I previously wrote how we got our first 4 customers without having a product. And I can’t stress enough how important these first customers are. How small a milestone it may seem in your incredible dream of start-up success, these 4 customers are the difference between certain death and the small chance of making your dream come true.
However, after the first 4 customers, it’s time for the next hurdle. I spend a lot of time reading and talking to smart people to find out what these hurdles will be. $10k in MRR? 10 unaffiliated customers? International expansion? … It seems like I plan my hurdles further ahead the further I get.
For us, that next hurdle was $10k in monthly recurring revenue. The $10k is not a goal on itself. It’s just money: a means to an end. The real challenge was to prove our first believers we are worthy of their belief. And to expand our customer base thanks to confirming that belief.
In this post I’ll share the 6-month journey that took us from 4 believers to $10k in monthly recurring revenue. Again: this is not a checklist for success. Just as any of us, I’m vulnerable to the narrative fallacy, and above anything you should build your own checklist to success.
Prequel: Method in the madness
Us start-up people are no corporate bozo’s, and our biggest strength is ‘agility’, no doubt. But don’t be too eager in drinking the start-up kool-aid. You’ll need some kind of process if your aim is to build a high-growth but sustainable business.
The funny thing about process is: it won’t work for your company unless everyone believes it will. That’s why I won’t bore you with the details of our process, you’ll have to come up with those yourself. Just be aware that you’ll need structure to facilitate creativity.
Step 1: Team balance
The configuration of your team is of massive importance. In this early stage, you don’t have a financial buffer to recover from mistakes in this area. We definitely dodged a bullet when we lost our first and only developer a few months in.
Apart from that, when you’re looking for the right profiles to join your company, I believe marketing, sales and development deserve an equal amount of attention. We reflected this principle in our team:
- Every company is a funnel: we should balance our efforts to Get, Keep and Grow customers all at the same time.
- People: there were three people working on Darwin Analytics full-time: one designer, one developer and one CEO/sales.
- “I can’t possibly pay three people.” – Neither could I, I fixed this by getting customers before I had a product.
- “I am the founder/CEO, but I can’t do sales.” – Either find a co-founder who can, or learn to do so yourself. To me, having a communicative (co-)founder is even more important than having a technical (co-)founder.
- “I can’t find people who want to work for me” – as a start-up, you don’t have much to offer other than a vision and the promise of adventure. Learn to articulate that vision and share your enthusiasm to attract the right people.
Having this balanced team made sure we made progress on all fronts at the same time.
- Design: get & keep customers
There was enough design power to test possible new features on customers and build quality sales material to acquire new customers.
- Development: keep & grow customers
There was enough development power to put validated new features into production so existing customers saw progress on our platform, and new features unlocked new pricing models.
- Marketing & sales: manage the funnel
And there was someone in charge of marketing & sales. Which meant there was a constant buzz about Darwin Analytics, frequent communication with clients and a constantly managed sales pipeline.
- It’s really hard to be the only developer on the team, definitely when you’re building a product from scratch without knowing what kind of product you’ll end up with. After a few months, we lost our first developer, and I think me underestimating this issue was one of the reasons why. As a non-technical founder, I would now probably hire an external CTO to watch over our development progress.
Step 2: Customer Advisory Boards
Monthly meetings with customers to keep them up-to-date about our progress and ask for feedback.
- Make sure customers know what we’re doing and why.
- Involve customers in the decision making process.
- Try to understand why certain features work and others don’t.
- Make sure your team understands why certain features have a higher priority than others.
Every month or so, we would have a meeting with existing customers to share our progress and ask for their feedback. A typical Customer Advisory Board meeting would look like this:
- Talk about current usage of the app, which we measured with Mixpanel.
The conversation was mainly to find out why someone was using Darwin Analytics the way they did. We learned a lot from these conversations, and it actually produced some of our most successful features.
- Share mock-ups of new features, tape the responses with Silverback.
Every new featured started with our designer building wireframes and mock-ups. We used these mock-ups to get feedback from our customers. This has two great advantages: (1) you get really specific feedback from your userbase without the need to write a single line of code, (2) you can use these mock-ups in sales meetings to test which features work in sales and why.
- Share findings with the team
In an ideal world, every member on the team is present at every Customer Advisory Board meeting. But when you have multiple Customer Advisory Boards planned in one week, no-one gets any work done. So we taped the conversations, and shared the details on Basecamp to get everyone on the same page. If everyone knows why you’re building something, it gets built a hell of a lot faster.
Definitely the most important one. We share all the details of our sprints with our customers, so they know when we are acting on their feedback. We also give explicit credit whenever we release something because of user feedback. Sometimes we even dish out gifts.
Tasty present for users who gave feedback on one of our new features. Thank you! pic.twitter.com/TMwFB243X0
— Darwin Analytics (@DarwinAnalytics) August 14, 2013
- “My users won’t talk to me” – Sometimes, users will slip away because they don’t like the direction you’re going. That’s okay. When you’re bringing a vision into reality, you’re making choices. Choices are good. Just make sure you’re losing these customers for the right reasons, eg: for a feature they want, that doesn’t match other users’ needs.
- “I don’t have the time to arrange all these meetings and follow-up on them” – Seriously?
