Growth, Sales, and a New Era of B2B | Summary and Q&A

TL;DR

B2B companies are adopting a growth-driven approach before implementing sales, revolutionizing the way startups are built and disrupting traditional B2B strategies.

Key Insights

• 👻 B2B companies are adopting a growth-driven approach before implementing sales, allowing them to build a large user base and then monetize it effectively.
• 📁 Traditional B2B strategies that focus on direct sales are being disrupted by the success of B2B growth sales companies.
• 😘 B2B growth sales give startups an advantage over incumbents due to lower capital requirements and a stronger focus on product development.
• 🚒 Evaluating B2B growth sales companies is challenging for investors due to the complexity of managing growth and sales engines effectively.
• 🤗 B2B growth sales strategies are prevalent in various industries, including security, open source, developer tooling, infrastructure, and cloud services.
• 😮 The rise of B2B growth sales is leading to a new wave of B2B startups, with the potential to unseat traditional incumbents.
• 👻 B2B growth sales allow startups to access buyers from multiple sectors, not limited to core IT or security buyers.

Transcript

a very common question that I get asked is someone with a technical background who started the company or what are the new trends and what people expect to hear from someone like me is like oh it's IOT it's AI it's blockchain whatever and those are all really interesting technologies but honestly I think there's a trend that's much more significant... Read More

Questions & Answers

Q: Why are companies adopting a growth-driven approach before implementing sales?

B2B companies are finding that a growth-driven strategy allows them to start with a simple product, drive user adoption, and then build a sales engine on top of that user base. This approach is more cost-effective and efficient for startups.

Q: How does B2B growth sales disrupt traditional B2B strategies?

The traditional approach for B2B companies has been sales-led, focusing on selling products directly to enterprise buyers. However, the growth-driven approach allows startups to access buyers through marketing-led strategies, giving them an advantage over traditional incumbents.

Q: What are the advantages of B2B growth sales for startups?

B2B growth sales require less initial capital and are more focused on product development rather than understanding complex sales channels. This gives startups a competitive edge and allows them to emerge from anywhere, not limited to traditional tech hubs.

Q: How do B2B growth sales impact the evaluation process for investors?

Evaluating B2B growth sales companies is complex for investors, as it requires understanding the interplay between growth and sales engines. Many B2B growth sales companies fail due to the challenges associated with managing these two motions effectively.

Summary

In this video, the speaker discusses a significant trend that is shaping the B2B landscape: companies going to market in a different way than traditional B2B. Instead of relying solely on sales, these companies are adopting a bottom-up growth approach followed by sales overlay. This trend allows startups to build companies with less money and focus more on product excellence rather than sales expertise. The speaker emphasizes the advantage this trend gives to startups over incumbents and highlights the rise of b2b companies in various locations worldwide. The speaker also explores the difference between consumer and enterprise companies and how VCs evaluate them. The video concludes with a discussion on the challenges and complexities of implementing this growth and sales model successfully.

Questions & Answers

Q: What is the trend that the speaker believes is more significant and disruptive than technologies like IoT, AI, and blockchain?

The trend that the speaker considers more significant and disruptive is the approach of going to market in a different way than traditional B2B, where companies focus on bottom-up growth first and then overlay sales. This approach allows startups to build companies with less money and prioritize product excellence rather than sales expertise.

Q: What is the advantage of the growth and sales approach for startups over incumbents?

The growth and sales approach gives startups several advantages over incumbents. Firstly, it requires less initial capital, making it more accessible for startups to enter the market. Secondly, it shifts the focus from traditional execution and sales knowledge to product excellence, allowing startups to compete on innovation. Incumbents, on the other hand, struggle to defend against this approach due to their existing structures and strategies.

Q: How has the growth and sales approach transformed the location landscape for B2B startups?

In the past, there were only a few notable centers for strong B2B companies. However, with the growth and sales approach, B2B startups can emerge from anywhere. The speaker mentions Berlin, France, the UK, New York, and Silicon Valley as examples of locations where B2B startups are thriving.

Q: What are the traditional approaches for consumer and enterprise companies?

Consumer companies are typically marketing-led, as it is not feasible to have a sales force reach every individual consumer. These companies rely on marketing campaigns to reach their target audience. Enterprise companies, on the other hand, have been sales-led. The expectation is that a sales force will sell the product to enterprise customers.

Q: How do VCs traditionally evaluate consumer and enterprise companies?

VCs face challenges when evaluating consumer companies before they enter the market because it is difficult to predict consumer preferences. Therefore, they rely on metrics and data to assess the potential success of these companies. Enterprise companies, on the other hand, are evaluated based on the rational buying behavior of enterprise customers. VCs can call and assess the business needs of these customers before making investment decisions.

Q: What types of founders do VCs look for when investing in consumer and enterprise companies?

VCs typically look for strong product founders when investing in consumer companies. These founders should have the ability to create products that users like. In contrast, for enterprise companies, VCs expect founders to solve a strong technical problem and invest more money in building the product.

Q: Why does the growth and sales approach work in today's market?

The growth and sales approach works because buying software has become a routine for many individuals due to the App Store generation. As a result, startups can access a wider range of buyers beyond core IT and security personnel. This shift allows startups to monetize their products by targeting various departments such as HR, marketing, and finance.

Q: What are some examples of successful companies using the growth and sales approach?

SurveyMonkey is an example of a company that experienced significant growth through a bottom-up growth engine, but they realized that growth alone wasn't sufficient, which led them to shift focus towards building a sales engine. Dropbox is another example where the company heavily invested in bottom-up growth and is now considering the need to develop sales capabilities. The speaker suggests that most modern B2B success stories involve a combination of growth and sales strategies.

Q: What are the challenges and complexities of implementing the growth and sales approach?

Implementing the growth and sales approach is incredibly complex, as there are numerous failure modes and ways to get it wrong. One challenge is that the interaction between the growth and sales curves is intricate and difficult to evaluate for investors. There are also problems such as users adopting a product that they are not willing to pay for or companies giving away too much during the growth stage and having nothing left to sell. Additionally, sales limitations due to the growth engine and the potential erosion of organic growth when trying to monetize a product can make this approach challenging to execute.

Q: What should startups consider when executing the growth and sales approach?

Startups should start with a simple product that drives growth, virality, and network effects. This initial product should be horizontal in nature, allowing widespread adoption. Once the growth engine is established, the product can then become more complex and verticalized to deliver enterprise value.

Takeaways

The growth and sales approach, which involves bottom-up growth followed by sales overlay, is a trend that is reshaping the B2B landscape. This approach enables startups to build companies with lower initial capital and prioritize product excellence over traditional sales expertise. It also helps startups compete with incumbents who struggle to defend against this new approach. The rise of B2B companies in various locations worldwide, the challenges of evaluating these companies for VCs, and the complexities of executing the growth and sales approach further highlight its significance. However, successful implementation of this approach requires careful consideration of the interaction between growth and sales curves and the potential pitfalls associated with monetization, adoption, and organic growth. Overall, this new approach is set to unseat incumbents and pave the way for a new wave of B2B companies.

Summary & Key Takeaways

• B2B companies are shifting towards a growth-driven approach before focusing on sales, allowing startups to require less capital and be more successful in the market.

• This trend is reshaping the entire B2B landscape, making it advantageous for startups while posing challenges for incumbents like Cisco, IBM, and HP.

• Growth-driven strategies, which involve marketing-led motions, are allowing B2B startups to emerge from various locations, not limited to traditional tech hubs.