Business to Business (B2B) Models

Nine Business to Business Models

1. B2B Commerce – Example Grainger
   1. Grainger is a wholesale supply company with a $15B market cap. This ordering site shifted the expense of ordering from their counter to the customer.
2. Subscription – Example Salesforce.com – detailed post
   1. There are so many great examples now of B2B subscriptions; I wanted to highlight one of the frontrunners in Salesforce. One of the things they did that was masterful was recruited sales people directly (cheap for 5 users or less) who would then expense it back to their company.
3. Search – Example Google
   1. Google’s model on search wasn’t original (at least according to Yahoo’s lawsuit). The Pay Per Click (PPC) model was the monetization option for search results.
4. Advertising – Example Facebook
   1. Facebook delivers consumer eyeballs for advertisers. You’ll need at least 1M uniques a month to your site to monetize this way however.
5. Productize a Service – Example MOZ – detailed post
   1. Services business (Consulting) usually generates 35%+ Gross Margin. Given that pull of profit $, very few companies make the shift from services company to product company.
6. Marketplace – Example Alibaba
   1. Nearly everyone has used eBay or similar. Alibaba’s IPO and global presence is what people know it for in 2015. But this marketplace was founded in 1999.
7. Transaction Fees – Example Square
   1. Square launched with a replacement for credit cards like PayPal and take a percentage of every transaction as their payment. They’ve since expanded into Point of Sales (POS) services.
8. Lead Generation – Example Mint
   1. Consumers are the product to whom Lead Generation companies are selling. They are a business that sells other businesses (consumer) leads. They are paid for the lead, not a transaction. Sometimes this is a great customer experience like Mint, but with others, like Insurance, it’s a bad customer experience.
9. Combination – Example Uber
   1. Uber is a business that created a marketplace that innovated around transaction fees (the driver doesn’t control the price like an eBay seller).

I’ve listed a few other business models that don’t make the list, given the criteria of viable models at launch – vs. scale.

1. Big Data – Example PatientsLikeMe
   1. This is a great business model but will require capital to get to a scale point where you will have enough data to monetize the data. I’d also include the sensor market or Internet of Things (IoT) market in this category.
2. Panels – Example Toluna
   1. Surveys of precise groups that can be used as market research is a unique business model, that again requires a level of scale.
3. Multi-sided Marketplaces – Example Etsy
   1. Like the general marketplace model, you have to build product first into the model. In a multisided marketplace you’ve increased your complexity which will again require time.
4. Nonprofit – Example Startup Weekend
   1. I have to give a head nod here to UP Global, the parent of Startup Weekend and Startup Next.  The company is a 501(c)(3) that doesn’t make money through its events, but rather through sponsorships. I’ve moved  this off the list because it’s not a business model used by tech companies.