Before you sell to everyone, sell to someone!

This is the story of our journey as first-time entrepreneurs, so far.

After two years of working hard to create the perfect product for everyone to use and become the next big thing I’ve read the following piece of advice:

“When we look at the big successes, they seem to serve the whole world. Google lets anyone find anything. Paypal helps anyone send money anywhere. Evernote backs up all the writing of everybody. But they didn’t start there. If you start too generic, everything is watered down. Your marketing message is generic. You suffer feature creep. In their early days, Google helped PhD students find obscure bits of code. Paypal helped collectors buy and sell Pez dispensers and Beanie Babies more efficiently. Evernote helped moms save and share recipes.”

Fitzpatrick, Rob. The Mom Test: How to talk to customers & learn if your business is a good idea when everyone is lying to you (p. 95). Robfitz Ltd. Kindle Edition.

 

This was one of the most impactful insights I’ve ever had!

In this article I will share our experience as first-time entrepreneurs, try to help you avoid making the same mistakes we did, share our most impactful insights and share what we’ve done to improve our company and ourselves.

I’ll do so by describing each phase of our evolution. While these stages might not apply to all individuals/companies the insights concluded from them should be applicable to the vast majority of early-stage startups, and have vastly improved both our team and our company.

 

Phase 1: EZ-mode

When you do make the leap, that big decision, to go all in for creating something of your own, it’s incredibly exciting! It’s crazy! It’s scary!

However, this also means you believe in yourself and have the confidence that you have what it takes.

For us, the beginning of building our company was bliss, later we learned it was merely a bliss of ignorance :)

 

 

Newbies think they know best!

There’s no need to explain the chart or the effect, but I will say that this was exactly the case for us, we were overconfident thinking we will easily make it. At this point everything seemed so simple. We were certain that as soon as development was completed, we’d either make a ton of money or be able to effortlessly raise enough funds to grow our company and be the next big thing.

This confidence came from our lack of understanding how hard is it to actually build a successful company. You hear advice like “just build something valuable” and say to yourself: “Yes, I can do that. I know exactly what I need to build”

You may even take it one step further, assuming “once we build it, we will just need a bit of marketing and we’re golden!”

Well… we have built it, but only to discover that no one is actually using what we created (OK that’s a bit harsh, we did have some success, but not to a level that could justify quitting our jobs and going all in).

Realizing something is not working takes time and it did. So we analyzed what happened…

 

We were overconfident in our ability to create what the market needs, we needed to talk to customers!

 

Phase 2: It’s all about the customer

Armed with new insights and ideas we devised a plan to contact users from other platforms, provide them with value and get to know them. Once we understood what they wanted, we would easily build it and sell it to them. Easy as pie.

Our plan seemed to be working, we secured and onboarded some of the top vendors from a competing platform, spoke to them, understood what they wanted to see in ours, and went ahead and built every requested feature, just to delight them!

 

“This is how things should be done”

We all agreed and decided to only develop things if and when a real customer would ask. We were burnt pretty hard from developing things that didn’t work out, and the team was very suspicious about developing anything new.

And so we did, we received dozens of feature requests from customers and users. We developed them quickly and communicated to our customers that we have exactly what they asked for.

To our surprise this didn’t work as well either.

 

Turns out that while “it should all be about the customer”, the interpretation of what that means needs to be refined!

It’s quite easy to just be customer-centric and still build a bad company and a poorly selling product.

 

By building what our customers thought they needed we removed ourselves from the roles of innovators and problem solvers. As it turned out, creating a product comprised of feature requests which originated from potential customers, resulted in a non-coherent product and experience. Each customer wanted something they thought would be cool. but the overall experience of what we were providing had started to become unclear since we were no longer carving our own path.

 

Being Customer-centric <> Developing what customers say they need

 

Phase 3: Learn and Strategize

We soon realized that we had gone long enough without a major breakthrough and decided to set a six month timeline, it was do or die.

We either achieve 20K MRR as a bootstrapped company (a salary we could live with as 4 co-founders) or we’d raise funds. Otherwise, our journey was over.

Following that decision, we had realized that the bootstrap scenario was not going to be realistic for us. We did have a good product at the time, but no real traction nor did we have the required resources to advertise and attract new customers.

Fundraising it is!

We built our pitch deck, did our research and built a product, we are both talented and hardworking individuals… How difficult can it possibly be?

Our first meeting was with an angel investor, who owns his own startup and is very tech savvy, this should be a good sign!

