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Or number 3, leave the boring B2C world and go enterprise

That just means the customer acquisition cost is even higher. You're not paying for Google ads, you're you paying salespeople to go out, wine and dine, and get new customers. As a result, the margins on products needs to be higher to support the sales process.

I'm biased, but I don't think this is as big a problem as you suggest. Yes, customer acquisition is more expensive and takes much longer... but each customer is spending orders of magnitude more than in a typical B2C sale.

And I think there could be considerable cost savings in reduced overhead from having to support fewer customers at a higher price point.

This used to be a lot more true, but it's hard to apply it as a blanket statement anymore. Some counterexamples come to mind:

- 37 Signals

(because you're going to object that they're the only ones, here are some more)

- Fog Creek

- Atlassian

- Rackspace

- SoftLayer

- Amazon EC2

- Balsamiq

- Heroku

- ZenDesk

- Visual Website Optimizer

To my knowledge, none of them have travelling salespeople. Acquisition cost is likely higher than with consumers, but likely nothing like the costs associated with an outside sales force (or their prices would have to be higher).

Everyone says 37 Signals is an exception, but I think that's just lazy thinking. There are lots of enterprise businesses that don't do expensive outside sales.

There are different risks selling to businesses, but B2B businesses don't need massive scale to be able to pay their rent. So if you're bootstrapping, B2B is likely to have a higher probability of non-failure.

Vast majority of the companies above make products for developers/designers, and that is not a coincidence. Developers/designers live on the web, seek and find solutions themselves. Rest of the enterprise market is quite different and much harder to reach, hence drastically higher customer acquisition costs.

I posted products I know, and I happen to be a developer. If you google (space) SaaS, you'll find bootstrapped companies serving many other parts of the enterprise.

Agreed. I am working on one :) I just meant that if you are addressing developer market, sales costs are lower as developers live on the web and there are many mediums to share information such as hacker news.

I find that other parts of the enterprise market are surprisingly harder to reach. In enterprise companies information sharing is often discouraged, many folks working in the enterprise are hesitant to mention what products they use let alone promoting (or criticizing) them. Successful SaaS companies addressing the enterprise seem to either gain traction elsewhere and then try to penetrate enterprise or spend tons of money for marketing and sales.

Plenty of those do have sales people.

In the end why leave massive wads of money on the table, do both.

Yes. I've had a few conversations with SoftLayer's sales people. I am not sure if they travel, but they do pick up the phone.

Not to mention the very long and unpredictable sales cycles. The money is good, but it's a different set of problems as you said.

Exactly. The B2B markets are typically harder to penetrate for startups, unless the startup has plenty of cash to drag businesses to their product.

Go enterprise and don't get lured to the "enterprise for 1.99" business model, propagated by a few exceptions that succeeded (e.g. 37signals). It's a lot "easier" to scale charging proper money for B2B products than betting on scale...

I wouldn't say 37S were "enterprise" , they started at the low end of the business market. I'm guessing a lot of their initial customers were freelance rails developers.

They do have enterprise level customers but that's more of a "trickle up" thing.

You have to hire out execs from previous enterprise companies, or work at one and get to know people in the company (as well as their problems) that you solve with your technology.

not necessarily. Cold calling works rather well, in most products. The sales process is definitely long (several months), but it does work... (my first company was a B2B for companies with 50+ employees and we didn't know anyone in the industry)

That said, knowing someone definitely helps. A LOT.

Wouldn't that just be #1?

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