As a startup founder, those first few customers are crucial. They not only provide validation of your product, but can also give valuable feedback on what works and what doesn’t. For founders eager to grow quickly, it can be all too easy to jump on every comment or suggestion.
“When you get your first customer who can have a big impact on your overall revenue, it can be very tempting to start steering the ship towards their vision rather than your own,” says Alberto Rizzoli, cofounder and CEO of computer vision AI platform V7 Labs.
We spoke with Rizzoli about why those first customers aren’t always the right ones, and why his biggest mistake as a founder was letting feedback from early adopters derail his overall vision.
When you get your first customer who can have a big impact on your overall revenue, it can be very tempting to start steering the ship towards their vision rather than your own.
The customer’s not always right
Rizzoli cofounded V7 Labs in 2018 with Simon Edwardsson, who used to lead up research and development at SaaS giant Retail Solutions Inc.
V7 Labs builds a SaaS product that allows AI teams to create automated training data workflows. In layman’s terms: AI requires developers to continuously collect and label visual data to allow their models to adapt to new scenarios, objects and information, and companies have to build and maintain in-house systems to manage this alongside their actual product. V7 Labs automates this process, allowing clients to focus on growth.
The speed of AI’s development means that V7 Labs is working in an area that’s constantly evolving. As the technologies Rizzoli’s team uses are so new, every customer has a differing opinion on best use, so product feedback is often skewed toward what they want it to do, rather than the potential of what it could do.
There will be a time in the growth of all hardtech companies when your ideal customer is none of your customers.
Ensuring that you don’t get sidetracked by competing customer demands is vital, says Rizzoli, which is a trap V7 fell into early on. Rizzoli had to learn how to say no to potential clients and focus on churning existing ones instead.
“There will be a time in the growth of all hardtech companies when your ideal customer is none of your customers,” he says. “Your current customers will be early adopters who need your product in its current state, but only scrape the potential of it. They might ask you to implement a new feature that isn’t part of your strategy — but if you take on all these requests without thinking about where your product is going, suddenly you’re no longer sharpening your product, but becoming a directionless blob, making multiple features just to keep existing customers happy.”
3x a week
We tell you what's happening across startup Europe — and why it matters.
“It’s a much wiser and more adventurous approach to go straight for your ideal customer — at the risk of not finding anyone — than to shake hands with everyone,” says Rizzoli. “Doing that turns you into a consultant company, which is OK at everything but not special or unique.”
Automate day-to-day processes so you can focus on your vision
V7 Labs’ focus on macro strategy is a principle that cascades down the entire company. As the organisation has grown, Rizzoli has focused on long-term vision and growth over short-term gains and gimmicky features, learning from his early experiences.
He gives the example of Google’s app that takes your picture and, using AI, turns you into the Mona Lisa. While the technology works (kind of), the final result isn’t always accurate — which is ok for a fun app. But if you’re building a programme to search for debris on a rail track, you need the AI to be perfect, as the entire project relies on it. These are the customers V7 Labs is chasing, rather than their earliest customers who were dipping their toes in AI, and more inclined towards gimmicks.
This focus on long-term vision means Rizzoli recruits slowly and carefully (he tells Sifted that for some positions, only one out of every 200 applicants makes it through to the first interview stage), hiring for strategy over output.
It also means V7 now automates much of its day-to-day work across departments, sending “micromanagement to the robots,” while outsourcing for specific expertise-related work. Practically, this can be as simple as customer success managers receiving Slack notifications when someone enters the unsubscribe section of the platform.
There’s a lot of business process outsourcing at the core of our organisation. We sit up there, overseeing the robots and making strategic decisions.
Instead of spending time creating test environments for new features, or spinning up demo sites for potential customers, V7 employees are empowered to work on high-level KPIs, strategies and product enhancements that work towards a step-change in the startup’s future.
“There’s a lot of business process outsourcing at the core of our organisation. We sit up there, overseeing the robots and making strategic decisions,” Rizzoli says.
Build your dream dinner party
It’s one thing to decide to stick to a macro strategy and work towards an ideal customer. But how do you figure out who your ideal customer is?
“We use a metaphor at V7. We’re at a dinner party with all of our customers. Do we want to stay at that party? Almost every time we’ve thought about pivoting, the dinner party question failed.” This idea of the ‘dinner party’, Rizzoli says, is also a good way to think about whether you and your customers are the right match long-term, in terms of market fit. Will you keep developing together, or will you run out of things to talk about?
We’re at a dinner party with all of our customers. Do we want to stay at that party? Almost every time we’ve thought about pivoting, the dinner party question failed.
“Most companies in AI settle on a space because of their first customer,” Rizzoli says. Founders should focus their efforts instead on talking to the customers they wanted to win, but didn’t — even if it means awkward conversations about the product. Doing so will allow you to build a persona of the type of customer you want, and you’ll naturally gravitate towards solving their problems in the future.
“If you are at the right dinner party, you want to be there, and things flow naturally. You won’t feel like an imposter,” says Rizzoli. “There isn’t a perfect customer, but there is the one you keep coming back to again and again.”
From recruiting talent to setting up accounting, startup founders have enough on their hands. They need tools to help them manage their operations so they can focus on the bigger picture.
Over 24k companies use Oracle NetSuite to manage their business. Fast-growing, internationally-focused startups looking to get funding or go public need a scalable and agile tool to support their aspirations. NetSuite delivers a cloud platform to help you gain a clear view across your financials, inventory, customers, commerce and more, so you can illustrate momentum and progress to investors, giving them confidence to offer funding. Find out more.