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All of my jobs have been in B2C. I worked in retail, I worked in loyalty, and I’ve sold to musicians. Yet, every single technology business I started has been in B2B SaaS.
- I started a consulting company selling user experience and usability services to businesses.
- I built Flagback adding a layer on top of the web for quality assurance teams and agencies.
- The employer brand monitoring platform I was building at HireVoice was B2B.
- My current startup, Highlights, is also B2B SaaS.
Why the best technology business to start is B2B SaaS
I ❤️ B2B, and there’s a lot of reasons why B2B startups matter. Here are the top eight reasons why the best business to start in 2020 is B2B:
1. You get to leverage what you know
The company you’re working for might be Business-to-Consumer (B2C), but you’re working in a business. You get to see the problems, you build domain expertise, and you learn the industry. If you work in data, you understand data. If you work in finances, you start to understand finances, but you also build solution expertise; you learn how to build a product for that market or for someone with your job title in another company.
2. The opportunities are almost infinite
If you truly understand the Job to be Done, you can find opportunities. People in companies are constantly looking for an edge over competitors – internal or external. There’s always a desire to improve retention, have better employee engagement or increase the performance of the marketing funnels; there’s always going to be a need to make things better. If you truly home-in on a niche and understand the need and buying process, you can build something really exciting for businesses.
3. B2B SaaS markets can support multiple winners
Think about it, how many email marketing automation platforms do you know? I can probably name ten off the top of my head. In B2B, you can have multiple companies serving the same need for different types of businesses. You can target a niche, go upmarket, low market, mid-market, etc. Whereas, in B2C, markets tend to be winner-takes-all. Facebook has no real competition. They’re WhatsApp, Instagram, and Facebook. What else is there after them?
4. Software spending is growing
We’re in the golden age of tech. Businesses are still transitioning to the Internet, and software spending is growing. Businesses use more and more tools. I was recently speaking with a company that uses 80 tools to manage their business. They’re still doing free trials thinking about getting new products, and why shouldn’t they? If they can automate a task or improve a business process, and the return on investment is there, it just makes sense, no? A lot of job functions are still underserved. Marketing, project management, customer service or development may be well covered, but there’s still a lot of other functions in companies that can be helped. Think archiving, financial services, purchasing, operations, etc.
5. Legacy vendors still control the market
Legacy software companies like Oracle, Salesforce, Microsoft and SAP control a market cap of 83%, and own 93% of all software revenue. This means that only 7% of all software revenue is in SaaS; the bulk of the revenue is still legacy software. A lot of products will probably transition to more Software as a Service or cloud models, and there’s a lot of things that will need to evolve in terms of tools to give better service and better results to businesses.
6. Profits are cool again
After the bubble burst in 2008, a lot of investors realized that they can’t keep investing in high-growth companies that don’t necessarily have business models. There’s less and less investment in companies that are just acquiring users, growing and then eventually thinking about monetizing. Monetization is a key part of it. It’s easier to bootstrap and build a sustainable small business in B2B because you’re expected to sell, have sales and be sustainable. You can’t just acquire all the businesses and then someday try and convert these companies into customers. It doesn’t work like that in B2B, you needs a sales process.
7. The innovation industry is booming
If you look at the US, the Asian or the European markets, there’s more and more people working in innovation in businesses because companies have started feeling the heat. They realized that their business models need to change. One way for them to do that is to acquire startups that can help them leverage an advantage over competitors. This increases the odds of successful exits for B2B entrepreneurs. If you build a meaningful product, it might not become a sustainable business, but maybe a company will need it to build or expand its product offering.
8. B2C incumbents are going B2B and B2B SaaS
Last, but not least, B2B is becoming cool-er. Because of the consumerization of enterprise software, business users have come to expect the same kind of user experience that they get in B2C in B2B. More and more exciting B2B SaaS products like Slack, Box or Intercom are coming up each year, and they’re attracting more and more attention. Even top SaaS companies like Dropbox are slowly transitioning to more B2B services because they realize there’s a lot of money in B2B SaaS sales.
How to start a SaaS company
As an entrepreneur, if you’re willing to dig deep into the value chain and the needs of the market, you can find opportunities for breakout products. You just need the patience and the dedication to do the research, find product-market fit, and get case studies. There’s countless opportunities in B2B, and that’s why it’s truly exciting. :-)
Now that you know what is B2B SaaS, and know why it’s exciting. Check out the Lean B2B Masterclass to learn how to start a B2B business.
More on B2B SaaS Companies
- 17 Fundamental SaaS Frameworks B2B Entrepreneurs Should Use
- The Guide to Crossing the Chasm for SaaS Startups
- How to Run Customer Exit Surveys to Improve Product Retention
⚡⚡ Enjoyed this content? I go into way more detail on this subject in Lean B2B. It covers the ins and outs of finding traction in the market for B2B products. Check it out »
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