B2B Beats Consumer Returns

A venture investor shares insights about the stark contrast between B2B and consumer/social businesses, highlighting how B2B offers more predictable outcomes while consumer products, especially social apps, are highly unpredictable but potentially more rewarding.

• B2B Investment Perspective:

  • More predictable outcomes
  • Can assess likelihood of mild success with higher confidence
  • Easier to understand and evaluate potential

• Consumer/Social Apps Reality:

  • Essentially "gambling" with very low predictability
  • Like "rolling dice" with little confidence in outcomes
  • Success rates are extremely low (described as 80% chance of loss)

• Why People Still Pursue Social Apps:

  • Massive potential upside when successful
  • Can reach billions of daily users
  • Becomes integrated into people's daily lives (used with family, friends, relationships)
  • "When you hit social, you're the freaking king of the universe"

• Investment Psychology:

  • Requires being a "madman" to pursue
  • Similar to casino gambling with unfavorable odds
  • Entrepreneurs accept poor odds for potential massive outcomes
  • Need high risk tolerance due to unpredictable nature

• Success Impact:

  • When social apps succeed, they "hit different"
  • Create deeper integration into users' lives
  • Achieve unprecedented scale and impact
  • Potential for billion-user platforms