How to Get Your First Customers | Startup School

Y Combinator

Y Combinator

22 min, 54 sec

Gustav Alströmer from Y Combinator discusses strategies for startups to move from talking to users to acquiring their first customers.

Summary

  • Gustav emphasizes the importance of doing things that don't scale in the early stages of a startup.
  • He argues that founders should personally handle sales initially and explains the sales funnel process in detail.
  • The significance of charging for your product from the start is highlighted as a sign of providing real value.
  • Gustav advises on how to work backwards from sales goals using the sales funnel and the necessity of tracking conversion rates.
  • He recommends tools and resources for sales and emphasizes the differences between early stage sales tactics and growth strategies at scale.

Chapter 1

Introduction and Agenda

0:10 - 35 sec

Gustav Alströmer introduces himself and outlines the topics he will cover in the presentation.

Gustav Alströmer introduces himself and outlines the topics he will cover in the presentation.

  • Gustav Alströmer, a partner at Y Combinator, introduces himself and prepares to discuss transitioning from user engagement to customer acquisition.
  • He plans to cover the concept of doing things that don't scale, the importance of founders doing sales, charging for the product, and working backwards from goals.

Chapter 2

The Importance of Doing Things That Don't Scale

0:45 - 1 min, 13 sec

Gustav underlines the critical mindset of doing things that don't scale and why it's essential for startups.

Gustav underlines the critical mindset of doing things that don't scale and why it's essential for startups.

  • He references Paul Graham's essay 'Do Things That Don't Scale' and the early days of Airbnb as an example of a startup that succeeded by not initially focusing on scalability.
  • A good product is necessary but not sufficient; founders must engage with customers and manually recruit them, which often feels uncomfortable and is commonly avoided.
  • Startups take off because founders make them take off, not due to automated growth channels.

Chapter 3

Understanding the Startup Curve

1:58 - 1 min, 41 sec

Gustav explains the startup curve and the phases startups typically go through.

Gustav explains the startup curve and the phases startups typically go through.

  • Startups often go through a launch phase, followed by a drop in energy as early adopters leave, entering the 'Trough of Sorrow'.
  • Many companies fail at this stage, but those that persist and iterate based on user feedback can reach the 'Wiggles of False Hope' and eventually product-market fit.
  • Founders make the critical difference at every stage, either by learning new skills, such as sales, or pivoting to a better market.

Chapter 4

The Fundamentals of Sales

3:39 - 1 min, 26 sec

Gustav discusses why founders should handle sales and how to effectively approach it.

Gustav discusses why founders should handle sales and how to effectively approach it.

  • Founders need to understand their customers deeply, which is why they should be involved in sales to learn about customer needs and problems.
  • Knowing how to sell and what constitutes good sales is essential before building a sales team; this helps in understanding product feedback.
  • Passion for solving customer problems is infectious and can be a powerful sales tool.

Chapter 5

Successful Founders' Sales Stories

5:05 - 54 sec

Gustav shares stories of successful founders who took on the sales role and excelled in it.

Gustav shares stories of successful founders who took on the sales role and excelled in it.

  • Founders of successful companies like DoorDash, Front, PlanGrid, and even Steve Jobs, took on the sales role initially.
  • An example is provided for the Brex founders who recruited their first 10 customers from their YC batch by identifying a simple value proposition that was directly useful to startups.

Chapter 6

Writing Effective Sales Emails

5:59 - 2 min, 38 sec

Gustav provides detailed advice on crafting short, clear, and compelling sales emails.

Gustav provides detailed advice on crafting short, clear, and compelling sales emails.

  • Sales emails should be brief and to the point, with no jargon or buzzwords, addressing the potential customer's problem directly.
  • Use plain text, include social proof and authority, link to a simple and informative website, and always end with a clear call to action.

Chapter 7

Understanding the Sales Funnel

8:37 - 1 min, 53 sec

Gustav breaks down the sales funnel process into understandable 'founder speak' and 'sales speak'.

Gustav breaks down the sales funnel process into understandable 'founder speak' and 'sales speak'.

  • The sales funnel includes making a list of prospects, reaching out, scheduling demos, discussing pricing, closing customers, and onboarding them.
  • Tracking each stage's conversion rates is crucial and can be done using simple spreadsheets or CRM software.

Chapter 8

Prioritizing Early Customer Targets

10:30 - 1 min, 1 sec

Gustav advises on choosing the easiest initial customers and avoiding those who slow down the sales process.

Gustav advises on choosing the easiest initial customers and avoiding those who slow down the sales process.

  • Start with the easiest potential customers to close and avoid those who are less responsive or present complex barriers.
  • Selling to startups is generally easier due to less bureaucracy and faster decision-making processes.
  • Focus on early adopters and avoid spending time trying to convert those who are not naturally inclined to try new products.

Chapter 9

The Necessity of Charging Customers

11:31 - 3 min, 46 sec

Gustav stresses the importance of charging customers from the start to validate the product's value.

Gustav stresses the importance of charging customers from the start to validate the product's value.

  • Offering free trials or unpaid pilots can be tempting, but paying customers provide real validation of value.
  • A money-back guarantee is preferred over free trials in B2B sales, and prices should be increased until customers start complaining but still pay.

Chapter 10

Working Backwards from Sales Goals

15:17 - 2 min, 26 sec

Gustav explains how to set and achieve sales goals by working backwards using the sales funnel.

Gustav explains how to set and achieve sales goals by working backwards using the sales funnel.

  • Understanding drop-off rates at each stage of the funnel is crucial, and these rates will become clearer as more sales activity occurs.
  • Tracking conversion rates is essential to gauge what works and what doesn't in sales tactics.
  • Startups often fail to send enough outreach messages, resulting in incorrect conclusions about their sales process.

Chapter 11

Sales Tools and Resources

17:43 - 3 min, 34 sec

Gustav recommends tools and additional reading for founders to improve their sales processes.

Gustav recommends tools and additional reading for founders to improve their sales processes.

  • Apollo.io, Close.com, Pipedrive, and Hunter.io are recommended as sales CRM tools.
  • The book 'Founding Sales' and Lenny Rachitsky's newsletter are suggested as helpful resources.

Chapter 12

Growth Strategies at Scale

21:17 - 1 min, 28 sec

Gustav differentiates between early sales tactics and scalable growth strategies.

Gustav differentiates between early sales tactics and scalable growth strategies.

  • He notes that even companies like Airbnb that rely on scalable growth channels now did not start with those strategies.
  • Finding early adopters and leveraging personal networks is key in the initial stages before transitioning to scalable channels like SEM and SEO.

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