Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Andy Sack
I had dinner with Rahul Pathak, CEO of LookStat, and about mid-way through dinner I gave him a list of the things that 6 months from now he’s going to look back and wish he’d done today.
- Raise prices – Rahul knows he’s giving the early customers too good a deal (i.e. price is too low) but he really wants to build his base of paying customers from 10 to 50. I told him he’d regret not raising prices today. Most early stage enterpreneurs I know (myself included) are gunshy when it comes to asking customers to pay a higher price. Entrepreneurs have no trouble (in my experience) asking investors to pay higher valuations so you’d think they’d do the same thing with customers. But, no! I pointed out to him that it’s much easier to discount and lower prices than it is to raise prices in the future…and that if he’d raise prices now, the number of customers he’d have to close to get to break even would be lower. He told me he’d take this advice under advisement. (I doubt he’ll listen :-) )
- Spend aggressively on marketing — I also told Rahul he should figure out how to spend 40-50K on customer acquisition (a better word for marketing) today. He’s in a race against time and getting that early customer momentum and the accompanying revenue, cash flows and customer feedback ASAP is critical. If he waits till he has 150K in the bank, spending on growing the customer base will be a much harder decision! Don’t be stupid here — spend wisely AND aggressively.
- Get a hold on your financials and your opearitng dashboard– This seems trivial but it’s important and it gives you the information you need to make quality decisions as the business evolves.
- Every time you think about waiting till….ask yourself if you should really be waiting — Rahul was waiting to announce certain features, waiting to hire a candidate, etc. In most cases, waiting is the wrong answer.
- Get smart about SEO and SEM — Google still owns the internet — learn how to work well with them. In about 6 months, I might add “get smart about Twitter“. Twitter is on the cusp of being vital (in my humble opinion).
For your context, Lookstat is an analytics and back office operator for microstock photographers. The company is about 1 year old and just closed a 500K Series A round in March 2009.