The meeting went terrible, not because of our product, pitch deck or plans, it went south because I was still suffering from the “Dunning-Kruger effect”. I thought raising funds would be easy since I didn’t understand what needed to be done in order to do it successfully.

After realizing why the meeting went bad I emailed that same angel investor and I apologized for having wasted his time, I realized I didn’t listen enough and thought I had all the answers. I also asked him for another meeting, this time to learn. To my surprise, he accepted (both the apology and my request for a meeting) and a week later we met again.

I was shocked to discover how little we had done compared to what was required. Not because we were lazy or chose not to do certain things, simply because we didn’t know any better.

In that meeting he gave me a master’s class about GTM (Go To Market) strategy. We immediately went to work and started an on-going process to create our GTM strategy. For two weeks our team met daily for hours at a time, and discussed different aspects of our customers, products, value propositions and competitors, and came up with a new GTM that we felt great about.

Once we completed strategizing our GTM, things started to get a bit easier. We were aligned about what we’re trying to achieve, had clear goals, and each team member knew exactly what they needed to do.

Another cool side effect of having a good product with a solid GTM strategy is that it makes fundraising much easier. Having a great GTM strategy at an early stage is a positive signal for investors.

For us, it took another two meetings with angel investors to secure our very first investment (pre-seed). This happened exactly 48 hours prior to our deadline!

 

Invest time in research, strategy and team alignment — these actions will lead to a solid plan that is well thought of and that team can stand behind.

 

Listen! Listen! Listen! As an entrepreneur your job is to learn the business/industry/market. Speaking doesn’t translate to learning, but listening does!

 

Set deadlines. Even if they are artificial, having a deadline to achieve a specific goal makes a huge difference!

 

Phase 4: Focus

The plan we had come up with was great, it was well thought of and carefully designed. We even raised funds based on it from a greatly appreciated and well experienced investor and yet… it still failed.

A few months went by since we had raised funds and we found ourselves stuck yet again. Things weren’t going as well as we’d hoped they would.

But our way out of it was through knowledge! We attended webinars, met professionals, listened to podcasts and read books.

We attended an excellent and highly recommended webinar called: “Market Entry Strategy”, by the well-respected Jacques Benkoski .The next few conclusions all originated from there:

 

Choose who to sell to

What? You can do that?!?

Choosing the best persona you can sell to is easy enough to understand but it’s quite difficult to imagine how to actually do it.

“It’s your company, you will sell to whoever you choose to sell”

What does it mean to say “choose your customers”? It means you evaluate your company, product, market, trends, co-founders, past experiences, network and more. Then think to yourself, who are the people you could help and sell , who are the people you can reach, talk to, learn from?

 

Shine one big spotlight

This goes to say that although your product might have dozens of great features, there’s a single main reason why customers will ultimately choose to buy or not buy your product. Go shine a huge spotlight on that one aspect of your product that people find most valuable. Too many spotlights are a mess! Make sure the thing you chose to showcase provides value for the customers you chose to serve!

Bonus: Try to make sure you are the only one with this unique value proposition (remove features your already competitors offer) , they only steal the spotlight from the real deal, your one truly unique and exclusive value proposition.

The next in line comes from a fantastic book our team read: The Mom Test, by Rob Fitzpatrick.

If you’re starting a new company, I highly recommend reading this, like right now!

 

 

The mom test- The most impactful guide I have ever read!

Aside from giving us the methodology of how to approach talking to customers it led us to a huge insight:

 

Even though we have already built a product, got hundreds of users and raised funds, we needed to focus. We need to choose who we sell to, understand them — and literally ignore all the rest.

It’s so easy to go with inertia and just push what you’ve already built by trying to add features or spend more money on marketing in order to “kick things off”. It’s much harder to say let’s truly make this about the customer.

And, since the customer, generally speaking, has not even heard of us, we decided to try something a bit risky.

We chose to focus on a small target audience, people we are able to meet, learn from, and solve problems for!

For us it would be Risk and Fraud analysts, since we have vast previous experience in the industry. We made the difficult decision to forget about what we had already built, and dedicate all of our time towards understanding our new potential customers’ problems.

 

You shouldn’t care about what customers want. You should be concerned about their problems. As an innovator your job is to efficiently solve their problems.

Doing this was scary! We didn’t know if any of the problems we would learn about could even be solved. As we dove deeper into the research process, we grew more and more confident in the process itself. We knew for a fact that we could both help and sell to these people, we know them well, we are part of them.

