Are you a business-to-business (b2b) or a business-to-consumer (b2c) dot-com? Or perhaps you are a recently conceived b2b2c business. You may be an application service provider (ASP) or an Internet service provider (ISP). If you are raising finance, you will know how important these labels are to your success.
In August 1999, I was invited to head a new b2c company, which became Whizz.com. It was conceived as an event planning service, helping groups of people meet in the “real world” and utilising all interactive channels. The company had already secured seed financing from a business angel before my arrival.
I actually moved the company away from b2c positioning to a b2b one. Our remit was to provide viral marketing software to third parties under license. With our functionality, Whizz could guarantee cost per acquisition by driving incremental users to our customers’ website. From my background at Carat Interactive, I knew we had a clear solution for a clear problem in our industry. This also opened up the potential for other products for other sectors.
This b2b positioning was more commercially viable and suited the technical heritage of our sister company. However, I had one problem. I had inherited a business angel who had no understanding of our industry or our business.
The business angel originally came in on a b2c positioning. Everyone can conceptually understand a b2c company. Everyone is, after all, a consumer. However, an ASP business selling b2b is altogether different. It is about great technology, customer support and developing relationships. No longer were we simply a business about driving millions of users.
The upshot was that as our label changed, the “dumb money” cooled. Progress is easy to measure against website traffic, but technology and intellectual property is more difficult to assess.
Happily in Whizz.com’s case, the other shareholders are going to absorb the business into their existing company and continue to pursue this opportunity.
So what have I learnt from this experience? Don’t accept dumb money unless the money is effectively in the bank already. Secondly, make sure the investor does not have absolute control of the company. If the investor does have control, convince yourself that he understands the business beyond what he reads on the label.
Finally, pursue your vision, and don’t be swayed by changing fashion and labels.