What are you supposed to do once you’ve got your first paying users?

by | Mar 2024 | Build a Product

A founder I know managed to get his SaaS product into the hands of his first paying users. He’s wondering what to do next. Marketing? Fundraising? What would you do?

Here’s his plan… 👇


This isn’t the founder’s first rodeo. He’s built tech products for 20 years, first as a service provider, now as an operator.

His last business attracted over $1m in funding (then collapsed due to a shareholder fallout).


 

Like me he’s been reading all the bootstrapping porn here on LinkedIn.

He likes the idea, but he also needs to be paid. For now, he’s consulting to keep the wolf from the door, but no matter how great bootstrapping may sound in principle, it’s hard to do two things at once and do either well.

“So what next?”, he asked.

The platform is very flexible. Paying customers include self-employed tradespeople, creatives, accountants, artists….

With something so broad, where do you possibly advertise? Not surprisingly, the money he’s spent to date hasn’t yielded anything.

Should he…

>> Spend more time testing LinkedIn / Facebook / Google ads?

>> Hire a marketing expert?

>> Look for a commercial cofounder?

>> Raise money?! (He received a single inbound message from a VC in Dec, and now he’s all excited.)


Here’s my take:

01. Forget the VC. VCs need to keep tabs on what’s going on because they need to avoid missing the next big thing. To do this, they need to be across 𝘦𝘷𝘦𝘳𝘺 deal. Contacting founders is part of the day job. So chill – receiving an inbound does not mean your business is destined to receive a term sheet. With only a few users, it’s doubly unlikely. Take the call, sure, but don’t expect a cheque.

02. Instead of all the above, focus on your existing users.

>> Who pays?
>> Who logs in the most often?
>> Who uses most of the available functionality?
>> Who costs the least (e.g. rarely submits support tickets)?

Turns out, one cohort stands out on all these metrics.

So here’s the plan…

Instead of running ads, he’s going to spend more time getting to know this specific cohort of users… in person, if possible.

>> What are they liking about the platform?
>> What problem are they overcoming?
>> What triggers them to use the application?
>> Why did they subscribe in the first place?
>> What job is this helping them to get done?
>> What did they do 𝘣𝘦𝘧𝘰𝘳𝘦 they used this platform?
>> What does it NOT do that it should?

Once he (and they!) have understood exactly where the value lies, he’s going to ask each user to introduce 5 people who suffer the same pain.

And he’ll keep doing the same thing until he reaches 50 users.

Then, unlike now, he’ll have options. These may include raising money.

But that’s for later.

We’ve agreed to catch up again in the spring.

I can’t wait to see how things have progressed.


 

P.S. This might seem obvious, but it’s amazing how few people do it.

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