So we’ve covered what to do when you reach 10 customers, and what to do when you reach 100 customers. Today we tell you what to do when you reach 1000 customers. If you haven’t heard our last two podcasts about getting customers, check out the links in the resources section below.

When you reach the 1000 mark it means your business is forming an inner and outer customer base. When you reach this point you have to start looking for opportunities to expand. Today’s episode is about how to  use your customer base to expand and diversify your company.

The topics we discuss today are:

  • How to break your income numbers down into segments.
  • How to use those segments to find new customers.
  • The experiment process to find new opportunities.
  • Why research is so important when you expand.


TSC Episode 30: How to Get Your First 10 Customers

TSC Episode 48: How to Get from 10 to 100 Customers for your Startup

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 Steli Efti:  Hey, everyone. This is Steli Efti.

Hiten Shah:  And this is Hiten Shah.

Steli Efti:  And in today’s episode of The Startup Chat, we’re going to talk about a topic that’s probably going to be relevant once you’re past the 1000 customer mark, which is how to, you know, launch a new verticals, new industries, new markets; how to diversity the markets especially if you were hyperfocused at the beginning. And, we’re going to talk about this even very specifically with my business in mind,, and how we think about these things.
Before we do so though, let us tell you about something super-special. There is going to be a life event in person about—it’s going to be a Q&A. It’s not going to be an episode like always. So we’re going to mete physically at the same building that we record The Startup Chat. We’re going to have a big room. We’re going to have pizza and drinks and you’re going to be able to come and ask questions, get to meet us, interact and be part of the live recording of The Startup Chat.
The dates are going to be the March 31st so it’s this month. It’s from 6:00 to 9:00 PM in Palo Alto, that’s in the bay area so if you’re in the area or if you’re willing to fly here, you can show up, but there’s limited seats. So what we want you to do is to go to for Facebook. Join the Facebook group if you’re not already on it and the top for there is a link to RSVP. You want to pause everything you do right now and do that immediately. If you’re in the bay area, if you have time on March 31st at 6:00 to 9:00 PM and you want to come down to Palo Alto, be in Palo Alto to meet us, join us and be part of the recording, you want to RSVP ASAP because we have limited seats.
It’s free and it’s exclusive for The Startup Chat community. So people, if you enjoy listening to the podcast, you’re going to love meeting us. We’re going to have drinks, pizza. We’re going to do Q&A. You’re going to be able to have your questions answered in person by us and a bunch of other shenanigans. So make sure to RSVP for March 31st 6:00 to 9:00 PM in Palo Alto for The Startup Chat recording.
All right. Let’s get started with the episode.
Hiten Shah:  Yup.
Steli Efti:  So, let’s—
Hiten Shah:  Why don’t you to lay out the—
Steli Efti:  Yes.
Hiten Shah:  –sort of situation that, you know, your team has been thinking about.
Steli Efti:  So, you know, we’ve talked about this on the episode on how to get your first 10 customers, how to get from 10 to 100 and how to get from 100 to 1000 customers.
Hiten Shah:  Yup.
Steli Efti:  We have these episodes. We’re going to share the link to those in the show notes. Listen to them. So in the early days, I would venture to say that most companies, most start-ups want to be hyperfocused and be in a niche that’s very, very targeted to really get traction and build momentum.
But eventually, you know, it might be somewhere between the 100 to 1000 mark but it’s definitely past the 1000 mark. Usually, if you’re not in an end-consumer space and you’re like—we have whatever, you know. We have some group of people using our app where there’s hundreds of millions of them. If you’re not in that type of an area and most of our listeners are probably not. Past the 1000, you are probably going to want to start to be a bit less hyperfocused because it’s going to be hard for you to go to 10,000 if it’s a niche.
Hiten Shah:  Yeah, you’re probably thinking of expansion basically, right?
Steli Efti:  Yes, yes. And now—and we’re in this situation with, we are well past 1000 customers, you know, we’ve gone to many, many millions in revenue, but we do have a very clear, you know, core customer base which is a lot of technology companies, a lot of SAAS business, a lot of e-commerce businesses, a lot of startups around the world, that’s kind of still the bulk of our customer base and then we have a massive long tail of anything and everything you can ever imagine—big, small, weird, awkward, standard from all kinds of industries, all kinds of countries, all kinds of verticals and used cases.
