Recap of Oct 18 Guest Speaker Event
Thanks to our speakers and attendees who attended our first guest speaker event of 2006-07, “Finding Your First Customer”. We’ve captures a few selective quotes and answers to some insightful questions brought up during the session. Enjoy!
Eric Hills
Until you have a customer, you don’t have a product.
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Don’t think of getting a single customer. Think about your first set of customers. Figure out how to work 3 or 4 of them in parallel so that they reinforce each other. No one wants to be the only customer.
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What does it take for someone to trust in you? You should ask yourself, “Do we have something to bring to the table?”
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How do your customers help build and bring in others? An acquisition we did brought a software application and 8-10 customers to our business unit. The application was not mature, and the customers were more unhappy than happy about the product. However, their existence helped the firm use them in a domino approach, which helped land bigger and bigger customers. Those first customers were absolutely critical.
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Read “Crossing the Chasm” if you haven’t already.
Jeff Connally
When starting a business, always start with the end in mind.
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There are international companies…and there are global companies. There is a difference.
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When you are an entrepreneur with motivations, one drive you might not expect is the fact that your employees’ families are relying on the success of the business.
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Branding as a strategic advantage. When a customer asks, ‘who are they?’ talking about a patent won’t help you. At some point you need to differentiate yourself from the competition. Be an “anti-them.” Separate yourself. And understand the customer culture.
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How do you get your first customer? However you can!
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An entrepreneur’s key attributes should be, know what you don’t know. Be curious. Ask open-ended questions. Let them tell you what they need, and teach you a thing or two.
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The definition of wealth is living on less than what you have.
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The great thing about entrepreneurship is that you can screw it up fast, or you can improve it fast.
If customers ask for financials, and you don’t have any…
[Jeff] Make it a no-risk investment for them. It may increase capital costs, but you should be prepared for it.
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[Eric] Have your CFO go in and explain your business model. They will get more comfortable if they know where your company is headed. Just make sure that person is credible and sophisticated!
On needing a patent prior to market…
[Jeff] Patent lawyers say yes but the reality is that you probably will go into the market without one. It is good to go through the proper channels, plus they are cheap ($5-10K). Parents can also give you a position if the technology is yours; help you raise money; and provide a barrier to entry for competitors.
On having mature products before trying to land that first customer…
[Eric] The sooner you get out and talk to potential customers, the better. Consider contract to build, or build a prototype. The best approach is to run a service business in parallel.
On convincing your funders to take a risk…
[Jeff] (pulls out Mastercard) If you are not willing to do whatever it takes, then don’t.
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When you’re raising money, don’t do it if you can bootstrap. Investors can and do take ownership from you when milestones are missed. If an investor spends $60,000 on a term sheet, run the other way.
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[Eric] When you are an entrepreneur, everything takes longer than you think it will. Angel investors know this, and most will not continue to invest if you keep missing milestones.
On locking in customers in the B-to-C market…
[Jeff] Study your customer! One computer maker did this when they targeted the medical space. The first thing they did was to ask their potential customer what they may need, then watch them in action to find out what they really need. Through observations, they developed a handheld that would fit in a lab coat pocket.
On cutting your losses…
[Eric] As soon as things start to go bad, start to think of other strategies or an exit. Money is like oxygen. Make the most of the oxygen you have.
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[Jeff] It is easy to be in denial as an entrepreneur. The good thing about outside capital is that it keeps you honest. They will ask the tough questions and demand results.
On the type of customer to approach…
[Jeff] Think of your ideal, best customer as an “A”, but try out your product with the “D” customer. Then, work your way up.
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You need a champion out of your first customer.
On staffing…
[Eric] Don’t, for example, hire a VP of Sales unless you have a product and a few customers. That means you, the entrepreneur, have to wear all the hats.
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[Jeff] When the only time you have to talk strategy with your management team is at 3 am, that is probably a good time. But in reality, it all depends on the circumstances.
On partners:
[Eric] It’s good to have a partner. I didn’t the first time I started, and I probably won’t do that again. You need someone who is fundamentally different in perspective and skills.