How to Get Your First Customers with Gustaf Alströmer | Startup School

**Gustaf Alströmer** (0:09)
Hi, welcome back to Startup School. My name is Gustaf, and I'm a group partner here at Y Combinator. Today, I'm gonna talk about how to go from talking to users to getting your first customers. Here's what I plan to cover today. One, 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? Two, how to do sales. I'll make the argument, the founder 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, 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. Paul is the co-founder of Y Combinator. 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. This is not the case. 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 one 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 founded Polygram 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. Here's how it goes. First, you launch. These days, most companies don't launch on TechCrunch, but probably on ProductHunt 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. They listen to users and they improve. Many still don't get anywhere further and become victims of the crash of ineptitude. It's the founders who stay the course and don't give up that reaches the wiggles of hope and eventually the promised land of product 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 to make the difference between success and failures.
If you are in the wrong market, it's the founders that switch to a new one, 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. Two, 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. Sometimes you just have to learn it. 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 your 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 a 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, Mathilde from Front, Tracy from PlanGrid, and Steve Jobs. Let's get straight into an example. 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. potential customers. 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. The first version was very, very simple. Customers just had a virtual credit card, and Henrique from Brex actively onboarded every one of the customers himself. Of course, they couldn't wait until they had a full-blown product, a website, a mobile app, all of those things, but they decided to get going when they had 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. 10 spots. That sounds like there's 11 spots, so I should take actions. Brex is a corporate credit card focused on technology companies. That's me. Perfect. 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. This was the value prop. Most other alternatives to Brex did not have something like this. So how much does it cost? It's free. The merchants are paying us, so there's zero annual fees. This seems like a no-brainer. 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 six to eight sentences. The Brex example on the previous slide is probably too long. It still worked, but probably too long. People don't have time to read long emails.