Why is narrowing your target audience so scary?

When you’re still in EZ-mode (phase one) you think that you can just build the perfect product you have in mind. You may think that everyone will simply buy your product because it’s the best and because it works for any and every use-case. With this in mind, narrowing down your market from EVERYONE to Risk, Fraud and Compliance Teams seemed like a loss of potential in both sales and market share, but as stated in the main title above — “before you sell to everyone you need to sell to someone”.

 

Start by selling to someone! Someone whom you can talk to, meet, help and generate unique value for.

When we targeted “funded tech companies with less than 100 employees” we had little success, it was hard to get leads, interviews, sales calls or anything really. But when you’re hyper-focused and your customer persona represents the real people you know and can approach, your job becomes much much easier!

The next insight came from our angel investor

 

No one cares about the “how”, they care about the “what”!

What he meant by this was that no customer really cares about how you’re doing what you are doing, they care about the what.

What are you doing for them? What is the product? What are they getting?

One of our main issues was that though we had awesome technology, we didn’t really have a product to sell. It was more of a service and worse over the need for this service rarely came up in a company. So, we had to go out and find companies at the right stage, right time and with the right task at hand in order to help. When these conditions were met our service was great and customers really liked it, but it just wasn’t enough.

So, we then decided to make a product! For the people we knew, had already interviewed, the people whose real problems we fully understood.

I can’t even begin to express how much easier it is to get things done now. Having a product that solves a real problem for real people, people we know and can reach, made everything easier.

 

It’s easier to validate ideas — You can easily compile a list of experts (customers, partners, vendors…) in your domain who are happy to help you and will be happy to do so again. Reach out to them!

 

It’s easier to get leads — Once you solve a real problem for someone who told you about it, there’s a much bigger chance they’ll want to use what you built, and are even very likely to share their excitement with colleagues and friends. You should always ask for leads, even if they didn’t offer any :)

 

It’s easier to run projects — Once the team shares a common vision for the product, projects become fun! The team can’t wait to see what the impact of each project will be. Creating solutions for customers’ problems feels so much better than developing randomly requested features from clients.

 

Phase 5: Design Partnerships

This is where we currently are:

After interviewing dozens of Risk, Fraud and Compliance professionals, we agreed on our MVP approach and went to work. We created a demo to showcase what we’re building, to present to all of the great people who helped us, and we are currently looking for 5–10 companies to use our product as design partners.

There are many benefits of having a design partner, the best one I think is being able to quickly solve real problems for real people. The money, fame and glory will perhaps come later, but being able to create something that solves someone’s problems is almost priceless. With design partners it’s simple, the deal is that they don’t pay (or pay a reduced price) and in return they work with you to actively improve the product and experience by providing feedback, making suggestions, and pointing out the things that were completely overlooked.

In our use case we feel 5–10 design partners working with our product for 3–4 months will drive us to a product that is valuable out of the box for most Risk, Fraud and Compliance teams in the world.

I hope I’ll get a chance to write phases 6–10 in the next year or so, but first we need to execute them, make mistakes, learn, correct, succeed, rinse & repeat :)

 

Final notes

This article wasn’t a deliberate plan to achieve a specific goal. It is just about me sharing our story and hoping that others from all around the world can benefit in different ways.

 

Early-Stage Entrepreneurs:

I know that talk is cheap and you get a lot of advice from each and every direction, and it’s hard to decide who to listen to. By sharing the insights we had, how we came to discover them and what we did to better ourselves, I hope to offer my advice with more credibility and relatability, so you won’t have to go through the mistakes and the pain we had to, just to understand it.

Another thing that is important to acknowledge is that as first timers, you may constantly suffer from the “Dunning-Kruger effect”. You are new to everything! You think you’re good at everything but you aren’t, nobody is!

But you can be good at anything and you should be good at everything your business needs. Just try to be humble, listen to industry experts and make educated decisions.

 

Risk Fraud and compliance professionals:

If you’re in the Risk, Fraud or Compliance industry we’d love to hear from you! We are looking for not only potential design partners but also advisors and partners.

 

(To my) Personal friends:

This is my way of sharing what we’ve been through without being the guy that constantly talks about his startup :)

 

Mentors, Investors and all the good people who occasionally help:

Thank you for supporting us, teaching us, funding us and mainly believing in us.

Should you have any feedback, questions, ideas or interest in learning more about us, please feel free to email me at offer@redstrings.io