Monetization in B2B, One Year Since SVB, How The World Ends

The future of innovation is global. We discuss it here.

With Dall-E, caption for the book of the month

Monetization strategies in B2B

B2B marketplaces have scaled around the world across multiple verticals. Yet, they do not all look alike, and use a variety of go-to-market and monetization strategies. My colleague shared a deep dive on a few core monetization approaches we’ve seen succeed.

Central to this discussion of course is the concept of the "take rate" - the lifeline of commission-based models. This approach demands a delicate balance; too high, and it risks alienating participants, too low, and it may not sustain platform operations.

Another monetization strategy is the adoption of membership and subscription models. These models not only provide a predictable revenue stream but also serve as a testament to the platform's market fit.

The emergence of SaaS within B2B marketplaces presents a novel solution to the classic challenge of balancing buyer and seller acquisition. By offering valuable tools and services before sellers are fully onboarded, platforms can attract and retain a quality user base.

Embedded fintech has surged as a transformative force in B2B marketplace monetization. By integrating financial services directly into the platform, such as payment processing and lending, marketplaces can significantly enhance transaction values and customer loyalty.

Read on here for the full piece.

One year since:

I can’t believe it’s been a year since the SVB collapse and the banking crisis. What has changed? What have we learned?

I enjoyed contributing to, and learning from this piece. Here are five takeaways for me:

1. Forever, it was completely rational, and normal to single source a deposit bank. Today, every startup and VC fund has multiple bank accounts and redundancy. Even for those that stayed with SVB or FRB, they have multiple providers.

2. The trust barrier to adoption has been lowered - as part of a portfolio. People were willing to try new startups and non-tech incumbents as part of a broader portfolio of providers. But it makes it harder to win the full wallet

3. As a result, this created a huge opportunity for startups to fill this void. Companies like Brex, Mercury, MEOW and others scaled rapidly.

4. Last year I predicted in Forbes that fintech will coalesce around two stable points. "On the one hand, players can be nimble rapid adaptable companies. That’s where fintechs shine. Already, a number have reacted fast to the unfolding SVB collapse, doing everything from rapid enrollment to creating credit lifelines. On the other hand, boring, timeless stability will be a feature, not a bug. Incumbents that thrive will stay true to traditional risk management may see lower short term growth, but enduring long-term survival." Source in comments. I think that is happening.

5. Counterparty risk became a conversation more broadly. SVB showed us that even the most stable companies are not necessarily unshackable partners. What happens if another core partner is down.

The SVB crisis was in some ways an isolated experience, but we're seeing this live in Change today. Many of these lessons seem as important today (though not 1:1 of course).

Interesting discussions

Startups must get over the funding shell-shock. “People tend to think of startups as creating something from nothing, but it’s more like finding order in chaos. A founder faces an infinite number of paths in front of them, each demanding an infinite number of decisions to be made, at random times, while the paths shift and curve and crisscross, backtrack, or dead-end in unpredictable ways” But the last decade of low interest rates and high investment “led many to believe that the chaos was less chaotic and that the unpredictability was more predictable. The startup journey started to look more linear.” Ultimately, fundraising is not the end. As argued in the piece, it is “a stay in execution.” #Camels.

One of the reasons for the global fintech explosion, is the growth of infrastructure, that makes it easy to test, launch and scale a new platform. Great report on the current market. It is reasonably comprehensive with some exclusions: like crypto, insurance, healthcare, and CFO stack.”

The problem with the Giving Pledge? “When 40 of the U.S.’s richest residents pledged to give away half their net worth in 2010, news outlets heralded the business giants who were ‘giving back in a big way.’” Today there are over 200 signatories. But: “according to a recent report from the Institute for Policy Studies, the 73 living signatories who were billionaires when the pledge launched in 2010 saw their wealth more than double by the end of 2022.”

This is a pretty daunting graph in the world of emerging managers in Venture. What used to be a 60% graduation rate from first fund to second is now closer to 12%. I’m not sure I agree with the methodology (and anecdotally the results), but directionally it is correct. Worth a full read or here is a good summary.

I just turned 40. And I read, and re-read Mark Manson’s own reflections. What am I missing?

Book of the month

The news would have you believe the most serious security threats facing the U.S. are the present wars in Russia, the Middle East or the evolving great world power with China.

In the recent years, I’ve dived deep into cyber threats (in my case with a financial services and insurance lens on). And even so, reading This Is How They Tell Me the World Ends: The Cyberweapons Arms Race both entertained (it is a non fiction but equally a thriller) and terrified me.

As the NYTimes reviews it: “In the last half decade or so, American corporations have suffered billions of dollars of losses in similar incursions. Between 2019 and 2020, more than 600 towns, cities and counties were hit by ransomware attacks, shutting down hospitals, police departments and more. America’s adversaries — Russia, China, Iran and North Korea — have by now thoroughly infiltrated the computer systems that run some of the United States’ most important infrastructure, including not just power grids and dams but also nuclear plants.”

What astounded me was less that it was happening - but more how little we are talking about it.

For instance, a massive ransomeware attack last month is rumored to be costing U.S. medical providers $100m a day right now.