Anyone noticed that almost no YC companies are purely B2C software anymore?
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Though definitely not a YC company, we're [1] doing alright for ourselves in the B2C disaster recovery market; there are certain niches that have not yet been fully taken over by the "this should be free" movement. Not that a day goes by that we don't have a comment left on our site or sent to our customer support department about why our software that has literally cost countless hundreds thousands of dollars and man hours to develop isn't free, but such is life.
I was previously in both the B2C and B2B backup market, but "cloud" has completely taken over that market segment. Our focus on (disaster) recovery solutions has proven profitable - it seems when their data is gone, customers will then do anything to get it back. Good luck convincing them to shell out for backup software before disaster strikes, however.
People always ask me why I'm in the recovery niche, and the answer is easy: when their data is safe, you have to beg them to buy your software to protect their information and their data. When their data is gone, they'll come to you begging and pleading to get it back.
A big problem with B2C these days is honestly piracy. We have our hands beyond full keeping the very first page of Google free of piracy links. Even the best-meaning of customers will turn when simply searching for the product name + "download" turns up "Download now, free activated and serial XXXX" as the 3rd or 4th result on Google or Bing. SaaS is much easier to police for piracy (or pre-empt entirely) in that respect.
B2C also isn't as "sexy" for investors and founders who've heard so much about and drank much of the "recurring revenue" koolaid. We try to sell licenses for updates as recurring charges, but that gets almost no traction whatsoever. This current startup cycle is very much recurring-revenue-focused, B2C has a much harder time with that than SaaS or B2B enterprise software.
1: http://neosmart.net/EasyRE/
I was previously in both the B2C and B2B backup market, but "cloud" has completely taken over that market segment. Our focus on (disaster) recovery solutions has proven profitable - it seems when their data is gone, customers will then do anything to get it back. Good luck convincing them to shell out for backup software before disaster strikes, however.
People always ask me why I'm in the recovery niche, and the answer is easy: when their data is safe, you have to beg them to buy your software to protect their information and their data. When their data is gone, they'll come to you begging and pleading to get it back.
A big problem with B2C these days is honestly piracy. We have our hands beyond full keeping the very first page of Google free of piracy links. Even the best-meaning of customers will turn when simply searching for the product name + "download" turns up "Download now, free activated and serial XXXX" as the 3rd or 4th result on Google or Bing. SaaS is much easier to police for piracy (or pre-empt entirely) in that respect.
B2C also isn't as "sexy" for investors and founders who've heard so much about and drank much of the "recurring revenue" koolaid. We try to sell licenses for updates as recurring charges, but that gets almost no traction whatsoever. This current startup cycle is very much recurring-revenue-focused, B2C has a much harder time with that than SaaS or B2B enterprise software.
1: http://neosmart.net/EasyRE/
My favorite "this should be free" has to do with when Qt was released under the GPL. It always bothered me when people selling software would complain that they couldn't use the GPL version of Qt. At some level understood that software costs money to make which was why they were not giving away their software, but at the same time they didn't want to pay for software. And then when it was put under the LGPL people still complained. Having lived through Qt being released under the QPL/GPL/LGPL I understand that when selling pure software there will always be people who want more and they should just be ignored because they are not your customer and never will be.
>The biggest problem with B2C these days is honestly piracy
It might also have something to do with the fact that free (in both senses of the word) alternatives exist for your product. It must be difficult to sell a product that is already being given away.
It might also have something to do with the fact that free (in both senses of the word) alternatives exist for your product. It must be difficult to sell a product that is already being given away.
>The biggest problem with B2C these days is honestly piracy
The MPAA and RIAA agrees with you.
You're in an industry where hundreds of thousands of people are making a good living with billions of dollars in market cap. What's the biggest problem you are facing again? Pirates in Somalia or other high seas? Seriously?
The MPAA and RIAA agrees with you.
You're in an industry where hundreds of thousands of people are making a good living with billions of dollars in market cap. What's the biggest problem you are facing again? Pirates in Somalia or other high seas? Seriously?
Why? Google, Facebook, and others convinced consumers that software, storage, etc. should be free.
Try to sell better email than Google email to consumers? Good luck - you will get so much hate email "this should be free" that you can write a book from them.
Anyway I'm not aware of any new B2C software company which is hot right now. But please correct me - I would love to know (and learn how they get over 99% users who think it should be free).
Try to sell better email than Google email to consumers? Good luck - you will get so much hate email "this should be free" that you can write a book from them.
Anyway I'm not aware of any new B2C software company which is hot right now. But please correct me - I would love to know (and learn how they get over 99% users who think it should be free).
It's not free. It's supported by surveillance. But people don't care.
If people started caring about that kind of thing, new niches could open up for alternatives that were more secure and under user control.
If people started caring about that kind of thing, new niches could open up for alternatives that were more secure and under user control.
