The happy first customer

by | Nov 5, 2020 | case-study

While planning a new business one may think of the first few customers as an unimportant business milestone. One that eventually leads to the real goal: thousands or millions of customers. There are many reasons why companies should do the opposite. I’ll explain why.

It’s a reality check

Focusing on a few users, makes you see that your customers are actually real people with complex issues. You start looking at them in greater detail. Think of a product like Airbnb. Source here says that Airbnb were a slow moving start up before they noticed a pattern in most of their listing: bad photographs. Because of that users weren’t booking rooms as often as they should. Paul Graham came up with a completely non-scalable solution: the founders actually took a flight to New York, took photographs of their listings themselves and put them up on their site. Turns out that the revenues increased immediately. Looking at a few listings as real customers and taking an interest in the details of each customer, Airbnb discovered and fixed a potential critical requirement for their business to run.

It helps you get to market faster

Products consists of the core features and the bells and whistles. When you are trying to build a new product, it is almost always the case that your first release is going to be very basic, buggy, behind schedule or even incomplete. Focusing on just a few users gives you a chance to convince your few customers to use the first release in spite of its shortcomings. If you are focussing on a handful of customers only, it is possible that you will develop a relationship with these customers so you may convince them to use the release in spite of the shortcomings. Piloting your product early gets you to market faster and gives you much valuable market feedback. You get a chance to tweak your product so it could add more value. That’s invaluable when you reach a thousand users or more.

It is cheaper

A lot of “bells and whistles” in product design become relevant long after the product goes live. Examples: making the product scalable, deploying pain free updates, backward compatibility of features, supporting multiple versions and platforms of the same product etc. These would not matter if you only had, let’s say, three users. Yet these are complex and expensive problems to handle and totally unnecessary for your first release. Omitting these bells and whistles make the product only marginally less useful for the early adopter. Your chances of convincing a few users to try the product in spite of some limitations is quite high if you are solving a real problem. It is much safer than investing in perfecting a product before the business model and customer benefits are clear.

You don’t have to be the first one to scale

Focusing on your competitors makes you want to scale fast. But I would argue that most businesses (and start-ups more so) need to focus more on adding value to their users than on beating competition. One, because markets are bigger than they seem: most industries have thens of thousands of businesses providing similar set of services. Let alone the few competitors that we can have our eyes on. Two, because not all who scale first survive. Facebook was much smaller when Orkut was already big. Gmail was an invite only privileged service when yahoo mail and hotmail had users locked in.

Happy users talk

Happy users talk about the products and services they LOVE. Especially to other people who may need similar products. Recommendations from other users is the cheapest AND the best form of marketing. Focusing on fewer customers and building relationships you are more likely to convert them into users who talk and recommend your product or service.

The other alternative of being focusing on everyone (don’t know if that is even possible) could be a big waste of time and money. More so if your plan has many moving parts.

Resist the pressure to scale before the core product is awesome. Resist the pressure to over-design to scale early.



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