4 ms·

Yeah, don't try to sell to restaurants. I'm not sure if that, or running a restaurant, is the worse idea.

danieltillett 10y ago
Worse to sell to a restaurant since if you have a chance of success if you are running a restaurant. There whole SMB market is a death trap for technology companies. It looks so attractive on the surface; great demand and no competition, but the reason there is no competition is the cost of acquiring a customer in this market is greater than the lifetime customer value.
- thebladerunner 10y ago
  Square seems to be doing not too shabbily in that market.
  - ams6110 10y ago
    That's because they hit squarely (no pun intended) on a pain point with a clearly better solution.
- mahyarm 10y ago
  So how does slack, square and shopify do it with their SMB products?
  - vacri 10y ago
    'traps' don't necessarily have a 100% capture rate.
    - danieltillett 10y ago
      Exactly. People see the few companies that manage to succeed in this market and assume it is easier than it really is - the few survivors hide the thousands of companies that tried and failed.
  - danieltillett 10y ago
    It is not impossible in this market, just very hard. The key is getting your cost of customer acquisition down below your lifetime customer value. You can do this two ways - use a low touch sales model or offer a sticky product with high margins at a relatively high price. The problem is not many products can be sold successfully into the SMB market with a low touch sales model - the decision makers are just too busy running their businesses to investigate what technology products will make their life easier on their own (hence the need for sales staff). Once you need sales staff you need a product that is going to give you a high lifetime customer value and there are not many technology products aimed at the SMB market that can offer this. I sell into SMB market, but I sell a very expensive SAAS product in a tiny niche. This makes a great lifestyle business, but it has no interest to investors because the total market size is just too small.
  - AznHisoka 10y ago
    I recommend you don't even think about the term SMB. It's such a broad category. You can't just group all small businesses together and say you can't sell to this group. They all have different pain points and problems. Some products address them (slack), others don't (op)

Worse to sell to a restaurant since if you have a chance of success if you are running a restaurant. There whole SMB market is a death trap for technology companies. It looks so attractive on the surface; great demand and no competition, but the reason there is no competition is the cost of acquiring a customer in this market is greater than the lifetime customer value.

thebladerunner 10y ago
Square seems to be doing not too shabbily in that market.
- ams6110 10y ago
  That's because they hit squarely (no pun intended) on a pain point with a clearly better solution.
mahyarm 10y ago
So how does slack, square and shopify do it with their SMB products?
- vacri 10y ago
  'traps' don't necessarily have a 100% capture rate.
  - danieltillett 10y ago
    Exactly. People see the few companies that manage to succeed in this market and assume it is easier than it really is - the few survivors hide the thousands of companies that tried and failed.
- danieltillett 10y ago
  It is not impossible in this market, just very hard. The key is getting your cost of customer acquisition down below your lifetime customer value. You can do this two ways - use a low touch sales model or offer a sticky product with high margins at a relatively high price. The problem is not many products can be sold successfully into the SMB market with a low touch sales model - the decision makers are just too busy running their businesses to investigate what technology products will make their life easier on their own (hence the need for sales staff). Once you need sales staff you need a product that is going to give you a high lifetime customer value and there are not many technology products aimed at the SMB market that can offer this. I sell into SMB market, but I sell a very expensive SAAS product in a tiny niche. This makes a great lifestyle business, but it has no interest to investors because the total market size is just too small.
- AznHisoka 10y ago
  I recommend you don't even think about the term SMB. It's such a broad category. You can't just group all small businesses together and say you can't sell to this group. They all have different pain points and problems. Some products address them (slack), others don't (op)