In this week’s episode of the Founder’s Corner, Tawheed Kader, founder and CEO of Sales Communications Platform ToutApp, shares the story behind his company’s growth and his thoughts on customer segmentation, upfront payments, building lasting customer relationships, and more.
This Week in the Founder’s Corner
“It takes at least three years to do a startup and then understand there’s something there, and even longer for a great outcome — for most cases. So unless you’re really passionate about that need you’re solving for, you’re just not going to last.”
— Tawheed Kader, CEO at ToutApp
Watch the Full Video
On transitions when building a founding team [0:12]
- Keep in mind not everyone will be in it for the long haul. Although startups are exciting and people are enthusiastic about joining one, when it comes to big decisions like moving cross-country, not everyone will be willing to make that jump. That’s when you’ll have to look beyond friends and your immediate network to find team members who are just as passionate as you are.
- When recruiting early hires, make sure they understand the bigger picture. It’s important to filter out those who are diving in because it’s cool or easy vs. because they really want to be a part of making something.
On a founder’s role in hiring [2:01]
- Culture is something you have to own. For a small company, each new hire can make or break things. On one hand, you naturally want to make sure you find the best person possible for every role, but as a founder/CEO you need to ensure they also have the right fit to be an integral part of your team.
On narrowing your focus on a primary customer segment [3:07]
- You shouldn’t try to be everything for everyone. Narrow down your focus to who is paying the most, complaining the least, and the most fun to work with. For ToutApp, that group was salespeople.
- Learn everything you can about the demographic you’re serving. That means knowing their pains, their preferences, their day-to-day challenges, and their goals — both business and personal.
On switching to up-front, annual payments [4:45]
- Economically, it just makes sense. You reduce churn, increase your immediate cash flow, and build more of a natural runway. “Quite frankly, we’re in a massive space,” TK explains. “We have competitors who have raised 2x, 3x more than us. But because we’ve gotten so good at servicing our customers, retaining our customers, and getting the money up front we’ve been able to fund our business internally and have raised a lot less and have had more control over how we grow, and it’s been fantastic all in all for the business. So I highly recommend it for any SaaS company. If you can do that a lot of things get solved for you.”
- The biggest hurdle. Teaching your salespeople how to get customers on board. ToutApp’s approach was to introduce the change in stages, first offering customers a 15% discount for up-front, annual contracts, then transitioning to simply asking for the payments upfront with no discount.
On building strong customer relationships [9:26]
- Have as many conversations as possible. If you’re not genuinely interested in talking to clients and helping them, they can tell you’re faking it and won’t stick around.
- Create an atmosphere in which you are super accessible to customers. When they know you by name, you feel more responsible for helping them and improvements are a higher priority.
On metrics [10:48]
- Focus on revenue. But also look at other things, like retention and renewals.
On encouraging customers to keep coming back [12:23]
- Changing behavior is the biggest challenge many startups face. Humans don’t like to change, so when you are creating something, keep in mind that it has to be easier than what they’re already using for them to want to make the switch (for more on this point, see TK’s blog post “This is Great, But I’m Not Coming Back to Your Awesome Web-App After Signing Up”).
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- Larry Kim, founder and CTO of WordStream on what it means to be a technical founder, his tips for working with one, and his philosophies on recruiting and product development.
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