Selling at Home vs. Going Global – The B2B Startup Dilemma
(This post is part of the Think Next thought leadership series)
B2B startups such as Freshdesk have taken the world by storm, raking in 100,000 global customers while building their business from Chennai, India. For them, and many other startups, an enterprise-buying decision that would normally take place with a handshake on a golf course, is now happening with a Skype demo 20,000 km away.
But selling to enterprises (Indian or Global) is no easy task — something the all the speakers agreed during the ‘Why Go Global?’ panel at Think Next Winter 2016. In the Indian B2B market, a lack of professionalism, unpredictable sales cycles, and a constant focus on cost by Indian clients are just some of the factors that adversely affect a B2B startup’s profit margin. On the other hand, trying to sell products to a global prospect will be impossible without deep domain knowledge and empathy with the buyer. How does a founder make this choice between a rock and a hard place?
The Three Levels of Selling
Any enterprise today has two basic needs — money and time. Therefore, there are three levels at which a startup can make an offer to a buyer. These are:
Level 3 — ‘Buy from me, and I’ll save you time’
Level 2 — ‘Buy from me, and I’ll save you money’
Level 1 — ‘Buy from me, and I’ll make you money’
Indian enterprises — due to our market maturity stage — are laser-focused on top-line growth. Given the huge, cheap labor pool, they are almost indifferent to saving the time of their employees. If a product can provide significant bottom-line impact, Indian enterprises will at least listen to you. But if you really want to sell fast, Indian buyers will want to see directly attributable top-line impact. In developed economies, products can be sold for any of the levels, but you will still find faster acceptance with a Level 1 product.
Find the Money-making Angle
This is Business 101 — if a product doesn’t solve a company’s fundamental problem, it can’t be sold effectively. Accel Partners’ Shekhar Kirani drove this point home at the panel and also noted that this fundamental problem is different for global or Indian enterprises.
Global companies are more likely to consider B2B services if you solve an efficiency problem for them that saves time or money. These companies are more or less financially secure and focus their attention on increasing productivity. As a result, a multitude of B2B businesses around the world offer services that make processes faster and more efficient. These solutions then find more takers among global enterprises.
Most of the Indian businesses however, are value-seekers. If a solution is aimed at maximizing profits rather than saving time or increasing productivity, Indian enterprises are more likely to buy. As Shekhar says — if you pitch your product to a hospital by saying it will get them 200 patients per day instead of 100, and that your price is only a 20% commission, you will have a better chance of netting them as your client.
Essentially, when a B2B startup hits the market, it should first assess the markets’ core problem. Does it need value or efficiency? Once that is determined, promoting the product along that angle will give it the best shot at success.
Fear Equals Opportunity
We live in times of enormous, disruptive change — demonetization being the latest one. It’s critical for B2B startups to understand the fears of their enterprise customers. iSPIRT Foundation Co-founder Sharad Sharma says Indian bank CEOs are seeing large-scale change in their businesses. Indian banks have recognized that the economic climate around them is changing, and that they have to do things differently to survive. This fear has in turn opened a window of opportunity for B2B businesses to pitch their services.
In fact, this phenomenon has re-shaped the thinking of many founders (including me) on selling to businesses. A few years ago, the popular opinion was that focusing on global enterprises was the best route. Conversely, pitching to big Indian companies was considered a waste of effort and resources due to their already secure position. Thanks to the rapidly-changing business landscape, Indian businesses are now becoming quite open to unique B2B products that can drive large-scale value and efficiency.
The Road Ahead for B2B
Today, global companies are very receptive to products that unlock value. Additionally, Indian enterprises are opening their eyes to B2B startups. With online connectivity, sharp business acumen, and the right knowledge of their market, B2B startups can proliferate both nationally as well as globally. Look at software giant Zoho — a company that expanded its offices to Japan as far back as 2001 when they recognized this!
With all these advantages and despite the various challenges, it’s now a great time for B2B startups to choose to score on Indian wickets or become specialist international players. So go global or stay at home – B2B startup opportunities are about to explode.
Raghav KherManaging Director, Microsoft Accelerator Seattle
This week, we’re proud to announce the latest batch of startups joining our Seattle Accelerator’s Fall cohort. With a combined funding of over $140 million, these 11 startups span AI, cloud, and IoT spaces.
Ravi NarayanGlobal Director, Microsoft Startup Growth Partners
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