Startup Notes: Prioritizing Sales, Cultivating Early Champions, and Listening Wisely
Hey everyone, it’s good to be back on Medium after couple of years. I’ve been recently gathering my thoughts and learnings as a founder as I build dotflo. These are my candid daily thoughts being a early stage founder. This article is compilation of three chapters. If you’d like to receive these notes on daily basis do sign up for my daily newsletter on substack at the bottom of the page. I aim to compile the top posts from my Substack every week and give a compilation on Medium — this being the Week 1.
The Story of Sale Before Product
The need to just solve something that matters.
One of the insightful learnings that I’ve had in retrospect is that you don’t need software to solve a problem. Even about an year ago I used to believe that people pay for software products — but what they are more fundamentally paying for is the solution. And software is just a means for the problem to be served and solved.
In the early days as you are testing your hypothesis out you don’t actually need a product. I’ve seen this work from our experience at dotflo. If we were able to solve the problem and convey that, the customer didn’t even care how we solved it. It could merely be couple of jupyter notebooks and a python script that ran locally on our laptops. And this is possibly the best way to test your hypothesis out with lowest possible resources and time input. I was going through our bank statements earlier and looking back the first ever payment made to dotflo was on a simple Streamlit app. It just did one thing — you would upload a list of prospects and we would research on these prospects and return back the enriched sheet. That was it! And we getting paid to solve this can be considered our low cost approach to estimate the need of our solution.
Of course this is not very sustainable and as you work from one to two to ten customers these scrappy techniques start failing and that calls for a more comprehensive product. But hey, if 10 people are willing to pay for your solution — you already have good indicator of the solving a problem that matters.
The more I see dotflo evolving, the more I agree to the fact that unless it’s a hardtech, medical or any other highly regulated industry making a sale before building a product is one of the best ways to quickly assess the need. One of the other examples for this approach is our Mentor Seth Radman’s startup Crescendo which was sold to Ultimate Guitar — Crescendo helped muscians improve their skills and before they had any kind of software or recommendation system it was Seth behind the screens manually evaluating the muscians and providing the scores. Later on, he hired few ML PhDs to build the best in class algorithm that did just that.
If you are having an idea right now that you want to test just grab the phone, reach out to people who the solution is aimed towards, sell your solution (not product) and become their part time consultant in helping solve their problem. If they pay you and you can replicate with few other simialr people — you have signs of a potential business!
Early Customers Being Long Time Champions
How company can grow alongside the initial customers
In one of our calls last week, something stood out. We were talking to a senior leader at Salesloft, one of the biggest sales enablement platforms. She shared her experience of watching the company and many other startups grow. Her insight? Your early customers can be champions for your company in the long run.
The early customers of a startup aren’t really buying fully into the solution yet because it’s still being built and evolving. What they are buying into are the founders. As founders, it’s crucial to stay very close to all initial customers, and one thing matters most: responsiveness. If a feature isn’t working, you need to shift your focus quickly to solve the issue and get things back up and running. Customers appreciate that quick support, which is generally filled with friction when dealing with a behemoth.
Why does this matter in the long run? Especially in sales, it’s hard to move people away from products they love using. If someone loves your product and moves to a new company, they often have a say in introducing your product there. If the company sees that this product is crucial for that person’s success, they will pay whatever it takes to get it. Customers also grow in their careers. Someone who starts using a tool as a new grad Sales Development Representative might, in a few years, be a VP of Sales at another large company. And it wouldn’t be surprising if the product is brought along with them.
This is a reminder of how important the initial customer base is to a product. Serving them to the best of our abilities is something we shouldn’t compromise on. Word of mouth is huge, too. If a Sales Rep hears from another Sales Rep that a product helps them close deals and book meetings at a higher rate, they might even pay out of pocket to get that tool.
At dotflo, we always try to keep our customers in the loop with everything going on so that they feel part of our growth. We have frequent calls to see how they’ve been using the product and what more they’d love to see. And if there’s an issue to be solved, unless something pressing comes up, we drop everything and get to fixing it.
What and Who Do We Listen to?
Separating Noise From The Signal
When we do build along with our customers with a tight feedback loop what I’ve observed is that the input sometimes gets really cloudy and complex and the big quesition of what and who do we listen to comes into play. There are bunch of cases:
- Feedback from current users
- From ones who are paying
- From ones who are on trial or just using the tool
- Feedback from potential future users
- Feedback from current market scene and competitors
- Feedback coming from experienced people in the field
- Personal gut feeling
- Investors, Mentors, and others.
I still don’t have the perfect answer yet. But if to pick one I’d say the users who are paying seems to be the one which we have seen generally to work. However, there are few other things that come into play one of which is if they are your ideal customers.
Is the customer your ideal customer
A good example of this could be how your startup can be building a software for enterprise but to test the value of product you are currently having few early stage startups use it. This could be many reasons:
- Smaller companies tend to shorter sales cycles
- They are more open to try out newer products
- Overall they might be easier to sell to.
Now though they might be paying for your product they are still not your ideal customer. What I’ve seen is it is difficult to evaluate what feedback from smaller startup would translate to the the large enterprise which is ultimately your ideal customer.
Difficulty to evaluate future buy-in
When a company does pass on your product accounting for the lack of some functionalities is also a tricky feedback to evaluate. A polite “No” is often masked as a request for more functionality. In such situations, it is very easy to go into a rabbit hole — where build all the functionality due a lack of which it was initially passed on to only realize that was not the deal breaker in the first place — and now you’ve alsolost time and resources. We are still learning what the best way to evaluate future buy-in — we do see Letter of Intents (LoIs) working for some startups where they get a signature saying that if they build the xyz feature, the company would be considering purchasing the product.
The distractions from the market and competition
I do agree how we all can learn from competition. But sometimes it might be a noise too — especially when your competitor is in the same stage as you and is also trying to figure things out. We have seen how sometimes the news of big raises from competition do make us question our approach — on the other hand there are times where big raises are a sign of big market. But again it is hard to differentiate one from the other adding further to the complexity of decision making.
Personal Gut
Your intuition can be as crucial as feedback from paying customers, especially if you’re solving a problem in your field of expertise. I don’t know how and why but if your gut says this will work there’s a good chance it will. I’ve seen it from our experience too of gut being right most of the times. And even before you sell your product it’s only minimum to expect that you believe in it and have strong gut feeling about it.
To sum up, from my little experience the seperation of noise from signal in the initial stages is very tricky. I’m curious to see how this would change as the product matures or if it would change at all.
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