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Selling to the wrong customers will kill your startup

37 points by SteliE 12y ago

trevelyan 12y ago
It seems that there are an awful lot of things that will kill your startup. But paying customers is probably not really in the top ten.
gk1 12y ago
Somewhat off topic: I'm glad to see more startups using gag cartoons in their blogs. I built a platform[0] where you can find and license more cartoons like this for your posts to make them more enjoyable and engaging, while also helping the artists earn money from licensing. [0] https://www.gagcartoons.com https://www.gagcartoons.com
HillRat 12y ago
Oh, god, yes. I've worked with multiple enterprise-oriented software companies whose founders hustled to make early sales at any cost, and then ended up creating massive long-term costs that far outweighed the value of the initial sales. "Poison chalice" customers are common in the enterprise space -- they look great up front, manage to ameliorate your burn rate, and then you end up mortgaging the future of your company to support a small number of contracts. It's incredibly hard to turn down those contracts, though, especially as they often come in as relationship sales, and because the companies in question rarely staff up sales at the beginning. I consider this a good example of why founders need to onboard professional sales as soon as reasonably possible; it's a whole lot easier to turn down those poor-fit sales when you've got an active funnel, and it's very hard to build that funnel when your entire company is trying to keep those poor-fit contracts happy.
joeblau 12y ago
Great post. I also wonder about the ops thoughts on free versus paid from a consumer perspective. I wonder what the cost of a free customer is when you have a consumer product with a freemium business model.
isergio 12y ago
Brilliant: "Rather than trying to bring as many customers as possible on board, start with just a few perfect customers: the kind who you can build your product for and who will adore your product once they put it to work. Until you have that handful of fanatical customers, you shouldn't focus on scaling your customer base."
Im_Talking 12y ago
Don't agree fully. Maybe these 'wrong' customers are actually telling you to shift your focus in another more profitable direction. You need to be flexible as a start-up and listen to the customers. They are in the trenches, not you.

37 points by SteliE 12y ago

It seems that there are an awful lot of things that will kill your startup. But paying customers is probably not really in the top ten.

gk1 12y ago

Somewhat off topic: I'm glad to see more startups using gag cartoons in their blogs. I built a platform[0] where you can find and license more cartoons like this for your posts to make them more enjoyable and engaging, while also helping the artists earn money from licensing. [0] https://www.gagcartoons.com https://www.gagcartoons.com

HillRat 12y ago

Oh, god, yes. I've worked with multiple enterprise-oriented software companies whose founders hustled to make early sales at any cost, and then ended up creating massive long-term costs that far outweighed the value of the initial sales. "Poison chalice" customers are common in the enterprise space -- they look great up front, manage to ameliorate your burn rate, and then you end up mortgaging the future of your company to support a small number of contracts. It's incredibly hard to turn down those contracts, though, especially as they often come in as relationship sales, and because the companies in question rarely staff up sales at the beginning. I consider this a good example of why founders need to onboard professional sales as soon as reasonably possible; it's a whole lot easier to turn down those poor-fit sales when you've got an active funnel, and it's very hard to build that funnel when your entire company is trying to keep those poor-fit contracts happy.

joeblau 12y ago

Great post. I also wonder about the ops thoughts on free versus paid from a consumer perspective. I wonder what the cost of a free customer is when you have a consumer product with a freemium business model.

isergio 12y ago

Brilliant: "Rather than trying to bring as many customers as possible on board, start with just a few perfect customers: the kind who you can build your product for and who will adore your product once they put it to work. Until you have that handful of fanatical customers, you shouldn't focus on scaling your customer base."

Im_Talking 12y ago

Don't agree fully. Maybe these 'wrong' customers are actually telling you to shift your focus in another more profitable direction. You need to be flexible as a start-up and listen to the customers. They are in the trenches, not you.