Intro chapter, first draft

Good morning Predictable Revenue community,

Today’s email is a little different.

I usually write these emails as a way of getting the core ideas for the book onto a page. There is nothing like a deadline and an audience of folks expecting an email to make sure that I hit my goal.

As I get closer to the first draft being ready, I’d like to start sharing the bones of the chapters I’m working on. There will be spelling mistakes, terrible grammar, and duplicate content from previous newsletters.

If this sounds good to you, today’s email is my working draft of the Introduction for, “The Terrifying Art of Finding Your First Customers”.

Big thanks to Andy and others for their suggestions on adding “your first”.

Since what follows is a draft chapter, I’ll front-load my CTA: what is one thing that you would keep and one thing you’d take out?

Here it is, thanks for your feedback and support getting to here.

Collin Stewart

“Pain is just the sensation of experience entering the body”
– Jerry Seinfeld 

I always wanted to work for myself. I remember sketching out video game designs when I was a kid, building business models for dumb ideas in college (urinal sticker advertising company), and sketching wireframes for CRMs through my final years of working as a sales rep. 

In high school, I remember reading about tech startups during the boom and the crash. It seemed like the only way to break into the valley at the time was through Google’s APM program. My problem was that my grades were only good enough to get me into the local community college. And, if I’m being honest, only because they didn’t look at my grades. The college was designed for working professionals and after two years I found myself both going to school and working full time as a salesperson. I sold cell phone contracts, used car (yup, singular), wheelchair lifts, roofing, kitchen cabinets for highrises, diesel generators, and specialty welding equipment. 

I might have been in sales but I never lost that drive to start something. Every time I met an entrepreneur, I would tell them my dream and ask their advice. The number one most common reply was “sales is the most important piece so get some experience before you start your own thing”. The core of this advice is great, every company needs sales and in the early days and those responsibilities will fall on the founder. However, this advice was usually grouped in with advice that was either outdated or never true, that a great sales team could sell any product, in any market, all it took was great salespeople. It might have been true at some point but in 2012 the collective “we” probably knew better. I however was fully bought into both as gospel. 

This belief that sales was the only thing that mattered gave me the confidence to start my first company. I was pretty confident in my sales abilities to put it mildly. It was also the belief that led me to ignore customer feedback and build my own ideas anyway. 

After all Steve Jobs said, “people don't know what they want until you show it to them. That's why I never rely on market research.” I weaponized these two ideas to justify my actions and it likely cost me millions. I spent 18 months butting my head up against a wall because I had a great insight but was trying to solve it in a way that customers didn’t want. Once we pivoted, we found strong product market fit very quickly. But two things happened. First, we were now 2 years behind 2 entrepreneurs with the same insight and more experience so it was going to be an uphill battle instead of a greenfield opportunity. Second, after we scaled from $0 - $1m in just a few months, it gave me the false confidence that I could outsell our churn. When your core product is built for sending cold emails and it takes 2 weeks for the platform to send an email, you know things aren’t going to go well. 

The hard part is that I received good advice, I read the right books, but I still missed the through line. That breadcrumb trail that helps you find your way through the forest. 

I thought I was an expert because during the 10 years I had been in sales, I had been involved in a new CRM project at every company I worked for. It just kinda happens when you’re the only one in the office that knows what RAM stands for. I came across Salesforce around 2005 and could see that two things would be true. 

First, this would be the new paradigm for CRM. Gone would be the hassle of trying to get 17 laptops, each with their own mySQL database, synced to a master database. Managers would have real time dashboards and reporting features. And they wouldn’t have to copy and paste together 17 different spreadsheets or use Crystal Decisions just to see a holistic view of their pipeline.

Second, the personal productivity system I had built into my Maximizer was about to be usurped. I love my hotkeys and could use that product blindfolded. Having to use Internet Explorer 6 to access my personal productivity system felt like trying to run in a pool of molasses. 