- “If Ford asked what people wanted he would’ve built a faster horse.” – Yeah. That one. First of all: stop reading the Steve Jobs book. Secondly: user feedback is only interesting when interpreted by a human with brains. Think about why users are giving you certain feedback. If users ask for a faster horse, you should be smart enough to know it is speed they’re looking for.
- Clear choices:
We lost a few customers, but we knew why: they looked for something we weren’t going to build. On the other hand these clear choices choices made our sales process a lot easier. Instead of answering ‘maybe’ to every feature request, we now had a clear answer. Prospects felt more comfortable because of this, and were more likely to sign on.
- A close relationship with our customers based on trust.
We screw up some times, it happens in a start-up. But when we lost our first developer and missed deadlines because of this, our clients understood.
- Growing early customers
One of the greatest moments in Darwin history was the first client upgrading to a bigger license. From now on, they were measuring the marketing results of not one, but five countries with Darwin Analytics. I believe the trust we created in our customer advisory boards played a huge role in this.
- I sometimes gave up on customers too early because I believed they were looking for something we weren’t going to build. In fact, it was my poor explanation about our direction which produced confusion. We managed to fix this later on, when bigger parts of our product got built, but we wasted some precious time and feedback because of this.
- Because of the huge workload, we didn’t always take the time to share findings of every advisory board in a structured way. I would just come back from an advisory board all pumped up, share some ideas during coffee, and run off to another advisory board. You can see how that may confuse people building the product. :) We now have a more structured process, where we document and process user feedback every few weeks in an all-hands meeting.
- Because every advisory board meeting could potentially add or change a new feature, there was a lot of movement on our roadmap. Especially in the beginning, when we hadn’t made any clear choices yet. Ironically, this got some customers confused about what our plans were and when we were planning on executing them. This problem fixed itself. We now know where we are going, and our roadmap is a lot less volatile because of this.
Step 3: $10k in MRR & our first client event
We got increasingly enthusiastic reactions on the new features we were building. Early customers even started recommending us to others. We also saw our usage numbers going up, with more people using the application more frequently, and getting insights from our application that we didn’t even come up with.
We felt the time was right for our first client event.
- Thank our growing base of early customers for their feedback and their enthusiasm (about 12 companies attended our event)
- State clearly what Darwin Analytics is, so they know when it’s appropriate to recommend us to others.
- Share our plans for the future.
- Awesome customers
- A team with decent social skills
- A beautiful presentation about past present and future
- A custom hand-picked book for every customer
- T-shirts for everyone
- A guestbook where users could share how the felt about Darwin as a product and as a company
What a great night this was. We shared the full details on the Darwin Analytics blog. In short: we gave a presentation about the past, present and future of Darwin Analytics, with highlights on how our customers had such a big impact on that journey.
Every member of our Customer Advisory Board received a unique certificate for being a member, and a book that we hand-picked for every member to help them reach their professional goals.
- “I don’t like pizza”
- “We need more money to do something fancy!” – Don’t pretend to be bigger than you are. Our customers know about our runway, they appreciate our honesty and our common sense in managing our financials.
- “Our customers don’t want to attend” – Something’s clearly broken. Fix it.
- “There won’t be enough people” – Doesn’t matter. Get 3 people who love your product together in one room, and it’ll be awesome.
Customers left awesome testimonials in our guestbook, confirming that the relationship between our customers & Darwin Analytics is not just a vendor-client relationship.
We also got some other great testimonials to use on our website, and customers are upgrading and recommending us more frequently than ever.
This solid base of customers is a crucial asset in extending our aggressive growth rate, which is one of our main focus points at this moment.
- I had little to do with the event itself, I just had the idea to organize it. So little room for mistakes on my part. When it comes to those who made the event into such a success – our team and our customers – there is nothing I can think of that could’ve made this more of a success. Lesson for me: others do things better. :)
What’s up next?
Looking back, our $200k angel funding really brought us to a point where we have a minimum sellable product, and an enthusiastic userbase buying, using & recommending the product.
We’re growing pretty fast at the moment, and we like it. So it’s time for us to take this first validation to the next level. Right now, 4 people are working on Darwin full-time, and we have a clear view on the people we need to scale our growth.
The most important things I learned traveling from 4 believers to $10k in MRR are these:
- Hire a designer on day one: great design maximizes the impact of technical innovation. I’m convinced that users enjoy our features ten times more because they are greatly designed.
- Search for your non-technical co-founder: What appeared to be one of my biggest weaknesses has turned out to be a big strength. At least for now. Because I’m not technical, we have a huge focus on sales & customer success.
- Customers are awesome: Good days or bad, if you have customers involved in your business, everything gets better.
- Take a step back: at the beginning of Darwin, it was all about execution. The more we grow, the more I need to take the time to reflect about where we go, and plan accordingly.
- Facilitate conversations: Honestly, I am the dumbest person working at Darwin. But when I get smart people to talk to each other, magic happens.
- Your company is a funnel: every part of your business should be about ‘Get, Keep and Grow’ customers. From sales to development, from customer support to marketing, we plot the activities along these three goals.
I never got a degree, but I have many teachers. They just aren’t working at schools. Learn about these great people at the Darwin Analytics karma page.
If you have any feedback or questions: find me on Twitter, or reply in the comments. Looking forward!