And now the question is, hey, as we look ahead to the next 3 to 4 years, it’s hard to believe that there’s the core customer base that we have is going to allow us to get to where we want to be. So, how do we decide strategically to expand in other areas? And I do have some thoughts on this and we have some debates of what to do and how to do, but even before I launched it, they’re much more interested just to get some advice from you and see what your thoughts are in this space. How do you think about that? Do you think about that at all? What’s kind of your philosophy if I came with this and ask for your advice?
Hiten Shah:  Well, like what you said at the end which is like you’re trying to figure out how to make more money.
Steli Efti:  Yeah.
Hiten Shah:  Right? So it’s like if you don’t believe that the current market or the current segment you’re in will allow you maybe a year from now to keep growing, then it’s just like I go back to the business and say, okay, you’re making X amount of money on this market, then you have Y amount of money in the long tail, how can you go analyse the Y? So, X is your current segment and X is something that you’re probably stable at. You probably know how to get more of them. You might even have projections by then on how you’re going to get more and that’s great.
But then you have—what people don’t do is they don’t split out the difference between that and that long tail separately. So what if you said that our revenue from this segment which is our core is, you know, X and our revenue from the tail is Y, then I would actually just chomp up your tail and go figure out which ones can you run revenue experiments on or marketing experiments on depending where you’re bottleneck is to get more of them, right? Usually in the SAAS business at that scale, you’re trying to increase average revenue you produce, average revenue for customer whatever metric you’re using, ,but it’s always about more money from each customer on a monthly basis, right? And so, your goal would be take the long tail and go figure out where you can get that. That would be the very strategic way I would think about it.
Steli Efti:  Okay. So, let’s say you do that exercise right now—I love that framework—and you decide—oh, you don’t decide. You discover that, oh, we have this industry that, you know, looks like a very promising opportunity, but you know what? We know nothing about this industry and we’re not particularly excited about it. Let’s say that could be a situation because a lot of times there’s a bias involved in what we gravitate towards. We’re going to serve the market that we like the best so we identify it with the most.
Hiten Shah:  Yeah, totally.
Steli Efti:  And there’s benefits to that, right? Because you probably know how to speak—
Hiten Shah:  Maybe.
Steli Efti:  —to these people. Maybe.
Hiten Shah:  I will get that.
Steli Efti:  So, what happens then? Let’s say you have—
Hiten Shah:  I think it’s simple. What are the other options? Because if that’s your only option, that’s what you’re going to do. It doesn’t matter.
Steli Efti:  All right.
Hiten Shah:  Right? That’s your best option.
Steli Efti:  Yeah.
Hiten Shah:  You’re going to have to learn to love that.
Steli Efti:  Okay.
Hiten Shah:  Right?
Steli Efti:  Yeah.
Hiten Shah:  Or your business isn’t going to grow. So it’s either that option or some other option.
Steli Efti:  Or you look at some other option.
Hiten Shah:  I don’t know. That’s what I’m saying. It’s like pretty obvious to me. It’s like—but I deal with this all the time, right? Entrepreneurs come and they’re like “Yeah, I can make money there, but I don’t want to do it.” I’m like “Wait, wait, you can make money?” You know like, I know we’re here to make money. That’s what a business is, right?
Steli Efti:  Let’s rewind to the money part. What did you say about money? I didn’t listen to anything past that point. What was that? I love that.
Hiten Shah:  Can I go back? Yeah.
Steli Efti:  So, let’s say—okay, let’s just accept that. This is riffraffing, but I’m just figuring out what’s going on. Let’s say okay we are, you know, a bunch of engineers—we’re like 5 engineers super-engineering-focused team and then we find out sales people really love this and there’s no alternative. Let’s say that the sales industry should be like—so far a lot of engineers have been using our tool but really salespeople could be the way to make more money.
So, now we decide, okay, we don’t have any other options and we just accept that that’s a great opportunity and we want to run experiments around this. How do you do that when there’s that kind of a disconnect? What’s your experiment framework for even like expanding on framework? Because here’s something I’ve discovered and I don’t know if that’s standard for most people or most companies, is that when I look at the customers we have that are completely like other verticals we’ve never marketed anything to and then our like—if anything you read about us doesn’t speak of that language, if I look at how they found us, it’s always kind of the most cutting edge technology-savvy-in-the-know when it comes to what’s new in the category. It’s always kind of this fear of the head, right?
