- The video discusses the importance of going from talking to users to acquiring your first customers in a startup.
- It emphasizes the need to do things that don't scale and the mindset required for success.
- Founders should be the ones doing sales initially and should learn how to sell before hiring a sales team.
- The video provides examples of founders who took on the sales job and became successful at it.
- It also gives an example of how the founders of Brex recruited their first customers during their time at Y Combinator.
- The video provides tips on writing a great sales email, including keeping it short, using clear language, and including social proof.
- The concept of the sales funnel is explained, with steps including prospecting, sending emails, scheduling demos, discussing pricing, closing the customer, and onboarding them.
- The importance of onboarding for long-term revenue and customer retention is highlighted.
- The video suggests using a simple CRM software to track customer information.

- Using a simple CRM software can help with sales goals
- Startups should focus on the easiest customers first
- Building a big pipeline and prioritizing potential customers is key
- Selling to startups is easier due to shorter decision-making lines
- Most people are not early adopters, so more outreach is needed
- Charging customers is important for validating the value of your product
- Working backwards from your sales goal is crucial for understanding conversion rates
- Many founders make the mistake of not doing enough outreach and drawing incorrect conclusions about sales
- Qualifying customers and doing sales yourself is important
- Recommended tools for sales include a CRM software and reading Lenny Roshitsky's blog.

- The speaker recommends several tools for sales, including Apollo.io, Close.com, PipeDrive, and Hunter.io.
- They also recommend the book "Founding Sales" and linusnewsletter.com as additional resources.
- The speaker emphasizes the importance of starting with strategies that don't scale, rather than immediately resorting to scalable growth channels.
- They highlight the need to identify where potential customers are online, which may not always be on Google.
- The speaker suggests that personal networks and selling through coworkers can be effective for early-stage sales.
- They mention that the principles of sales remain the same regardless of the stage of the company, but with more automation, tools, and metrics in larger sales teams.
- The speaker notes that starting with online marketing may not allow for effective user feedback and learning.
- The summary concludes with a thank you to the audience.

The video discusses the importance of going from talking to users to acquiring your first customers in a startup. It emphasizes the need to do things that don't scale and the mindset required for success. Founders should be the ones doing sales initially and should learn how to sell before hiring a sales team. The video provides examples of founders who took on the sales job and became successful at it. It also gives an example of how the founders of Brex recruited their first customers during their time at Y Combinator. The video provides tips on writing a great sales email, including keeping it short, using clear language, and including social proof. The concept of the sales funnel is explained, with steps including prospecting, sending emails, scheduling demos, discussing pricing, closing the customer, and onboarding them. The importance of onboarding for long-term revenue and customer retention is highlighted. The video suggests using a simple CRM software to track customer information. Using a simple CRM software can help with sales goals. Startups should focus on the easiest customers first. Building a big pipeline and prioritizing potential customers is key. Selling to startups is easier due to shorter decision-making lines. Most people are not early adopters, so more outreach is needed. Charging customers is important for validating the value of your product. Working backwards from your sales goal is crucial for understanding conversion rates. Many founders make the mistake of not doing enough outreach and drawing incorrect conclusions about sales. Qualifying customers and doing sales yourself is important. Recommended tools for sales include a CRM software and reading Lenny Roshitsky's blog. The speaker recommends several tools for sales, including Apollo.io, Close.com, PipeDrive, and Hunter.io. They also recommend the book "Founding Sales" and linusnewsletter.com as additional resources. The speaker emphasizes the importance of starting with strategies that don't scale, rather than immediately resorting to scalable growth channels. They highlight the need to identify where potential customers are online, which may not always be on Google. The speaker suggests that personal networks and selling through coworkers can be effective for early-stage sales. They mention that the principles of sales remain the same regardless of the stage of the company, but with more automation, tools, and metrics in larger sales teams. The speaker notes that starting with online marketing may not allow for effective user feedback and learning. The summary concludes with a thank you to the audience.

YC Partner & Former Head of Growth at Airbnb, Gustaf Alströmer, gives tactical advice to answer the question: how do I get my first customers? Gustaf will cover this topic for all kinds of companies - whether you're B2B or B2C.

Apply to Y Combinator: https://yc.link/SUS-apply
Work at a startup: https://yc.link/SUS-jobs

Chapters (Powered by https://bit.ly/chapterme-yc) - 
00:00 - Introduction
00:20 - Outline
00:44 - Do things that don't scale
03:40 - Founders should learn how to do sales
08:45 - The sales funnel
13:50 - Charging your first customer
15:24 - Working backwards from your goal
19:51 - Summary

#startup #tech #entrepreneur

My name is Gustav and I'm a group partner here at Y Combinator.

