The founder of one of the startups in our Global Entrepreneur Program reached out to me this week. He is ready to start selling his company’s product, but he’s never done sales before.
Often, startups consist of a hacker and a hustler—where the tech person is the hacker and the non-tech person is the hustler. In the aforementioned company, there are three hackers. Despite the founder being deeply technical, he is the closest thing they have to a hustler. I’m sure he’ll do fine getting in front of customers, but the fact remains that he’s never done sales.
So where do you begin as a startup founder if you’ve never sold before?
Free vs. Paid
His business is B2B, focusing on car dealers. He’s worried about facing a few problems, including working with business owners who don’t normally work with startups. He wants to give the product away for free to a few customers to get some momentum, but is worried that after giving it away, he won’t be able to convert them to paying customers.
Getting that first customer is incredibly important, but there needs to be a value exchange. Giving products away for free presents two challenges:
- By giving something away, you devalue your product in the eyes of the customer.
- The customer has no skin in the game—no incentive to use it or try to make it work.
Occasionally, founders have a very close relationship with a potential customer (e.g., a former manager or a trusted ex-colleague) where they can be assured the product will get used. In those cases, it might be appropriate to give it away, but only for a defined time.
The goal is sales. Paying customers reduce burn and show traction.
Price your product, go to market, and start conversations. Be willing to negotiate to get that first sale. If you do feel strongly about giving it away for free, put milestones and limitations in place for how and when that customer will convert to paid. For example, agree to a three-month free trial that becomes a paid fee in the fourth month. Or tie specific milestones to the payment, such as delivering new product features or achieving objectives for the client.