Wondering whether or not you should consider starting a B2B business at a B2C Company? Last week, we had Darren Shimkus, the GM of Udemy for Business, on the Bowery Capital Startup Sales podcast to discuss exactly that. Udemy started as a B2C business about 10 years ago, offering online education for professional adults who want to add new skills to their resumes or explore their passions. About 3 years ago, Udemy decided to try its hand at a B2B effort by selling directly into businesses for corporate wide education. During the podcast, we go into details on how Udemy ultimately decided to launch a B2B business, who was in the room for this decision, and all of the things they considered before making the decision.
Darren shared a ton of relevant insights and considerations worth discussing before taking on this massive undertaking. Here are 5 things to consider before starting a B2B business at a B2C company.
(1) Your B2C data is a valuable resource – use it! At Udemy, one of the key indicators that led the management team to believe there was potential for a successful B2B business was how consumers were using their B2C product. While personal development courses were performing well, they noticed that courses like programming, data science, IT, and product development were off the charts. It became clear to the team at Udemy that people were paying for these classes with their own money, but the courses were likely benefiting them in the work place. Thus, a B2B offering may make a lot of sense. In general, user behavior based on money they actually spent is much more valuable than any survey you could run or opinion you might have.
(2) Assess the competition in the B2B market today – is there a need and can you compete? At Udemy, because the B2B classes were so popular, they began to suspect that corporate training overall is not doing a great job at meeting the needs of their employees. They then took the time to really assess the current offerings in the market and determine whether or not Udemy for business would be able to compete and differentiate in the existing market. Darren suggests that you should do everything you can to disprove the hypothesis that a B2B model makes sense for your business. If you still think you should do it after that, then move forward.
(3) Everyone in management should be on board with this decision. Deciding to take on a B2B effort requires rethinking the entire organization, thus it should be a decision made with all of the current company management in the room. At Udemy, as they assessed whether or not to consider starting a B2B business at a B2C company, they aired on the side of having more people from management in the room than less. Ultimately, this decision will impact the entire company, thus all of the org leaders should be a part of the decision process.
(4) Launching a B2B effort will be distracting and will take up management’s time. While it may seem like a small product pivot, in reality, starting a B2B business at a B2C company is a significant investment (time and money), and more likely than not, will require building a completely new org structure. At Udemy, Darren admits that they probably did not quite understand the magnitude of the undertaking of building a B2B business.
(5) Timing is everything. When you decide to try a new initiative like a new business line, it is critical that you be of a certain size and maturity as a business. Darren believes that organizations develop in step functions and it only makes sense to even consider a new line of business once you feel you have some level of predictability in your business. From a size perspective, the company should be in the range of 40-50 employees if not more. Essentially you need at least this many employees to have enough mental capacity to begin thinking about and assessing new initiatives. Lastly, in having at least this many resources, it allows the company to be able to bifurcate some of your resources during the initial testing phase of the new initiative.
If you found Darren’s 5 Things to Consider Before Starting a B2B Business at a B2C Company helpful, listen to the full episode with him here and subscribe to get a new episode of the Bowery Capital Startup Sales Podcast every week.