How To Earn Customers For Life

Summary

In this Y Combinator talk, Michael Seibel and Dalton Caldwell discuss the importance of caring about your customers to ensure lasting relationships and business success. Many startups make common mistakes such as thinking solely about funding and neglecting customer relationships. By genuinely liking and listening to your customers, your business can leverage this as a competitive advantage. Even small startups can excel by prioritizing a personal touch, which larger companies often lack. This thoughtful approach not only improves customer satisfaction but is also a superpower that distinguishes successful companies.

Highlights

• Michael Seibel and Dalton Caldwell emphasize the importance of genuinely liking your users for business success. 🤝
• Startups should avoid mass-spamming and impersonal communication, and instead, focus on personal interaction. ✉️
• Making users feel heard and valued can be a competitive advantage against bigger companies. 🌟
• Experiences from companies like Stripe and Amazon show that personal attention can create customer loyalty despite mistakes. 🏆
• Founders should strive to know their customers personally, understanding their needs and ensuring their satisfaction. 🕵️

Key Takeaways

• Caring about your customers is a vital component for long-term business success. 💖
• Personal connections trump mass marketing; customers appreciate talking directly to founders. 🗣️
• Big companies often lose touch with customers, giving startups a chance to differentiate. 🌟
• Emulating large companies' impersonal tactics is counterproductive for growth. 🚫
• Genuine care can lead to more sales, better feedback, and customer loyalty. 📈

Overview

Michael Seibel and Dalton Caldwell unravel the profound question of whether you actually like your customers and why it fundamentally matters for business success. Instead of focusing just on profits or VC dollars, they emphasize the power of genuine interactions and relationship-building with customers. The conversation highlights that personal engagement, while often overlooked, is a key differentiator for startups in a world of automated and impersonal business tactics.

The discussion further delves into the pitfalls of mimicking big companies. Despite their market success, these companies often lack direct interaction with their customer base, a gap that startups can exploit to their advantage. Caldwell and Seibel suggest that startups should prioritize nurturing genuine, heartfelt relationships with their users, reshaping any business dynamic into one of trust and mutual respect.

By recounting personal stories from startups like Stripe and Amazon, where founders took the time to personally address customer issues, Seibel and Caldwell illustrate that this approach not only remedies mistakes but fosters robust customer loyalty. They wrap up by encouraging founders to develop a true affinity for helping people, as this compassionate mindset can fuel both personal and business growth.

