Your first customers

The most difficult hurdle in getting a tech startup going is getting that first reference customer. First customers are very important because they are the ones who tell the others how good you are. The technology market is today, more than ever, run by conservative individuals who only buy what you have to offer when they see evidence of the benefit you have provided to others.

That first customer needs to have very special characteristics. He needs to be a visionary. He needs to understand the value you may provide, even before you have a completed product, and work with you as a partner.

What companies should you focus on first for customer references?

Large enterprises are not as good as they seem. They usually carry a name but are usually stingy about the use of their brand and logo. They may force you into completely unreasonable contracts and into customizing your product towards directions that might not be what you want for general adoption. And sometimes they believe they have muscle enough to not pay you in time.

Small enterprises don’t work well as references. They are too small to be credible. And they are extremely financially conservative, which means they not only have little cash to invest but they are always short of people to help you rolling out your product or service.

I tend to like midsize organizations (around 2000 employees). In these you can find smart, driven people that want to make a difference and can actually make a difference. These are your visionaries. If they are happy with your product or service they are willing to lend you their testimonials and brand. And they want to be part of your success.

So, better than getting that business plan all jazzed up with IRRs curves and 5 year revenue projections work on your first customers. Your chances of landing funding will increase by an order of magnitude.