Ideas

/ Thoughts about new products and digital in general

The curse of the large customer

A new startup often gets their first real break when a *Big Customer* finaly realises how awesome the product is. Benefits for the startup are immediate; cash, credibility, better understanding of how the product meets a real customers need and a great boost to the team’s motivation.

But its not all good news. Large customers know how much leverage they have on a small company and often use it to exctract special conditions as part of the deal, often promising even more business when the solution is adoped more broadly. Also, these larger customers have very specific requirements and internal policies that don’t give the the latitude to be flexible. This means that if they are not careful, the startup can slide into a situation where everything they do revolves around a single customer who asks them to modify their product, spend lots of time with in-house and generally do stuff the management team had never planned to do. It can be very defocussing if internal operations are not structured to handle it.

Don’t get me wrong, big customers are great if you can get them, you just have to make sure they don’t end up running your company.

JM

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