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Customer acquisition or revenue during early stage?

What would you say is most important during an early stage pre-revenue startup - customer acquisition or revenue even if it is a very small amount? If you need to pick one over the other what would it be?

23 Replies

Michael Lissack
0
1
Michael Lissack Entrepreneur • Advisor
Applied Philosopher of Science
Customer acquisition
Kate Hiscox
1
0
Kate Hiscox Entrepreneur • Advisor
Boss at Venzee
It really depends on the scenario. You want to lock your customer base in and that can be achieved through a variety of ways including having them pay. If you don't fear that they'll pick up and run away to the next, shiny solution then I would go for customer acquisition as you'll have time to figure out how to monetise them.
Carlos Diaz
4
0
Carlos Diaz Entrepreneur
CEO & co-founder at Kwarter
Before focusing on Customer Acquisition I would rather focus on Customer Retention. You need to make sure before you bring more user that your service is not leaky and that you retain at least 20% of the users after 30 days. Once you reach this milestone I would focus on acquisition. Revenue comes later.
Kris Bliesner
3
0
Kris Bliesner Entrepreneur
Founder and Chief Technology Officer at 2nd Watch
Startup decisions are rarely binary. I would look at it as an "and" not an "or". I am a big fan of driving revenue as it proves that someone is willing to pay for your product or service. You can dial in the right amount but a paying customer beats a non-paying one all day long.
Stephen Campbell, PMP
2
0
Project Management Professional
If the revenue is $.01 is that ideal? Probably not. I agree with the retention comment over the paying customer comment. Much easier to monetize a community than it is to increase prices for an existing paying customer.
Tommy Katzenellenbogen, MBA
0
0
Tommy Katzenellenbogen, MBA Entrepreneur • Advisor
Previously Ventures Team at Octopus Ventures
I would say the most important thing is proving assumptions. It really depends on the business model and space you are in. But if you would make choose, I always like to see growth in traction over growth in revenue.
Brendan Benzing
0
0
Brendan Benzing Advisor
Cofounder at MyNeighbor
Customer Acquistion, unless your are B2B, but even then it is valuable if they are using you. Sent from my phone
Neha Parnandi
0
0
Neha Parnandi Entrepreneur
Founder, Product at CareForMe
Thanks for the inputs everyone!

This is the situation - I'm in talks with another startup for a potential partnership regarding our product. We are working out the details.... So the final price that we will pay depends on if the first goal we have- customer acquisition or revenue right off the bat (I know this sounds a bit vague). So effectively we need to figure out which metric is more important for us right now. Another thing is, eventually our customers will be paying for the service; it's not free so I'm leaning towards customer acquisition which would translate to revenue.
Michael Lissack
0
0
Michael Lissack Entrepreneur • Advisor
Applied Philosopher of Science
revenue at this stage can be flighty (e.g. does a pilot project which fails to get renewed count) and to focus on getting a few dollars in the door seems a mistake compared to building and locking in clients. And if you do set the target as revenues what is to assure that the revenues will actually be derived from long term client relationships? One off revenues have little strategic value (though they may be tactically necessary if survival is at stake)
Charlie Graham
1
0
Charlie Graham Entrepreneur • Advisor
Entrepreneur & Executive With 15+ Yrs Exp. Building Successful Consumer & SaaS Businesses
I vote for neither. IMHO your key metric should be engagement - how much are people using your product on a daily/weekly basis? How much do they LOVE it? If they start using it, how sad would they be if you took it away from them?

Build a product that people love and can't live without and you'll have a much easier way of getting both revenue (since they would pay for it with their attention or their pocketbook) and customer acquisition (since they will tell their friends). You'll also have great reference customers who can give testimonials to prospective investors.

At the early stages, the only reasons I think you would want charge up-front is a) to validate people recognize they have a big enough need that they are willing to pay a promise to solve it and b) that it encourages some level of commitment to at least try the service. And the primary reason to focus on customer acquisition is to build a big enough audience to test versions of your product and see if you can build a product they can't live with out. (In the process of getting those users you'll end up learning a lot about how to correctly target your audience and grow it).

Hope that helps!
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