Naman Sarawagi

In India, most consumer internet brands have used discounts as a hook to lure in users. If your service is good, those users will stick. If not, they will go to the next brand that gives discount. Discounts are good to drive consumption, change habits and make people use your app to indulge in the newly formed habit.

For B2B, discounts are not a sustainable way to create new marketplace.

Here are some reasons:

1. Timing – Businesses do not have a need for a new service/product all the time. You can buy an extra t-shirt if there is a heavy discount but can you buy something extra for your business just because it is cheaper. An extra phone number? No. An extra LMS? No. Over procure commodity for trading – may be yes. Sustainable? Debatable.
2. Cost – B2B has High ticket size transaction so high absolute amount of discount is required to move the needle.
3.  No lock-in. If it’s a commodity service/product, it’s easy to come in and easy to leave.

Let’s look at “tools” as a way to create a sustainable B2B hook? 

We are not talking about selling the SaaS tool for profit but using a SaaS tool as a hook to marketplace or network. How does a tool fight the above 3 problems.

1. Timing – There is always a need for the tool, new companies will adopt your tool faster because they haven’t adopted any tool as yet. If a tool itself is powerful, it might give competitive advantage to early adopters and hence drive industry-wide adoption. A popular category tool will always find takers.

2. Cost – Initial development cost is as much as it take to create a SaaS company. Incremental cost of serving a new customer is negligible with SaaS. Giving it out for free or at a lower price will hurt, but not so much if the network it is building is valuable. Read this on when to choose free as a pricing model.

3. Lock-in – SaaS Tools are great for business lock-in, here’s why:

1. Workflow and adoption – Each tool has its own workflow, if you have adopted one, it is very difficult to leave unless the incentive to move out is too high.
2. Data – Moving existing data to a new system is cumbersome, if possible at all. Doing it across an organisation is like moving a mountain.
3. Network effect is a true lock-in and a SaaS tool can do a strong seeding before the network effect kicks in. It’s like supporting each other  for sustainability.

Why do tools not work to seed a network/marketplace?

1. Bad tool – The tool itself is of low value or bad. In this model, you still have to make a good SaaS product. Future network effect is not an excuse to make a bad tool today.
2. Unrealted tool and network utility – There is little to no relation between the tool and the network. This will end up being 2 products in the same org competing for resources and that do not add value to each other.
3. The network is not valuable– The utility of network is of low value. You have a working and sticky SaaS tool but the value unlock is not valuable enough for businesses using it.

The tool, the network and the relation between the 2 must be analysed for this to work. It’s tricky, but when it does work, it is great.

Some companies doing SaaS enabled marketplace in US

1. Stripe – Payment tech is really a SaaS tool. A lending company unlocks major marketplace level value. If a lending company has to be built otherwise, what seeding or lock-in do you have?
2. Wave – Free book keeping software. Upsell accounting services.
3. Zenefits – Low cost HR software, capture employee data, upsell insurance.
4. Invoice.2go.com – SaaS for book keeping. Upsell invoice discounting.

All of them have used SaaS for seeding the demand side of marketplace. None of this has used a network effect. FrieghtOS has seeded the supply side. Network effect is still minimal.

Examples in India:

1. Wishbook – Funded by Naukri. A SaaS tool for apparel manufacturers. Building a B2B marketplace on top.
2. IconScout – Won grants from Adobe. SaaS tool, delivered as plugins for popular design tools, to manage your design assets. Building design assets marketplace on top – icons, illustrations, stock images.
3. Refrens – Yours truly’s startup. We made an invoice and payments system for freelancers and SMEs (SOHO), and seeding sales referral network on top.

Ecosystem will take time to embrace this as a model because this is literally like making 2 products at once, with 3 chances of going wrong.

Will marketplace enable tools? Or tools enable marketplace or is it a case of “it depends”?

Related reading: 1, 2, 3.

I gave a talk on effective product communication at Webengage’s Engagemint Confrence in Dec’18. Here’s the video from that. The adjoining slide deck is also attached.

