#95: Sell The Problem, Not The Product

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#95: Sell The Problem, Not The Product

Read Time: 3 min

 

Today, I will discuss how to find buyers before you continue to wrangle engineering resources to build.

This is a big one. What I typically see is the opposite. Founders will build a product they believe the market wants, ship it, and try to find buyers. This is the wrong approach. I’ve seen countless numbers of founders who have run this playbook and blown up their companies.

If you speak with our clients, they will universally tell you that selling a product before continuing to build helped them keep burn at bay, find early indications of PMF, flesh out a repeatable sales process, and deliver a product the market wants.

Don't find customers for your products; find products for your customers."

~ Seth Godin

Staying on the topic of this newsletter, I’ve attached a screenshot (below) of an email from a prospect explaining why they thought that timing was off and why this was terrible advice.

Some context here is that this individual had built a compelling AI product with serious capabilities and investors. He closed $200k in ARR with no sales process or lead generation, and the revenue they managed to close had come from warm investor intros and other batchmate founders. None were on any agreement - it was all monthly recurring revenue (MRR). Customers started churning; they hadn’t found indications of PMF, and their pipeline had dried up from their internal network, with no new leads coming in. I walked through our process and explained how we can help - they were super pumped, and then I received this email. Needless to say, I convinced them that this was terrible advice. They decided to move forward and are now at $3.3M in ARR.

This advice came from one of their investors. Let me explain why this approach is fundamentally wrong and, in my opinion, is the leading cause of startups starting on a slippery slope of burn, anxiety, and disaster.

The goal of your pre-seed to seed journey should be to establish six things.

1. Build and iterate on your minimum viable product (MVP)

2. Find some indications of product market fit (PMF)

3. Close some business

4. Systematize lead gen

5. Systematize sales

6. Survive

To close early business, find indications of PMF, and survive, you must have leads consistently coming in and a predictable process to walk them through.

You want to find buyers before you build. You should have a minimum viable product (MVP) built out. The idea is to begin pitching the idea of what your MVP is solving for (hypothesis). This is done through a qualification process where you ask prospects specific questions to identify whether or not they have use cases that apply to what your MVP can solve. And if they’re not a good fit for you, you’re still collecting valuable information to help determine which direction to move with the product.

You succeed at this by building out lead gen, testing different ICPs and messaging, and finding the direction the market is telling you to move. This is how you “perfect a product for a specific group of buyers.“  

Otherwise, you burn cash and wrangle engineering resources to build based on speculation and “what you think.” What I have seen work repeatedly is moving in the direction the market is telling you to move by actively building out a sales(GTM) and asking people to buy your product.

This allows you to do two things. (1) Close revenue. And (2) collect the data on different use cases who didn’t buy and use that information to make the necessary iterations on the backend. That’s building on accurate data, not hypotheticals. 

A few other important ideas to note.

It’s so important to launch early and iterate based on user feedback. Ship your minimum viable product (MVP) as soon as possible to understand customer’s problems and assess whether the product meets their needs.

Early on, you will most likely engage in activities that do not scale initially, such as manual processes to acquire the first customers. That’s okay. This approach provides invaluable insights into customer needs and preferences, steering product development and helping to establish a repeatable sales process.

If you follow these principles, I assure you it will help mitigate risks associated with premature scaling and ensure that you build a product that truly resonates with your target audience.

That’s it for today!

See you all next week.

Darren

P.S. If you’re a Venture-Backed company interested in coaching, book a call here.

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