Podcast Summary
Creating a Trusted Partner for Fintech Startups' Accounting Needs: To acquire customers for a Fintech startup in accounting, focus on providing a service that feels like a team member or trusted advisor, rather than just a software tool. Approach the problem differently by creating a tech-enabled service that feels like an accounting firm, and consider appropriate pricing and secondary signals for building trust.
When it comes to acquiring customers for a Fintech startup, particularly in areas like accounting where customers can't try before they buy, it's important to focus on providing a service that feels like a team member or trusted advisor rather than just a software tool. Waseem Dahir, co-founder and CEO of Pilot, shares his experience of founding Pilot, a bookkeeping, CFO, and tax services company for startups and growing businesses. He and his team identified a deep personal pain point in their previous ventures – the tedious and manual nature of accounting – and decided to approach the problem differently. Instead of building a traditional accounting software, they created a tech-enabled service that feels like an accounting firm to their customers. This approach has helped them win business by addressing the fundamental need for a trusted partner to handle financial operations. Additionally, Waseem emphasizes the importance of pricing appropriately and considering secondary signals, such as customer referrals and online reviews, in building trust and acquiring customers.
Focusing on MVP and iteratively improving it: Start with a minimum viable product, focus on delivering value to early customers, and iteratively improve it to achieve startup success
Starting a business involves beginning with a minimum viable product (MVP) that addresses a fundamental need, even if it's not fully tech-enabled. Our interviewee started their accounting firm in 2017 and initially did the bookkeeping manually using QuickBooks. They hired engineers to develop software to automate tedious tasks over time, while they focused on high-value tasks. Initially, they targeted startup founders and did the accounting work themselves, observing areas for improvement. They prioritized product development over marketing hires. In summary, focusing on the MVP and iteratively improving it while delivering value to early customers is crucial for startup success.
Identifying the Right Target Market for Your Business: Understanding the needs, shared experiences, and willingness to change providers of your target market is crucial for building a successful business.
When starting a business focused on solving a common problem like accounting for businesses, it's essential to narrow down the target market to have a hope of building something that can serve a specific customer base well. The speaker initially targeted early-stage technology startups due to their shared experience with the problem, the complexity of their needs, and their accessibility. When working with this customer base, the company discovered two distinct groups: those with no accounting solution and those unhappy with their current providers. The speaker was surprised to find that the latter group was open to switching accounting solutions, which influenced the company's marketing strategy. In summary, understanding the target market's needs, shared experiences, and willingness to change providers are crucial factors in building a successful business.
Leveraging personal connections and incentivizing referrals for growth: The company grew through word-of-mouth referrals, investor connections, personalized outreach, and a referral leaderboard. They initially relied on the quality of their experience, but later introduced a monetized referral program. Building trust through personal connections and incentivizing referrals were key to their early success.
In the early stages of their business, the company positioned themselves as tech-enabled, modern, and forward-thinking, leveraging their own startup backgrounds to build trust with their customer base. Word-of-mouth referrals and investor connections played a significant role in their growth. The company's personalized outreach to customers, asking for referrals and introducing a referral leaderboard in investor updates, helped to incentivize and gamify the referral process. For a long time, the company relied on the quality of their experience being better than what customers were used to as their primary selling point. However, they eventually introduced a monetized referral program. The alignment of interests between the company and its investors also drove referrals, as investors wanted to see the company succeed and grow. The company's approach to building trust, leveraging personal connections, and incentivizing referrals proved effective in driving growth in their early stages.
Understanding customer needs and pricing for trust and value: Founders shared their experiences of charging from day one, realizing customers are willing to pay more for better quality, and emphasized the importance of good fit and transparency in pricing and communication to build trust and deliver value.
Pricing is a crucial aspect of building trust and demonstrating the value of a product or service, especially in high-trust scenarios like financial transactions. The founders in the discussion shared their experiences of charging from day one and how they have evolved their pricing strategy over time. Initially, they positioned their offering as faster, cheaper, and better, leveraging technology to make it cheaper. However, they soon realized that customers were willing to pay more for better quality. They also acknowledged that they didn't necessarily pick the correct price point in the early days or had the brand to command the prices they can now. The founders emphasized the importance of charging and ensuring a good fit between the customer and the service provider. They shared that they still turn away potential customers who are not a good fit, even if they are willing to pay. The challenge lies in training the team to communicate this effectively and respectfully. For small businesses or solopreneurs with limited budgets, the founders expressed hope that they will be able to offer their high-quality service at more affordable prices in the future as they advance technologically. Overall, the discussion underscores the importance of understanding customer needs and being transparent about pricing and fit to build trust and deliver value.
Aligning pricing with customer willingness and company expenses: Founders should set pricing based on customer willingness and company expenses, spending around 1%-1.5% on accounting. Founder-led sales provide valuable insights, so stay involved in the process as long as possible, and hire a sales team when a scalable process is established.
Effective pricing strategy and founder-led sales are crucial elements for a startup's success, especially during its early stages. Pricing should be set in a way that aligns with the customer's willingness to pay and the company's expenses. A good rule of thumb is to spend around 1% to 1.5% of total expenses on accounting. Founder-led sales are beneficial as they provide valuable insights into the product, messaging, and customer feedback. Founders should stay involved in the sales process as long as possible to ensure they receive firsthand information and can quickly address any issues. Hiring a sales team should be done when a scalable, repeatable process has been established, and the founder is confident in the product and the team. By maintaining a hands-on approach, founders can strengthen their company and make more informed decisions.
Gathering customer feedback is essential for product development and business processes.: Focus on acquiring customers early on to validate your product and ensure it's something people want to pay for. Hire a smart, talented generalist for go-to-market efforts.
Directly gathering customer feedback is essential for product development and business processes. This feedback cannot be replaced and is crucial for understanding your target audience and refining your sales strategy. When hiring your first go-to-market person, look for a smart, talented generalist who complements your background and can help build up the pipeline. Founders should focus on acquiring customers early on to validate their product and ensure it's something people want to pay for. This process can be uncomfortable, but it's necessary for business success.
Start conversations with genuine curiosity: Approach potential customers with a non-salesy attitude for valuable insights and long-term relationships during initial stages of customer development
During the initial stages of customer development for a startup, it's essential to approach potential customers with a genuine, non-salesy attitude. People generally want to help and are often curious about new software or services. These initial conversations can lead to valuable insights, long-term relationships, and even great leads. Perfection is not necessary in the beginning; instead, focus on getting things to a good enough stage and putting yourself out there. Remember, market discovery is the first step, and it can be done with minimal resources. Engaging in early conversations can save time by providing valuable insights before investing significant resources in product development.
Finding early customers and building strong relationships: Understand customer needs, build MVP, iterate based on feedback, network, and build a community to increase chances of business success.
Importance of finding early customers and building strong relationships with them to establish a successful business. The guests shared their experiences and insights on this topic, highlighting the value of understanding customer needs, building a minimum viable product, and iterating based on customer feedback. They also emphasized the importance of networking and building a community to help spread the word about your product. Remember, the journey to building a successful business is not easy, but by focusing on your customers and continuously learning from them, you can increase your chances of success. To stay updated on the latest fintech industry news and trends, be sure to visit a16z.com/fintech and subscribe to our monthly newsletter.
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