New companies face innumerable challenges around fine-tuning their product and constructing the appropriate revenue model. You may be looking ahead to raising some funds and trying to juggle the administrative aspects of running a business, but before all that, the purpose of your company is to sell your solution and generate revenue.
But to do that requires customers, so how do you get someone to take a chance with you?
To answer that question, we convened a panel of three technology industry veterans at TechCrunch Disrupt 2021 last week. The panel included Kate Taylor, head of customer experience at Notion; Pablo Viguera, co-CEO and co-founder of Belvo; and Vineet Jain, CEO and co-founder of Egnyte.
Beyond their body of experience in helping build successful startups, each of these panelists’ companies have taken a very different approach to generating revenue. Egnyte, a content storage and management platform, is more of a straight enterprise sale, while Notion, a collaboration and content organization tool, uses the freemium model and then upsells to paid subscriptions with additional features. Belvo, for its part, is a financial services API provided to developer organizations and is monetized when the API is added to products and people use them.
Viguera says you shouldn’t try to do too much with the product initially. Get something out the door and get customers to tell you what they think. “In the early days, the v1 that you’re shipping, that you’re building, will hardly be anything like what you have two years down the road or 10 years down the road. So focus on getting a lot of feedback, not only in the early days, but over time. Really build in those feedback loops and be really deliberate about seeking feedback, even if it’s a complex business,” he said.
At the same time, Taylor says, you can’t let customer feedback push and pull you in too many directions. You have to find a set of committed users and let that core help you guide the product. “[You have to] manage the distractions, because there are a lot of different ways that you can take the product, and a lot of different feedback that you’ll hear. So find those engaged voices, and the people you’re going to bring in the circle that are helping you understand where to grow,” she said.
To that end, Viguera said he and his co-founders targeted 50 or 60 companies and did a lot of shoe-leather sales — knocking on doors, making phone calls, trying cold contacts on LinkedIn and leaning on angel investors to find a set of early users. He added that at this point, they were pitching to other startups rather than larger enterprise customers, an approach that many startups take early on.
Jain says early customers who believe in you are a precious commodity and you must work closely with them. “The early adopters who have taken a chance on you, you [need to] treat them with all the respect, all the dignity in terms of keeping the post-sales experience absolutely delightful. Because I’ll tell you, if you are evolving the right way — we have this program called champion tracking — a lot of these customers grow with you,” he said.
Getting your message out depends on your product, revenue model and your own personal sales style. Jain says that in the early days, his company targeted SMBs, because they could acquire those customers quickly, and were able to get their attention using search engine optimization (SEO) and search engine marketing (SEM) to drive the first sales. And then over time, larger companies liked what they were doing and began to gravitate toward the product. Eventually, Egnyte was able to move upmarket, but the takeaway for early startups is not to worry about who’s buying at first — the product will find a market fit where it’s best suited.
For Notion, Taylor says the company focused primarily on community building early on and finding a set of passionate users who could carry the startup’s message out in the world. When they combined that with a freemium model, the company could concentrate early on user acquisition, then work to upsell them to paying products over time.
Belvo turned its pool of 50-60 potential target customers into a group of 10-15 design partners of sorts who helped shape the first version of the product. “In a way, it was almost we were co-creating the product into something that made sense [with these early companies] based on that early customer feedback,” Viguera said.
Belvo approached this with the understanding that if they liked what they were helping to create, at some point these early partners would turn into paying customers. After that period, Belvo got into Y Combinator, where they worked on refining how to sell the first version.
Jain said founders should remember that they’re going to make mistakes, but they should keep working toward their goals. “Especially in the early stages, when you lack the scale, you lack the budget, sometimes there is a tendency to take shortcuts or address the immediate short-term [need]. And of course, you’re also unsure on how your business model will pick up and how the growth will happen,” He said that in his company’s case, the product-market fit eventually came and you have to trust that it will with yours, too.
As you grow, Taylor said, you have to balance the needs of the customer with what you’re trying to accomplish as a company and what you’re able to do. “One of the balances that we think about is that our engineering hiring and where the product is going needs to mirror the sales hiring and the supporting functions and go-to-market. If those are out of balance, then you have conflict there,” she said.
She adds, “And so we’re thinking very thoughtfully about where the product is going, where our product-market fit is, and then how do we have the supporting structures to make sure that we’re meeting that.”
In reality, there probably aren’t many software companies pointing to their first few customers the way a diner owner may frame their first $1 bill earned, because the nature of how you sell software is so different. But in the end, the goal is the same — you open your business and you try to get people to buy what you’re selling, whether that’s pancakes or software.