Success as an early-stage founder requires going through the process of finding early customer prospects and deciding who will be the few that you'll deeply engage with initially.
Picking the right set of early design partners can make all the difference in the trajectory of a company, and ultimately determine its success or failure. You will need to iterate in order to land on the “right product” and the only proven way to do so is to combine your initial insights with practical early customer feedback. There is a process to selecting the right design partners. Our goal in this section of the Field Guide is to provide tactical advice for finding and selecting the best design partners for your product.
Founders sometimes make the mistake of thinking design partners will tell them exactly what to build in order to be successful. In reality, customers know what they want right up until they see something better.
A more helpful way to think about design partners is as trusted product testers who will assist you in filling in the missing gaps in your offering. As a founder, It's crucial to be insightful (but not arrogant) about the product you're building. You don’t need to have the product 100% figured out initially, but there should be conviction around the product specifics you believe address a well-defined customer pain.
You are ready to engage with early customers when you believe you have about 80% of what the right product is. Then work closely with the right design partners to help you iterate to your Minimum Viable Product (MVP) and is essential to developing a product that you can sell repeatedly in the future.
To make sure you’re targeting the right design partners, there are several criteria to consider, including attributes that are “Nice to haves” and “Things to avoid.” Imagine a normal distribution curve, defined by how forward-thinking and risk-willing a company is in embracing new technologies.
Looking at the curve above, as you target your ideal design partners, you don’t want someone in the middle of the pack and you don’t want prospects at the tail end (the laggards). Why? Because need design partners who:
As a startup, you likely have enough money to last months (not years) and your ONE advantage as a resource-constrained (starved!) organization is your ability to move FAST. You can only benefit from that advantage if you have a feedback cycle that is also FAST.
The ideal design partner is a business that's willing to take chances with new technologies and solutions because they need an edge to compete and win. They themselves need to move fast in order to succeed. I’ve seen many Fortune 1000 companies tell founders they “are desperate” to solve a particular problem, but when pushed regarding when they must have it solved, they speak in “quarters and years” vs. “weeks and days.” Every day counts for a startup, and as a founder, you need design partners who are calibrated along the same timeframe as it relates to the definition of urgency.
You want to build a solution that is needed by a large addressable market — eventually. Your revenue (the ultimate measure of all businesses) will ultimately be a function of how many people find value in what you are building and what they will pay you for it. Go back to thinking about a normal distribution curve — the design partners you aspire to have represent where the mass market will be 18–36 months from now. These are customers two to three standard deviations ahead of the mass market when it comes to their appetite for embracing new solutions. As a founder, you want to work closely with those early adopters and forward thinkers to perfect your product so it will be polished and ready when the majority shows up, realizing they are in pain and looking at the forward-thinking organizations (that they typically copy) for the answer.
Too often, we’ve seen founders succumb to the siren song of working with design partners who are in the majority (or worse, the laggards) because of the attraction of the dollars they can secure today. In our experience, this almost always leads to a “win the battle, lose the war” outcome. Small companies can get overwhelmed by “whales” as they request feature after feature to make the product successful. Meanwhile, the market keeps moving and founders end up with a chunk of revenue but a product that is only a good fit for laggards as the rest of the market has started to embrace the next new thing.
Conversely, founders who work closely with a handful of carefully chosen design partners that other companies view as “leading lights” end up gaining a significant advantage as they perfect the functionality that the majority will ultimately adopt — all while hitting their early, modest revenue goals for the business. The polished user experience and “halo” that comes from working with known forward thinkers in the industry, combined with a battle-tested selling process is what enables a business to achieve product-market fit and move on to the hyper-growth phase.
So what do those forward-thinking companies who serve as the optimal design partners look like and how do you find them? Most forward-thinking companies who aggressively embrace new technologies and provide feedback on the timeline you need tend to have these attributes:
At the risk of oversimplification, we segmented the market for all companies into three broad categories: Leaders, Challengers, and Startups.
Leaders sit at the top of their market and are doing everything they can to maintain that position. The general mindset in such companies (whether they realize it or not) is often “don’t screw it up.” Protecting their position atop the leaderboard is their primary objective. As a result, they are reluctant to take unnecessary risks, which often means taking chances with cutting-edge solutions.
Inertia keeps them from embracing a rapid change mindset and employees are often rewarded for keeping the ship running on time, not for taking risks. Pushing an idea that tries something aggressive only to have it fail is usually the clearest path to being asked to move on.
Challengers are typically successful new entrants in an existing market or a leader in a new market and winning demands they move quickly. The organization tends to have a growth mindset and an authentic desire to try new products because they need to be bold in order to beat the leaders. They need every edge they can muster and are willing to move quickly and take risks to find it. Compared to the risk leaders face when adopting new technologies, there’s real upside in how quickly challengers can move and the speed of their innovation. Employees who work for challenger companies are rewarded for taking risks and have the opportunity to be “heroes” when they bring in a new solution that has an outsized impact.
These are typically companies that are one to four years old and are doing everything they can to grow, rise above the noise, and stay alive. Priorities can change on a daily or weekly basis as they do their best to find the through line to consistent growth. Startup employees tend to be scrappy and hustle. They will embrace new ideas, but are often interrupted as priorities can change in a heartbeat. Sound familiar?
We’ve found startups to be less optimal design partners than challengers. While they have extreme urgency and can certainly move quickly, they lack the stability and consistency that a challenger company has. In addition, they often have small budgets and a high propensity to “DIY.” They are often consumed with their own challenges and feedback so you can easily get lost in the shuffle.
The second key attribute to focus on when seeking the right design partners is the industry they are in and the natural gross margins that occur. Our experience has led us to focus founders on working with companies in high–gross margin industries. The reason being that they have more budget for experimenting with new technologies as a result of having higher contribution margins from the products they sell. High–gross margin companies are typically in the technology, media, and finance industries. Examples of typically (but not always) low–gross margin sectors are manufacturing, government, and education.
The relative cost of investing time and money into something that doesn’t work is higher for low-margin businesses and it frequently translates into taking a more cautious approach. Time is not your friend as a founder — you need to align your resources with design partners who are risk-seeking and will move at the pace you need them to with regard to feedback and decision-making.
When we conduct sales outreach to find design partners, we ruthlessly qualify against these attributes. Your goal as a startup is to find early partners who will work with your non-GA product and give you timely and high-quality feedback about the product experience.
Is your product easy to use? Does it solve the pain as intended? What’s lacking that would enable them to justify buying the product today? How easy is it to install the product with their current tech stack? How would they justify the purchase price to their boss? Founders should aspire to receive this feedback weekly via a Slack channel, email, tickets, or short feedback calls. After all, the only real advantage that a startup has is fast, relentless iteration based on quality feedback.
To recap, one of the most critical decisions early-stage founders make when thinking about the optimal design partners is aligning with the right stage of business within industries that have high-gross margins. We recommend founders seek out “Challengers”, as over time we’ve learned these design partners are willing to take risks, give great feedback, have a culture that rewards individuals for trying new technologies, and represent where the market is going. They’ve encountered problems earlier than most and are willing to work with startups to solve them as it provides an advantage they need to succeed.
A practical example: Traceable