Chapters

• 00:00 - 00:30: Introduction In the chapter titled 'Introduction,' hosts Michael Seibel and Dalton Caldwell discuss the importance of caring about your customers. They humorously note the surprising nature of the question 'Do you like your users?' which is often unexpected. The discussion is set in a new format, as they are recording in person rather than as avatars, adding a fresh dynamic to their conversation.
• 00:30 - 01:30: Signs of a Struggling Startup The chapter 'Signs of a Struggling Startup' explores the initial stages of the YC batch, focusing on startups facing challenges. It begins with a light-hearted note about the metaverse before diving into the serious topic of identifying struggling startups, particularly those having difficulties in acquiring new customers. The narrative is set at the beginning of the YC batch, where many companies are keen on boosting sales and attracting new clients. The chapter aims to define what constitutes a 'flailing' startup in this competitive startup ecosystem.
• 02:00 - 03:00: VC Marketing Influence This chapter discusses the typical mindset and challenges faced in venture capital (VC) marketing. It points to an almost aggressive approach some entrepreneurs and marketers adopt when introducing a product to the market. Influenced by the 'hammer and nail' metaphor, it highlights a tendency to forcefully market products to customers, sometimes disregarding the customers' actual needs or responses. Entrepreneurs may become perplexed or frustrated when customers do not embrace their products, underlining their conviction about the product's utility. This mindset may define many first experiences in sales, reflecting on the need for a more receptive and understanding marketing approach.
• 03:00 - 04:00: Disliking Users The chapter 'Disliking Users' explores the disconnect between creators and users, highlighting the frustration creators feel when users do not appreciate their software. It delves into the emotions involved, from seeking sympathy to persistently urging users to engage. Additionally, it addresses ineffective methods like mass emailing and spamming, which creators often resort to when trying to get user attention. The chapter emphasizes the need to reflect on how one would perceive such communication if received personally.
• 05:00 - 06:00: Emulating Big Companies The chapter focuses on email communication strategies, particularly reflecting on how individuals perceive the quality of emails they send and receive. It highlights a common issue: people often send emails they would not respond to themselves, acknowledging them as ineffective or poorly constructed. This behavior raises questions about how companies view their customers and the importance of smart, thoughtful communication.
• 07:00 - 09:00: Founder's Unique Opportunity The chapter titled 'Founder's Unique Opportunity' discusses the motivations behind certain business actions, particularly focusing on startup founders and their relationship with venture capital (VC) funding. It suggests that some founders view serving customers not as the ultimate goal of their business, but rather as a means to attract VC investment. The text hints at a critique of this mindset, suggesting that the quest for VC dollars can often overshadow the fundamental purpose of serving customers in business.
• 10:00 - 11:30: Caring as a Competitive Advantage In this chapter titled 'Caring as a Competitive Advantage', the discussion revolves around the importance of liking your users. The speaker reflects on a recent situation with a founder where they contemplated on stepping back and considering if they genuinely like their users. The notion seems unconventional but emphasizes the significance of liking the users for whom products and services are being built. This approach is suggested to enhance the relationship with customers and ultimately serve as a competitive advantage.
• 15:00 - 18:30: Building Genuine Customer Relationships The chapter discusses the concept that many companies, including the example of Comcast (now Xfinity), seem to dislike their customers. It implies that this dislike is evident in the way services are designed and provided, often making customers feel undervalued or mistreated. The rebranding effort of Comcast to Xfinity is mentioned as an attempt to improve this relationship, though the author remains skeptical.
• 19:30 - 21:00: Conclusion The chapter 'Conclusion' discusses the challenges faced by consumers when large corporations possess monopolies, specifically highlighting how companies often secure government support to maintain their market position. It uses the example of utility companies running wires directly to homes, effectively stifling competition. Even as customers, individuals remain bound due to limited alternatives. The discussion briefly touches on other similar monopolistic behaviors in industries like telecommunication before indicating that another example would be addressed subsequently.

