How to Pick Your Startup's First Customer

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• How to be Recommendable

Why This Episode Exists + Nerdy Stuff Not In The Pod 💡

Today’s episode is an ITS Classic that got a ton of traction when it was released and has been listened to a bunch since.

There are a few key ideas in it that I think are compelling.

• The minute you get serious on an idea other ideas will start popping up left and right

• These ideas will seem more compelling and will steal time from the main idea

• If you don’t have a system to evaluate the side ideas, they’ll distract you from any meaningful work

The episode is that system.

Pod References

• Tacklebox

Pod Timestamps:

00:26 Intro
05:40 Chronic Pain Side Idea
08:30 Smooth Jazz
09:00 All Babies Are Cute
13:00 Internal vs. External Signal
14:01 Why You Have a Lawn
16:50 What to Look For in a New Idea
20:30 How to Win a Baking Competition

Transcript - Feel Free to Read it Like a Long-form Article:

Today, we’re going to talk about the question founders ask me the most. Well, second most. The most is definitely “do you have any other ideas for how I could find customers?” I get that one daily. Finding customers is the hardest thing you’ll do. Make sure you’ve got a secret that lets you do that better than anyone else before you do just about anything else. But that was last week’s episode.

The question I get the second most, is this:

“Another idea popped up as I was working on the core business. I think it might have more potential. What do I do?”

Today, we’ll help you build a system to handle all of the side ideas that are inevitably going to pop up as you build a startup. We’ll help you identify which ones are a waste of time, which are worth paying attention to, how to test those, and when to jump over to them.

This episode is spurred on by two things:

1. My love for procrastination, which leads to my love of side ideas, which led to the system for dealing with them

2. A pretty tempting example of a side idea that popped up while I’ve been working on the chronic pain startup idea

Also, by the end of the episode I’m going to teach you how to win any baking competition. Bit of a double whammy. We’ll do the baking competition towards the end, though. There’s gotta be a little tension here.

How to focus and what to chase first.

How to win a baking competition second.

Hopefully this all ties together nicely. It’d be a bit random if it didn’t.

This episode comes from a pretty special place in my heart because as I said I am an absolute world class procrastinator. All of the systems we talk about building on the show to keep you on track exist because I’ve had to build them for myself because I absolutely love distractions. If left to my own devices right now I’d probably be deep down a rabbit hole learning about fusion energy or Moorish architecture or whether ross and rachel ended up together at the end of friends or rabbit holes themselves instead of making this podcast. The system I’ve built to keep focus and momentum has taken years and needs a ton of upkeep and monitoring. Like a tamagachi, which I now want to google to see if they’re still around.

When I tell our founders about my love for procrastination they get excited.

“You procrastinate, too? That’s my biggest fear. I thought all the best entrepreneurs were these world class executers that could get razor focused and obsessed with one thing and tune out the world. I don’t do that - my mind wanders.”

But the dirty little secret is that this is the only way to be a good entrepreneur in the first place. Any entrepreneur worth their salt is a procrastinator. And by procrastination, I don’t mean texting or social media or playing video games and avoiding work. I mean being interested in lots of things and learning about them.

Anything new is just a combination of old things put together in a way someone hasn’t thought of yet solving a problem for a customer everyone else has overlooked or undervalued. So, the most interested people have the most diverse inputs to cram together which means they make the most diverse stuff. This is why focusing is so hard for entrepreneurs. We wouldn’t be entrepreneurs in the first place if we could focus. It’s like spirderman or a terrible answer in a job interview - our biggest strength is also are fundamental weakness.

So, there are two challenges. First, how to keep yourself focused once you find the thing that demands and deserves your full attention and will only work if it gets your full attention, while still being curious and adding in the new circles and inputs that’ll make your businesses’ venn diagram unique.

And second, what to do when you inevitably stumble on other interesting things. How do you choose what to take and what to leave. So many successful startups are results of opportunistic pivots - of the founder chasing down something different from what they set out to do. Alternatively, I’ve lost track of the number of startups in Tacklebox that failed because they couldn’t stop chasing shiny objects - switching ideas like they were impatiently switching lines at the grocery store.

In short, when is curiosity good and when is it a waste of time?

How do you stay open yet focused?

It is the challenge for entrepreneurs.

And I ran into it this past week.

