Today I attended a lunch event hosted by SVASE and Pillsbury Winthrop. The title of the event was “First Customers: Targeting The Right Customers To Build And Sustain Your Business.” The featured panelist were John Witchel Of Prosper & Bruce MacNaughton Of Crosslink Capital. It was an informal questions and answer discussion between the crowd and the panelist regarding ideas on targeting your first customers. There were several good questions and answers, however the two I found most beneficial are below.
Audience Question: Can you share your opinion on launching a business to consumer website?
John Witchel’s Answer: For those of you who think all you need to do is put up a website and something will happen, let me make it clear for you… nothing will happen. Launching your website is so crucial to the success of your company, especially in the consumer space. In our model we needed two types of users; the lenders and the borrowers. In planning we learned that we needed more than just lenders and borrowers, we really needed a community of leaders who would monitor specific groups. Therefore we created group leaders who would be responsible for certain types of loan relationships.
I spent months on the phone convincing people to be lenders, borrowers, and group leaders. I asked every favor I could of everyone I knew just so the website had content and an engaged community prior to launch. I had to deal with people concerned about fraud, security, model won’t work, you name it. All I could do is promise that it will work and sell them on the vision.
Really, what do we do? We mediate a transaction for a loan to take place. There are a thousand and one different places you can get loans. We do not loan money, we solve problems. Everyday people need cash to fix a car, build a deck, pay off a credit card. We solve these problems. Lending money allows us to solve the problem but the customer does not think their problem is getting a loan. Their problem is having enough cash to buy a flat screen to host the biggest super bowl party.
The point is nothing just happens, there is always an inside job. Your role as the founder is to orchestrate everything and make it happen.
Audience Question: What does the “right first customer” mean? Isn’t the point to collect revenue?
Bruce MacNaugton: Everyone knows that your first customers are usually your friends and family, so you are not fooling anyone. You need to understand that you have not successfully closed your first true customer until you have sold to a complete stranger.
Your first customer is important because they will help you figure out which features are important and which they do not need. We often see people startups build products with too many features. They have a solution for everything. This really means they have a solution for nothing.
John Wichtel: There are some businesses that are primarily consulting firms that have some IP but not a working product. Then there are product companies that chase the consulting dollars to keep the lights on. Picking your first customer is very important because you are going to feature this customer as a super star. You want to find a customer that you can develop a story around. The next set of customers will want to know who is using your product and if they have the same problem as the person you previously helped.