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Hey everyone - today we’re breaking down how to pick who the right customer for your company is as you’re getting started, based on the experiences of Jetify, an AI-powered software quality assurance platform.

When faced with a massive market opportunity, the temptation to go broad is irresistible. After all, why limit yourself when "everyone could use this"? (also aren’t larger $$$ TAM numbers better??)

As all founders we’ve spoken to find out, selling the right product to the wrong customer is just as bad as the opposite.

Where the product finally ends up will probably change, but the people you first sell your product to are instrumental in the bloom (or doom) of a business.

Let’s find out why…

(BTW: last week we dove into how Daniel Loreto, CEO of Jetify, navigated the AI wave by finding the right problem to solve. If you missed it, check it out here)

The "Everyone Is Our Customer" Trap

When Daniel first launched Test Pilot, Jetify's AI-powered QA product, the market seemed enormous. 

Every company with software engineers needs testing, right?

But Daniel had a hunch that trying to serve everyone would effectively mean serving no one…

Founders need to identify a "wedge" - a narrow, specific segment that helps you get your foot in the door. (there’s a great post on Lenny’s newsletter on picking a wedge here) 

Daniel identified his wedge segment by answering 3 questions: 

1. Who feels the pain most acutely? Not all customers experience the same level of pain from the problem you're solving

2. Where can we have the largest impact? Early stage adoption = customers can’t live without your product

3. Who can we convert the quickest? Quicker the deployment, quicker the product development feedback loop (and also quicker cash comes in the door)

Getting your foot in the door

Daniel and his team answered these 3 questions, and decided to sell to… cash-strapped start-ups.

You’re probably thinking, why, daniel? Why? These customers are inherently disorganised, have smaller budgets, and might not even exist long enough to calculate their churn.

But Daniel and his team had a novel insight from speaking to (and being themselves) a start-up:

Daniel believes that many founders make a mistake by avoiding this segment and going immediately after enterprises, and here’s why:

1. Limited resources
This means they need all the help they can get.

These companies have to choose between diverting scarce engineering resources to testing or risk shipping buggy products. No existing solution served them well.

The QA-problem is a perfect problem for a SaaS product to solve - it’s a core task that no one wants to do, but it needs to be done.

2. (Significantly) cheaper than the alternative
Jetify offers these startups professional-quality testing at a fraction of the traditional cost:

Unlike enterprise customers, startups don’t have the resources to just throw money at the problem through a large QA team.

They need a productised solution that can allow their engineers to dedicate resources to shipping product.

3. Sell quick, learn quicker!
With a technical co-founder or CTO as the decision-maker, these companies could evaluate and adopt solutions within weeks.

On the other hand, enterprises are impossible to get access to as you need to the perfect entry point (something we spoke to Anish Dhar, CEO of Cortex in depth here)

… and don’t forget they also have drawn-out procurement processes and require complex contracts before you can even get the product on the ground.

Early-stage startups also provide direct, unfiltered feedback while tolerating occasional limitations of a new product.

They help you iterate faster and focus on what truly matters. This is one of the most underrated aspects of this customer segment.

By choosing customers who are willing to collaborate on product development, provide candid feedback, and forgive early imperfections, Jetify was able to accelerate their product development dramatically.

Larger customers might offer bigger contracts, but they demand perfection from day one.

They're rarely willing to work with you through bugs or product limitations. When your product inevitably fails, enterprise customers won't give you a second chance. 

What this means for you

At the early stages, finding which customer segment to go after is a balance of two things: impact and speed. Decide where you’ll have the largest impact, and adjust that for which segment will allow a quick deployment and feedback loop to speeden up product development.

As Nikita Bier said (check out his X here):

“A reproducible testing process is more valuable than any one idea. Innovate here first. All things equal, a team with more shots at bat will win against a team with an audacious vision”

If you enjoyed this edition of Scale please share it with another founder, operator or investor!

If you know anyone that could be good to feature - please reach out at [email protected]!

See you next week!

Rahul & Aryaman