It was these two insights, and 10 years selling, that made me believe I was a CRM expert and it was this belief that killed my first company. The insights were correct. It was my belief in my own expertise that closed me off to hearing any feedback that contradicted my vision. 

I started working on voltageCRM by sketching ideas in a notebook and then interviewing sales leaders to ask their opinions. I weaponized Steve Jobs’ advice as a way of writing off customer feedback that didn’t align with how I saw the world. In my roughly 100 customer development meetings with sales leaders in various capacities, I heard a lot of comments that sounded like “wow, that’s a really smart idea”. Which, when you have a Jobs’ complex, just feeds the ego. If you’ve read Never Split the Difference, you know there is a world of a difference between “you’re right” and “that’s right”. What I thought was validation was actually people kindly telling me they’d had enough of me not listening. 

I wanted to solve the sales productivity problem by competing with Salesforce. I knew it was probably a bad idea but I was convinced that unconventional ideas were how you took big swings. Customers were practically begging me to build this in a way to work with Salesforce but I pushed on without listening. It wasn’t until a mentor of mine popped my ‘I’m a genius’ bubble that I realized I had been going about it all wrong. 

“I just can’t wait until you’re working on something that has a chance of being successful” – Roger Patterson, directed at me, summer of 2013. 

Roger’s words were just the kick in the ass I needed. It sounds mean but is actually the kindest thing anyone could have done for me at the time. It made me realize that I was so dug into being right I had lost sight of solving the problem for customers. I was so stuck on validating my idea that I wasn’t listening to the real feedback that people were sharing with me. They had this problem, especially with their sales development reps, and they wanted it to work with salesforce. 

I came across the Startup Genome project shortly after Roger’s verbal ass-kicking. They released a report called Why Startups Fail, they had surveyed 3200 startups and the report documented the reasons some were successful and others failed. The big learning was that premature scaling was the number one startup killer. This meant investing in growth before you had strong enough product market fit to get a decent return on your investments. Essentially, trying to sell something that nobody wanted. 

They found that 74% of startups fail due to premature scaling. It was nice to know I wasn’t alone but I didn’t like being on this side of the statistic. I have both experienced this myself and aided and abetted others in burning cash on premature scaling their go to market team through my current company. I’ve spent the last 12 years helping founder find their first customers using sales development as a channel. I’ve seen hypergrowth unicorns and companies on their last few investor dollars and just trying to find a path forward. 

This experience has taught me that the strength of your product market fit has a direct impact on the effectiveness of your go to market spend. That is, the stronger your product market fit is, the lower your cost to acquire a customer will be. 

I started writing this book because I felt like Predictable Revenue needed a follow up, our community is still very strong and we felt we owed it to them. As I put pen to paper - really more like finger to keyboard - and started sharing it with others, it evolved into the book I wish I had when I first started out. I felt like every book I read on how to start a company had a different “this is the only thing that matters”. They were all good points and it made it hard to see the path forward. Especially as a bootstrapped founder with no investors to kick my ass in the right direction. 

When you’re trying to find your first customers, there are three critical steps: 

• Find product market fit 

• Find your first customers 

• Build a repeatable sales model that doesn’t rely on the founder 

For the worst results and highest chance of failure, tackle them in whichever order you feel like. For best results, start with product market fit and work down the list. I’ve started 3 companies (1 dud, 1 rocket ship that crashed, and 1 that’s still going), and through these experiences, I’ve learned invaluable lessons about the unpredictable nature of entrepreneurship and the terrifying art of finding my first customers. 

I wrote this book to help founders see that in order to grow a company the only thing that matters is tackling these three steps one at a time and in the right order. By the end of the book, I’ll share the milestones I’ve found for each step, benchmarks to help you figure out when to advance, and stories of me screwing things up and somehow coming out alive. 

I can’t promise that demand for your product exists, that you won’t run into roadblocks (you will), or that you won’t make a bad hire (you will and that’s ok). This book was created to help you see the bigger picture so you can figure out for yourself what to do next.

CTA time again - what is one thing that you would keep and one thing you would take out?