As startup founders and product developers we want to solve problems for others. A basic question every new company has to answer is whether what they are doing is valuable to someone else. In order to answer that question startups need to find early customers that can answer that question for them by either engaging directly in the development process or testing the product.

I would argue that value is just one part of the equation when it comes to finding your early customers. The other part is thinking about the frequency of action that your future customer is performing in your product.

Focusing on potential value for an user is often not enough for a company that is just starting out. In the beginning you often have information debt, that means you work with assumptions and are moving faster than you get information back, that support or debunk your assumptions. This is similar when you are running very fast, you run and get into an oxygen deficit, because your body is not able to provide the oxygen that fast. After your sprint you need to catch your breath and your body can perform its usual processes.

Peter Thiel also makes this point in his book from zero to one, when they started out with PayPal. They first targeted immigrants with their email-based payments system as customers. From a value perspective this makes total sense. There are millions of immigrants living in the USA, they send huge amounts of money back home to their relatives and the transaction fees of banks are high.

The problem they soon encountered was that these transactions were too infrequent. This infrequency of transactions in this case is even more impactful, because it not only effects your product development, but it threatens the foundation of the business model which is based on a percentage of the transactions. PayPal was eventually able to solve the problem by finding a smaller niche segment with higher velocity of money, which were Ebay Power Sellers.

Imagine you are building for example a new B2B software for companies to build online courses for their employees. You probably find a lot of companies that find this software useful and valuable. That means your pool of potential first customers is quite big, because corporate learning is an established and useful field. I would argue that finding your most valuable customer is still not easy in this scenario and can be potentially be dangerous for your new company if you don’t focus on frequency and base your choice on other attributes.

As a startup your most valuable customers should constantly engage in your products main action, which in this case is creating and consuming new learning materials. So a company that just creates one course that is relevant for employees just one time is a difficult first customer. You need a faster feedback cycle that enables you to have a steeper learning curve and enable you to have a better product development in the long run. A more valuable first customer should therefore be from an industry that needs to regularly educate its employees with new materials that have a high value, e.g. new regularities, new procedures etc. 

If we take a closer look at the product development than we have a huge interest that we get feedback faster in order to to keep our information debt lower. The longer we go without feedback the higher our information debt will be. That’s  why frequency of us is such an important concept when it comes to our first valuable customers.