How To Earn Customers For Life Transcription

• 00:00 - 00:30 can we take a big step back do you like your users you know do you like them yeah and people think that's a weird like that's not what they expect you to say this is Michael Seibel with Dalton Caldwell and today we're going to talk about caring about your customers well first I guess yeah let's be meta here we are does this look different yes we we're in person we're trying this where's your art I know yeah but we are really literally in person this is us we're in person we're not avatars we're
• 00:30 - 01:00 not in uh the metaverse we're not the metaverse right now people not maybe next year we're upgrading this is an upgrade great we had so much fun last year we decided to do this in person so let's set this up we're in the beginning of a YC batch and there are a lot of companies who are trying to get sales trying to get new customers always a good thing and we might describe some of them as flailing so what is the sign of a startup that is uh flailing when trying to get new customers you know
• 01:00 - 01:30 it's like the old aphorism when all you have is a hammer uh everything's a nail and so they'll have a product that'll have an idea and they want to like bully customers or Bank some strategy to like cram it down people's throat they're like why won't they take it why won't they take this thing that I'm trying to to get them to buy I'm trying to help you yeah with my arms I have this thing and it's good like what's wrong with you yes you're making a mistake to not want this thing and so that's a lot of people's first experience with sales yeah that was my
• 01:30 - 02:00 experience yeah people are dumb like they don't they realize how brilliant my software is or trying to get them to feel sorry for just please use this like do like if you could just use this thing like I'll be your best friend and so that also translates into a lot of actions right Mass emailing right Mega spam spamming the like templated email with one word of customization yeah just click on that like you should always say to yourself if I received this email that I am
• 02:00 - 02:30 sending would I respond because hilariously a lot of people send a lot of email that they themselves think is horrible like they are positive like when I asked this question the founder would you respond to Zemo they don't even think about it they're like absolutely not I've regularly archived emails that look exactly like this so we're like you don't think your customers are smart or something like this you actually
• 02:30 - 03:00 don't care hey it's not for me but maybe they want it yeah maybe these and and if we were trying to unpack the psychology of why people do this like why they're making these silly motions I think a lot of it is based on a lot of VC marketing I think a lot of it is customers are not an end serving customers is not the end of my business serving customers is a means to getting VC dollars and we all know that VC dollars that's that's important right that's what we're here to do right is uh that's all we're here to help you with is how to get DC
• 03:00 - 03:30 dollars right customers when we were in this this situation with the founder you know very recently this started clicking in my head where I'm like oh like can we take a big step back do you like your users you know do you like them yeah and people think that's a weird like that's not what they expect you to say no no why are we talking about it if I like my users these people are trying to build things for yeah do you like them now you
• 03:30 - 04:00 brought this up a lot of companies don't like their users right any examples well look to speak from personal experience Comcast who dislikes the user so much I think they rename to Xfinity like that's part part of the rebranding let's try again I don't know maybe they won't remember um every experience I've had with them and again maybe maybe you've had the same one you can tell that the whole thing was designed with the implicit assumption that they don't like their customers and their customers are bad
• 04:00 - 04:30 and everything that you try to do they want to make it bad yeah and it seems to be baked into the whole thing right it's pretty weird well there's they don't have a lot of competition we can talk about why that is that's probably different it helps that they're running a wire to your house right that's a big part yeah I'm still a customer let's be real yes they figured out that their customer was the government that gave them Monopoly yeah so that's one example are there others you think about um I mean look there's other stuff like that like uh phone companies but let's let's talk about another one we've used
• 04:30 - 05:00 more often social media companies let's talk about Facebook um Facebook is known to do some user hostile stuff like there's even what's the term for it dark patterns there's a whole field of research yes and again maybe someone would say watching this oh well they kind of like their customers how would you how would you articulate well I mean I think what's funny is one it's not obvious who the customer is of Facebook right on one hand you could argue they're users are customers the other hand users aren't paying and then you're like oh well maybe they're really serving their advertisers but then you see all these stories about how like all the numbers don't aren't
• 05:00 - 05:30 real like yeah and so if it clicks yeah all kinds of stuff so needless to say when you're big um you cannot like your customers so how do what's the takeaway for Founders well the takeaway is you look at these big companies and you can easily decide to emulate this stuff yeah yeah again if all I'm doing is from first principle is trying to look how does the world work why does the world work the way it does it's easy to look at these very successful very valuable companies yes know the story of Facebook yep and actually attempt to emulate the end
• 05:30 - 06:00 state of these companies yes which they're so big um the people that work there are very isolated from their customers the customers are sort of like only a small percentage of those companies employ people whose job it is to talk to their customers yes and most people if you work at the work of those companies you would never talk to the customers when most people work at the companies now weren't around in the beginning yep when those companies did like their users and did serve their users yeah so they don't even they're not even getting good patterns so I think what's funny about
• 06:00 - 06:30 this is that this opens up the opportunity for startups right like yes this is your secret sauce like even if you didn't believe us that it was just being a nice person like being good-hearted would be to serve your customers it's a competitive Advantage yeah to care about your customers let's set this up so check this out a lot of folks especially if they worked at one of these big companies yes their first instinct right when they start out is to pretend that their startup is a big company pretend that it looks like it
