Do Clients Ruin Software Companies?

Someone told me recently that Marc Benioff, the founder of Salesforce.com, turned down a large client in Salesforce's early days because he didn't feel like the product was ready. He took a huge (I assume calculated) risk, but Benioff didn't want that client to impact the software roadmap in front of him. He had development goals and no one was going to stand in his way - not even large contracts.

Now, I have no idea if that's true or not; someone told me the story in passing, but it got me thinking.

How do you balance the vision for your company with the vision your customers have for your company? I've spoken to a few seasoned vets about this and most answer: That's a good problem to have. I'll agree that it's not as bad as many problems to have, but I'll argue that it's not a good problem to have either.

Clients, especially big ones, know that they can have a direct impact on your development roadmap and will not hesitate to exercise that power.

I believe that you'll find yourself in this situation for any combination of the following reasons:

1. You're soliciting clients too early;
2. You're targeting the wrong customers;
3. You built the wrong product; and/or
4. The market isn't ready for your product.

You're soliciting clients too early
Whether your self funded, angel backed or venture backed you need to plan a reasonable amount of time and effort to reach what I, unlovingly, call baseline. I hate the concept of baseline because it seems so limiting, but in this case limits are a good thing. When you started your company you likely put together a business plan that clearly outlined objectives and markets. I'm not saying that it can't change along the way, but have a reasonable goal in mind and give yourself enough time and resources to reach those goals before you bring clients into the picture. Customers will pee in the pool before you've even had a chance to fill it with water.

You're targeting the wrong customers
If your customers are constantly pushing you to make unplanned changes to your core product then you are talking to the wrong customers. Just because a prospect has timeline and budget doesn't automatically mean that they should be your client. When you take money just for the sake of onboarding clients you are doing a great disservice to your company, your vision and your other clients. Over the long term, you will pay in multiples for this common mistake.

You built the wrong product
Okay, so you're sure that you're talking to the right people. There's no doubt that you've got your ideal customer in the bag, but they're still insisting on core changes to your product, what does that mean? You built the wrong product. Somewhere along the line you either strayed in the wrong direction or, more likely, you misunderstood the need for your product to begin with. It's time to take a step back, look at your product and the market need and make a very difficult decision: do you march forward, kick your clients to the curb and stand behind your product as it is or do you start over? This is not a good situation to be in. Talk to your employees and your investors and find a way out.

The market isn't ready for your product
You've got the product, you've got the customer interest, but something doesn't fit. Somewhere along the line, there's a gap. Being two steps ahead of the market is great, but don't get too far ahead. Being too far ahead is no better than being ten steps behind. You are not ready for clients - you need to dial back a few notches and make sure you have a market.

There are exceptions of course, but I believe that there are very compelling reasons for early stage companies to stay far away from selling their product. If you do it right it will pay off big in the end and you'll be able to focus on growing your company and developing great software for all of your future clients.