Today I'm going to talk about how to go from talking to users to getting your first customers.

1, what does it mean to do things that don't scale?

And why is this mindset so, so important at this stage of your company?

I'll make the argument, the founders should be the ones doing sales in the beginning.

Then we'll cover some sales funnel information, and then why is it so important to charge for your product.

And finally, we'll learn how you work your way backwards from your goals and why that's important.

I hope you read this article or this essay.

The most important essay ever written about the very early stage of startups is Do Things That Don't Scale by Paul Graham.

He published this essay about the early days of Airbnb.

Airbnb is perhaps the best example of a successful YC company who got their feet off the ground this way.

Many founders who never worked for a startup or an early stage company, incorrectly believe that all you need to succeed is a good product and growth will take care of itself.

The truth is that a good product is very rarely built in isolation, but together with your customers, and as a result, it's not actually that good when you show it to your first customers.

Said this another way, startups don't take off by themselves.

Startup takes off because founders make them take off.

And you have to manually recruit your customers.

It's not enough to push a button on an advertising network.

This is uncomfortable and founders continuously find many ways to avoid doing this.

The most common way is believing that you can recruit people by just writing more code or doing more work on your machine or your robot, whatever you're building.

I know this from my experience at YC that this actually don't work.

So why am I talking about this right now?

Learning The tactics of sales is just 1 side of this learning.

The most important side is just really realizing that it comes down to you.

It's not just knowing exactly how to do sales in theory, but actually doing it and actually wanting to succeed.

Another great visualization is what's called the startup curve.

This was initially drawn by YC founder, Paul Graham, and then labeled by Trevor Blackwell.

And you've probably seen this curve before.

Most companies go through something like this.

It's kind of like a timeline for startups.

These days, most companies don't launch on TechCrunch, but probably on Product Hunt or Hacker News or some other internet board.

The launch energy that you get from this launch eventually starts wearing off as early adopters are looking out for something new.

If you don't have instant high retention, nobody does, for what you are building, then you will enter the through of sorrow.

This can take a long time, and many companies die during this stage.

They just give up and don't move fast enough with testing new things.

Some startups do move fast enough and release new improvements of their product.

Many still don't get anywhere further and becomes victims of the crash of ineptitude.

It's the founders who stay the course and don't give up that reaches the wiggles of false hope and eventually the promise land a private market fit.

The learnings we draw from the startup curve is that every moment in the early days of the startups, the founders are the ones that make the difference between success and failures.

If you are in the wrong market, it's the founders that switch to a new 1.

And if you don't know how to do sales, it's the founders who learn.

So you have to really want it, otherwise this won't work.

All right, let's talk about sales and how to do sales.

First, founders should learn how to do sales.

You should learn how to do sales because you'll need to learn to know your customer.

Talking to customers and sales are effectively different sides of the same coin and the same reasons founders can't understand what to build they don't understand what the problem is, you don't know how to sell unless you know your customers.

2, learning how to do sales actually gives you full control of your destiny as a startup.

Just like you can't outsource engineering, sales has to be part of the DNA of the founders.

As a result, You should not hire a sales team until you know how to do sales yourself.

Only then will you know what good looks like.

You also can't do sales if the product is bad, and you won't know if the product is bad unless you've had some effort in trying to sell it first.

If you don't know how to sell, don't worry, you can learn.

It's probably the easiest job to learn in startup.

If you know the problem you're solving, if you know your product intimately, if you know the market, you are an expert in the eyes of the customer.

They will want to hear what you have to say.

Finally, a love for solving customer problems is really infectious.

If you're really passionate about solving this problem, they will be able to tell.

If you don't believe me, here are some examples of founders who took on the sales job and learned to get really good at it.

So Tony from DoorDash, Matilda from Front, Tracy from PlanGrid, and Steve Jobs.

So these are the Brex founders, Pedro and Henrique.

When Brex was in Y Combinator in winter of 2017, they recruited the first 10 customers directly from the YC batch.

During YC, you have the benefit of being around other startups, i.e.

The Brex founders asked themselves, what would the minimum product look like that they can build to be useful to other startups?

And then they went straight into signing up those customers.

Customers just had a virtual credit card, and Enrique from Brex actively onboarded every 1 of the customers himself.

