If You Have 10 {Unaffiliated} Customers in SaaS — You Have Something.

HAMSTER-WHEELOne of the tough things in SaaS, a downside of the fact that it compounds, is that you’re always running on the Habitral.  That makes it really hard to see your moments of success, and perhaps even more importantly — really hard to see and internalize and process pre-success.

So I’d like to highlight a few of those moments, in case it can help you.

And the first key, critical moment, of Pre-Success, that no one will appreciate but you — is when you get 10 Unaffiliated, Paying Customers.  I don’t mean friends of your investors, or your old co-workers or boss.  I don’t even mean folks you hustled at some conference or meeting (well done, there, though.  But that’s prospecting, which is something else.).

No, I mean 10 customers that Just Came in Through the Ether.  A raw, unaffiliated, lead, that somehow found you on their own, kicked the tires, and now — is actually paying you.  Every month.

Because here’s the thing.  10 customers may not seem like much.  We called these guys “Beer Money” in the early days at EchoSign.  10 customers was $200 a month.  Didn’t really pay the bills on 4 engineers and 3 other guys.  Barely paid for Beer.

But …

10 is actually amazing.  Yes, you may still fail, of course.  But 10 is your first sign of pre-success.  Because it means three things:

  • First, you will definitely get 20 … and then 100.  I mean if you got 10 out of nowhere, I guarantee you will get 20 ;)  And if you keep going at it, you will get at least to 100.  And then 200, at least.  At a minimum, you can keep doubling and doubling.
  • Second, more importantly, it’s amazing you got those 10.  >> Because no one ever heard of you.  Because why the heck should they trust you, and pay for your product?  It’s a huge vote of confidence not to be under-appreciated.  Maybe you were on TechCrunch or Mashable or PandoDaily or some blog, great.  But in the real world, no one has ever heard of you.  Yet you still got these 10 customers.
  • Third, it means you built something real.  Something valued.  Most importantly, Something you can build on.  These 10 customers will give you a roadmap, feedback, and indeed, the path to 1000 more customers — if you listen carefully.  Don’t take all their advice, of course, don’t get distracted from the big picture.  But the feedback from these first 10 customers won’t be from outliers.  It will be transformatively informative.  I guarantee it.

>> In other words, you’ve got the SaaS version of an MVP — the “MSP” — the Minimum Sellable Product plus the Very Beginnings of Organic Leadflow.

Because your 1,000th customer most likely will be just like your 10th, in concept and spirit, in category and core problem solved, in pain point at least.  At EchoSign, our first unaffiliated customer  was a distributed sales manager of a telesales team.  The exact industry she was in was unusual (debt consolidation), but digging deeper, the actual use case was exactly the same, in spirit if not in workflow, as 80%+ of the customers that came later.  The same as Facebook, as Twitter, as Groupon, as Google, as Verizon, as BT, as Oracle … as all of them.  The same core “goodness” that you’ve built attracts all of them.  Of course, you’re going to need to build tons more features, mature your product dramatically, etc.  But the core will be the same goodness as Customers 1-10 experienced.

Trust me.  10 customers may not pay the bills.  But if you got them Out of the Ether, you have the very start of organic leadflow, of organic demand.  That’s really special.  And something you can actually build on.

So this is your first time to double down now, after Customer 10 … even if it seems too small in absolute terms.  Even if others think it’s “Just Beer Money.”

Because this is your first pre-success in SaaS.  You should be proud.  Now, Next Stop:  Initial Traction!

There are 33 comments

  1. beardygeek

    I’m currently building my first SAAS product, and there’s always the worry that you’re not going to get enough users to make it pay. But as you say, if you can get 10 out of nowhere, why not 100 or 1000 in time. Thanks .

    1. jasonlkn

      Exactly. Certainly if you have 10, you’ll get 20. Then take it from there. Once 20, you’ll get 40. As long as you focus on doubling, and keep an order of magnitude as the next lofty goal, you will get there, at least … IF the customers + leads are from the Ether.

  2. James Deer

    I’ve just discovered your blog and really enjoying it.

    We’re nearing 300 customers 4 months in, but this post has definitely made me think about our results from a different perspective.

  3. jasonlkn

    Exactly. You’ve got pre-success, at a minimum. I don’t know if you’ll get all the way there … I have no idea … but do I know you have something real. Something to build on. A real SaaS product, not an idea for a product, or a test of a product. Congratulations!

  4. Joe

    We are launching a SaaS product that has been sold at the Enterprise Level to 3 major brands and has delivered great results. I’m now stripping it down to make it available via a SaaS product launching in March 2013. My question is, should we promote the Enterprise Brands as customers or will that scare the smaller SaaS buyer?

    1. jasonlkn

      I think so long as you clearly emphasize that you server BOTH small and large companies — and having 2 different editions is a great way to do this — then highlighting the enterprise logo accounts + brands is going to help a ton with the smaller companies. It will give you gravitas.

  5. Shaili Jain

    Really good stuff. Thanks. Any insights on how time factors into these stages?
    BTW, we celebrated our SaaS phase 1 milestone by splurging and switching from a manual to automated contract workflow process for our customers (w/ Echosign) :-).

    1. jasonlkn

      That’s great to hear!

      Time can vary, but the overall timing for SaaS companies is usually 7-10 years to $100m+ in ARR.

      To make it, usually you need to get those first 10 customers in the first X months, and usually, to $2m or so in first 24-30 months. If it takes too much longer … people get too tired …

  6. Andrei

    Jason, do you refer to the time period required to get to X in ARR as time period after the Beta or 1.0 launch or after the company is started (start of product build)? In your experience, how long should it take to get to 1.0 product after starting the product build? And how much in $?

  7. Tom

    Your blog posts and quora answers always provide great insight for me but this is among the best I’ve read. You gave a specific critical moment think about. More importantly, you were able to explain the why behind the goal with brevity, clarity, concision in a way that I rarely see.

    Thank you again for your continued excellent content.

  8. Derrick Grigg

    Great post and exactly what every infant SAAS needs to hear. I’m curious when you say ‘unaffiliated’ do you discount customers you have been able to attract via email campaigns, not people in your network, but people you were able to get an address for, and hit with a targeted approach. It is definitely a rush to see a sign up come out of nowhere though.

    1. jasonlkn

      Unaffiliated just means not friends and family, people 1-2 degrees away from you.

      If you got them via an email campaign, that’s outbound yes … but clearly unaffiliated.

  9. Jared

    Great post Jason. We are quickly approaching our 10th unaffiliated customer and this post gave a lot of context to why that should be really exciting for us. I guess as an added bonus we can feel really good that our monthly revenues will be way over $200 ;)

  10. How do I know when to quit trying to make a business work? | Launchpad for DevOps@UCF

    […] 1.  Never Quit If … You Have 10, Unaffiliated Paying Customers. And Aren't Completely Out of Money.  It's almost impossible to get anyone to buy any new business web services.  The last thing I need is another CRM, another invoicing app, another quoting tool, etc.  You got 10 paying customers out of the ether, that aren't your friends, folks that work at your old company, your old boss, etc.?  That's real.  It's not enough.  But 8 times out of 10, it shows the earliest stages of real product-market fit, i.e., potentially having something.  More here: If You Have 10 {Unaffiliated} Customers in SaaS — You Have Something. […]

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