Hiten Shah:  That’s wonderful. If it really is that, then you have many options because you’re essentially in an early adapter curve for that market, for your product, right? Which is something actually that I don’t think people realize. They think that, “Oh, the whole product has an early adapter curve, or the market has actually segments in the market.” So when you say that, I’m like “Oh, that’s cool” because that person that’s usually the early adapter 50% of the time and this is just anecdotal so it’s not like [0:08:44][Indiscernible], they will tell everyone. If they love it and you just came a little bit of attention, right? Even as simple as “Hey, we’re creating a landing page for your vertical. We’ve love a quote from you.”
And then, I would say all kinds of things open up that you might not be thinking about because all of a sudden that person is like “Really?” “Yeah. I’m going to put you on the page and you’re fixed,” right? And then they’re like “Really?” “Yeah.” “Why?” “Because you’re one of the first in this category to use our product and we think we’re going to spend more time in it.” So to me it’s like, you know, that’s cult because that means that all you have to do is evaluate out of all the opportunities you have and all the early adapter segments you have, is there one that’s large enough, you know, that can actually increase your revenue.
To me, though, like maybe I take a different attitude just going back to your earlier point, but like I don’t give a shit if you like it or not. If it’s only the option to make money, guess what? Engineering people, right? That are trying to get sales customers, either decide you’re going to go figure it out, which I’ve seen done so amazingly. I’ve seen people who don’t know shit about sales go in and tell the salespeople better than other people that know a lot about sales. So it is totally impossible, right? You just have to know that that’s where I’m going to make money. But like a lot of times people don’t think about it like we’re going to hit another segment.
Steli Efti:  Have you gone to this before in any of the businesses that you—
Hiten Shah:  Every single one. This is like what happens when you hit those scale.
Steli Efti:  Any mistakes you’ve made or any—
Hiten Shah:  Too much effort into a new segment without validation that it’s worth it.
Steli Efti:  Tell me about that.
Hiten Shah:  So big, right? Like, so this is why we chop it up. We say, this is the X, right? And then the Y and we spend a lot of time trying to figure out even if we only have 3 customers in a segment. Is it better than the 20 customers we have in another segment, from a segment perspective? So it could that like, you know, sales for pharmaceuticals, you know, you have like 3 customers. Sales for the construction industry, you have like 20. If you just do the math there, you’re probably going to go pharma over construction unless you have a way to reach those construction customers more efficiently than the pharma ones, right?
And in terms of like experiment, it’s like, hang on, to get to where you are at that scale, you obviously did a bunch of stuff, right? Around marketing and sales and the like. Why not match that up with the segments that are easiest to get with that same method that your company already knows?
Steli Efti:  Right.
Hiten Shah:  Right? Whether it’s content marketing, outbound sales, social media. I don’t know what you’re using, but some segments will work with that channel and some won’t, so that’s like a channel segment fit kind of thing. And it’s like if you pick the right segment and you already know how to market in the way that’ll work for that segment, I don’t know why you wouldn’t do it.
Steli Efti:  That’s so awesome. So this starter is like we’re thinking about this topic. I just want to know your thoughts too. Now, you’re giving me all this goal that I could just play all these different characters and ask you like real questions to see what you say. So—
Hiten Shah:  Yeah. Right, this is fun.
Steli Efti:  So, Sir, Mr. Hiten, my next thing that came up is like I get the sense that what you’re saying is don’t go and hire somebody from the pharmaceutical sales world or the construction work and give them the job because that’s I think a common theme is like a company will think, “Oh, we need to expand in an area. We’re not experts in that. Let’s hire somebody from that area, in that world.”
Hiten Shah:  Oh, no, you don’t have to be an expert. And if you hit bottlenecks of unable to be an expert or really need an expert, you don’t need to hire somebody. You could go get a consulting firm to give you, you know, $500 an hour, 3 hours. If you know the right questions to ask in 3 hours from somebody who’s an expert, you will get so much goal, it doesn’t even matter. So it’s more about finding the right people to talk to and advise or even just digging in and talking to as many pharma people as you can that are actually customers because, honestly, people just want their problems solved. So in any segment, it doesn’t matter. They just want their problems solved. So you don’t need to get all intimidated about it.
