Hey Reader,

The line between early traction and early captivity is razor thin.

No matter who you are, frictionless B2C to heavy B2B, your first customers are, by design, total mayhem at best. They expose the sh*t that's broken. The sh*t you forgot. The support doc you never wrote. The button in the wrong place. The button missing. All of it. Go deeper, the infrastructure that cannot handle the load, the observability missing so you have no idea what's happening. All of it.

The great thing about it, is that's how you learn, right. So you have to look at it like a tax on entering the market.Like a cost of education, the price of getting truly unfiltered, deep knowledge to make your product work as it should in the wild is paid in the chaos, the operational pain, and the shame of missing something obvious in hindsight. We could call it a chaos tax.

Chaos is fine, more than fine, welcomed, it's understanding the difference between chaos and control. Your ONE role in this seemingly unequitable situation is to listen to the signals, find the gaps and start innovating and inventing on your customers behalf and show them a world they couldn't even imagine - the 10x'r.

We accept that you celebrate the first customer because they prove you're real. But that's where the loop of the monopsony trap and commercialization muscle start to creep in:

1. The market tilts first. In your desperation for the logo or the revenue, the market power structure tilts entirely in the customer's favor.
2. Then the revenue motion bends. Because the customer has power, they start to dictate the terms of your business. Perhaps through custom features, super-special pricing, or custom integrations. Your pricing bends to meet their demands.
3. Finally, your own thinking falls. You start using rational excuses to justify bad decisions. You move from serving the market to serving your anchor customer. You become captive to their constraints aka the hostage situation.

If you're not careful, that same customer will quietly start running your roadmap, your pricing, your integrations, your sleep schedule, and eventually, your company. It's scary common, almost as common as the rational stories founders use to justify it...

Why Founders Fall For It

Because it makes sense. 10000% the story tracks.

• "Everything we build for customer one will work for customer two." True, in theory.
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• "We're getting paid to build our roadmap." Sometimes, maybe.
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• "If we get this right, it becomes a reference customer." Could be.
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• It's a learning experience. We have no choice. We need the money. Better trapped in revenue than not and bankrupt...

All of it 10000% fair, and, I agree with it.

To restate I wholeheartedly agree with (a) doing what you must to survive (b) that it's really easy for some prick to tell you the downfall of you doing the one thing that is keeping you alive right now (c) only you know what's necessary right now, and more importantly, I support your decision.

So if we agree none of that is wrong, these things can all be true at once. The problem is that these are rational sentences that, in the wrong context, turn into ransom notes. It's about that razor thin line that you can't see, because you're standing on it.

This trap works because the fear is the same, regardless of scale:

• Early Stage (1–5 customers): Fear of losing your only proof point. It's the logo on the deck, the one you drop to new prospects, investors, employees, the drip of real money in, this is how it's supposed to feel...

I'll say it again.. You celebrate the first customer because they prove you're real. I agree.

• Growth Stage (10+ customers): Fear of losing the biggest logo that validates your valuation, category, growth, capability etc. Fear of any churn, fear of having to talk to your board about churn, fear of what churn looks like on your capability as a CEO. The key word here. As you might notice, is FEAR.

We All Do It....

So you start shipping custom work or hard coding hot fixes in the name of "speed to value," you start to rationalize scope creep as "customer prioritization" and of course you tell yourself you're being smart by building a deep relationship that will help you scale. You probably even have a tag of that customer in Jira/Linear.

The thing that happens that ruins it all, is in your race to be an INCREDIBLE vendor, an INCREDIBLE partner, an INCREDIBLE solver of the problem is that the requests keep coming.

The more you do, the more you set the expectation of what you will do. The velocity of customer requirements just compounds, and their expectations will always outpace your capability to deliver.

So traction suddenly is obligation? And the big ideas, the next jump in value, the massive release that changes everything, is impossible to do, because your tiny little dev team is basically a contractor for the anchor customer.

What Should You Do

Well, you should probably do exactly what you are doing, because, you know all this, you have mapped it out, and to some extent you know that "the day will come" - BUT, there is one core adjustment to remember...

No matter what stage you're in, to really truly understand how you solve the customers' problems, you have to have a customer willing to talk. The more they talk, the more you understand and uncover the big ideas underneath their feature noise.

It starts with you asking them, and you should, but that is just how you open the door, it's not enough.

You have to start innovating and inventing on their behalf. The winners, the ones who go 100×, are the founders who get in the door and dream for their customers and deliver at a level they never could.

You don't wait for the request, you don't expect it, they don't know it. You take all the data, all the usage, all the patterns, all the pain, all the insights to make this monstrous leap. What would they ask for, but can't because they don't see it.

That's how you build the 10× feature every quarter, that's the moat, some work, most don't, but that's part of the deal.

Because the flip side of the customer hostage trap is your unique position to read the signals in a room your likely didn't have the right to really get into in the first place, and then take this massive leap.

Building what they ask for is a dev shop on demand. Build the thing they didn't even know to want yet and you are on your way to something epic....

FounderOS

If The Memo was about building a baseline of normalcy, the first few customers force you to defend your MO because you can't stop external forces from trying to destabilize you, but you can decide who, what, which forces are allowed inside your system.

FounderOS isn't about having SOPs for your first customer. You should have an etch a sketch, some broad, loose idea of how it might play out, knowing you have no real idea. The least amount of process for the most clarity on how to make your customer's life easier. The guardrails we pretend to create, to exist, are really about converting everything into some form of advantage.

So yeah, we will be your dev slaves, sure, because really we are getting so deep inside your business, that we are going to see what you only wish you could.

And when we launch the 10'r it will be market moving. Also known as a trojan horse.

So don't cut them off, don't change the hostage situation, it's actually in your favor, sure, set boundaries where you can, but reframe it into a learning loop, into a cash flow smile, into a case study, into your 10x'r.

One more thing.

Your early customers know. They didn't pick you because you had the most complete and robust platform. It definitely wasn't a breeze to get you through procurement. It's actually not that easy to do business with you. They know. They picked you because how insane of an opportunity to get someone they trust (you) who clearly has a really good view of how to solve the problem (you) to do this.

They forgive, they forgive, they forgive. Because where else are they going to find a team willing to dedicate their entire lives to making it work for them? Deal of a lifetime for them.

The only currency you have is really your willpower to make it work, you just have to make sure that will, unguarded, doesn't become servitude.

Customer One is a teacher, not a captor. Learn, don't obey.

If I can be of service, feel free to grab time.

LFG.

-- James

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