#10 The Importance of Founder Sales
When founders start their business they must get the first few customers. Not a new concept but one worth diving into:
Much Easier to Recruit Your First Sales Hire
Getting customers and generating revenue increases the attractiveness of the company for the first sales hire. If they are good/great, they will be taking a significant haircut on their short-term cash compensation in hopes their early-stage equity will generate significant returns in the long-run.
No good salesperson will hop on board unless the market has some level of validation. Without it, there is simply too much risk.
Retain more Equity When Negotiating with VCs
Even if you’ve built incredible technology, are going after a large TAM and have a super defensible moat protecting the company from competition, you will have little leverage when negotiating with institutional investors.
On the off-chance you receive a term sheet in this challenging environment without customers or revenue, investors will be assuming far greater risk and their ownership stake should reflect that.
Getting customers and generating recurring revenue de-risks the startup significantly.
You will not only increase your odds of actually getting a term sheet, you can also negotiate better terms that protects your ownership stake, liquidation preferences, etc.
Don’t Build in the Dark
I get it, you’re a product/technical person and want to focus exclusively on building the technology. But without customers you don’t have a business and are building based on market speculation.
The product roadmap must be driven by customer value. And without customers you don’t know what’s valuable.
If you don’t rip off the band-aid and hustle to get your first few customers, you’ll spend your time, effort and energy just building in the dark. You may think the market wants certain things, but until you have customers paying for it in exchange for business value, you really just don’t know.