There is a lot of debate lately about the right business model for news content. Ad supported models are failing for various reasons and some publications are seeing success with paid subscriptions. Here I have categorised various forms of content based on why it is consumed and how best it can be distributed and monetized. Please see the chart below. The rest of the article only tries to advocate the chart.

Here’s a look at different reasons why people consume content online. See details in the chart above.

1. Utility – You already know a specific question. You are looking for an answer. To save time and/or money.
2. Hope – You don’t know the question but you will know when you find a good answer. Gives you hope of being smarter, instills long term pride. Most non-fiction books and business tycoon blogs fall in this space. There is some shareability in such content.
3. Porn – There are no questions. There are no answers. It generally has no takeaway but it instills some emotion like envy, nostalgia or anger, which is short lived. Quantity rather than quality should be the focus here. It has to be new for the consumer, irrespective of when it was produced. This is just like real porn that instills momentary lust but has no value after you have (s)wiped off. Such content has high shareability due to the emotion it triggers.
4. Professional Utility – This is a mix of Utility and Hope. It revolves around consuming content around your specific profession. This content is partially actionable for the consumer but is not an answer to any specific question. Industry journals fall in this category.

Same content could be packaged in different ways for different audience.

• Reading about the price of a newly launched iPhone is porn.
• When you are looking to buy it, is utility.
• An iPhone seller would need to subscribe to price change alerts, serving professional utility.
• A consumer brand owner might read about the price change pattern in the hope of understanding the strategy.

Some Examples to Understand the Context of the chart above:

1. One would subscribe to Scoopwhoop or Buzzfeed on Facebook but would you subscribe to it over email? May be not. How often would their article land on a search engine result page when you are searching something? Not enough to make them survive.
2. A price action movement in stock price for a stock trader needs to be reported instantly (Professional Utility). But if you are just drooling over a 40% price jump news for a tech stock IPO, you are most likely just reading for orgasm, hence it’s a porn content. You were never really searching for that content.
3. Inside.com does a great job of category specific news digest emails. Most of the content they serve has low shelf life hence they do not write but just curate the content.   
4. Skift.com for travel industry is a great professional utility content. Similar to Medianama for digital media in India. Most of their content has short shelf life but is important for their specific industry.
5. Subscribing to the-ken.com is hoping to become smarter. It doesn’t serve a particular industry but their articles cover some nuances of doing business in general. Subscribing to Naval Ravikant on twitter serves a similar purpose, hence we might even buy his quotes packaged as a book.
6. A how-to site wikihow.com would serve limited purpose to subscribe on twitter or FB but do great if it shows up on Google’s result page.

When we built version 1 of Freecharge, it was targeted at first time online transacting users. The transaction flow had more explanations regarding “Why” a certain info was required and “How To”. We even had to explain things like we are safe to transact. The media coverage helped. We did succeed but the flow was slow for repeat users.

In 2011-12 when Paytm was becoming popular they were particularly attracting the power users. Faster flows, coupon screen could be skipped, maintain wallet, recharge over IVR. The users who only wanted a clean and fast recharge moved to Paytm.

Had Freecharge started with a power user flow, we may have never succeeded. It would have been impossible to explain things with minimalist UI. Had Paytm launched with the first time user UI, there would be no reason to move to Paytm.

I recently moved all my family’s MF to Kuvera. While there are many apps trying to get users to buy Mutual Fund through them, Kuvera has 2 features that gets the power user i.e. single sign-in for family accounts and ability to import old transaction. MF is a complicated product for first time user to figure out on their own online. Once the power users are captured through these features, these users can influence the laggards as well.

Depending on what you are building and when, it is important to note if you are building for first time users or a more valuable product for a power user.

Hotstar was the first and fastest 100MN download app from India. Indian women were a major contributor to this. They are the bread buyers of the family so it make perfect sense for media companies as well.

Stay at home women in Indian households are major consumers but they are also considered a major reason for low growth of Indian economy. The social structure does not allow enough freedom to go out of home for standard work hours.

I am particularly talking about educated women in urban Indian family. Typically a women’s income in such family is “additional income” and not mandatory to run the household income.

