Great post!

I've seen this dynamic in so many product-based companies.

You do a great job articulating.

Great post! I've definitely felt some of this 'pain' in our startup.
We had reached a decent level of revenue but it was highly dependable on the founders selling and delivering it. We just couldn't scale, so recently we ended up downsizing the company in order to find the Product/Market fit. (We're still going through this learning period)
Your last tip is going to be my takeaway from this post.

extraneous SHIMMER reference spotted; you are dating yourself eric... that's SNL Jan 1976:
http://snltranscripts.jt.org/75/75ishimmer.phtml

Great Post on Start Ups. These are very important points. And will lead to longer term success.

This is possibly the most insightful startup article I've read in a while. People talk about funding funding funding, bootstrapping, etc., but few step back and really examine the underlying assumptions of startup finance.

So here's the question that I pose to you - our startup helps software companies develop a scalable revenue engine in the form of software-specific hardware devices. However, its not that the scalability problems disappear, its just that we take them on for the client. Since we're offering a complete solution, which involves the development of a new product, there is design, prototyping, etc., involved before we go into production.

Do you have any thoughts on scalable customer acquisition in cases where a decent bit of knowledge work has to be invested into each customer? This is a puzzle I've been actively working on solving.

Transitioning from founder sold bootstrapped revenue to a functioning sales team is certainly possible. The greatest trait for an entrepreneurial founder is adaptability, so this is fundamentally no different from many other challenges that they face.

@dave - glad somebody noticed. It's called cultural literacy, not dating. Right.

@Alex - that sounds like an especially good case for Customer Development. You really should read Steve's book: http://bit.ly/FourSteps

The short version is, you need to build up an in-depth mental model of a prospective customer. If you're still very early stage, then you need to know what a true early adopter looks like. Regardless, this model should tell you at least three things:


1. Within the companies that you sell, who is the decision maker for this kind of product? Who's the economic buyer, the end user, potential saboteurs?

2. "A day in the life" of the customer - in particular the decision maker or economic buyer. How is that picture changed before and after your product.

3. The selling order. What's the right set of materials, conversations, etc. that completes a sale for these customers? Steve likens this to a map: first go here, then go here, etc.

The whole point of this exercise is that, once you have this level of understanding, you can use it to train full-time salespeople who can simply execute your sales strategy. That's quite scalable, assuming that the market is large and the revenue per sale is also high.

Helpful?

Eric, I have Steve's book and wish I had it for 1 couple of my earlier startups where the framework would have helped our team get on the same page.

In these examples I was selling enterprise software where the vocab matched perfectly. Now that I'm in a web based company I'm finding a difficult match the framework, culturally. I get it personally and can see how it applies cause I've lived the pain but today there's so much "just try it, its cheep to get started" mentality that its difficult to get people to think about this level of planing when your customers are less well defined. Perhaps thats a fallacy?

In short: I'd love to read your take on a web version of customer development.

Cheers, and wish I hit w2e this year. Whould have loved to grab a coffee/beer.

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Eric,

Thanks for a great article. It struck a chord when you talked about companies that go down the customization route in return for greater revenues and how they face future problems when it comes to scalability. Currently we are in that exact position; however, because we are a very early stage startup we decided to accept a temporary strategy of accepting customization requests from clients until we reach ramen profitability. Then we could focus on standardizing a product that could have an automated sales cycle online. Would like to hear your thoughts and if there are any pitfalls to such an approach.

Fantastic post. At present would represent the $30,000 revenue company. We are going through those very processes you mention. They key point which relates to our current situation is understand customers extremely well. So far the we have learnt a hell of alot about our customers that we REALLY did not know before. Looking forward to more of your posts, this blog is a favorite of ours right now!

Great post! The part about scattering efforts really struck a cord with me, since it seems people are trying to find new things to sell, instead of sticking with one thing and letting it grow and improve organically.

Very thorough and informative post. I appreciate it!

Great post!! Very well narrated with clear illustrations.

The key to making progress as a startup is validated learning about customers; defining the customer both in terms of interests and also metrics. It is better to be well defined and small than large and unsure of your customer.

For start-ups with friends and family funding, the pressure to use revenue as the most important measure of success can be almost overwhelming. Thank you for your simple, insightful explanation of why that is the wrong metric to use.

Thanks to Twitter, I just discovered your blog. You'll be on my regular list now.