I was in discussion recently with a headhunter about a CMO role at a tech start up. The start up is looking to expand and make new hires to the senior team. I shall refer to them as Company X.
Right here, right now
The start up specializes in a Saas for Web Real Time Communications (Web RTC). Real time messaging and communicating online in real time isn't new, of course, but incorporating real time functionality into apps and websites has typically been costly to create. The infrastructure for two parties to communicate in a full duplex system has been prohibitively expensive, historically. It also requires specialist skills and a team of people to maintain it.
Web RTC is powering second screen companion apps, news apps and peer to peer video. It's been especially handy for sports based apps where stats change on the fly and push messaging to a mass audience is in high demand.
* Not to get all Seth Godin on you, but if you know about web RTC and B2D marketing already feel free to scroll to the header "A pincer movement."
New protocols, new opportunities
When the Websocket protocol was standardised in 2011 it lowered the barriers to entry for real time communication on the web. The infrastructure, skills and costs involved were less prohibitive. Reusable services with a massively scalable offering asked: Why reinvent the wheel? Why get caught up in building your own set up when you could use one that's ready to go with a monthly subscription? Instead you can focus on priorities like user experience and growing your user base.
We have lift off
Success was sudden and unexpected. Mostly through simple word of mouth marketing. The founders are still riding the roller coaster. With a million dollars in seed money and a dozen people Company X is leading the market. Thoughts have turned to funnel conversion rates, cost-of-customer acquisition and net churn rates. The service is primarily, if not exclusively, aimed at developers.
B2D
Selling into enterprise businesses, B2B, takes time and money. The risks are higher and so are the rewards. Establishing sales channels and reaching maturity can still take several years. Even in the fast paced, globalised, world of the internet. B2C on the other hand, selling directly to individual consumers, requires little or no seed money to start up. It's as old as stone age bartering and with social media accelerating market penetration there's no shortage of overnight sensations.
With so many new companies creating businesses online, which are essentially software, there is a growing demand for services tailored to the people who build these apps and websites. This kind of sales and marketing is Business to Developer, or B2D. It's a bit of a hybrid. The purchasing power of B2D firms is usually closer to that of B2C companies, but they ultimately operate on the supply side rather than for consumers. Their raison d'être being to save businesses time and money and to aid productivity wherever possible.
Automate! Automate!
If only the Daleks had grasped automation instead of extermination. They might have conquered stairs. As I mentioned earlier why reinvent the wheel? Actually I know plenty of developers who love reinventing the wheel but have to focus on the requirements of the business today. Reinvention and creativity is great, that's how businesses are created, but to find the time to be creative means finding ways to automate processes and workflow. B2D companies which support automation and productivity for developers are gaining serious traction. Here are some of the best known:
- IFTTT aka If This Then That (task automater)
- GitHub (source code management)
- Heroku (Cloud Paas acquired by Salesforce.com)
A pincer movement
The tech behind Company X isn't exclusive. I'm not aware of any patent or IP involved. The threat to their business model doesn't just come from competitors. It's new frameworks that dominate trends right now. Eventually Company X will need to make it's business model and B2D strategy more resilient to increased developer adoption of new frameworks and collaborative libraries like Laravel and PHPReact. This summer RTC developers will head to peer workshops at Laracon to develop their own custom RTC solutions. Or they'll be experimenting with PHPReact + Load Balancer (nginx) + Memory Optimisation for RTC development. Creating a peer to peer RTC multimedia hack can be as easy as six lines of code. Tech disruption can be karmically cyclical. In less than five years the disruptor becomes the disrupted.
This also means that future competitors to Company X will require less skills and resources to build alternatives. More pressingly one of the biggest competitors to Company X has $30M in VC funding and is almost certainly looking to make the leap from server installations to Saas. They will be B2D and B2B in the same space and can easily outspend on advertising. You don't need to be a tank general to recognise a pincer movement when you see one.
Crossing the chasm
It's not enough to survive, a B2D company needs to grow. Obsolescence is always beckoning. How will Company X maintain its stellar growth while remaining crucial and valid to customers? In his book "Crossing The Chasm" Geoffrey Moore advises focusing on each of the five groups in technology adoption one by one. Using the previous group as a launchpad to the next one. The chasm he refers to is the leap from early adopters to the early majority. A jump from visionary users to pragmatic users.
There needs to be a distinction between user affection (visionaries that adopted early) and user need (pragmatic users buying into a service standard). At the heart of potential success/failure is brand. And that means turning affection for Company X into brand loyalty. This is because user need (and the existing product) is so susceptible to changing trends. Be creative with both the product and the marketing.
Howdy partners
The approach for attracting big brands has been encouraging developers (who work at big companies) to use Company X in their work and hope that they share this with decision makers, who are then suitably impressed. That's nice stealth marketing but is it sustainable and is passive expansion enough to meet growth targets? Investors like to see robust plans and a clear path to ROI.
Using developer advocacy alone to win business with big brands is a single point of failure. What do you do if developers move on to another service or framework? B2D efforts suffer and any expansion to B2B withers before bearing fruit. Better to shift focus from an approach solely servicing developers (in the hope they'll convert from a freemium plan to a paid one) by building partnerships with agencies and outsourcing firms.
You're not selling out
Developers love Company X for making it easy and cost effective to deploy push messaging. Leveraging that brand recognition and brand affection into a marketing effort which can inform, educate and convince the rest of the market is the key. Expanding B2B efforts targeting decision makers (CMO, CIO, CTO, Service Delivery Manager, Head of News and product owners) with use cases that appeal to larger companies will yield more dependable revenues. The hardest part will be maintaining company culture and sentiment, but learning to service businesses and satisfy B2B customers has to take precedence.