on.
Neither of these are impossible to overcome of course. People can and do do extremely well with B2B businesses. I just want to point out that there are real problems with selling B2B as well, and that it's not nearly as easy as it might sound.
I'm doing an ad-supported B2B media startup now. So that's doubly unsexy since free ad-supported media is not a very trendy business model right now.
But it works because we understand our market, we understand marketers, and we've had a dedicated sales staff since day 1. You can make a lot of money with ads if you don't treat them as an afterthought.
Create a product that solves a need that businesses have and sell it to them. Steve Blank's The Four Steps To The Epiphany is a great resource that is heavily focused on the B2B world.
> Does B2B mean you're solving how two companies do business with each other?
No, it just means that your business ("B") is selling "2" other businesses ("B"). So, when IBM sells WebSphere AS to other businesses, that's a B2B market.
B2C, conversely, is when you sell something to consumers. So, Wal-Mart is mainly B2C.
The lines aren't always clear, and there are other models that don't quite fit either definition.
Lots of Jason Fried's influence in the subconscious, I should say. Two or three segments seem to be extracted verbatim from 'Getting Real' book. Nice text, congrats.
>The biggest opportunities probably aren’t in social anymore
Economy struggles because there almost no new ways to increase labor productivity further. Making business tools more collaborative and social may boost labor productivity to next level. It's too early to dismiss social completely even if it's hit glass ceiling in B2C market.
[+] [-] mindcrime|13 years ago|reply
And that’s true. B2B is unsexy in that I don’t build things that my college friends want to use.
Nah... if you're doing sexy technology, it's sexy even if not a single college kid has ever heard of it.
I'd encourage everyone to NOT buy into the HN echo chamber mentality... there is a LOT more to the business world than consumer facing geo-local-social-mobile-photo-sharing-cat-picture startups.
Do cool shit that solves problems for people, charge for it, and make money... that's not a half-bad formula.
(disclosure: I'm a founder of a very sexy B2B enterprise software startup).
[+] [-] mattmanser|13 years ago|reply
Let's be frank, b2b is boring as shit.
It's not even vaguely interesting.
The only challenge to setting up the ultimate competitor to Sage/Quickbooks is that it's so mind numbingly dull. B2B programming is an utter pile of mind-numbingly boring crap. It's not sexy because it's incredibly simple with a colossal amount of edge cases. B2B is mindbogglingly complex simple software.
B2B is just the edge cases.
It's not in the remotest bit interesting to most people. It's often bound by the most ridiculous laws and covenants.
But it'll make you a lot of money.
Do you want to read about it? No, because it's so ridiculously shallow and dull. That why no-one talks about it.
(disclosure: I am also writing b2b software)
EDIT: There was a very recent post by Intuit about the 10 million lines they've written for Quickbooks and how they manage it. That says it all to me really. 10 million lines means something has gone very, very, very wrong to me. Would you want to write a 10 million line essay about accounting? Think about your average words per line programming, that's nigh on a 50 million page essay. Just to do accounting.
Joy.
[+] [-] hkmurakami|13 years ago|reply
[+] [-] dshipper|13 years ago|reply
[+] [-] maayank|13 years ago|reply
[+] [-] drumdance|13 years ago|reply
The one type of B2B I won't touch is that which has a lot of external friction in the value chain. Health care and government come to mind.
[+] [-] bdunn|13 years ago|reply
Why?
* Businesses are used to paying for services.
* Businesses can typically make judgements about the ROI of software (X saves Maggie 5 hours a week. That translates to $200 in pay. Sure, $100/mo is worth it.) Consumers can't.
* Businesses pay thousands of dollars a month for each person on staff. If you can eliminate the need for a position, a business will probably willingly pay 3 to 4 figures for your software.
[+] [-] karamazov|13 years ago|reply
[+] [-] diminium|13 years ago|reply
B2B is also very dysfunctional. You almost have to operate in a different reality to survive there.
diskdoctor answered with "Marketing and selling software to enterprises is the most dysfunctional cycle of decision making you will ever see in business. In almost all cases the individuals in the business who actually derive value from the technology are entirely disconnected from those who make the purchasing decisions. Many times those purchasing decisions are made based on "perceived" synergies with other software systems already owned from the same vendor, having never been vetted by the actually consumer in the business."
