If you are taking the leap from corporate, SERIOUSLY CONSIDER building a B2B

I was in a startup pitch event some months ago attended by a good number of people, a lot of which had corporate day jobs. I was listening intently to the ideas being pitched, and I jotted each of them on my tablet to get some sort of idea as to what exactly people wanted to get into. Almost EVERY idea pitched was a B2C (business to consumer: a business which offers products directly to consumers). A good number of them were social networking sites. A good number of them were location-based apps. A good number of them were online marketplaces. In fact, a couple of people thought of exactly the same idea.

This is all well and good, of course – it’s very good to think big. Why not create the next cool social network? Why not create the next killer location-based app? By all means, let’s dream big.

On the other hand, I was thinking the idea distribution was SO skewed towards these “sexy” apps: location-based, social, etc… There were hardly any B2B (business to business: a business which offers products to other businesses) ideas thrown on the table. This was surprising for me. My first thought was wondering about how many people around the world they were competing with. Moreover, there’s that danger of having a giant like Facebook or Google making a feature out of your idea – you’d be out of business in a hurry.

People, why not B2B?!

Here are some powerful reasons to consider it:

1) Online Purchasing Isn’t A Standard (yet)

While internet penetration is uncommonly high here in our country, online purchases are far from the norm. Not yet, anyway. And since our country is a third world country, it may take a while to get there. Since online purchases are commonly the lifeblood of web startups, it becomes a challenge to create a sustainable business model for those who insist on them. You could target a first world country nowadays, of course, since the world is flat – but then you’d have to worry about a ton of competition and a disadvantage of knowing the market a bit less.

2) Take Advantage of Your Corporate Domain Expertise

The ironic thing is that most of the people in that room with me were corporate lifers. Do they hate their corporate jobs that much that HARDLY any B2B idea were generated?

If you spent 5 years in Finance, or 7 years in Supply Chain Management, or 10 years in Human Resources, one thing is for sure: you know more about your corporate domain than most people. You know gaps / problem areas, or at the very least know people who would know about these gaps in detail. These gaps are tremendous opportunities. The fact that they are still gaps means you can come in and take that strategic early mover advantage. (instead of being, like the 167th mover in one of those “sexier” areas)

Also, while a great number of people do not like their corporate JOBS, I’m betting it’s not because of the domain. For example, I was in corporate HR for a good decade before taking the leap. It WASN’T HR that I loathed about corporate – it was the politics, the narrow responsibility sets, the butt-kissing, rigidity, etc… But HR as a domain and body of knowledge? I continue to love it.

I bet you feel the same way about your domain – marketing, sales, finance, etc…. There might be a reason you gravitated towards the domain. It might just be love of the game.

3) Take Advantage of Your Corporate Network

In corporations, one thing you have the opportunity to do a lot is to network. There is a TON of ways to do so: of course you start with your co-workers, but then you also have your suppliers, or the would-be suppliers who send you proposals, those people you met in trade shows or public training courses, business partners, and clients. Why not build something where your existing network can still be useful, instead of creating a new one from scratch?

4) Corporations Have Money

Of course, during economic downturns, it might prove to be a bit difficult to get them to open their wallets. But you know what? If you solve a significant problem for them, you’d be amazed at how easy it is to do so sometimes. Oh, and yes, and corporations have credit cards.

I have discovered that locally owned companies tend to open their wallets faster than their multinational counterparts, probably because they don’t need to consult their regional counterparts for significant purchases. These might be good to target first.

5) B2B Firms Work

Amazon, Facebook, Mang Inasal, Zynga – these are all shining B2C examples. If you’ve got a killer idea like that, then by all means, take the plunge. But do take a look at some of the biggest successes in the startup world: Salesforce, 37 Signals, Linkedin (used mostly by business professionals), Success Factors (recently bought by SAP for $3 Billion), Taleo (recently bought by Oracle for nearly $2 Billion as a counter to SAP’s purchase),  I could go on and on. These firms work. These firms scale.

6) Yes, You Can Go Multinational

Creating a B2B firm does not mean you’ll get stuck in just the local market. On the contrary. First, a lot of the companies you can target here are MNC’s. This means have regional affiliates they meet and talk to very regularly. This is one of the EASIEST ways to get to go international – just ride with your MNC clients. Do a good job with the local affiliate and they just might recommend you to their neighboring counterparts.

Another idea is viewing the local clients as a way to perfect your products for the international market. It will obviously be easier (and cheaper) to sell stuff here. You can start with that. Then as your portfolio grows, it becomes a virtuous cycle – you make your products and services better to account for the increased clients, and as a result your portfolio will grow even more – allowing you to position yourself nicely for international growth.

If you are a corporate lifer thinking of making a jump, then a jump to becoming a corporate entrepreneur does make a ton of sense, especially here in our country.

Comments

  1. Jack Cuela says:

    Nice, I love this article of yours Peter! I am actually planning to dive into a B2B venture with some of my colleagues. Your article made me more excited and inspired to do the business.

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