How to find and select your first 10 customers
For a B2B company, one of the very first things you need to do after founding your company is search for your first ten customers. The internet is flush with articles on how to attract early anchor customers. But a lot of the advice out there is missing an important component of this process: not all customers are well-suited to be the first.
When it comes to your first ten customers, timing and fit are everything.
If you are making B2B software, you should be looking for potential believers who are willing to work so collaboratively with you and provide you so much feedback that they are effectively co-designing the product with you. I like to call these first ten customers “design partners.”
Much of this process may seem counter-intuitive, so I’ll share some of my own rationale and process for selecting your first ten customers, based on my experience building B2B products at Twitter, Uber, and Stripe, and investing in B2B companies as a seed-stage venture capitalist.
When to start your search
Contrary to conventional wisdom, you do not need to have a feature-complete product before showing it to customers. You need to strike a delicate balance in terms of the product’s stage of development and the timing of initial customer conversations.
Before you even start building the product, you should conduct customer discovery calls to validate their needs and get more clarity around the problem you’re aiming to solve. Once you have a very early version of the product — something that’s complete enough to demo — you can start to expand the number of conversations you have and narrow in on your ideal customer profile, or ICP.
Identifying your ideal design customers
How do you identify who your ideal design customers might be? The definition of “ideal” will differ from company to company. That said, after working across several dozen early stage companies from a range of perspectives — as an early employee, angel investor, and lead seed investor — I’ve found some themes and questions that are useful for any B2B early stage company to consider when searching for their first ten design partners. As you begin your list of targets, consider the following:
- Will they provide me regular, high-quality feedback?
As a seed stage company, you are optimizing for pace of experimentation and rate of absorbing new insights above all else. If you remember only one piece of advice from this list, make it this one. Your design customers should be excited and willing to share lots of regular feedback, not only on your first product, but also on their business priorities, budget, any relevant stakeholder feedback, future product requests, and more. Many of my portfolio companies set up shared slack channels with their design customers to optimize the bi-directional feedback loops in the early days.
2. Are they taking advantage of all that my product has to offer?
Sometimes, there are multiple ways to use your product, and some might be more narrow than others. For example, let’s say you are building an AI-enabled revenue management tool. One feature might involve automatically conducting monthly calculations such as monthly recurring revenue or net retention, which your accountant can then manually input into another reporting tool. Another feature might take those calculations and auto-generate a report that gets sent automatically to key stakeholders. The real “magic” of your product comes when you remove the friction of report-generation and communication, but some of your customers might prefer to simply use the automated calculation feature. While not every design customer needs to use every component of your product, to ensure you are getting the richest feedback, and to pave the way for the most valuable future case studies, try to find at least a few design customers that are using your product to the fullest extent possible.
3. Are they willing to provide logo rights?
Typically, your early design customers will either be on a free trial, or a heavily discounted beta rate. Since you’re not optimizing for revenue at this stage (more on that below), the two main things you’re optimizing for are learning and referenceability. For the latter, you ideally want what are referred to as “logo rights,” or the ability to publicly state that a given customer is using your product, including the ability to display their logo on your website. This can mean everything from “I’m allowed to write the company’s name in an outbound email to a potential customer” and “I can verbally mention the company’s name on a potential customer call” to “I can display the company’s logo on my website” and even “the company has agreed to be the subject of an in-depth case study and provide testimonial quotes.” All of these can be useful and, though sometimes tricky for a startup to obtain, worth asking for.
4. Do they have “taste”?
Relevant to point #3 above, if you’re going to brag about certain customers, you want them to be exciting companies that others will look up to. This is very industry specific, but generally speaking, recognizable brands that are relevant, known for being innovative and on the cutting edge, and viewed as successful are all great indicators. You want other companies to see the logos on your website and think to themselves, “I’d like to be like them!”
5. Are they willing to pay?
Since you are optimizing for rate of learning and referenceability above all else, you don’t want price to be a blocker in early conversations. Early stage startups will often offer free trials or discounted beta rates to their first few design customers, and I’m generally in favor of this strategy. That said, you want to avoid investing a ton of time and energy in a customer and letting their feedback dictate your product roadmap if they are unlikely to pay in the future. Early discovery around budget, willingness to pay, and what they’re looking for in a trial period in order to convert to full time are critical. Because of this, I am more in favor of a beta/trial discount, rather than a completely free beta product. If the customer never has any intention of converting to paid, or the person you’re speaking with has no budget authority, you’d rather find that out sooner rather than later!
