Founder-led Customer Success
Founder-led Customer Success
Small "c" Customer Success is all that matters on the journey to Product-Market Fit
In mid-2022, when I was still leading Customer Success at Motive, I started receiving frequent calls from friends at VC firms. The conversations typically started like this: “Hey John, could you jump on a quick call with a CEO in our portfolio? They were doing well, but now we’re seeing high churn, and we think it’s a Customer Success issue. Could you show them what great looks like?” I’d agree to connect and schedule a call with the CEO. The more of these calls I took, the more I noticed a pattern forming, and it quickly became clear: these weren’t capital “C” Customer Success issues—rather, they were product-market fit (PMF) problems or small “c” customer success issues, as I like to put it.
Famously, Andy Rachleff, CEO and Founder of Wealthfront, said, “For enterprise businesses, at the end of your free trial, you should pull the trial. If the customer doesn’t scream, you don’t have product-market fit. Because if they aren’t going to buy it at the end of the 30 days, they aren’t desperate. And if they aren’t desperate, you don’t have PMF.”
Late 2022 was the perfect storm of factors that accelerated a closet cleaning of pretty much all non-essential software. The “get lean” mantra required to survive this time of uncertainty pushed budget decisions higher in most organizations. If you couldn’t sell the ROI of a solution to your CFO or CEO, there was simply no room in the budget — “nice to have” wasn’t enough. The ZIRP-era free trial was officially over. Churning customers was the last indicator of a product-market fit that perhaps never was, or at least no longer existed in this new hardened environment.
Renewals are the ultimate barometer of product-market fit. It’s one thing to sell to a customer, but it’s a much bigger deal to renew them. In software, the sale is essentially a promise: You, customer, have a problem to solve, and if you buy this software, your problem will go away. This is, in essence, what happens at the time of sale. The renewal, on the other hand, is a confirmation of value delivered. At the moment of renewal, the customer is effectively saying, “Hey, not only did you promise to solve my problem, but you delivered on that promise, and I want to pay you again to do it all over again.” It’s the purest expression of product-market fit. When trials don’t convert, or LOIs don’t become paying customers, it’s a massive issue. When long-term contracts don’t renew, it’s the beginning of the end. I had a lot of empathy for these founders—and for my VC friends who invested in these start-ups at high 2021 prices.
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Founder-led Sales is proverbial wisdom at this point in start-up land. The advice is rooted in the belief that, in selling to at least the first few customers—if not until the first $1M in ARR—the founder will uncover what really makes their customers tick. Investors and founders alike use the ability to “sell” to customers as a proxy for product-market fit, but it’s really just the starting point on this journey. The time between when the customer signs and when they renew is where the real product-market fit is found. In reality, we should call the entire motion Founder-led Customer Success.
Few people have more experience finding product-market fit than my friend, mentor, and LP, Mar Hershenson. If 10,000 hours is the baseline required for expertise in a subject, then Mar is an expert four times over. Between her time as a founder and her experience investing at the earliest stages of company building with Pear VC, few people in the world know the PMF journey better than Mar. Not to mention she teaches ENG 245, the Lean LaunchPad class at Stanford, which teaches students to find product-market fit and is perhaps the most sought-after course for aspiring entrepreneurs in the world! The next generation of exceptional entrepreneurs all pass through Mar’s class!
Mar maps the PMF journey into three stages — Customer Discovery, Customer Validation, and Customer Creation — and, in a slide, it seems rather straightforward.
Customer Validation is the earliest incubation of a Customer Success organization — and founders are the first CSMs. At scale, Customer Success teams are responsible for driving engagement, adoption, and usage. These organizations measure their success via NPS (customer love) and retention. These same metrics are core to validating product-market fit and essential before going to market (GTM). It is also the hardest part of the product-market fit journey for two reasons: 1. Founder capacity and 2. Feedback loops that are longer than the urgency of the start-up.
The capacity of a founder to support customers hits a limit very early on in the startup journey. Every time a founder makes a sale, they now have to onboard, drive adoption and engagement, and solve bugs in their immature product. With every customer they acquire, the number of essential tasks needed to support that customer acquisition grows. It’s tedious, sometimes annoying, and overall painful work. It’s often one of the first things founders choose to outsource in an effort to scale their capacity, but in doing so, they skip the valuable learnings found at this stage. Learning how to make a customer successful with your product needs to happen before acquiring more customers. Customer Validation is the nutritious part of the meal; it’s where the vitamins one needs in order to grow come from. Customer Success is the foundation of this stage.
If Customer Validation is like eating vegetables, then Customer Creation is dessert — it’s the part that VCs clamor for. Despite what you might read, growth is king. It’s not sentiment; it’s simply math. All VC funds are modeled on a 10-year maturity cycle, and VCs need billion-dollar outcomes in this time frame to fulfill their funds’ return goals. The only way to get there is with revenue growth that triples and doubles, especially in the early years. VC is a competitive game. For exceptional founders, VCs are willing to bear risk early and, in most cases, long before true product-market fit is validated through a renewal.
This presents an acute challenge for entrepreneurs, pitting them against the desired outcome of the VC—growth—and the ever-existential challenge of the company: staying in product-market fit. It’s a murky equation that VCs and founders alike often confuse. Growth can be manufactured, but without product-market fit, it cannot be sustained.
The best founders I have seen are able to cycle through Customer Discovery, Customer Validation, and Customer Creation in an always-on motion, even at incredible scale. They leverage capital with exceptional effectiveness. At times, they will manufacture growth with sales headcount, marketing spend, and clever acquisition strategies, but when they do choose to spend, they never miss the Customer Discovery and Customer Validation insights they’ve gained through these acquired customers. They find capacity or create organizational loops to toggle in and out of these phases on a continual basis, allowing them to execute micro-adjustments on the fly. The companies that do this best are the ones that achieve extraordinary enterprise value. They are all maniacally focused on Founder-led Customer Success, both at the beginning of their journey and all the way to the top.
Founder-led Customer Success isn’t just a step toward product-market fit—it’s a strategy for lasting growth. By staying close to your customers, you secure the insights needed to adapt, scale, and thrive. Great founders don’t just acquire customers; they champion their success every step of the way.
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Lessons for Founders:
You are the first CSM: The gap between getting your first customer and when you hire a Head of Customer Success is often years. Find a mentor to coach you through what great Customer Success looks like. Founder-led Sales is actually Founder-led Customer Success; treat supporting your first customers with the same vigor you put into acquiring them. Delay hiring someone to do this work for you as long as you can—it’s your job and one of the highest-order tasks you can be doing with your time. The learnings from these customers shape everything you become.
Small “c” customer success needs to happen before you build your go-to-market playbook. Two LOIs that are finding incredible ROI in your offering, using your product for congruent outcomes, and that are willing to shout from the rooftops about how much they love you, is a better foundation to launch from than five LOIs with differing needs that leave you struggling to fulfill your promises. Celebrate customer success.
As you grow, stay close to both your new customers and your old customers. When you eventually hire for Customer Success, push that person to know your customers as deeply as you do. You have made a mis-hire if your Customer Success leader doesn’t understand the pains, needs, and desires of your customers as well as you do within 90 days. Great Customer Success should feel like an extension of you. A CS leader who knows your customers’ needs cold is an organizational feedback loop that will allow you to stay in product-market fit even as you grow at the most rapid pace.