• 06:30 - 07:00 has a bunch of employees pretend that there's a customer support rep that's not them and recreate the whole weird Rube Goldberg machine of talking to customers that they saw elsewhere yes right and again it makes intuitive sense what if the opposite were the case and something incredibly powerful is that people like to talk to the founder of companies who knew and they like to talk to the people that make
• 07:00 - 07:30 software that they use yes and they like to feel listened to and they like to feel heard and that's unique and the big companies can't do that again imagine you had some problem with Facebook and then one day literally Mark Zuckerberg showed up at your house and was like let me fix okay you wouldn't like that but okay no I'd like that I would I'm about to say I'd be Facebook's biggest I'd be like I don't know what you think about Facebook you would you would want to tell people hey I actually met Mark Zucker when he came to my house and I guess they really like yeah it would be a story it'd be a story I was a early customer of stripe at my startup and it
• 07:30 - 08:00 was invite only and very few people were using it and my customer experience was Patrick the founder of stripe I had a chat with him like in Google talk it's a long time ago um and he would message me all the time yeah and they had a big mistake where they overcharged a bunch of my customers and there's a problem on their end yeah and so what happened is Patrick dm'd me told me that it happened said that they fixed it and apologized do you think that I like stripe more or less
• 08:00 - 08:30 after that experience even though they messed up exactly exactly it's not wild it's wild and what's funny is that sometimes big companies can pull us off too I remember early days at AWS we were blowing up we actually like there wasn't enough time to buy and rack servers so like we literally needed to use ec2 and it was in beta like you just couldn't sign up for it and we randomly tweeted can anyone help us into the world and like this guy Jeff Barr tweeted us
• 08:30 - 09:00 back he's like yes it was like Amazon bad but it was like Amazon had a face in a human and a hero and he hooked us up and saved our company and that's Amazon they did it and you remember that you're telling the story it planted in your head so if you can create that experience for customers yeah if you can blow people away by how much you go the extra mile to care and solve their problems and not emulate the big company stuff you're giving away your power if you don't do
• 09:00 - 09:30 that you've got to use them you've got to do that caring about your customer is a superpower and I think what's funny and you made this point right is that like it's really really hard to beat a competitor who cares about the customer more than you do yes it's really hard the customer knows in their bones so you don't give a yes and I think that if we bring this back down to startups one of the things that's tricky is that you know you get into a startup for a lot of different reasons right and like hey Dalton I'm building a B2B SAS company for
• 09:30 - 10:00 accountants like I think it's really good I have some experience doing accounting stuff at my previous company but I don't love accountants yeah I'm just kind of like going through the motions I don't know I'm looking for let me tell you about my next startup idea after this like you know it's not great when they want to pitch you their next startup not good but but that's not a horrible starting point like what's the advice you give to that person who like thinks they have an Insight but like wouldn't say at this moment oh yes I
• 10:00 - 10:30 really care my co-founder about my customers if I've learned from the folks that I think are best at sales yep is they learn to break down the barrier between salesperson and customer relationship and actually genuinely care about the other person yeah and their life and what they're doing so say you're selling to small businesses you're selling to coffee shops or something if you actually care about the owner and you know their life story and you can see how the software that you're selling
• 10:30 - 11:00 them might help them stay in business longer or help pay their employees or what have you yeah and take it on a personal level such that even if you left that job even if you sold your company or left a company you would still remember fondly yes the people that were your customers and how you were able to help them that's real yeah and you can't fake that I think a lot of Founders when they have competition they think that whoever raises the most will win or they think whoever is the most famous will win most employees sure
• 11:00 - 11:30 right and again I can't really quantify this but if I think about think about the people you and I know that have done startups the people that care yeah about their customers the most that's they won that seems to be who wins and so you'll have companies that raise less that are less famous like all those things versus other folks but man they just gave a one it's so funny because I love your point around maybe you don't like coffee shops yeah everyone can like people everyone can like helping another
• 11:30 - 12:00 person like that's a that's just a quality of humans right do you like helping someone else yeah it feels good to provide service and it feels good to like give someone something that sure you're making money from it because you're charging for it but you know that the value that the thing is delivering is Big way more you're getting a great deal and you know in your heart they're getting a great deal and not just like hey they bought the software we know it doesn't work we know they don't use it but I hope they keep paying they sign the LOI so I was able to fundraise but we know the software sucks yeah that makes you feel bad that makes
• 12:00 - 12:30 you feel bad yes so if we're gonna wrap this up we've given a lot of advice on how to do all kinds of things around early stage startups but one of the things that we probably should have emphasized more is it really helps to care about your customers and if you can use that as a tool you'll learn more you'll make more sales you'll have more fun and people can tell if you care they'll want to tell you
• 12:30 - 13:00 more about their problems they'll give you the benefit out they'll cut you slack if they can tell that you care and that you know you want to actually solve their problems and not just get money raise we see dollars with that thank you very much see you later Dalton great thanks [Music] [Music]