Thread by @dunkhippo33

Today's thread is on "good ideas" in B2B.

A bit of a deeper dive on yesterday's thread:

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https://twitter.com/dunkhippo33/status/1364668553564065794?s=20

1) First off - "good ideas" are in the eye of the beholder :D. Even within our own @HustleFundVC team, we often DISAGREE!

We have a champion model, which means that if I want to invest, I can. Even if @ericbahn doesn't want to.

2) But we believe independent thought is impt and good for portfolio construction. So to some extent, there's luck in approaching the "right partner" @HustleFundVC who likes a given business.

But enough caveating - onwards!

3) In general, business customers will buy if you can:

-increase revenue
-decrease costs
-AND/OR save time

But you have to achieve this *significantly* in order to make it worth their while.

4) Outside of these areas, I generally think most B2B startup ideas are "nice to haves". Not always, but usually.

For example, a "nice to have" B2B idea might be selling some sort of HR benefit that is beyond health insurance...

5) ...companies struggle enough just trying to make their businesses work, so it's hard to justify spending time & money on extra things.

That being said, some seemingly "nice-to-haves" may actually help save time or increase revenue and it may be tough to tell.

6) An example of this incl fertility benefits. These don't impact the bottom line of a company directly. But, they can be a good employee retention tool -> saves time / increases revenue.

Or company lunches. They may feel like an expense but could be good for productivity.

7) Sometimes it's hard to tell what correlates with what. Especially for products / services that cannot be measured for their impact on $$ / time.

8) Additional considerations - as discussed in the other thread, CAC is really impt to me. Competition and alternatives drive up CAC and lengthen the sales cycle.

For example, marketing automation tools def do help increase revenue. But it's a highly competitive space.

9) So if you are going to build one, you have to rise above the noise. A company MUST understand QUICKLY how you are different.

10) AND, even if you are very different, you often need to be clever about your customer acquisition, because every marketing automation tool is using the same lead gen / outbound tactics. It can be tough to receive 100 sales emails a day even if they are all selling diff things.

11) In addition, you have to consider alternatives. Just because there isn't another co doing exactly what YOU DO, your customers are likely using a hacky way to accomplish the same results. How do those alternatives compare to you? Are they good enough?

12) E.g. Everyone has been talking about disrupting spreadsheets for decades because software is easier to use. And that is happening slowly. But apparently spreadsheets are good enough for a lot of ppl, because they haven't been disrupted yet.

13) Lastly, you have to consider workflow. Does your solution have to replace an existing workflow? Or can you insert yourself in side-by-side with what your customer already has in place?

Switching costs are a real friction:

https://twitter.com/dunkhippo33/status/1250551049158488065

14) Switching costs can also be a moat once you've displaced whatever was there before, but it makes the sales cycle long. So then there's the question of how will you survive long enough for that to happen?

15) So after writing all of this out, it sounds really discouraging. So MANY areas are crowded / have alternative solutions. Where are the opportunities?

A few thoughts:

-build around new trends. ala future of work will be a lot more asynch. no camaraderie in the office...

16) ...it's greenfield now to solve for workflows that are new.

-build for emerging mkts that have no software. this can be either emerging geographies OR sectors that have used a lot of pencil / paper

17) If anything, for these areas, I think it's a strength if you didn't grow up in the tech industry and understand first hand how ppl do things w/out software to know what exactly needs to be addressed

-using strong design to displace existing products for designers and engrs

17) there are so many stodgy products that techies would pay a lot for better design. ala Notion and Slack. Note that not all ppl who work in techcare -- primarily engrs and designers. There's a reason Salesforce hasn't been disrupted yet...

18) Those are a few ideas but a commonality amongst all of them is there's a major change / shift that is happening - whether based on geo / sector / how ppl do things / people's situations in life / etc.

Look for those greenfield areas and go after those.