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Historically, software was free - it was a value-add thrown in to support sales of hardware or developed by universities and licensed to the public. Microsoft was the one who convinced consumers that they oughtta pay for their software, and then Netscape convinced them that they shouldn't.
Anyway, the way to get consumers to shell out for software is to solve a problem that they'd previously been spending money on. Netflix gets away with charging because the alternative was Blockbuster, which was even more expensive. Spotify and Rdio get away with charging because the alternative was buying CDs, which was even more expensive. Uber and Lyft get away with charging because the alternative was taxis or buying a car, which are even more expensive. Solve a problem like rent, taxes, gas, better jobs, Internet, etc. and you'll have a bunch of people happily shelling out money.
Anyway, the way to get consumers to shell out for software is to solve a problem that they'd previously been spending money on. Netflix gets away with charging because the alternative was Blockbuster, which was even more expensive. Spotify and Rdio get away with charging because the alternative was buying CDs, which was even more expensive. Uber and Lyft get away with charging because the alternative was taxis or buying a car, which are even more expensive. Solve a problem like rent, taxes, gas, better jobs, Internet, etc. and you'll have a bunch of people happily shelling out money.
It is called a gold rush 2.0.
The second .com bubble is about making tools for startup to be efficient and then advertise how much these business models are successful to attract more startup to make tools for startups.
The same way during gold rush, the hardware reseller made the most money and were sending ads abouts the gold rush everywhere.
This time, there is just no gold.
The second .com bubble is about making tools for startup to be efficient and then advertise how much these business models are successful to attract more startup to make tools for startups.
The same way during gold rush, the hardware reseller made the most money and were sending ads abouts the gold rush everywhere.
This time, there is just no gold.
I do not know if this is about bubble. I think the cause for this is actually worse than a bubble - it is shift of consumer perception that everything on internet should be free. With exception of games - of course.
However, there is also an opportunity here: as bubble bursts (or deflates) all these money losing (and free) B2C solutions provided by large companies might become neglected to the level that people will be willing to pay a little - just to get something working.
However, there is also an opportunity here: as bubble bursts (or deflates) all these money losing (and free) B2C solutions provided by large companies might become neglected to the level that people will be willing to pay a little - just to get something working.
"as bubble bursts (or deflates) all these money losing (and free) B2C solutions provided by large companies might become neglected to the level that people will be willing to pay a little - just to get something working."
We can hope.
Right now these pseudo-free services are supported by surveillance. I wonder sometimes if that's a bit of a bubble, and if the value of user data and data mining of that sort of hugely overestimated. If that turns out to be the case, you'll see exactly that: these bait-and-spy services will be relegated to neglectware status and niches will open for quality alternatives.
We can hope.
Right now these pseudo-free services are supported by surveillance. I wonder sometimes if that's a bit of a bubble, and if the value of user data and data mining of that sort of hugely overestimated. If that turns out to be the case, you'll see exactly that: these bait-and-spy services will be relegated to neglectware status and niches will open for quality alternatives.
> it is shift of consumer perception that everything on internet should be free. With exception of games - of course.
I don't think games are exempt in this case considering the dominance of F2P games in the market.
I don't think games are exempt in this case considering the dominance of F2P games in the market.
I like this comment. Do you have any links to articles on this theory?
I checked; I remembered the wrong analogy: http://www.investopedia.com/terms/p/pick-and-shovel-play.asp
I am talking of a pick and shovel scheme. I should be ashamed, but I am not :) It is still the rigt idea and something already heard of.
I am talking of a pick and shovel scheme. I should be ashamed, but I am not :) It is still the rigt idea and something already heard of.
Very interesting. This is kind of like the bitcoin miner hardware sellers or marijuana grow equipment sellers.
Predictable customers with real, financially motivated needs? The downsides are that you'll probably need to invest more into your first product to do proper learning and face longer sales cycles.
B2B has got to be way easier to predict and value as a company. You can also get a big leg up if a founder comes from the industry and is therefore pre-baked with a lot of customer knowledge and a good rolodex.
B2B has got to be way easier to predict and value as a company. You can also get a big leg up if a founder comes from the industry and is therefore pre-baked with a lot of customer knowledge and a good rolodex.
Cool observation -- pretty clear people don't like buying software. I can think of a handful of reasonably-new software security companies (agile bits, dashlane) that sell software to people.
And worth mentioning, plenty of people expect bitcoin will make a difference here. It (or some centralized system that makes it easier to buy things online, like iTunes) certainly has/will continue to make people more willing to purchase other kinds of ones and zeros.