Of course, they could have waited until they had a full-blown product, a website, a mobile app, all of those things, but they decided to get going with something that was really useful.

This is how their first physical card looked like.

Before they had this card, they just had a virtual card.

Brex reached out to their YC batch and other YC companies, and this is the email that they sent.

I'm just going to read a brief portion of it.

Hey guys, we're opening up a beta for winter 17 batch friends with 10 spots for beta users.

It sounds like there's a limited spot, so I should take actions.

Brex is a corporate credit card focused on technology companies.

You're actually writing the email directly towards your customers.

We don't require a personal guarantee, it can underwrite startups who just got started.

Most other alternatives to Brex did not have something like this.

The merchants are paying us, so there's 0 annual fees.

I would argue that this email is probably a little bit too long, but it did work.

So let's talk about how to write a great sales email.

So first, it should be short, max 6 to 8 sentences.

The Brexit sample on the previous slide is probably too long.

People don't have time to read long emails.

If you're coming out of academia, your culture is gonna be very different.

But in the worlds of sales, you wanna get to the point and be brief as much as you can.

2, you want to make sure you have clear language, no jargon, no buzzwords.

Just say exactly what you do and how it works.

And then 3, address the problem that the potential customer is having.

Write your email in plain text only, like you would written it to a friend.

Say you are the founder of the company who makes this product.

Describe why you and your team are impressive.

Don't say how many years that you have been an expert.

If you're in the YC batch, if you worked at impressive companies in the past, those are other piece of social proof that you can include.

You want to include a couple of these ones so that the reader knows the source.

And even if they don't know you, gives assigned you some authority.

6, you want to include a link to your website.

It needs to have information about the product.

The website should not have a lot of drawings or sort of like paid for graphics.

You should just have screenshots from your product and bullets about what your product does.

Sometimes it works to send a short video, a YouTube video that you can embed in the email.

That's very easy for the receiver to click on and view.

Now those videos and those GIFs need to get to the point right away because the receiver is going to be intimately familiar with the problem but not really have time to watch 2 or 3 or 4 minutes of a potential solution.

And then finally, you want to include and ask for a call or a meeting or a self-serve, whatever is appropriate for your company.

But there needs to be a call to action in the email that you're sending.

All right, let's talk about the sales funnel.

The concept of sales funnels is really quite easy.

I think people get confused by the language the salespeople are using.

On the left hand side, I call it the founder speak.

On the right hand side, I call it the sales speak.

These are not gonna be perfectly mapping, but you get the idea.

So first, you want to make a list of customers you plan to reach out to.

In sales, it's called prospecting or lead generation.

And you can use Google Spreadsheets or something like that to make this list.

Then we want to send them an email or a LinkedIn message or add them on LinkedIn or whatever is the appropriate way to contact these people.

After that, you want to schedule and run a demo or a meeting from that response to the email.

And then you want to talk pricing and then finally close them as a customer.

The last thing which you should not forget is after you've closed them, you still need to onboard them to make sure that they start using your product.

If this is successful and you have good retention, that could lead to long-term revenue.

If you forget the last step, then you will have lots of churn because people don't actually know how to use your product.

And this is common with early products because they are not easy to onboard in the beginning.

This is not something you spend a lot of time optimizing.

So make sure that you do the onboarding as part of this process.

If you go back to the Google spreadsheets that I'm making, that I'm putting in all the information, you should start simple, but you should have some columns of things that you're tracking.

So industry, the company, the title, the name, the email, maybe the LinkedIn.

A lot of CRM software comes with these categories or these columns.

It's pretty good idea to kind of use a simple CRM software to kind of accomplish the same goal.

But the key thing here is doing this work upfront.

And I've seen a lot of YC founders that when they are getting to 1,000 of these, they're like, oh, this is a very simple task.

And I think that can work if you know exactly what it is you're outsourcing.

Storing all this information is going to be helpful for you in the future.

Now, I made my list, I understand the sales funnel, so who should I be going after and how should I be prioritizing as I'm doing the outreach?

Here's my most important advice when it comes to sales.

Your first customers should be your easiest.

This is not the time to bite off the hardest 1.

What I mean by that is you should try to do sales, make the sales process as easy for you as you possibly can.

Startups don't really have time to chase every lead.

You can pick only the ones that are the most likely to close.

The best way to do this is to have a big pipeline.

That means a lot of people that you're emailing are potential customers.

And then as you're getting responses and you're getting to meetings, start prioritizing those who are the most likely to close.

