How to Get Your First Customers | Startup School

Introduction (00:00:00)

• Gustav is a group partner at Y Combinator discussing how to acquire first customers.

Outline (00:00:20)

• Topics covered include the concept of doing things that don't scale, the importance of founders doing sales, sales funnel basics, the necessity of charging for the product, and how to reverse engineer from goals.

Do things that don't scale (00:00:44)

• A pivotal startup essay by Paul Graham emphasizes doing unscalable activities in early stages.
• Good products often need to be developed alongside early customers rather than in isolation.
• Startups require active effort from founders to acquire early customers, as opposed to relying solely on product excellence or advertising.
• The startup curve illustrates a typical startup journey, including a launch, a decline in momentum, and various challenges before achieving market fit.
• Founders are central to guiding a startup through these stages, including learning and doing sales.

Founders should learn how to do sales (00:03:40)

• Founders must understand their customers to build the right product and know how to sell it.
• Learning sales ensures full control over the startup's destiny and is crucial before hiring a sales team.
• Founding teams can learn sales through intimate knowledge of their product and market.
• Passion for solving customer problems can significantly enhance sales effectiveness.
• Examples of successful founders like the Brex founders show why early hands-on sales efforts are vital.
• The Brex founders started with a basic offering and personally onboarded customers to iterate their product.
• To write an effective sales email, keep it short, use clear language, address the customer's problem, avoid HTML, provide social proof, include a website link, and incorporate a clear call to action.

Sales funnel simplified [Section Shortened]

• The sales funnel concept is straightforward, with emphasis on clear communication and active engagement with potential customers.

The sales funnel (00:08:45)

• Create a list of potential customers using tools such as Google spreadsheets.
• Reach out via email or LinkedIn messages to contact the prospects.
• Schedule and run a product demo or meeting in response to outreach.
• Discuss pricing with potential customers to eventually close the sale.
• Remember to onboard new customers to ensure they start using the product and to prevent churn.
• Use simple CRM software to track important information like industry, company, title, name, email, and LinkedIn profile.
• Focus on closing the most accessible customers first, such as using your network or targeting startups with shorter decision-making processes.
• Recognize that most people are not early adopters and may ignore cold outreach, so prioritize and focus on those more likely to close.

Charging your first customer (00:13:50)

• Charge customers from the start; offering products for free doesn't validate the business model.
• Use qualification calls/meetings to test customers' willingness to pay.
• Move on from customers unwilling to pay, focusing on those who see real value in the offering.
• Implement money-back guarantees or opt-out options rather than free trials for B2B offerings.
• Increase prices until customers push back but still make the purchase, indicating proper value assessment.

Working backwards from your goal (00:15:24)

• To achieve a sales goal, be aware of potential drop-off rates at each stage of the sales funnel.
• Keep track of conversions from initial outreach to customer closing using a sales CRM.
• Understand that sales is a numbers game due to the drop-off rates and need to identify early adopters.
• Avoid drawing incorrect conclusions from too small a sample size; significant outreach is necessary.
• Read resources such as Lenny Rachitsky's blog for insights on early-stage start-up sales strategies.
• Founders should conduct product demos as they are most familiar with the product and customer pain points.
• Analyze successful outbound sales emails as examples for creating effective outreach campaigns.