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@ycombinator's Group Partner Gustaf Alströmer @gustaf just presented to 10k+ @startupschool attendees about the "most common question from founders":
🙋🏽 how do I get my first customers?
it's part of @startupschool week 4
📝 sharing my notes:
Gustaf will cover this topic for all kinds of companies - whether you're B2B or B2C. He's advised hundreds of companies on growth.
This is a brand new talk with examples from recent YC companies. Highly actionable!
today's agenda
doing things that don't scale
sales (B2B and B2C)
other ways of getting customers
the most important essay on this topic: do things that don't scale by @paulg
about the early days of @airbnb
a lot of would-be founders believe that startups take off or dont
but actually startups take off because founders make them take off
many founders who haven't worked for a startup think that growth will take care of itself
this is not true
@gustaf got into growth after he realized that this is not true
great products are not magically discovered
the founders who internalize this, are the ones who succeed
startups don't take off themselves
they take off because founders manually recruit customers
but many founders refuse to acknowledge it because it's difficult
avoid the temptation of focusing on new features when you should be doing things that don't scale
realize that it comes down to you doing sales and wanting to succeed
here's a great visualisation
most companies go through something like this timeline for startups
first you launch - on product hunt or hacker news
that buzz wears off
then you enter the trough of sorrow, where many companies give up and don't move fast enough
some move fast enough - they release improvements and listen to users
or they become a victim of the crash of ineptitude
those who avoid that have a chance at product market fit
if you don't know how to do sales, you have to learn it
like any skill, don't complicate it too much
that'll make it more difficult than it needs to be
let's simplify it:
first, founders must learn to do sales and talk to customers
you can't know what to build OR sell if you can't understand you customers
don't hire a sales team until you know how to do it yourself
you won't know the product is bad unless you've tried selling it
learning sales is probably the easiest function to learn from zero
many YC founders have done it and become good at it
if you know the market and product then the customer will think of you as an expert
loving customer problems is infectious and they will be able to tell
Example 1 - @brexHQ W17 recruited from their own YC batch - customers who needed credit cards. they asked them what was the MVP and then signed them up.
v1 was very simple - customers had a virtual credit card. manually onboarded each customer. didn't wait for an app.
this was what their first physical card looked like
and their email to batch mates
it was a bit long but it worked
a great sales email:
+ should be short
+ clear language
+ address a problem
+ no HTML
+ mention you're the founder
+ social proof
+ link to website
+ call to action
the concept of a sales funnel, simplified in founder speak:
1/ make a list
2/ email them
3/ schedule demos
4/ give a price & close
5/ onboard your customers
6/ generative revenue 💰💰💰
when targeting your customers, there are some standard things to track - a lot of CRM software comes with that out of the box
@gustaf recommends using a simple CRM solution
you can outsource once you've defined a process
where to find your customers?
try to get warm intros through people you know.
+ friends / personal network
+ co workers
+ people you don't know
if you spend time at a big company, then use that network - it's an advantage, use it
go to where the people you want to sell to are hanging out - it could be @linkedin, @reddit or @discord
in person events are great too but less common post COVID
most important advice: first customers should be your EASIEST
this is not the time to bite off the hardest ones to close
make the process as easy as possible for you
you don't have time to chase every lead
you're so early, just pick the ones that are likely to close
find a way to figure out the easy ones:
start with a big list of potential customers
prioritize the ones that are giving answers that indicate that they may close
don't be afraid to let go of customers that are unlikely to close
take advantage of your network!
sell to startups is the easiest category - specifically if they sell software
big companies have red tape and bureaucracy that slow you done
startups are quick to make decisions
that's why the recommend selling to startups at YC
another piece of advice - remember that most people are not early adopters. you have to bypass them
you have to send hundreds of emails - not because most get upset - but because they just don't care and don't want to try something new
when he was at @airbnb he was an early adopter - he doesn't mind the risk of trying new things
average outreach on linkedin will not hit an early adopter. you have to seek them out
charging - it's attractive for you to offer your product for free
but if you don't charge then they are NOT A CUSTOMER
and you DO NOT HAVE A COMPANY
customers paying you money is a sign of you providing real value
figure out what the price should be
if they don't want to pay then you should move on to the next customer
fire the ones that don't fit
exceptions:
money back guarantee (b2b)
or free trial with credit card (b2c)
your first sales meeting
should be mostly listening not pitching
ask about their problems
ask qualifying questions
plan a clear next step
qualifying questions are important:
what is the problem you're trying to solve?
why is it important for you now? not in 6 months?
do you pay for software that solves this problem now?
are you the decision maker? or is it someone else? multiple?
end the meeting with a call for another meeting or some kind of commitment. make sure that happens in the meeting
it's easier to ignore the request later if you send it by email
most founders get this wrong: working backwards from your goal with a sales funnel
you have to understand that each step in the funnel has a drop off
at the start, you don't know these conversion rates
you need to be taking notes and tracking these conversation rates
his advice - use a simple CRM software that automatically tracks these conversion rates
many founders hit a wall (the red example) and then conclude that they should move to marketing or some other tactic. that is the wrong conclusion.
a good summary of this lecture here:
this table summarizes different target groups for YC and non YC companies + their initial sales method
example email that led to a $72k/ year contract
another good one
founders don't send enough outreach because they're not working backwards from goals
there is another talk's worth of content on other sales methods
but even if you end up like @airbnb growing through search, referrals, ads... those are end states
they didn't start that way