Should you sell “vaporware”?
My dad introduced me to the term “vaporware” when he was talking about how they would do sales at a startup he worked at.
Apparently, it means software that doesn’t actually exist yet. Which, as you may know, a lot of founders sell.
But should they? Or is it too high of a risk? And how would a VC feel if you have $100k in sales but customers haven’t seen your product yet?
Or if you’re later stage, what if you’ve doubled sales by selling a feature that isn’t real yet?
Working with as many founders as we have, here’s what we’ve come to believe:
Should you?
A common mantra is “always be selling”. And there’s a reason for that.
Companies stay ahead by learning more and faster than everyone else. And companies can only learn by running experiments.
And the most important experiment you can run is offering your thing to a potential customer for an amount of money.
If the next version of the product is going to take a month or more to build, you wouldn’t want to spend all that time and then find out if it was worth it.
Instead, you can find out if it’s going to be worth it by selling it to customers now and getting their feedback. If nobody wants it, you can save all that time and build something else. If they do want it, you can pour even more effort and resources into it knowing the ROI will be there.
On top of that, when customers are faced with the decision to buy or not, their questions and concerns will tell you what you actually need to build.
But of course, this would be a bad idea if the customer is expecting to have it tomorrow.
How should you?
The two important questions here are 1. how do you get a customer to pay in advance and 2. how do you do it ethically?
And the answers are the three best tools in sales: urgency, scarcity, and guarantees.
By the first two, I just mean offers like “We’re only taking 10 customers in the pilot launching in 2 months, and it’s first-come first-serve. If you pay today, you’ll lock in your spot.”
By the third, I mean “If we’re even a week late on delivery, we’ll refund you 50%. If we’re a month late, you get it for free.”
It’s a nearly risk-free win-win, and it motivates your team by setting a very strict deadline.
On top of that, prospects’ responses to the offer will instantly show how much they actually value the product.
What will investors think?
Investors love when founding teams do this. It shows ambition, a desire to move fast, and a mountain of confidence.
If you’re a fan of these more business-focused editions that aren’t totally about pitch decks, feel free to reply and let me know. Have a great weekend!
Best,
Nathan Bucci