Making the Leap from B2C to B2B — a Product Founder’s Perspective
In 2019, I struggled with a major career decision. I had spent a decade working as a consumer-facing product manager and gathered a decent amount of knowledge about crafting a product for the masses. I had learned about customer acquisition costs vs. lifetime values, analytics-led decision making, and creating user personas to represent different use cases. But the new idea I wanted to pursue was clearly B2B — I would need to sell not to individuals but to organizations. The business model made sense, the timing was right, and the market size was set to increase dramatically in coming years, yet I was uneasy. Would my skills translate? Was I throwing away existing expertise and making my next startup journey unnecessarily difficult? As I approach Datasaur’s second birthday and reflect on a particularly eventful year, I took some time to record some of the learnings and surprises I faced along the way.
The Customer is Always Right
I’ll start with the skill that carried over the best. I spent many years focused on designing the best user experience possible. B2C users are fickle and the slightest obstacle can cause them to churn out and give up on your product. I tested thoroughly, performed qualitative user studies, and iterated on the areas of the funnel we lost the most users. Meanwhile, I viewed the SaaS software I used with some level of disdain, judging their clunky product flows and unintuitive tutorials.
But SaaS has come a long way and the need for a solid user experience has spoiled even enterprise buyers, who expect modern software to be thoughtfully designed and easy to adopt. I found my consumer background to be a strength as potential clients remarked on how easy it was to use Datasaur. Using basic yet consistent design patterns throughout our platform and adding a basic onboarding experience have ensured users are happy to use Datasaur and even recommend us to others in the field.
That said, it is difficult to balance the elegant simplicity I look for with the functionality required from different users. In a consumer world, there are a vast number of users and product development revolves around setting best practices for the majority. When selling to businesses, each customer carries significantly more weight. Certain features must be developed and use cases must be supported in order to win over a sale.
As a simple example, we originally only allowed users to upload files by choosing the corresponding files on their computer, à la Dropbox. We then had a customer who wished to upload the files via API. Another wanted to choose a previously uploaded file, and another still wants it to import directly from an AWS S3 bucket. One simple option ballooned into four and we expect more to come. As new use cases crop up, we must revisit our original designs and determine how to accommodate more options and new customer requests.
As with many situations, product development differences between B2C and B2B come down to tradeoffs. I believe it is easier to bend a consumer product to your vision. Only when the feedback gets “loud enough” or the data paints a clear picture are you able to (or need to) revisit decisions. For a business-centric product we are now more beholden to each individual client, but product decisions are, in my opinion, easier. We can either choose to accept a feature request or tell the client it’s not a good fit at this time. In the past year, our product roadmap has been driven 70% of the time by user requests.
One final note on product development — there is a fine line between putting the customer first vs. building custom software. Despite our focus on closing sales this year, we have always had a True North — build the best text labeling software in the market. Many clients have reached out asking for image labeling solutions and we are happy to refer them to potential competitors with better software. My team and I have followed a basic rule of thumb — we won’t build a requested feature unless we think at least 3 other clients would find this helpful. This allows us to stay focused while essentially using client requests to prioritize the long roadmap ahead.
New Numbers, Different Dashboards
We can’t have a proper product discussion without mentioning the exalted Product-Market Fit milestone and its corresponding metrics. As a consumer PM I obsessed over metrics like DAU, time spent on app, and 7-day retention. As we built our metrics dashboard I realized key metrics for Datasaur looked very different. Daily users wax and wane with the natural project cycle for labeling. Time spent was necessarily very high as our labeling software is open at all times. How could we know we were building the right product? Were we heading in the right direction?
Advisors cited B2B companies reach PMF at ~20 paying users.
B2B veterans focused on a different key metric — number of paying users. A plurality of my advisors cited B2B companies reach PMF at ~20 paying users. When I started the company there was a single existential question: are there enough users that require a text labeling solution? Does our product scale to address all the many different ways in which vastly different users approach text labeling? Of course, the only way to answer this question was to grind it out the hard way— get out there and convince companies to buy our product. We spent the majority of the year signing up users from a wide variety of industries (ex: legal, financial, medical) and I’m finally convinced we are building a product with a sufficiently wide customer base. So now we are entering the new year focused on sales and scaling.
A Different Chasm
As I reflect back on this year, I also am reminded of a book I read a full decade ago — Crossing the Chasm. When I look back at designs of what we sold in January 2020, I can’t help but cringe a little bit. We had but a mere shadow of our current product, with little in the way of customization or automation. My willingness to get out there and sell this “MVP” was driven purely by naïveté and not knowing most companies would never consider purchasing a product this early and raw. (If you are reading this and purchased a license, a very special thanks — I owe you a coffee). But it did sell. Thanks to the Innovators and Early Adopters we found folks who were willing to take a chance on us. These people were excited to try the latest and greatest software in labeling, in exchange for early bird pricing and highly responsive customer support. Meanwhile, I spoke with a representative at a Fortune 100 company who bluntly told me to reach back out once I had a couple other Fortune 100 companies as clients.
Around July, we hit a surprising inflection point. We had built enough features in our product and credibility through our investors and clients, and we found larger companies willing to take an introductory call. It felt like we were climbing rungs on a ladder and had reached a stable new foothold; we started by signing seed stage companies, then climbed our way towards selling to Series A-C companies. In Q4 we began spending most of our time engaging with enterprise companies. I’d be curious to hear about other journeys. I know other startups have started by selling exclusively to enterprise and government, but at Datasaur it felt like we had to earn each additional rung on the ladder. This growth and maturation manifested not only through an increasingly mature product, but also through building sales experience and confidence.
Sales Confidence and Pricing
One of my biggest concerns in going B2B was the idea of doing sales. I had a lot of misconceptions around what it meant to sell your product and I feared sales and marketing more than public speaking. Over the past year I’ve learned a lot about getting comfortable with sales and finding my own brand and style.
I hired a sales coach as the start of the year. He taught me a lot of things I don’t think I understood at the time. In particular, he asked me to tell a customer that our product cost $10,000 a month. I couldn’t do it with a straight face. I knew how much I paid monthly for AWS, GitHub and Gmail and couldn’t fathom our product could possibly cost this much more. There was a recurring scene playing out in my mind that I would be laughed out the door. And so we started off selling our product at $100 per month. The following month, I sold it for $250. Then $350. Then $500. Recently we closed our first six-figure annual sale. There are many books out there about how to sell/price your B2B product I won’t repeat here. But my personal takeaway was that I needed time to build up my confidence in sales. Our product is complex and would take years to build internally. We’ve gathered lots of research from speaking with hundreds of customers around the world and put a lot of thought into designing the best possible experience for this particular problem. This level of research and effort has accrued a lot of value to our customers and I can feel good pricing it as such.
Should I Make the Leap?
There is, of course, no one-size-fits-all answer here. After spending 2 years in B2B I’m quite content with my new role. Much of what I learned previously in the world of consumer has served me well in B2B. In my role as de facto PM for the team, a lot of my day-to-day actually feels very similar. In fact the design, engineering and project management elements of my previous role were starting to feel routine and I was already looking for a new challenge. Being required to learn sales and a new approach to customer development has been a welcome way to grow my skills in a new dimension.
Most importantly, as a product person there’s no greater satisfaction than knowing users are getting value out of what you’ve built. With direct channels of communication to our end users in the world of B2B, I can feel more certain of that than ever before.
Thanks to Victor Z., Atha F., Sophia Y. for reviewing this story’s draft.
