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  • Writer's pictureMalcolm De Leo

Hey Founder, can you even handle 100 customers right now?

Founders are tasked by their investors to do one and only one thing...scale. It's like having a conversation about any topic with them and it probably goes like this...

Founder: "Hey Marty/Martha, how is it going with you?"

Investor: "Things are great, scale. I went for lunch today and talked about scale. Then I went to pick up my car and the mechanic just scaled up his garage. And then I called my mom who scaled up the number of recipes in her recipe book..." And on and on and on.

It's a dumb way to put it, but the pressure for founders to scale and grow their business is so embedded in the vernacular that sometimes people forget to it time to scale?

I have had the privilege of working with founders, mentoring founders, and even being a founder myself, and more times than not, the pressure to scale outweighs most companies' success.

From my vantage point, growing a company is a delicate dance. There are so many variables to manage from having a viable product, to figuring out if anyone even cares about it, to testing and learning where to attack the market, determining the best way to market that product, and ultimately getting customers to not only buy it but love it.

What I have seen gets lost in this very delicate and ethereal process is this; as you get started, the importance of trying hard to resist the urge to drive sales before you understand if your business can handle the avalanche of need from your customers.

  • Can you get them to pay for it?

  • Will they like the product when they get it?

  • Do they use it at all or often enough to justify their investment?

  • Will its features meet their often lofty expectations?

  • Can you develop what they need or request quickly enough to keep their interest?

  • Do they get definitive ROI/Closed Loop Attribution such that they can justify their spending?

And lastly, which is probably the most important question...if you had 100 customers using it would you be ready for all their various needs so you don't disappoint them? Do you even have the right resources and processes in place to meet those lofty expectations or even execution asks? We all know the old saying, that it takes years to build a brand and seconds to ruin it.

Before pushing the scale button consider the following. These thoughts come from years of working alongside leaders who mistake their brilliance with a market that may or may not agree with them.

With investment comes great responsibility

If you follow the standard startup process, you get an idea, you raise money and you get going on the yellow-scale road with your lion, tin man, and scarecrow in tow. But more often than not, the founder's behavior changes dramatically the moment they take an investment. Why? Because money makes you give up control and many founders who are true believers in the process believe getting the investment is what needs to happen to make a company successful. But this investment comes with great responsibility. The moment you take it, you are committed to someone else's metrics, motives, and desires. It doesn't mean don't take it, but if the point of this post if can you handle 100 customers, then be sure you are ready to head there before believing that you need the money. Take the money when you are at least 80% sure your product is ready for the market you crave to own.

Bootstrapping is a gift, not a curse

When I started my own company, I started it by trying to follow the "startup process". Create an idea, get a pitch deck, get a seed round, and bam! off the races. As a first-time founder (who may very well still fail), I can honestly say the best thing that happened to me was abandoning fundraising in the short term. This isn't because I didn't want the money, I still would love it, but bootstrapping helps a founder truly explore their operational side. Bootstrapping is about learning what is most important to build your business and focusing hard on knowing what not to do. If a founder is given enough money to have 2 years runway, their investment decisions are based more on a plan and less on the market. Bootstrapping forces you not to waste money on vanity spending that isn't at all necessary as you build towards being able to handle 100 clients easily. When every dollar counts you make decisions in a much more pragmatic way and it ultimately really tests your meddle

Know your customer and channel their needs

Our ideas are beautiful and it is this vanity that crushes companies. I have met many tech founders who have brilliant technology but have zero customers. Sure you can find a hole in the market, a pain that people need to solve but if you don't get customers' feedback and hear them you are guessing. The best products marry a founder's brilliant idea with the discovery of both a customer's unarticulated and articulated needs brought to life in a quickly evolving product. Someone asked me once why I was starting with the simple idea and not building it further. I responded by saying we know the idea is good, we know that this is a great place to start attacking the market (because we used customer feedback to build the alpha product) and then we will let the customer guide us to the places we believe are right through their partnership. I am amazed at how many founders think they know better than their customers. Sure you have to have a vision they can't always see, but without them you have nothing.

Scaling too fast leads to "point solution fantasia". I have seen this movie a few times now. The base idea at a startup is good. Eventually, it meets a customer who describes a vision for a module that meets their needs. The founder will often net down and build what a single or very few customers tell them. Suddenly they are building a "point solution" that the customer will "go online and swipe a credit card" only to begin a fever dream of product usage. And when this fails, they gather again several months later building the next killer point solution that will scale the company because "this is a big idea". And this goes on a few times because they are dancing around looking for the scale moment. The three times I have seen this "point solution fantasia" each company failed to get traction. Point solution fantasia feels like focus but it's a morass of bad market interpretation wrapped in the egomaniacal quest for scale and wealth by a hapless founder.

Customer Disappointment is real

Of course, this is obvious, but believing you are ready to scale is different than having true signals from the market that say you are ready. Only when you develop a use case that has ROI and others are inclined to buy as you test the market can you begin to say you are ready for 100 customers. The truth is you cannot mistake people buying your product for true scale and adoption. ROI takes time and while you should find many places to prove it make sure your customers agree with you that your baby is cute. Missing this can hurt you because misreading the market leads to wasted money, greater pressure and ultimately flailing that can lead to failure.

In Conclusion

The question "Are you ready to have 100 customers?" is a great benchmark question that keeps you honest. It causes you to make sure you have the right market signals. It causes you to make sure that your development team is ready to handle the crush. It causes you to decide when to scale up your sales process. This question should make you dig into your company's strategy and ensure that all the parts are humming together as best they can to begin to truly sprint toward success. Of course, you never really know if you are ready to scale... you do need to use your instincts, but without using this rule of thumb you can much more easily find yourself missing your weak points that need fixing so you can delight your first 100 customers seamlessly.

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