Why should founders be the ones doing sales in the early stages?

Founders doing sales gain deep customer insights, understand pain points, and learn how to best position their product. It also gives them full control over their startup's destiny, as sales expertise should be embedded in the company's DNA from the start.

What are the key elements of a good sales email?

A good sales email should be short and direct (6-8 sentences max), use clear language without jargon, address the customer's specific problem, and be in plain text. It should also include social proof, a link to a simple website, and a clear call to action.

How should I prioritize which customers to approach first?

Focus on your easiest potential customers first. Leverage your existing network, target other startups (as they often have shorter decision-making processes), and prioritize those most likely to close quickly. Don't waste time chasing difficult leads early on.

Why is it important to charge for a startup's product from the beginning?

Charging customers signifies they are receiving real value and validates your product. Offering products for free or using unpaid pilots means they aren't true customers. Resist the fear of rejection due to price; it helps identify serious leads.

What is the 'Through of Sorrow' in the startup curve?

The 'Through of Sorrow' is a phase after the initial launch hype wears off, where retention may be low and growth stalls. Many companies die here if they don't iterate and improve based on user feedback quickly enough.

How can I track my sales funnel progress effectively?

Use a simple CRM software or Google Sheets to track every stage of your sales funnel, including outreach, opens, responses, demos, and closes. This data is essential for understanding conversion rates, identifying bottlenecks, and making informed decisions.

Should I use free trials or money-back guarantees for B2B sales?

For B2B sales, a money-back guarantee or the ability to opt-out of an annual contract (paying only monthly) is generally better than a free trial. This ensures customers are committed and provides a stronger signal of value.

How to Get Your First Customers | Startup School

Y Combinator

Science & Technology4 min read23 min video

Dec 29, 2022|585,002 views|14,387|220

YC Y Combinator yt:cc=on

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Key Moments

TL;DR

Get your first customers by doing things that don't scale, embracing sales, and working backwards from your goals.

Key Insights

Early-stage startups must "do things that don't scale" to manually acquire customers, as growth isn't automatic.

Founders are the best people to handle sales initially, as it deepens customer understanding and controls destiny.

A clear sales funnel, from prospecting to onboarding, is crucial, and founders should track conversion rates.

Prioritize easy wins: target known contacts, startups, and early adopters; don't chase difficult leads.

Charge for your product from the start; non-paying users are not customers, and payment validates value.

Work backward from your goals, track metrics, and iterate on your sales process; don't give up due to insufficient initial data.

THE PHILOSOPHY OF DOING THINGS THAT DON'T SCALE

In the nascent stages of a startup, acquiring customers is not a passive process driven by a great product alone. It requires founders to actively engage in 'doing things that don't scale,' a concept highlighted by Y Combinator co-founder Paul Graham. This means manually recruiting customers rather than relying on automated growth hacks or advertising. Early products are often imperfect, and direct customer interaction is key to shaping them into something valuable. Founders must embrace this uncomfortable, hands-on approach, recognizing that startups only take off because their founders make them.

THE FOUNDER'S ROLE IN SALES

Founders are unequivocally the best individuals to handle sales in the early days of a startup. Learning sales tactics provides invaluable insights into customer needs and pain points, acting as two sides of the same coin. This direct engagement allows founders to fully control their company's destiny, much like how engineering cannot be outsourced. Hiring a sales team prematurely is ill-advised until the founder understands what constitutes effective sales, how to evaluate it, and critically, whether the product itself needs refinement based on initial sales efforts.

NAVIGATING THE STARTUP CURVE AND SALES FUNNEL

Startups typically follow a 'startup curve,' beginning with a launch, often on platforms like Product Hunt, followed by an initial energy burst. If retention is low, companies enter the 'trough of sorrow,' a critical phase where many fail. Success hinges on founders who listen to users, iterate on their product, and persist through challenges. To manage this journey, a straightforward sales funnel is essential: prospecting (making a list), outreach (emails/messages), demos/meetings, pricing discussions, closing, and crucially, onboarding. Tracking these stages, often in a simple CRM or spreadsheet, provides vital data.

STRATEGIES FOR EFFECTIVE CUSTOMER ACQUISITION

When seeking initial customers, prioritize ease and likelihood of success. Sell to people you know, leverage your network, and target other startups, as they typically have shorter decision-making processes. Avoid cold outreach to the masses initially; focus on finding early adopters who are receptive to new products. Founders should write concise, jargon-free sales emails that clearly state the problem being solved, address customer pain points, and include social proof. Plain text, a direct call to action, and potentially a link to a simple product website or demo video are recommended.

THE IMPERATIVE OF CHARGING FOR YOUR PRODUCT

Offering products for free or through unpaid pilots can be tempting, but it fundamentally undervalues the offering and misdefines a customer. Charging customers is a strong indicator that real value is being delivered. Founders should overcome the fear of rejection due to price. If potential clients hesitate to pay, it signals they are likely not a good fit, and founders should move on rather than compromising on price. For B2B, instead of free trials, a money-back guarantee or the option to opt-out of annual contracts after a short period is more effective.