Here are few traits that I have been noticing. It will help you understand what they want.

1. Age 25 to 60. Married.
2. Can use popular apps on smartphone. Not necessarily tech savvy. More browse, less search.
3. They are influential but not necessarily on Instagram.
4. Everything goes Viral. Word of mouth is fast. Comparable to college kids.
5. Have free time from early noon to early evening. Not necessarily on all days. Not at the same time everyday. About 30-50 hours a week.
6. Do not appreciate physically intensive work like data entry. Creative works helps.
7. Need Social recognition for work. They need “colleagues” to work.
8. Not pressed for money. Not looking to meet a need or target to achieve.
9. “Sales” and “Creation” are most suited. Operational work is difficult remotely. Any work that requires time adherence is difficult.

There are few companies that are trying to tap this workforce. Let’s see what they are doing right.

• Foodybuddy – The startup enables home chefs to sell online. This domain has been explored by startups earlier. Shef just graduated from YC to address the same domain. Amongst other things the one thing they are doing right is that they are selling long shelf life items. Along with immediate consumption item like dosa, they are also selling dosa batter. They are selling pickles and Ladoo. These need to be less predictable in terms of time of service. It’s difficult to beat a restaurant’s time adherence for immediate consumption food. Fast and convenient will always over take taste. For other stuff it is has a strong story, as powerful as that of Lizzat Papad’s self help group. Women do creative work, app handles sales and delivery.
• Meesho / Glowroad / Shop101 / Wooplr– These are decently funded apps. All in the dropship category. Mostly selling non-branded women clothing. Apparently they are doing good in tier-2/3 towns. The local store may not have as much curation and catalog size so these apps work. Meesho sellers are like ecommerce assistants. Curating on Meesho is a creative skill. Same audience as Amway or Tupperware. Women do the selling work, app handles supply.
• Flyrobe’s Trunk Show – Flyrobe is into rental of premium clothing. They are trying their hands becoming the suppliers for women who want to setup kiosks at local Flea Markets. They deliver the goods before the orders are placed by the consumer and allow of a more physical viewing. The unsold inventory can be returned. App handles supply.
• Makemytrip has had work from home holiday consultants for sometime now. Sales centric again. But makemytrip gives leads to their holiday consultants. Users aren’t really selling to their own network. Time adherence will be higher in this case.

At my new startup, Refrens, we are looking at bring more work to this audience. Creative people who are good at what they do but may not be able to go out and sell.

Kingfisher recently launched Radler in Gujarat. It’s an aerated beverage, similar to Sprite or Mountain Dew. They promote it as 0% Alcoholic Drink. There are atleast 5 more “0% Alcoholic Beer” drinks sold in Gujarat. Branding the product closer to beer allows it to differentiate it from “soft drinks” and also keep a premium pricing.

In software products when you are making a category defining product for your market you have to choose your “tags” well. Is Slack replacing team emails or improving chat? Is Airtable a smarter Excel or a faster built custom app.

At my last startup, FindYogi, I liked to call it a “shopping decision platform”. I would always need 3-4 more sentences to explain what we do. Had I called it a “price comparison site” it would have been easier for people to understand in the first go. It would hurt the team’s ego that we were building in a crowded domain and not building anything fancy but that would be a separate problem to solve.

These “tags” are different for employees, partners and investors. This is your quick pitch and the goal is to let the audience put you in a “bucket” or “shelf” they already know.  

1. Keep it simple and generic. Even if it defines only half of what you do. A “price comparison site and we also help you decide which product to buy” is a better pitch than starting with complicated phrases.
2. Let the audience link it to a popular product that they might already know. Let them come up with that bucket in their head and don’t get offended with whatever they call you. If it’s a 50% match, it’s a win.
3. Let it evolve with time. Product and market maturity will give you new tags. Embrace it.

At my new startup, Refrens, I am currently pitching to potential users as “JustDial +Linkedin for B2B service providers”. It doesn’t sound fancy but gets me a foot in the door. This is how a user defined it. I am going to stick with this for some time before I find a better pitch.