Entrepreneur

Why getting 10 customers is all that matters

(Editor’s note: Jason Cohen is an angel investor and the founder of Smart Bear Software. This story originally appeared on his blog.)

I recently reviewed hundreds of startup pitches at Capital Factory, an early stage accelerator program for tech startups. Of those, almost none had unearthed 10 people willing to say, “If you build this product, I’ll give you $X.”

Think about that: Hundreds of people were ready to quit their day jobs, burn up savings and risk personal reputation - all without identifying ten measly people actually willing to pay for what they’re peddling. Short-sighted, no?

Put simply: If you can’t find ten people who say they’ll buy it, your company is bullshit.

Aren’t you sick of every startup blogger on Earth badgering you about this? Steve Blank says “get outside the building,” Eric Ries says “seek validated learning,” Sean Ellis says “seek product/market fit,” Drew Houston says “the only way to learn on a $0 budget is to talk to people.”

I say “find ten people who say they’ll buy.”

But entrepreneurs are still not listening. They repeat these mantras at Lean Startup Meetings but don’t do it.

They’re understandably scared of being proved wrong, especially now that they’re all worked up about the new business idea, having told friends and family they’re doing this.

But jeez people, you’re not even trying. And worse, you’re inventing lame excuses for why you’re not trying.

“I’m scratching my own itch. Since I’m my own target customer, I already know what to build.”

Phooey! By definition, if you’re a startup founder you’re explicitly not your customer.

“Scratching your own itch” is how all three of my companies started, but it’s only that — the start. It’s the spark of inspiration, not the strategy. It’s the grain of sand tickling the oyster, not the pearl.

I challenge you to find one founder of a real business who thinks “I’m the customer” is the only market validation you need.

“There are millions of potential customers, so it doesn’t matter what only ten of them think. I need to just start; later I can survey and learn something statistically significant.”

If there are millions, it’s trivial to find ten. If you can’t find even ten, then either there aren’t millions or those millions aren’t interested in you.

Businesses don’t start with millions of customers, they start with one, then ten, then a hundred, and then a thousand. But most don’t get past ten. If you haven’t gotten ten to at least say they’ll buy, where do you get your hubris to proclaim that thousands actually will buy?

“My customers can’t understand mock-ups. I have to build it first.”

You shouldn’t need screenshots or PowerPoints to convince someone in your target market that what you’re doing is compelling. If your concept is so esoteric that you can’t describe it in 30 seconds at a cocktail party, it’s either too complex or you don’t understand it yourself.

Even if I concede that some folks can’t grok mock-ups, remember that your first customers will, by definition, be early-adopters who are OK with alpha software. If you can’t find a few of those and get them excited about your product, maybe your product isn’t exciting.

“I suck at sales/marketing; I need to build a product so compelling it sells itself.”

The world is filled with decent products that make no money. Need empirical evidence? Here’s a list of the top 100 Twitter clients. Here’s another.

Now… how many do you suppose are decent pieces of software that basically work?  (My guess: 80%) How many do you suppose produce any revenue?  (My guess: 5%) Finally, how many do you suppose produce enough revenue that, after hosting and marketing expenses, results in a profitable company where the owner doesn’t need a day job?  (My guess: <1%)

Conclusion: If your goal is a business (not a hobby), building charming, novel software isn’t enough. Ability isn’t enough. It’s fun and exciting, but it won’t create a business.

Writing code might be what you love, so you myopically decide that’s what you’ll do. But what you should do is just the opposite: Attack the part of the business you’re least sure of and least qualified for.

If you’re still not convinced, think of it as project risk management. In a big software project do you tackle the high-risk, ill-defined stuff first, or do you postpone that to the end? Obviously you address the unpredictable stuff first — most of the project risk is due to the unknown, so the earlier you can sort out uncertainty the more time you have to deal with the consequences.

I’m making the same argument, except the “high-risk unknown” is “everything that’s not code.” Your code will be good enough; it’s the other stuff that will probably sink your ship — unable to find customers or unable to convince the target audience they should open their wallets. There’s no sense in postponing it.

“My friend/brother/co-worker/dentist thinks it’s a great idea.”

Your mother thinks you’re smart and good-looking, but that doesn’t mean I do.

It doesn’t matter what non-entrepreneurs think because they’re not versed in product/market fit, squeezing blood from evanescent budgets and using Facebook for advertising. In fact it only barely matters what real entrepreneurs think. (They might not be expert in your problem domain. They could have outdated notions. They might be biased against certain ideas and technology.)

The only thing that matters is that people are willing to give you money. Business “experts” can argue all day long that it makes no sense to buy shoes over the Internet, but as long as people give Zappos $1 billion per year, it doesn’t matter what experts say.

When ten people say they’ll give you money if you build this thing, that’s the only validation that counts.


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