And honestly, if you’re already at like a—you know, I don’t know, 500 to 1000 customers, you already have a very good idea of what your product can do for people. If you don’t, go find that out.
Steli Efti:  Oh, yeah.
Hiten Shah:  Yeah? Because then it becomes obvious as to like, you know, what segment to work on and like how to essentially engage those people.
Steli Efti:  How do you think about—we talked more about like verticals and industries, how do you think about markets in the sense of like countries, continents, like languages, localization? Because that’s another like really big growth opportunity potentially. You might see—and we do. We have like 30 large international customer base and majority is still North America, but there is a big and growing international piece to this, but there’s very clear like focused places around the world where we’re growing faster. So, obviously, you want to look at—
Hiten Shah:  What’s the revenue potential.
Steli Efti:  What’s the revenue potential.
Hiten Shah:  Because that’s not just number of customers.
Steli Efti:  Right.
Hiten Shah:  It’s how much they’re paying and the upsell, you know, potential as well.
Steli Efti:  Well, how much they’re paying, upsell potential and how many more businesses in that country would fit your customer profile, right?
Hiten Shah:  Yeah.
Steli Efti:  Like, you can have more customers in one country than another, but if you have all customers in that country, it’s much smaller. So, the total revenue potential in the other country is much larger, although currently you just have 2 customers there and the other one you have 20, right?
Hiten Shah:  That’s right.
Steli Efti:  Same example. But—
Hiten Shah:  But if you were systematic, you can get every country.
Steli Efti:  Yes.
Hiten Shah:  So if you found a way to just get countries. For example, even if—this is what I don’t see people do, but even if the site, even if your website—I’m sorry. Even if the language is English that they’re in, you could still have a website just for that country, it’s okay, right? Not a website, but like a subdomain or when people come from that country, you’re redirecting them to it. You’re telling them the businesses in their locale that are using you.
Steli Efti:  I love that.
Hiten Shah:  You’re using codes from it, right? It’s just tactical.
Steli Efti:  I love it!
Hiten Shah:  But like we like to do things at scale, right? Opening an office in Copenhagen ain’t going to get you Germany the way you scale your business, right?
Steli Efti:  Yeah.
Hiten Shah:  But, every time someone comes from Germany, show them things that are going to make them more likely to feel like this is for them.
Steli Efti:  Right.
Hiten Shah:  Right? Even if you have to say Germany at the top, right? In the headline. “CRM for companies in Germany.” What do you mean? Yeah, “Companies in Germany, CRM, what’s up? Let’s go,” right? That’s so much more compelling than “We’re a CRM.”
Steli Efti:  Yup. I love that. And that’s something I’ve never thought about. So, yeah—
Hiten Shah:  Oh, I got one in today.
Steli Efti:  You got one in, finally, right? Finally. So, okay, so you that. What is the next step? What are other things that you do in terms of like global expansion? Like you can have specific versions.
Hiten Shah:  We had people split off the sales team, best salespeople attack that problem, build a process. Essentially we thought of it as not a new sales funnel but essentially a new sales funnel. So you take old sales funnel, copy/paste over to this segment and then go start testing leads in and have somebody actually running the process as if it’s a separate sales process just to see what happens. Because one of the things—I’ve experienced it. I don’t know if it tracks with what you have. We usually think of our sales process as generic. It’s one sales process. But the segmentation around it actually makes a big difference when you start thinking about different segments or different countries. Even if at the end you realize it’s the same thing, that’s fine. If you’re trying to increase revenue in a certain area, then it’s better to measure the funnel separately.
Steli Efti:  I love it. And—
Hiten Shah:  And with people too so your resource allocation would be like, okay, every lead from there goes to jump, right? For example.
Steli Efti:  I love—one heck. This is not really practical but it’s just more for like what’s possible. Some companies the heck that they’ll use is especially when they want to grow in multiple countries really fast and they don’t want to open an office in each country is you just find either a place that has people from all these countries. Like Berlin is such a great place for many startups because you open one office there, you can hire people from all European countries that speak the language. I know they Twitter for a while. I don’t know if they do it still, but for a while they would hire— for their international expansion, they would hire people from that country but have them in San Francisco. So they have like a bunch of French-speaking people that are like the French team and a bunch of—and still get the benefit of having people with local talent and have them physical there.
