Finding Early Customers for Your Startup
If you have a great product but nobody ever buys it, is it a great product?
Most people who want to start a business want to do it because they have an idea for a new, or better, way of doing things. It could be a new process that is simpler than what’s out there, or an improvement to an existing one that makes it better, or faster, or cheaper, or safer, or whatever. Broadly speaking, most people want to start a business because they have a product idea.
Product ideas are fun to talk about and fun to work on. And a good product is important! But for most businesses it’s a minor component on the path to success. What separates the good ideas from the good businesses is distribution.1
A mistake a lot of founders make is thinking that their product is so good that anyone who hears about it will immediately be sold. Sometimes this is true, but it’s pretty rare. An even bigger mistake founders make is thinking that everyone will hear about their product once it’s built. This is never true!
For example, say you are building workforce management software, and you’ve worked out a way to build it that works with commodity hardware, eg. iPads. This is good for customers because it’s cheaper and easier to install than other products.
The first mistake would be to think that it sells itself. In reality you still need to show prospects how it works (so you need to a product demo) and you also need to convince them that it’s so much better than the competition that it’s worth switching (so you might need some more killer features). Mistake #1 is not being realistic about sales.
The second mistake would be to put up a website and expect strangers to find it and become customers. This sounds silly - of course people won’t just find it - but people often make this mistake in more subtle ways, like thinking that they can get to the top of Google results cheaply and in a way that incumbent competitors won’t just copy. Mistake #2 is not being realistic about marketing.
In short, if you don’t have realistic plans for sales and marketing, you could build the best product ever and go broke doing it.2 This can sound intimidating, particularly to people who just want to build things, but it shouldn’t be. Going broke sounds a lot worse to me.
This newsletter is about SaaS, but the distribution problem is pretty universal. With that said, here’s some anecdotes.
When we started Tanda we didn’t have any money, and we didn’t have much in the way of a product. Lots of other products existed, but they were all more expensive or complicated.
The one thing we did have was a first user ready to go, through connections at university. This user never paid us anything but they gave us a lot of feedback, and gave us the confidence of seeing something we built get used in a real business. But confidence doesn’t pay the bills; we had to find customers too.
We knew a guy who ran a company that did something related to logistics. I didn’t really understand it, other than he had a warehouse with employees he paid by the hour. We could help with that! The poor guy probably got a phone call every 3 days until he finally agreed to let us show him what we’d built, and then the same again until he agreed to use it. This was incredible for us as we were able to get feedback from a much more legitimate business. I built and shipped a lot of features very quickly as the feedback flooded in, and often I was sure they hated us given how often I got emails with bug reports or questions I couldn’t answer.
So it was a nice surprise when after using Tanda for a few months, they paid their first invoice right on time. Even more so when they told us we weren’t charging enough!
Drowning in confidence, we set out to find more customers. This meant finding more ways to contact people who could be customers. We decided it would be a good idea to send a letter in the mail to every Subway restaurant in Australia. Why Subway? At the time, the store locator on their website let you zoom out so far you saw the entire country, and you could copy and paste all the results into Excel. So we sent our letter out, and a single restaurant got back to us. Luckily, they were a 15 minute drive away. Many in person meetings, demos, and commitments to being around for the long haul later, customer #2 was locked in.
I hesitate to use the word strategy, because at the time we were just doing whatever we could think of to have anyone talk to us. Other things that worked included Facebook posts asking for friend-of-a-friend intros, trade shows, making addons/integrations for products our prospects used, and, yes, Google ads. But we always had a feeling that online ads were expensive and hard to control, so we were always looking for more direct and simple ways to get attention. Our marketing “strategy” was “we’ve built it, so how do we tell everyone?”. And our sales strategy was “if someone is silly enough to start talking to us, they’ll keep hearing from us until they buy”!
Even today most of our new customers find us through word of mouth (they’ve used Tanda before, or someone they know has) or from us reaching out directly. We have a slick website but we don’t assume that just having a slick website is enough. Every prospect still gets a phone call within minutes of signing up and we keep trying to be helpful until they buy or tell us to fuck off. (Software people hate this, but our customers love talking to us on the phone and knowing that we are always there if they need us.)
If you came to this post thinking it would contain a list of guaranteed ways to get early customers, then I’m sorry to get your hopes up. No such list exists.
Every business that still exists today has at least one story of finding initial customers in scrappy, dodgy ways. I’ve shared some of ours. Meanwhile, most businesses that don’t exist anymore don’t exist because they had unrealistic ideas about distribution and went broke waiting for customers to beat their door down.
You don’t need the perfect distribution strategy to get started. But if you don’t have any ideas for distribution, you won’t be in business for long.
Depending on the type of business, distribution could mean marketing, or sales, or something else entirely. Broadly, it’s how the product gets connected to users or customers.
By the way, a different mistake that some founders make is getting obsessed with distribution hacks and forgetting to make a product that is worth distributing. If you get good at selling but what you are selling is shit, customers will eventually work that out too.