Daniel's notes on Lean B2B

The more B2B and B2C winners got decided, the clearer it became that consumer plays were often winner takes all, while B2B was long tail and could often support multiple winners. In B2B, it's not uncommon for many companies to be addressing the same need for different types of customers or business models.

Austin Petersmith, Racket.com's founder and CEO, explains: "When it cost tens of millions just to get to market, products needed to cover a relatively wide offering in order to justify big prices and long contracts. Today, you can build a billion dollar business selling into the enterprise at $5 or $7 or $11 per user per month. With more companies covering narrow solution spaces, there's room for more products on the market."

Influenced by their experiences with consumer apps, business users have come to expect the same quality of user experiences in B2B. They've become savvier, now doing most of their shopping before engaging with an organization's sales staff'', or even its website. With more options and power in the hands of buyers, products now get hired, and fired faster than ever.

Software spending is growing at 10.5% annually. The opportunities are being multiplied by growth in global markets, the introduction of new enabling technologies, laggard organizations transitioning to new technologies, and significant increases in acquisition multiples.

Lean Startups start by identifying the riskiest parts of their business models. Then, for each of their riskiest assumptions, they create hypotheses that are rigorously tested through fast and cheap experiments with code, users, customers, marketing, etc. When a hypothesis is proven true, it becomes "validated learning," something that can reliably be built on. When it gets invalidated, the hypothesis is refined and re-tested, or the team turns its attention to its next riskiest assumption.

"A half-baked B2B product shown to a few "early adopter realtors" runs the risk of 1.) Losing that potential customer forever as it would be much more difficult to get in the door again, or 2.) Irreversible reputational loss ... if the customer landscape is a tight and chatty one." Oliver Jay Asana Head of Global Revenue & Business Development

Businesses don't get to stand still. Their markets change, competition mounts, their customers' expectations evolve, and new market opportunities open up in front of them. When their activities change, new needs and challenges are created. Sometimes these needs and problems can be addressed with their current capacities, tools, and resources. Sometimes they can't. When that happens, companies seek out new solutions to address their needs, and product opportunities get created. They start to do more. New inefficiencies emerge, new points of friction get created. The technologies they use can no longer support their visions. And the cycle repeats.

"We're still in the first phase of software eating the world where every industry goes digital, and every workflow and service becomes an API you can build on. But there's a second phase of opportunity once those APIs are ubiquitous that we've barely seen yet.” Aaron Levie