Business-to-business, or B2B, means selling a product or service to another business rather than directly to a consumer. The buying business may use it itself, include it in what it sells, or resell the resulting service. section 13.2 section 25.0
The main B2B variants are:
- B2B: a business sells directly to another business that is the end user. section 13.2
- B2B2B: a business sells to a business that incorporates the product into something sold to another business. section 13.2
- B2B2C: a business sells through another business to consumers; either extended model is often called original equipment manufacturing (OEM). section 13.2
- B2B services can evolve into B2B software: software tools gradually make service delivery more efficient and eventually become the product. section 13.4
A practical B2B path
A services company can use customer revenue to pay its expenses while building software, reducing its need for venture capital. SAP followed this broad pattern, combining enterprise resource planning software with substantial after-sale services. section 13.4 section 13.2
Table 13.1 B2B variant business model companies I founded
|
Company
|
B2B type
|
Description
|
|---|---|---|
|
MasPar
|
B2B hardware
|
MasPar was a supercomputer company that sold to businesses that bought our machines as “major capital equipment hardware” in terms of how the machines showed up on its books.
|
|
Aguru
|
B2B hardware or B2B2B services
|
Aguru Images made a giant half-geodesic dome with 400 computer-controlled cameras and lights mounted all around the inside. A movie actor would sit in the middle, and thousands of images of tiny portions of their face were taken from many different angles in many different lighting conditions in 14 seconds. This made it possible for the very first time to create computer-generated images of the actor’s face that viewers could not tell were computer-generated. These devices were sold to large movie studios in a B2B model or to service bureaus that then sold their image-creation capability to movie studios in a B2B2B model.
|
|
Ambric
|
B2B OEM
|
Ambric was another hardware startup. It designed and built a semiconductor chip that contained 300 processors and replaced a dozen or more boards full of expensive chips. The Ambric chip could encode and “shrink” the signals transmitting high-resolution video images on their way to consumers, signals critical to
streaming. To make streaming of high-resolution images practical, bandwitch utilization had to drop from 25 megabits per second to 7 megabits per second with no loss of fidelity. Ambric’s chips could do this shrinkage for a fraction of the cost and space that the dozen old boards required. This was B2B OEM because Ambric sold its chip to a company that added something to it and then sold it to Apple and the makers of broadcast equipment and set-top boxes or modems in people’s houses.
|
Compare founded-company examples across B2B hardware and B2B2B services, including capital equipment and specialist production systems. section 13.2
B2B sales is not simply prospecting, pitching, and closing. After product-market fit, growth depends on relationship-oriented salespeople who listen well, show empathy and patience, manage a sales funnel, and build long-term customer relationships. Hiring them too early can frustrate them. section 25.0 section 25.5
