When we make early stage investments, one of the key things we look for is unaffiliated, passionate, paying customers. The number varies based on what type of customer you are selling to (i.e hospital vs. B2B Enterprise SaaS vs. B2C). Here is why each of those is so important.

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Unaffiliated

When you first start a business you often reach out to friendlies. That is perfectly fine and normal. They will often allow you to shortcut the full sales process and give you the benefit of the doubt. But at some point you have to start learning the best go-to-market process to bring in customers with whom you had zero relationship before. How do you find them, bring them through the sales funnel, message them, onboard, and deliver value to them? Until you start bringing on some unaffiliated customers, there remain a lot of questions in the sales process.

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Passionate

Early on you can get customers to sign up on promises and good salespeople. But do those customers stay with you after using the product? Do they get value and renew and upsell? Most importantly, do they become so passionate about your solution that they refer you to other customers and essentially become an amazing channel for growth. Hint - customers who join from other customer referrals tend to be better customers, have higher lifetime value, and have much lower acquisition costs. I even see early customers that are so passionate they complain about any bugs, yet remain on your solution - that is another great sign you are onto something. You want your customer so passionate they would genuinely be upset if your product went away.

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Paying

When something is free, it is easy to sign up users and “customers.” But there is no guarantee they even use the product, get value, or remain as customers in the long term. We love seeing customers that so badly want their problem solved, they will pay for your solution even before it is built (see design partners and authentic demand). The other thing I have found is paying customers give you infinitely better feedback than free customers - they have way more skin in the game. Lastly, I have been burned so many times by people telling me once I build XYZ feature they will buy it … only to learn that is not the case.

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Early in your business, make sure you focus on getting unaffiliated, passionate, paying customers to put your business on the right trajectory to something special.