On the side, I’ve been exploring an idea in the chronic pain space. Far too many people suffer from chronic pain that I believe is treatable. So, I’ve been running interviews, and everyone I interview has someone else they’d like to connect me with. I’m getting deep and the network is growing. I’ve also been talking about the idea here on the pod.

And, over the past two weeks, something funny has happened. Inbound emails and linkedin messages. From… investors. An angel investors and four VCs, to be exact. Our frenemies from the other side of the aisle.

Each said they were interested in investing in companies tackling one of two buckets - the future of work and mental health in the workplace.

And each told me the same thing.

“If you want to help people with chronic pain - best of luck. Keep us in the loop. <editors note - that’s VC speak for definitely do not keep us in the loop>.

BUT, if you are going to build a B2B solution you sell to companies to help their employees with chronic pain, specifically carpel tunnel or other types of chronic pain that help employees with ergonomic setups or programs, let us know.”

Every single one of these investors was searching for someone solving pain caused by sitting at a computer all day for big companies. I was curious - why was this a bigger opportunity than going direct to consumer, aside from the obvious larger contract size with corporations?

“Oh,” one VC said, “productivity. There are all sorts of studies that show carpel tunnel or other pain while working pulls you out of the zone. It allows you to work fewer hours and those hours are less productive. So, let’s say you added an hour of productivity back per employee per day, without actually asking the employee to be at their desk any longer. What’s that worth to Google? Amazon? Stripe? They’re paying engineers a couple hundred dollars an hour. Let’s say $100 to keep the math easy. That’d be an extra $100 of productivity per day, $500 per week, $25,000 per year. Per employee. If 10% of employees at Google have bad chronic pain, which is a wildly low estimate, that’s more than 10,000 employees. That’s five million dollars of extra hours per year you’ll just find - not to mention the increase in happiness from not being in pain all the freaking time. And that’s one company and we rounded everything way down.

Helping get rid of chronic pain hand, wrist, and back pain is a billion dollar b2b business. And if you do that, I’m very interested.”

Well. It looks like we got ourselves a rabbit hole.

And we’ll talk about it… after… a little smooth jazz.

All Babies Are Cute

I don’t remember where I first heard this saying. It’s possible I made it up. We’re 160 episodes and 9 years of content in on this stuff, it’s impossible to know for sure. But, it’s one of the things I repeat to our founder the most and it’s universally true.

All babies are cute.

Until you spend a weekend with them. Then, you get the reality a bit more.

When you’ve been hacking away at something for weeks or months or years, you know the reality of the situation. You’ve got data points. You know how hard it is to find customers and get them to talk to you. You know that they’re irrational and non responsive and unwilling to pay and a million other things.

And then, you have a new idea. And you don’t have any data points yet. And all babies are cute.

Any idea you think up while you’re in the slog of a different business will be artificially attractive because you haven’t spent the weekend with it yet. There are no data points - just the story you tell yourself about how the thing will go.

It’s a lot like raising money pre-product. We often tell our founders to do it, if they can, before they have too many hard data points because when you pitch a story, investors can get aligned with it and see the potential. “We help X customer do Y, and we think we can get 100 customers on board in the next 12 months.”

But as soon as you say “we’ve had a product out for two months, we’ve got 2 customers and 1 of them churned,” your story is suddenly grounded in these crappy metrics. The potential investor can extrapolate - “you only got 2 customers, how the heck are you going to get 50x that in six months?” Data makes the baby ugly.

So, when there’s an idea that pulls you away, we need to see the ugly baby as fast as possible.

And the first step is a fork in the idea road we can answer with a question:

Is this idea being driven by internal signal or external signal?

Humans are extraordinarily good at self-sabotage.

As I do more of the chronic pain interviews I’ve been amazed that like 90% of the people I interview grudgingly admit the same thing:

“If I do my exercises each day, I feel good. But they take twenty minutes, and they’re boring, and I hate that I have to do them, and I wish I didn’t have to do them. So, I won’t do them for a while and my pain will get really bad. Then I’ll start doing them again until I feel a bit better. Then I stop.”

The vast majority of people I’ve interviewed choose to feel bad 24 hours a day because it’d take them 20 minutes to feel good for 23 hours and 40 minutes a day. I also interviewed people who said they were pretty sure an acupuncturist or a chiropractor or a change in diet would really help. When I asked if they’d tried, they said no. When I ask how long they’ve had pain, they usually tell me years, not months. Humans are irrational.

