HatchConf:

Customer Discovery

Ned Lilly, CEO, xTuple

On the Launch Pad• What you’ve heard so far• Idea, Funding, Business Model, Team

• So now all we need is . . . someone to buy this thing!

• So where do you start?

Your Circles• Let’s start with the obvious• Is it something you use yourself? (Eat your

own dogfood!)• Friends, family – anyone you know in the

business that could use your product/service. If you can’t ask them, you shouldn’t ask anyone else.

• Investors – anyone in the business willing to invest should certainly be willing to try your product (or help point you to someone who will).

The Importance of Beta

• Never design your product or service in a vacuum – identify “beta testers”

• Don’t expect them to pay – you need their input at least as much as they need your product

• But define the value proposition – free for some period of time, but they will have to pay later

xTuple’s experience• Built product with one initial

customer

• Got it to “good enough” – now what?

• Small “acquisition” of supposedly captive customers• Only works if they’re really captive!

Other Paths to #2, 3, 4

• Does beta customer #1 have colleagues in the same or related business?

• Don’t forget: They want you to succeed, it’s OK to ask for their help

• Identify communities of interest, opinion leaders

• Word of mouth is your best bet

Vertical or Horizontal?

• Would you rather have customers that are all pretty similar (own a niche)? …

• Or is there greater value in demonstrating a broader market appeal?

• You’ll need to choose one or the other.

Back to xTuple• We opted for horizontal – but it takes

longer, and is usually more expensive

• Freemium distribution model reduced our customer acquisition costs

• Now it’s humming, but it took 10 years!

The Virtues of Vertical

• More readily available customer lists (sort by industry, etc.)

• Trade groups, other marketing channels

• Word of mouth is easier within groups of common interest

Finally, a Culture Note

• Lesson learned: Everybody needs to sell!

• Get comfortable with that, or go do something else.

• Even when you hire dedicated sales people, you can never lose that focus.

• If you don’t have customers, you don’t have a business.

Conclusions• Eat your own dogfood• Friends, family, investors• Beta customer #1 – for feedback and

introductions to customers 2-4• Decide: vertical or horizontal• And remember, customers are

everyone’s job