WORKING BACKWARDS FROM GOALS AND DATA-DRIVEN SALES

A common pitfall for founders is failing to work backward from their sales goals and measure conversion rates at each funnel stage. Without tracking metrics—such as email open rates, response rates, demo conversions—it's impossible to understand what's working or how long it will take to achieve objectives. Many founders don't perform enough outreach, leading to zero customers and a false conclusion that sales are ineffective. Implementing a simple CRM to track these conversions is paramount for identifying strengths, weaknesses, and scaling efficiently because sales, especially early on, is a numbers game.

TOOLS AND RESOURCES FOR SALES IMPROVEMENT

To support the sales process, founders can leverage various tools. Simple CRM software like Apollo.io, Close.com, or Pipedrive can help manage customer information and track funnel stages. Tools like Hunter.io can assist in finding contact information. Recommended reading includes the book 'Founding Sales' and newsletters like lineage.com, which offer practical advice and data from successful startups. Even if a company eventually scales with channels like word-of-mouth or SEO, the initial growth almost certainly relied on direct, scalable sales efforts.

Mentioned in This Episode

●Software & Apps

●Companies

●Organizations

●Books

●People Referenced

Getting Your First Customers: A Founder's Guide

Practical takeaways from this episode

Do This

Do things that don't scale initially to manually recruit customers.

Founders should personally handle sales to understand customers and the product.

Write short, clear, jargon-free sales emails (6-8 sentences max).

Address the specific problem your potential customer is facing.

Use plain text in emails, include social proof, and a website link.

Always include a clear call to action (call, meeting, demo).

Start with the easiest potential customers to close.

Leverage your personal network and target other startups.

Charge for your product to validate its value.

Consider a money-back guarantee or opt-out for B2B contracts instead of free trials.

Track your sales funnel conversion rates meticulously.

Qualify customers during the first call; don't be afraid to let bad fits go.

Do enough outreach to gather meaningful data.

Keep sales processes simple initially and onboard customers effectively.

Avoid This

Don't believe a good product alone will guarantee growth.

Don't outsource sales until you understand how to do it yourself.

Don't use HTML or buzzwords in sales emails.

Don't write overly long sales emails.

Don't forget to onboard customers after closing the deal.

Don't focus on the hardest sales targets first.

Don't let slow-moving prospects drag you down indefinitely.

Don't offer free trials in B2B sales; opt for guarantees or monthly commitments.

Don't assume sales aren't working without sufficient outreach data.

Don't rely on scalable growth channels like SEO or paid ads for initial traction.

Don't outsource initial customer acquisition efforts.

Don't delay charging customers for your product.

Example Sales Funnel Conversion Rates

Data extracted from this episode

Stage	Example 1 (Goal: 2 customers)	Example 2 (Less Outreach)
Outreach Emails Sent	500	100
Open Rate	50% (250 opened)	50% (50 opened)
Response Rate	5% (approx. 12 responded)	5% (approx. 2 responded)
Demos Scheduled	50% of responses (approx. 6 demos)	50% of responses (approx. 1 demo)
Customers Closed	20% of demos (approx. 1 customer -> calculated error in transcript; should be 1-2 customers)	0 customers (implies rates need more volume)

Common Questions

It means founders should manually recruit their first customers and build the product with their direct input, rather than relying solely on code or automated growth strategies. This hands-on approach is crucial for early traction and product development.

Topics

Technology & Innovation Business & Entrepreneurship Product-market Fit Customer Acquisition Early Stage Startups Sales Strategy Sales Funnel Startup Sales Founder Sales Outbound Sales

Mentioned in this video

softwareTechCrunch

A technology news website where companies often launch new products.

softwareClose.com

A recommended sales CRM tool (formerly Closed.io).

companyFront

A company founded by Matild, who is cited as an example of a founder mastering sales.

companyBrex

A financial technology company that provided corporate credit cards to startups, used as a case study for early customer acquisition.

toolFacebook

Mentioned as a scalable growth channel, but not ideal for early customer acquisition due to difficulty in direct user interaction.

toolY Combinator

A startup accelerator that provides funding, mentorship, and resources to early-stage companies.

personLenny Rachitsky

An individual who writes a blog and newsletter with data on B2B startup go-to-market strategies.

toolGoogle

Mentioned in the context of search engine marketing (SEM) and search engine optimization (SEO) as a scalable growth channel, but not ideal for initial customer acquisition.

toolAirbnb

A successful Y Combinator company used as an example of how 'doing things that don't scale' can lead to significant growth.

organizationStripe

A company mentioned as an example that initially used outbound sales emails.

companyPlanGrid

A company founded by Tracy, who is cited as an example of a founder mastering sales.

softwareApollo.io

A recommended tool for sales CRM and contact finding.

softwarelineage newsletter.com

A newsletter recommended for insights on startup growth strategies.

toolPipedrive

A recommended sales CRM tool.