I see a similar behavior with founders. When they start getting close to something interesting, their tendency is to pull back rather than charge forward. Most people are scared to succeed. More likely, they’re scared to fail with something that had a high probability of working because that makes it more painful or public or embarrassing. I can’t put my finger on exactly why, but an extraordinary number of founders I work with get 85% of the way to something interesting and stop.

Look out for this. It manifests in all sorts of ways.

I notice it with myself when I write these podcasts - sometimes when I get on a roll and really like what I’m doing my tendency is to jump up and get a glass of water. I don’t know why. Maybe I’m scared that I’m about to do my best work and if I do my best work that means people might not like my best work and then what then?

The best way to tell if you’re self-sabotaging is to diagnose where the signal driving the idea is coming from. If it’s you having doubts… it might be worth ignoring.

But if the signal is external - data you get from customer interviews or customer actions or expert interviews or the results of tests - that’s different.

The internal vs external test will allow you to quickly brush off a bunch of ideas that are driven by insecurity rather than opportunity.

If you’re still excited about the potential idea, we need to get back to the organizing principle for early stage startups: speed. We need to know, as soon as possible, whether this idea is worth incorporating or pivoting for. We need to see the ugly baby. Or, we need to not waste any time on it.

The decision is to either take two weeks and sprint as fast as you can at the opportunity, or store it on a document called Ice Box and not waste time thinking about it in the near future. Founders get caught when they’re half in one place and half in the other.

For the B2B approach on chronic pain, I’m interested enough to see the warts on the baby. So, I need to organize a two-week sprint to get some metrics.

Here’s how to do it. And to start, we’ve got to talk about lawns.

Inertia, Envy, and First Principles

Do you know where lawns come from?

Like, why we have lawns?

I do, because, as I said, I love procrastinating.

In 17th century England, wealthy landowners started to have giant grass lawns in the front of their manors. These weren’t for sheep or other livestock - they were decorative.

Back in 17th century England, this was preposterous. The amount of human labor needed to keep a tight lawn was enormous. And, it served no purpose. Except to say that you were so rich you could afford to pay people to keep your giant lawn trimmed and beautiful. You had so much money you could waste it on this trivial, visible thing.

I googled lawns because I now have a lawn at our new house and am realizing what a pain in the ass it was and wanted to see why I was doing all this work. And the answer is a bunch of insecure lords from 17th century England made it a sign of wealth, which meant that signal tumbled down to the middle class, crossed the ocean to America, and now I’m stuck with it in Connecticut.

The reason I’m talking about this is that people have lawns for two reasons - envy and inertia. People make decisions on envy not greed, and the lawn to your left and right are clear, visible context. You want your lawn to look as good or better than your neighbor.

The other reason is inertia - it’s easier to have a lawn than to not. You could rip up your lawn and put a Japanese rock garden there, but you’d be bucking inertia. It’d be expensive and different and - maybe most importantly - I wouldn’t be able to benefit all the things we’ve adapted to lawns. Playing catch, a swingset, and on and on. The infrastructure and inertia and system and envy are pushing people towards a lawn. So even though the reason we have lawns is silly, a system pushes us towards them.

Most systems run on envy and inertia. So, when you’re thinking about an idea, it’s important to strip it down to those first principles as quickly as possible. To understand which way things are moving and why. To find the inertia and the envy. And, maybe most importantly, to see if there’s anything that’s changed recently that could throw a wrench in that system.

In LA, there are a lot of rock gardens where 5 years ago there was a lawn. The social pressure to not have a lawn because of the drought has chipped away at the inertia and the envy. Not having a lawn now means something.

For startups, you can never create waves. But you can learn to surf.

So, for the B2B chronic pain idea, I want to figure out inputs for the system. I wanted to see inertia and envy, to see how companies saw and solved the problem now, to see the metrics they tracked.

When I’m testing out one of these side ideas, I have file with six variables on it. I’m trying to learn more on each so I can understand the opportunity better.

Here they are.

Inertia:

• I’m looking for companies that have already shown they want to solve this problem, and, maybe more importantly, could easily implement a solution without having to break or change a whole bunch of other things. Who’s actively looking for an iced coffee, and who has no systemic barriers to drinking one.

Envy:

• I’m searching for trackable metrics the customer associates with the problem now, and clear metrics that would show what solving this problem would help them do. Ideally, it helps them compete or pass a peer. Also, b2b, I’m trying to find the person who will get promoted if I help them successfully solve the problem.

