Tag Archives: B2B

Internet Find: Do Things that Don’t Scale by Paul Graham

Back in July, Paul Graham – founder of famous accelerator Y Combinator – blogged about how startups get started, by (initially) doing things that don’t scale.

That’s a theme that I’ve seen popping up quite a lot in the last few months, for example at the Product Management Festival in September, the presentation from Thomas Arend from AirBnB advocated that approach as well.

Paul Graham provides several examples how successful startups in their early stages recruited and retained users through quite laborious, manual efforts that clearly wouldn’t scale to accommodate a larger user base:

“… if the market exists you can usually start by recruiting users manually and then gradually switch to less manual methods.”

Not Only for B2C Startups Selling Through the Internet

While Paul’s examples are mostly from B2C startups that serve customers through the web channel, I see the same happening with B2B sales efforts of startups that I’m coaching: here as well, initial customer acquisition is often quite manual, with the founders personally recruiting one business customer after the other.

This way, the founders learn not only a lot about B2B sales processes – which is something that founders fresh from university usually have no prior experience with.

This is also a great way of learning even more about the market their business customers serve, which helps them to further sharpen the value proposition of their product.

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IBM’s Earnings Miss – Evidence for the “Consumerization of IT”

On April 18, IBM announced quarterly results – and for the first time in eight years missed analyst expectations.

Top-line numbers are declining across the board: quarterly revenue was down 5% year-over-year (3% in constant currency), hardware revenue down 17% (16% in constant currency), and services revenue down 4% (1% in constant currency).

Some new businesses showed respectable revenue growth: for example, cloud revenue up 70% YoY, but these were too small to offset the decline from the larger legacy businesses.

A frequently heard conclusion in the market: this must show a weakness in the overall IT industry:

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Why B2B Software Companies Still Offer Professional Services

In a couple previous posts I highlighted that digital business models are characterized by low cost of revenue, resulting in low marginal costs. Therefore, they can generate profit margins that are not possible with traditional business models.

But what about support and professional services?

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Crossing the Chasm – An Evergreen Still has Valuable Messages for Startups

Book Cover: Geoffrey A. Moore: Crossing the Chasm, 2nd Edition 2002

Geoffrey A. Moore: Crossing the Chasm, 2nd Edition 2002

When Crossing the Chasm by Silicon Valley consultant Geoffrey A. Moore was first published in 1991, it quickly became the marketing bible for high-tech.

It was a perfect fit, especially for the type of business model that dominated the startup scene in the 90ies: complex IT products – hardware, software, or mix of both – that required quite expensive R&D and typically were sold B2B through a enterprise sales force.

One key insight presented by Moore was this: innovative technology solutions often require their users to change habits or processes.

And since individuals and organizations are typically resistant to change, a startup trying to sell such a solution was initially fighting an uphill battle with the majority of its potential customers.

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