B2B SaaS: Our Full-Court Press
In Malcom Gladwell’s book David and Goliath, he told the story about a man named Vivek Ranadive. Vivek had a problem. He had eight, pleasant 12-year-old girls who were obedient and willing to work hard. Unfortunately, none of them were exceptional basketball players. In fact, most would struggle to be considered average. This typically would not be a problem except Vivek was the coach of these eight girls. Even more concerning was that Vivek himself had never played basketball in his life.
However, Vivek, an electrical engineer by trade who had worked his way into Silicon Valley, was not going to give up. He devised a plan. It always confused him that teams would essentially “give up” almost 3/4ths of the court. They would allow the other team to calmly dribble the ball up the court and run their coordinated plays. In order to correct this, he installed the “full-court press.”
The full-court press is a strategy wherein the players are guarded the entire way up the floor. It can be a risky strategy as it leaves you vulnerable to easy baskets if players are not disciplined and tenacious. Vivek knew his girls could not win if they played the “normal” way. The full-court press was risky, but he was confident it gave him the best chance to win — so he did it.
After the first six victories, Vivek realized he might be onto something. The press hid the weaknesses of his girls (lack of actual basketball skill) and highlighted their strengths (disciplined, fit, and aggressive). In addition, it also neutralized their opponents strengths (size, effective plays, etc.). Vivek’s girls would go onto play in bigger tournaments on the regional and national level. Not bad for a group of unskilled girls coached by a man who had never played.
And while the above story is great (who doesn’t like a good underdog triumph), the point was not about basketball but the strategy of taking what you have (or don’t have) and turning it into success.
Take a look at the five largest companies based on market cap. They are all heavily B2C focused. Take a look at TechCrunch’s headlines for today — it’s constantly consumed by Facebook, Snapchat, Google, Amazon, Apple, and countless other B2C giants. Because of this, often times when the terms “venture capital” or “startup” come up, people immediately think of the B2C space. Whether it’s Shark Tank, Facebook, or Uber, people immediately jump to consumer technology when thinking about startups.
This does make some sense to some degree. As consumer-facing companies, they tend to be more public. For many of these companies, everyone is also potentially a customer, so the market is huge. B2C products can also be much cheaper to develop. There’s even more virality with B2C products than business-facing software—just look at Pokémon Go.
However, similar to Vivek, High Alpha did not take the “normal” approach to playing the game of company building. Similarly to Vivek, we did not have the same “normal” set of skills as other startup studios and venture capital funds in the B2C space. What the High Alpha partners and team did have, though, is an expertise in B2B SaaS. High Alpha decided to not play by the popular standard, but leveraged our strengths and our resources to install our version of a full-court press.
But it is not just our partners expertise about the B2B SaaS space. It is our fund as well. If we were to invest in and build B2C apps, it would be the equivalent of playing a “normal basketball game” with the wrong set of skills—it would be much more difficult to win. We needed to change the strategy, so we’ve focused on B2B SaaS and its own efficiencies and benefits. The products we make can be more engineering-heavy to develop than a B2C app, but the reduced scope of the market allows for a much smaller, more efficient marketing budget. We build a product that provides real value (and real revenue) from the very beginning instead of attracting a million DAUs and then starting to think about “monetization.” Word of mouth — which is free — can also be a much more effective marketing tool in smaller markets.
Vivek’s girls would eventually go on to the national competition and would win their first two games before a losing in the third round to an impressive team out of Orange County, California. Not bad for a team full of (slighltly) below-average players and a coach who had never played.
As Vivek shows, bucking trends is how unexpected success happens.
Building businesses is hard—building impressive ones is even harder.
But the full-court press is on. And we can’t wait to see where it goes.