Leap:

• If this problem is solved, what’s the status level jump this company will make? Is this a leap they’ll pay a big margin for? Is this something they’re trying to pay for already?

Swap:

• Where would the money for this come from? What would they stop doing, willingly, if I could solve this problem?

Outcome:

• What does it look like if I help them succeed? Can I describe success for them?

Wedge

• How can I work with them to solve a problem or get more data now? What can I do immediately to get some traction and data and momentum?

When I reach out to find some of the above, I love to ask what I call anti-questions. Since I’m usually testing out a specific idea, it’s a combination customer interview + specific idea test.

So, when I chat with people I’ll ask about problems and story, but then I’ll ask a few specific anti-questions after I tell them about the idea I’ve had:

Why are the systems set up so this won’t work?

Why won’t people see the value?

Why can’t the budget be pulled for this

To start testing out the B2B ergonomics idea, I reached out to a few HR folks in my network at pretty big tech companies. My hypothesis was that companies with flexible hours and work abroad, along with lots of higher priced engineers who were at computers all day, might be a good first customer. I also looked for companies that already prioritized an ergonomic setup - a few advertised things like herman miller chairs and standing desks.

The baby got pretty ugly pretty quick.

The inertia was towards working fewer hours - the companies I spoke with were thinking about how to give employees a 4 day workweek. It was also towards mental health support and benefits.

When I asked how these sorts of things were tracked it was all about hiring and retention. That was the metric. But, there were a lot of other inputs pushing that metric, and it’d be hard to isolate whether a chronic pain or ergonomic program helped get people or keep them.

None of the companies I spoke with already had chronic pain on their radar.

However, when I asked if I could send a survey to a subset of engineers, two companies said yes. So, they’re sending an email to a few hundred employees asking about how much pain they’re in each day, if it impacts work, if they’d be more likely to stay with personalized care, and a few other wishy washy questions. I’m not sold.

Now, I do think there are other interesting customers here, and I’ll spend another week pulling on this thread because I got decent data.

But, it was good to get my hands dirty and see some lumps so that I can contextualize the new idea with the old.

—

How to win a baking competition

We got there. It’s finally time. Let’s teach you how to win a baking competition.

A good friend of mine has a story she loves to tell about business school. During her first year there, every student was required to take a bunch of basic classes, including marketing 101. At the first session on the first Monday of school, students filed into Marketing 101 to find a huge table in the middle of the room with a ton of baking ingredients on it.

As they took their seats the professor told them to choose whatever ingredients they wanted from the table. They’d be baking something and selling it - so choose wisely. He’d take whatever was left over. The students and the professor would then have until the following class - the next Monday - to come up with a recipe, bake, and sell whatever they made. If anyone made more money than the professor with their baked goods by Monday, they’d get an A for the class.

The students painstakingly chose their ingredients, leaving the professor the ingredients the worst ingredients - barely enough to make basic corn muffins.

They spent the rest of the week thinking up and testing their recipes. They thought up names and slogans. They made websites and swag. Then, they went into parks and to friends houses and to their neighbors, setting up tables and selling. Most of them did fine.

When they got to class on Monday, they shared how much they’d sold. The professor smiled and wrote his number up on the board. His corn muffins made twice as much as the next best student.

“How the heck did you sell that many corn muffins? What was your recipe like?” one student asked.

“Well,” he said, “the elementary school across the street used the auditorium for the 5th grade class’ rendition of the wizard of oz. There were a few hundred parents here. The show is painfully long, but there is an intermission. Unfortunately, there’s no food. So, I set up a stand and sold $10 corn muffins. We sold out with about 15 people still waiting in line.

The key to selling food isn’t the food or the branding or the marketing - it’s finding a hungry customer.”

I think about that story whenever I’m testing out these side ideas. Every time there’s something promising, I give myself two weeks to find a hungry customer. Someone who wants a solution so bad they don’t care what it costs. To understand the motivations and inertia and envy and everything that sets up a system that’d support a new business.

The more I do this, the better I get at it, and the faster I can get past the cute baby stage and stick or go.

An entrepreneur’s superpower is noticing things and combining things other people don’t. Developing a system to dig in and test that stuff fast so that you can benefit from it - and not be weighed down by it - let’s you use that superpower.

Chase stuff down. Test it out. Stay or go. Procrastinate. Never settle for anything less than a hungry customer.

And if anyone knows some affordable landscapers in connecticut please let me know. This lawn is a disaster. Damn 17th century english lords.

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