What is an MVP for a B2B startup?
Startups

What is an MVP for a B2B startup?

February 8, 2018

Unexpectedly, there is a conversation going on about this article on HackerNews.

As a B2B startup founder, most conversations I have with other startup founders of B2C startups come to a point where they say “You should just develop a very simple MVP, and sell it to a few hotels.” When they see my half-baked prototypes, they mostly say “You can already sell this!”

Of course they all have good intentions, and for a long time, I tortured myself with these thoughts too. Am I just too scared to sell? Am I not able to control my perfectionistic tendencies?

At Automated Hotel, we’re developing an in-room tablet for hotels that allows their guests to request services, and helps them analyze guest behavior. The prototype I’m working on only allows guests to order room service, and provides some ROI data to the hotel. After a few months of development, I’m almost there.

But is this good enough to be sold? I don’t doubt that there might be a few hotel executives that are willing to bet on this, and sign up at this very early stage at a discounted price, but contrary to the belief of many others, this is really unlikely, and it’s not worth spending too much effort on considering the expected return.

At the same time, as we’re going to be providing the tablets to the hotel, even if they sign up for a prototype with fewer features, the tablet costs are the same. I still need to buy the same number of tablets to rent to hotels, and can’t even really discount the product that much. I still need the money to buy the tablets, or at least get enough investment that will provide enough cash to do so at loss for the short-term.

Most advice is for B2C startups

With a B2C startup, you can easily put together a landing page, start collecting e-mails. Be active on social media, share interesting content that your prospective customers might like. You can create a half-baked prototype, and if you get ten people to try it, you can already see how well it works.

But what many people don’t understand is, these methods don’t work with most B2B startups. For example, the person who is going to be making the final decision to buy the in-room tablets are mostly C-level executives. These people don’t go around putting in their e-mail addresses on websites, and sign up for products that cost tens of thousands of dollars a year. The buying processes are long and cumbersome. They don’t really make rash decisions, either they have to be feeling that they are really missing out by not having a certain thing (“because everybody else has it”, like websites) or you really need to justify the costs. I know this because I ran a hotel consultancy company in Dubai between 2013 and 2015. Making cold calls every day, going to events to network, trying to find out who the decision maker actually is… It is a lengthy process.

So, recently I stopped putting myself down for not being able to get to market as fast as the B2C startups around me. Being a solo-founder already slows things down (if you’re interested to partner up, I’d love to hear from you), and an MVP for a B2B startup is not the same as an MVP for a B2C startup, contrary to the belief of most people.

Update: As pointed out by some people on HackerNews, I’m definitely mostly talking about “enterprise B2B,” and Automated Hotel is also partly a hardware startup. So, this doesn’t apply to every B2B startup to the same extent.

Featured image from picjumbo.

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6 Comments

  • Reply
    Nicolas Brunet
    February 8, 2018 at 7:03 pm

    Not only that but I’ve found hotels are a tough target. Buying processes are lenghty, hoteliers are conservative and budgets are low for technology. We rent our smart devices to hotels as well – it’s called Instaroid, a social media printer for venues. Happy to exchange tips.

    • Reply
      Evrim Persembe
      February 8, 2018 at 11:39 pm

      Hotels are definitely tough, and they are not tech-savvy. This is why they were disrupted by companies like Booking.com and Airbnb, and are currently getting ripped off by many tech providers (without naming names).

      Instaroid looks pretty cool, I’d love to talk and exchange tips. What’s the best way to get in touch with you?

  • Reply
    Rachid
    February 8, 2018 at 9:45 pm

    What I would do:

    – As in a true lean spirit, the tablet is just an hyphotesis not a hard requirement and a costy to test hypothesis to test by he way: I would go for a mobile web app for the MVP.

    – As getting a business to fork time and effort to test a new solution is actually much harder that to get a random dude to fork a few dollars I would forget the «don’t go for free» B2C dogma. I would try to find an Hotel partner that can share my vision and accept to test my MVP and go from there. He can retain the free service as long as his feedback is valuable and he accepts to speak positively of the solution in the media and to futur leads.

    – Rather than shooting in the dark i would try to find a hotel chain that has developped or is about to develop an open innovation strategy: think Marriot or Accor or many others

    Good Husting!

    • Reply
      Evrim Persembe
      February 8, 2018 at 11:28 pm

      Thanks a lot for putting together a detailed comment Rachid.

      > I would go for a mobile web app for the MVP

      It’s not mentioned in the article, but my initial idea was white-labeled guest mobile apps, as you recommended. I approached hotels with that idea, and even had a pilot hotel, but, without getting into details, there were many issues with that solution. That’s why I pivoted into in-room tablets.

      > I would try to find an Hotel partner that can share my vision and accept to test my MVP and go from there.

      This is the plan, but the MVP should actually be at a stage where I can show that this brings value to the hotel, and isn’t detrimental to guest satisfaction. That is not necessarily the case with many B2C solutions.

      > Rather than shooting in the dark i would try to find a hotel chain that has developped or is about to develop an open innovation strategy.

      Marriott actually had a program called TestBed for startups, but I didn’t have much to show by the time the deadline passed. Hopefully, they will have a new batch in 2018.

      Thanks again for the thoughtful comment.

  • Reply
    Igor
    February 8, 2018 at 10:59 pm

    You’re right that B2B sales process is not the same as B2C, this MVP shall differ. Still the purchase decision isn’t made directly by C-level. It’s conceived somewhere below by someone who will browse for a solution and will be willing to leave his email. This person even might have an authority for a pilot where you can present a protototype. If you will convince that person tha prototype works, that you’ll be able to fulfill the roadmap, and would provided a good price then you have had your mvp right

    • Reply
      Evrim Persembe
      February 8, 2018 at 11:22 pm

      There are definitely hotels, especially bigger chains that have people below C-level that can make the decision to buy our product, but my experience selling consultancy to hotels in the Middle East was that even most general managers can’t make a decision like this. It might be different in Europe and North America though.

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