6. Are they representative of future customers I’d like to acquire?
During the period where you’re acquiring your first design customers, you likely have a hypothesis about what your ICP looks like, but you might also be rapidly iterating on that hypothesis. It can be tough to say no to a customer who shows an interest (and budget!) in your product. However, if said customer is in an industry you have no intention of supporting, a geography you can’t service well, or is using your product in a way you don’t think is representative of future customers, be wary of accepting them as a design customer, or risk wasting your time.
7. Are there certain attributes that give me confidence they might be a good fit?
It’s often helpful to come up with a few potential customer attributes that lead you to believe someone could be a good design customer for you. This is something you should constantly test and iterate. For example: 50–100 engineers, $5-$10M in ARR, recently raised a Series B, uses Quickbooks, and has a usage-based pricing model. This is not only helpful in terms of predicting which customers might have a higher likelihood of converting, but including this in the email you use to reach out (see below) can help give the customer confidence that you’ve done your research.
How to reach out to your first design customers
Once you have a good sense of the types of design customers you’d like to target and which attributes you’d like to look for, make a plan to come up with your wish list of customers, and get intros to them! Your to-do list:
- Generate a starter list
Create a spreadsheet with all the potential customers you think could be good design partners for you. Include the company name as well as the name(s) and LinkedIn profiles of the specific person or people you think would be the most receptive buyer.
2. Comb through your network
Comb through your network of friends, supporters, past colleagues, angel investors, and venture capitalists to find someone who is connected via LinkedIn to the potential customers you want to reach. Ideally, one of your contacts will be connected to the exact individual you’re trying to reach, but if not, any connection at the company can help.
3. Send specific, individualized, forwardable, introduction request emails
To get the highest likelihood of success with an intro, send individualized, forwardable emails to your contacts. If your lead investor is connected to five potential customers, don’t send them an email with five different LinkedIn profiles; send them five customized, individual emails they can easily forward. In each email, be sure to include the following: a blurb about your company, a link to your website, any existing customer names you can drop, a description of what you do, and what you’d like to discuss with the potential customer in question. I see countless investor update emails where founders say something like “We’d love any intros to Heads of Engineering in your network.” While this is fine, and may yield some results, in my experience, it’s far more effective if you take the extra time to identify specific individuals and send a forwardable blurb. Your investors and friends want to help, but are likely quite busy — minimize the friction so it’s easier for them to send these notes out!
Common traps to avoid
- Relying on cold outbound
In my experience, warm intros are by far the most effective way to find high quality design customers early on, and for good reason! If someone in your network vouches for you (either directly, or indirectly merely by reaching out on your behalf), the recipient is far more likely to open the email, read it, and reply, than if you reached out cold. Sending cold outbound emails is an important skill to develop once you start scaling the business, but for the earliest stages, the hand-picked, warm-intro strategy is most effective.
(P.S. There are lots of parallels here with recruiting! For a risky early-stage startup with little to show for itself, you’re more likely to find higher-quality candidates through your network than by searching through LinkedIn and reaching out cold.)
2. Reaching out to big, shiny companies too early
It can be tempting to reach out to massive enterprise companies early on, especially if you eventually see yourself targeting the enterprise market. However, larger, more established companies tend to be less willing to provide great feedback, have less patience for the inevitable bugs and bumps in the road that go with early stage products, and can also be less willing to give you a second chance if you fail to impress them in an early meeting. There are some exceptions here of course, notably if you have close personal relationships inside large organizations, but in general, be careful about targeting the largest customers in your first set of outreach when you’re still working out kinks in your messaging and your product.
3. Optimizing for revenue too early
As I mentioned above, your top goals for the design customer stage are 1) rate of experimentation, and 2) obtaining referenceable customers. This is not the time to crush your revenue goals. While I am in favor of charging your design customers something, their budget and willingness to pay should be just one consideration. Most frequently, I see companies make the mistake of focusing on revenue too early, which leads them to acquire a one-off customer that requires substantial customization and isn’t representative of future customers — both of which are a waste of time.
If you’re an early stage B2B company, I hope you find these steps useful to find, screen, and select your first ten design partners. If you do, please let me know! Once you get customers on board, be sure to continue to ask for lots of feedback (i.e. through conducting win/loss interviews), and document their feedback via case studies or user testimonials (more on this in a future post 😉).