This is probably the biggest difficulty in B2B.
Steve Jobs even said something similar "What I love about the consumer market, that I always hated about the enterprise market, is that we come up with a product, we try to tell everybody about it, and every person votes for themselves. They go ‘yes’ or ‘no,’ and if enough of them say ‘yes,’ we get to come to work tomorrow. That’s how it works. It’s really simple. With the enterprise market, it’s not so simple. The people that use the products don’t decide for themselves, and the people that make those decisions sometimes are confused. We love just trying to make the best products in the world for people and having them tell us by how they vote with their wallets whether we’re on track or not.”
[+] [-] paulsutter|13 years ago|reply
Ping Li has an excellent paper on this: http://www.accel.com/assets/resources/files/17/original_rena...
[+] [-] IanMechura|13 years ago|reply
They built a product that would usually be sold at the VITO level, gave it away for open source projects so it became defacto to developers and viola Jira is now replacing IBM products in many enterprise software development shops as we speak.
[+] [-] bmelton|13 years ago|reply
The less spoken, easier way around is to target smaller companies. The people making the decisions have more direct influence on the purchase, and are also a lot more likely to be involved in the actual use of the software. This has worked out well for FogCreek, 37Signals, et al.
[+] [-] pnathan|13 years ago|reply
No, we're not "sexy", we're not media darlings, and "social media" is really not in our genes. But our products are really awesome. :-)
[+] [-] philwelch|13 years ago|reply
[+] [-] AlexBlom|13 years ago|reply
My last startup was pure B2B, and during our valley runs I found most potential partners / vc's / workers were very excited (in part because of the opportunity, in part because of perceived market movements, and in part because B2B can be fun) at the prospect of growing in B2B.
B2B companies may not spawn a media darling, but it doesn't make the business itself unsexy.
[+] [-] debacle|13 years ago|reply
In B2C, if you have 10,000 users, VCs will just start to look at you. In B2B, except in some specific instances, if you have 10,000 users you're already a million dollar company.
Thus, in B2C the risk/reward inflection point occurs much later chronologically than in B2B, and for a B2B business, I, personally, think that there is far too much ambiguity before that inflection point.
[+] [-] rickmb|13 years ago|reply
Because, like soylent green, companies mostly consist of people...
[+] [-] j45|13 years ago|reply
The business model can be as sexy, or sexier than the idea itself.
When we build something that is boring to some, I wonder if we forget the magic of what we do.
What is boring to us is magic to someone, stuck suffering with managing details. It's nice to see the maturation of developers who do for the world what's being asked of us: help everyone everywhere, with software.
About B2C or B2B:
1) It's a preference. A reality is, there is not as much B2C out there as we think. Too many consumer facing "successes" do not take money from "customers". Why? The users are the product that are sold to advertisers. They often ask businesses to pay, maybe by advertising, and it's a lot of work.
2) Consumers are quite fickle, irrational and emotional decision makers. They will often think about any decision over $5/month.
Small businesses, on the other hand, don't think about $50/month too much. They're fairly logical (a good fit for developer's tendencies), and very much understand and make decisions based on value -- saving them, or making them money. They'll also be more forgiving about understanding features-based marketing instead of benefit-based marketing if you can't dial in your copywriting. In short, there's more flexibility to learn and still do well enough to keep improving.
3) If you let a sliver of your talent tackle a B2B problem that customers will pay for, you get to keep the panacea much easier: Work on what you want every day without fear of paying the bills, or pursuing a swing for the fences idea without fear of failure or running out of money. Not everyone gets to live in the Valley. I'm sure I'd be open to other possibilities if I lived there, but I don't right now.
If you're out for the first success or two of your life, consider this: check any ego and immature thought habits to fit in. Exchange them with discipline, to learn what you need to about the fundamentals of building a business, it will serve you very well when going after the B2C ideas.
Almost everyone who tries to fit in, inevitably gets left behind. Do what others aren't willing to do to build a business that makes money, because it's worth way more, to customers, and VC's.