You can probably tell from their answers to your qualifying questions during the sales call.

Avoid those who are moving slow and don't be afraid of letting customers go.

What I mean by that is that if someone is dragging you along 2 or 3 calls, you can always be like, it's been great getting to know you and I've learned a lot, but we should talk again in 6 months.

2, selling to people you know is going to be easier to sell to strangers.

So you should take advantage of your network.

3, selling to startups is the easiest category.

And I've learned this on and on again with YC companies, specifically the ones that sell software.

It just turns out that bigger companies have more bureaucracy, more processes.

They even have a specific department that is in charge of negotiating with you.

And startups don't have any of these things because they don't have time to create these things.

So startups have short decision making lines.

You can often find the decision maker right away as you're doing the outreach.

And you don't have to go through a difficult process.

And that's why we recommend most companies to sell to startups.

And I keep saying this to the YC companies I work with all the time.

The reason you have to send hundreds of emails is not that most of those people get really upset and be like, I can't believe you emailed me, like, I really love this alternative product, but I hate your product.

Most people they email are just be like, OK, they just don't care.

They're not going to try a new product that comes in through your LinkedIn or your email, and they might not be the people that try a new product at all in their career.

Some amount of people, I remember being 1 of those people when I worked at Airbnb, I would love when founders emailed me with new products, and I would be the 1 signing up for them.

So when I worked at Airbnb and you were a startup, emailing me was great.

I don't mind the risk of trying new things.

So for every outbound to an average company that you send, you will most likely on the average outbound, average email, average LinkedIn, reach someone who is not an early adopter.

To reach early adopters, you just have to send more outbound messages because then you don't have time to convince anybody to become an early adopter.

You have to find your adopters and just go for them early on.

Don't worry about everybody else, you just don't have time to convince them.

It's attractive for you as a founder and for your company to offer your product for free.

Offer free trials or unpaid pilots And these things come in many shapes and forms.

However, if you don't charge your customers, they are not a customer and you don't have a company.

Customers paying you money is a great sign that you're providing them real value.

So you should resist the fear of getting a no because of price, instead of figuring out what the price should be.

If they don't want to pay, and you learned this during the qualification process in the first call, the first meeting.

If they don't want to pay, that's a great sign that you should move on to the next customer.

Again, fire the ones who seem like they're not good fit.

But if you thought about it, Most consumer free trials ask for the credit card up front and then we forget and then we pay anyway That's because that actually works the best the B2B version of this is A better 1 than a free trial is a money-back guarantee So We charge you if you're not happy you can get the money back in 30 days or 60 days Or even better you have the ability to opt out from the annual contract just pay for 1 month instead of the annual fee But you should not offer free trials and B2B sales go for a money-back guarantee and go for the ability to opt out instead.

Increasing your price until your customers are complaining, but still paying is the right way to go.

All right, let's talk about the thing that most founders get wrong.

I've said this many times, but there are a few things that most founders get wrong, And this is 1 of them.

Working backwards from your goal with your sales funnel.

In order to work your way backwards from a goal of say, 2 signed customers, you have to understand that each step in the sales funnel is going to have a drop off.

When you haven't started sales yet, you don't know what these drop off percentages are.

Maybe you haven't done a lot of sales before, you don't know what you're not good at.

Maybe you're really good at sending emails, but really bad at closing or vice versa, you don't know that.

So as you're sending these outbound emails, you need to take notes and start tracking all of these conversions.

In this example, I'm sending 500 outreach emails or LinkedIn messages.

That means 250 people will open the email.

50% of those will convert to demo from the response, which means I'm doing 10 demos.

Only 2 end up becoming customers from the demos.

I bet you most of you don't even track this data, but you should.

If you track this data, you will have some idea of how long it will take to get to 10 paying customers.

If you don't track this, it's very hard for someone to give you feedback on what's working and not working.

It's just like when you're launching a new product, you want to have some metrics and some user data to be able to tell if it's working.

When you're doing sales, you want to have this data.

If you have this data, people will be able to give you feedback on what you're good at and what you need to get better at.

My advice is to use a simple sales CRM software that tracks these conversion rates automatically.

This is how it looks like for most startups, even the ones that I work with in the batch.

In the second example, I'm sending 100 outreach email.

If I keep the conversion rates constant from the previous example, I actually end up with 0 customers.

And the conclusion the founders draw after this is that sales is not working for me and I should just do marketing or SEO or something else or referrals or something that sounds attractive.

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How to Get Your First Customers | Startup School