And worth mentioning, plenty of people expect bitcoin will make a difference here. It (or some centralized system that makes it easier to buy things online, like iTunes) certainly has/will continue to make people more willing to purchase other kinds of ones and zeros.
financial services and payment processing - 28
web-based business productivity and collaboration - 21
devices/hardware/components (manufactured goods) - 20
search tech and messaging (contacts/email/sms/text) - 18
travel-related services - 18
employment resources - 16
games and game features - 16
analytics tools/data visualization/and big data - 15
video technology - 14
online music - 13
daily deals/coupons/and price comparison - 12
food discovery/catering/and restaurant technology - 12
photo sharing and social networks - 12
visual design - 12
fashion and clothing - 11
platform as a service - 10
e-tail infrastructure - 9
medical industry - 9
advertising/seo technology - 8
education - 8
event planning (real world) - 8
real estate infrastructure - 8
cloud storage - 7
database technology - 7
logistics/shipping/and warehousing - 7
nonprofit organization - 7
mobile-specific platforms and development tools - 6
parenting resources - 6
screen-sharing and collaborative real-time editors - 6
business communication infrastructure - 5
charity and philanthropy - 5
education/programming - 5
legal services - 5
news/reading/and publishing - 5
scientific research tools - 5
electronics design - 4
physical fitness - 4
programming tools - 4
business human resources - 3
gift card technology - 3
printing solutions - 3
psychometric tools - 3
surveys and forms - 3
user interfaces - 3
agriculture and farming - 2
biotechnology - 2
green energy technology - 2
home improvement - 2
memes and jokes - 2
proximity-based mobile apps - 2
food products - 1
web-based business productivity and collaboration - 21
devices/hardware/components (manufactured goods) - 20
search tech and messaging (contacts/email/sms/text) - 18
travel-related services - 18
employment resources - 16
games and game features - 16
analytics tools/data visualization/and big data - 15
video technology - 14
online music - 13
daily deals/coupons/and price comparison - 12
food discovery/catering/and restaurant technology - 12
photo sharing and social networks - 12
visual design - 12
fashion and clothing - 11
platform as a service - 10
e-tail infrastructure - 9
medical industry - 9
advertising/seo technology - 8
education - 8
event planning (real world) - 8
real estate infrastructure - 8
cloud storage - 7
database technology - 7
logistics/shipping/and warehousing - 7
nonprofit organization - 7
mobile-specific platforms and development tools - 6
parenting resources - 6
screen-sharing and collaborative real-time editors - 6
business communication infrastructure - 5
charity and philanthropy - 5
education/programming - 5
legal services - 5
news/reading/and publishing - 5
scientific research tools - 5
electronics design - 4
physical fitness - 4
programming tools - 4
business human resources - 3
gift card technology - 3
printing solutions - 3
psychometric tools - 3
surveys and forms - 3
user interfaces - 3
agriculture and farming - 2
biotechnology - 2
green energy technology - 2
home improvement - 2
memes and jokes - 2
proximity-based mobile apps - 2
food products - 1
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How would you characterize:
Doordash, Instacart, HomeJoy, 7CupsofTea...
Not much social software though. Social used to be a big percentage of YC startups, and a lot of the most successful YC startups have been social -- reddit, loopt, twitch, airbnb, etc.
That is well spotted, but at least reddit and loopt has not been very successful economically. I don't know what twitch sold for, but it seems to me that it would be an exception.
Airbnb is doing very well too, but it seems to be more a marketplace than social.
Airbnb is doing very well too, but it seems to be more a marketplace than social.
Those companies are selling services not software.
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> free social websites
Online advertisements generate less and less money (CPC and CPM earnings) for websites.
There is a need for advertisement-networks that offer less intrusive ads so that not half of the visitors use an ad-blocker. (Ads that follow me around and show me products I just bought on Amazon isn't very helpful and often just creepy.) Idea: What about ads that are related to the page/article-content? The ads network would have to crawl the page after the first visit of a user and analyze & categorize it. For the second visitor it can already show an ad that is related to the content.
Online advertisements generate less and less money (CPC and CPM earnings) for websites.
There is a need for advertisement-networks that offer less intrusive ads so that not half of the visitors use an ad-blocker. (Ads that follow me around and show me products I just bought on Amazon isn't very helpful and often just creepy.) Idea: What about ads that are related to the page/article-content? The ads network would have to crawl the page after the first visit of a user and analyze & categorize it. For the second visitor it can already show an ad that is related to the content.
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Pushbullet from a yeah ago is a purely B2C software product. I haven't checked the list but this one came pretty much on top of my head since I use the product a lot.
That is so last yeah.
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The ostensibly B2C companies that are ad-supported are actually B2B. The advertiser not the consumer is the one buying. As they say, the user is not the customer but the product.
Or perhaps we should call them B2A, since it's not fair to lump straightup B2B businesses with them.
Or perhaps we should call them B2A, since it's not fair to lump straightup B2B businesses with them.
Please provide stats.
Clickable link: http://ycuniverse.com/ycombinator-companies
Scroll down past the header section and you'll see the lists.
Scroll down past the header section and you'll see the lists.
That's a list, not a stat. If you come up with some actual stats to back up the assertion/impression you have, that'll make it more interesting and harder for people to dismiss it as just your (mis)impression.
http://ycuniverse.com/ycombinator-companies
Did this shift happen a long time ago and I never noticed?