B2B Product-Led Growth Non-Negotiable: TEAM Network Effects

But most miss this point and get stuck in the individual prosumer death spiral.

Have you noticed how much the B2B landscape is starting to mirror B2C? More and more companies are prioritizing the end-user with intuitive interfaces and engaging mascots. But there’s one major difference between B2B and B2C that will never change: B2B has to focus on nurturing a healthy, engaged team, rather than catering solely to individual users. The best way to achieve this is to unlock team network effects, where the addition of each team member enhances the collective value of th

e team. 

This post will explain everything you need to know. 

But if you want more detailed deep dive, make sure to take my Product-Led Growth Course with Reforge!

What are network effects? 

Network effects happen when a product or service becomes more valuable as more people use it. Imagine throwing a party: if you are alone at the party, it’s awkward and not fun at all. But as more guests arrive, the energy picks up, everyone has a better time, and it turns into a party you don't want to miss.

Here's how it plays out in tech:

• Social Media: The more friends you have on a social network, the more you can share and interact, making it more engaging for you.

• SaaS Platforms: Take Slack, for example. It's more valuable when your whole team or company uses it because you can communicate and collaborate all in one place.

• Marketplaces: Platforms like eBay and Uber benefit from a unique version of this phenomenon, called ‘cross-sided network effects.’ The more sellers there are on eBay, the more choices buyers have, and the more buyers there are, the more sellers are drawn to the platform. Similarly, with Uber, more drivers mean shorter wait times for riders, and more riders mean more business for drivers.

Two great resources on network effects are Kevin Kwok's analysis on Figma (here) and the Network Effects Masterclass (here) by NfX.

Team network effects

Although not every product can create platform-wide network effects mentioned above, almost all businesses can capitalize on team network effects. Team network effects occur when each team member benefits as more users get added to the team. Back to our party analogy, the party people aren't there only for you: they're there for each other. This, dear readers, is the lesson of the team network effects: Parties (and B2B Products) are successful when the arrival of more people (on the team) makes it more fun for the people who are already there.

Once this kind of effect is in place, it will enable the company to build an escalator from acquiring a user, to activating a team, to selling to a company an enterprise value with the coveted 6 or 7-digit deal. And although individual users are still super important, let’s face it: nobody will buy an enterprise contract for one lonely end-user. Team expansion and team adoption are such a priority because they ultimately lead to a selling motion for the company. 

So where does the user fit in? Well, you still have to acquire users, but you have to focus on activating and engaging a team, to unlock an ability to sell to a company. And if you don’t focus on that ‘engage a team’ component, your B2B expansion motion will be dead in the water. And nothing engages a team more than creating network effects. Not to say you won’t have a successful business selling to prosumer individuals… but without teams, you can kiss those enterprise contracts goodbye.

And it all starts with acquisition, of course.

Acquiring new logos vs. users on the existing logos.

One crucial distinction, as you get started: You must distinguish between acquiring new logos vs. acquiring more users within teams at existing logos. Landing new logos is a true acquisition target. Growing the number of users within teams is actually an expansion goal. This is why not all new sign-ups are created equal for B2B.