Hiten Shah:  Yeah, that’s cool.
Steli Efti:  Instead of like opening offices in all these countries. It’s much harder to do, right? So I like that. I think that—
Hiten Shah:  There’s a lot of ways to do it. Yeah. I think the creativity is key because before we thought it was like offices in those countries.
Steli Efti:  Offices, yeah, yeah.
Hiten Shah:  That’s how people scale internationally or even partnerships. I don’t think you need any of that. I think partnerships are great, but I don’t think you even need the local partnerships.
Steli Efti:  We need to do an episode on partnerships.
Hiten Shah:  Ah, of course.
Steli Efti:  Oh, really. We need to do one on that. I’m dying to hear your thoughts on this. All right. So, what else? Is there any other kind of mistakes that you do? The validation, let’s say you analyse the data. You look at where the biggest potential is to grow and to make the most amount of money. You start running some experiments in that area, you know. You use what you have like you have some customers, get testimonials. Ask them, learn from them, how they found you, what’s popular in the industry, how to market to them, all that. When do you know—I mean this is a stupid question, but are there pitfalls? Are there things where early on it might seem like it’s really great but then it’s really not? Because that one of the biggest mistakes was just wasting too much time on something, right? Or putting too much effort.
Hiten Shah:  Yeah, like it’s easy to get leads but no one is converting. What do you do?
Steli Efti:  Yeah.
Hiten Shah:  Right? Is it that you fix the process? Is it that the leads are bad? So it’s a normal sales problem you have. That’s why I like to separate it out and say we’re starting over with sales with this segment especially because it’s like it’s not a segment you spend time on. So the best way to do it is act as if you’re starting over. And once you do that, I think it becomes clear that like you have the normal sales funnel problems, right?
Steli Efti:  Yeah. Yeah.
Hiten Shah:  Lots of leads, not enough conversions. Not enough leads, lots of conversions, you know. That keeps dropping off at XYZ step and you don’t realize that the words you’re using in there just doesn’t make sense to them because it’s German. It’s Germany, right? Like there’s all these weird things that you end up having. But to me, the basics of it are just start over with the sales process, copy/paste and run it with these leads coming in, right? And then you’ll have a clear idea where the bottleneck is.
Steli Efti:  All right. Weird last one. This is curved ball, but in some places, there is a lot of like political implications, right? So you might look at the market and the customer base and all of that. It might be a huge opportunity or a big one.
Hiten Shah:  Like China.
Steli Efti:  China, for instance, but also Europe. Europe with all the new privacy laws—
Hiten Shah:  Oh, yeah, sure.
Steli Efti:  Jesus Christ, right? I mean for US-based company—
Hiten Shah:  That’s just a variable and a factor, right? In your prioritization of what you attack when and what experiments you’re on. So, if it’s onerous to do business in that country because of their rules and laws, then you probably don’t want to do a lot of business there. Like we had the same thing with KISSmetrics like certain—yeah. Eastern Europe, European countries like they have very stringent rules around cookies and stuff like that too, right? So those kind of countries like, you know, you have to—there’s just all these other guidelines like you have the optin, the cookies, visitors doing all this stuff so like you have to deal with it or you just say “I don’t want to do business there. It’s too hard right now.”
Steli Efti:  Oh, now, right?
Hiten Shah:  Exactly. It’s literally too hard. This is a hard thing, right? It’s like—if that’s one harder than another one, you’re going to do the one that’s easier, right?
Steli Efti:  Yeah. You’re going to prioritize, right?
Hiten Shah:  Yeah, exactly.
Steli Efti:  All right, my man, this was awesome. So—and I die to know from the listeners if anyone has experiences, done any kind of creative—especially a creative out of the box thinking, let us know. Please let us know. And make sure if you’re in the bay area on March 31st from 6:00 to 9:00 PM in Palo Alto, we’re going to have a live recording, a live event about The Startup Chat podcast. Go to the Facebook group and click on the link to RSVP. There’s limited seats so make sure to do that right now. We shall see you with our own eyes very soon in person.
Hiten Shah:  Bye.

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