Top Resources on Startup Funding & Venture Capital

Read and comment classics of VC, ask questions, and connect with our learner community.

Home 2021 Forums VC Quotes "You can't get into the trap of paying for customer acquisition." – Aileen Lee

  • "You can't get into the trap of paying for customer acquisition." – Aileen Lee

     Aram updated 5 months, 1 week ago 1 Member · 1 Post
  • Aram

    May 17, 2021 at 11:33 am

    If you’re looking for a picture of Aileen Lee, chances are you will find her sporting her famous cowboy hat, in homage to the values (and the name) of the VC firm she founded almost ten years ago, Cowboy Ventures.

    Lee is well-known for at least two things: her tireless push for more diversity in VC — she’s the first female Founder of a VC firm, and 80% of the team are women –, and her 2013 analysis of Unicorns, a term she was the first to use for 1B$-startups (see the link below.)

    A typical Series A firm based in the Silicon Valley, Cowboy sees first-hand the mistakes most startups make on their way to product/market fit. It is the context of this quote by Aileen Lee: if you pay for customers too early, you run at least two risks:

    • Wasting money on a product or service that is not the right iteration of what it should be;
    • Getting misguided on who your real customers are.

    Silicon Valley has long imposed the idea that successful startups’ products fly off the shelf — or out the door, as Marc Andreessen would say. It doesn’t mean that all you need to do is build the best product. In fact, most successful Founders and savvy Investors will tell you that you don’t need the best product but one that satisfies your market.

    If you serve desperate customers with a product they need, you won’t have to pay to get them to know about you. They’ll do the job for you. The first power-users will spread the word and, in many cases, even make the sale for you. Recent B2C successes such as Canva and Calendly are cases in point. Hubspot would be a good B2B illustration.

    Attracting customers organically has two more advantages: these customers tend to stick longer (lower churn, higher retention), and VCs will take a favorable look at your funding opportunity.

    🗣 What other examples of successful product/market fit can you think of?

    💬 Become a member to comment or post a new quote, apply here

    🔗 You can read Aileen Lee’s original Techcrunch post on Unicorns here

    We mentor Founders to raise funds and Aspirings VCs to get a VC job. Visit us now!

    > Funding Accelerator

    > VC Career Accelerator

Viewing 1 of 1 replies

Original Post
0 of 0 posts June 2018
Copy link
Powered by Social Snap