As every single person on HN gets older, they will have more responsibilities because of the other things in their lives they want, and cost money every month. There's a chance now to address those very easily and get some great business development experience. That doesn't sound like much to some, but startups are a longer haul game than anyone ever admits.
[+] [-] the_cat_kittles|13 years ago|reply
[+] [-] unimpressive|13 years ago|reply
By this definition the majority of social startups are as unsexy as possible.
[+] [-] jsiarto|13 years ago|reply
[+] [-] jacques_chester|13 years ago|reply
If I as the manager approve the $5000 WooFiz 7 Platinum purchase, I might feel a some concern to ensure that the ROI is defensible.
But that's it. Because it's not my money. If WooFiz turns out to be junk ... well, that sucks. But I'm not personally out of pocket.
[+] [-] pilif|13 years ago|reply
It's also very rewarding to see users be productive with the software and be grateful for making their lives easier. In fact, many of the end users are to this day computer illiterates and making great software they can use is a very interesting challenge.
Also the technical stuff. Just because it's b2b doesn't mean you can't make it interesting for you. Whatever new technology comes around, I make it a point to try it out and apply it in production where it helps.
We've done AJAX before it was called that. We've been running node.js since the 0.2 days and we've solved interesting scaling problems.
There is nothing we can't do that makers of consumer products can do. The difference is that we are getting paid handsomely ever since and that we don't have to deal with advertisers or, god forbid, VCs.
Thanks mainly to our product Switzerland was and still is one of the countries with the highest percentage of electronic orders among dentists (I only have numbers there. The restaurants numbers might be even bigger).
Combine that with the cool technical challenges to solve and you are left with a very interesting job that just never gets old.
[+] [-] jacques_chester|13 years ago|reply
[+] [-] nbashaw|13 years ago|reply
In a nutshell, I think there's still a lot of value in creating web and mobile apps for consumers, it's just that there's been a glut in the market, especially for mobile. Too many apps that aren't very differentiated.
In the long run I still think consumer is a good play, though.
[+] [-] DRMacIver|13 years ago|reply
I think this understates what incredibly hard work selling B2B can be. Large companies will pay you a lot of money, but are ridiculously high maintenance - they expect custom work on your product (often of the "Can you integrate it into our ActiveDirectory/Exchange/etc" form) and the sales process to them is incredibly long.
Small companies on the other hand are often strapped for cash and have weirdly distorted views of the value of their time - If what you're selling them is something they can "do now" by spending 3 hours of an employee per day it can make it very hard to convince them to pay you at a rate you'll be able to sustain a profit on.
Neither of these are impossible to overcome of course. People can and do do extremely well with B2B businesses. I just want to point out that there are real problems with selling B2B as well, and that it's not nearly as easy as it might sound.
[+] [-] eli|13 years ago|reply
But it works because we understand our market, we understand marketers, and we've had a dedicated sales staff since day 1. You can make a lot of money with ads if you don't treat them as an afterthought.
[+] [-] vkatluri|13 years ago|reply
[+] [-] mindcrime|13 years ago|reply
Create a product that solves a need that businesses have and sell it to them. Steve Blank's The Four Steps To The Epiphany is a great resource that is heavily focused on the B2B world.
> Does B2B mean you're solving how two companies do business with each other?
No, it just means that your business ("B") is selling "2" other businesses ("B"). So, when IBM sells WebSphere AS to other businesses, that's a B2B market.
B2C, conversely, is when you sell something to consumers. So, Wal-Mart is mainly B2C.
The lines aren't always clear, and there are other models that don't quite fit either definition.
[+] [-] rodolphoarruda|13 years ago|reply
[+] [-] dshipper|13 years ago|reply
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] codexon|13 years ago|reply
[+] [-] dgudkov|13 years ago|reply
Economy struggles because there almost no new ways to increase labor productivity further. Making business tools more collaborative and social may boost labor productivity to next level. It's too early to dismiss social completely even if it's hit glass ceiling in B2C market.
[+] [-] robwhitley|13 years ago|reply
[+] [-] malkia|13 years ago|reply
[+] [-] andrewflnr|13 years ago|reply