When my cofounder and I started Okta, we were focused on a particular type of customer: small-to-medium-size businesses investing in cloud technology. But over the years, we broadened our focus to include any organization looking to modernize—from government agencies and nonprofits to the world’s largest organizations. Many of these customers use our technology in ways we would have never imagined back in 2009.
Our experience isn’t unique: most founders start off with a product idea meant to address a specific problem for a specific group. These initial customers are important, but they alone won’t sustain long-term growth. This week on Zero to IPO, we spoke with Stewart Butterfield, the founder and CEO of Slack, and Frederick Hutson, the founder and CEO of Pigeonly, about why you need to expand into new markets if you want to play the long game.
Explore alternative customers
If you want to grow beyond your initial customers, Butterfield says you need to be adaptive, responsive, and willing to change the orientation of the company. He also suggests identifying new markets by thinking about who will naturally benefit from your success—a tactic that Pigeonly used as well. Pigeonly originally marketed its platform, which helps people search, find, and connect with incarcerated loved ones, directly to consumers. The company made a successful business out of helping people send mail into prisons, so Hutson realized his team was well-suited to help these same prisons manage their incoming mail.
The company started developing a strategy to provide correctional institutions with screening and authentication software to vet and secure incoming mail. By thinking about parallel uses for Pigeonly’s technology, Hutson was able to identify a brand-new use case and expand into the government sector.
You don’t have to do it alone
After identifying which markets to pursue, the next, equally important step is to figure out how to enter. Partnerships are one of the most effective ways to break through.
For example, if you’re like Hutson and you want to start selling your product to the government, Butterfield says you can cut through a lot of the red tape by partnering with other like-minded NGOs or companies that are precertified to do so. When your team is small, it can be suffocating and resource-consuming to meet all the requirements of working with a government agency. But if you partner with government technology providers or nonprofits, they can help you leap through many of these hoops.
Partnerships can offer you another advantage: access to people who understand what you’re going through. The life of an entrepreneur can be a lonely one, and as a founder, you often feel like you’re the only ship out at sea. If you collaborate with adjacent industries or organizations working on the same problems you’re thinking about, it can be empowering and unlock opportunities.
Leverage your passion
Thirdly, a very natural way to expand your business and to convince the people you’re selling to—whether those people are prospective customers or investors—is to let your passion shine through. Hutson’s business idea stems from his personal experience, and he has learned that sharing that story is key to helping the company grow. He came up with the idea for Pigeonly’s platform when he was incarcerated. Hutson witnessed how difficult it was for people in prison to connect with their loved ones, and he realized the people who could afford to stay in touch with friends and family were less likely to become incarcerated again. Over the years, Hutson has learned that embracing and sharing that backstory has helped Pigeonly win the support of investors.
From day one, Butterfield has been passionate about Slack’s mission: making people’s working lives better, more pleasant, and more productive. It’s an aim any professional can support, which helps Slack extend its product suite while staying true to its vision, and at the same time, appeal to new customers.
We can relate to this at Okta, too: our vision resonates with all kinds of people, from developers to end users. When an entrepreneur’s passion overlaps with their end users’ pain points and goals, the company will have an easier time expanding into new types of organizations.
Finding new types of customers is the key to rapid and reliable growth. Once you’ve nailed product/market fit for your initial vision, spend some time critically thinking about who else might benefit from your products and look for partners to help you reach those customers. And most importantly, show your passion—not just the vision of what you’re going to do, but the drive behind why you do it—and you’ll be successful in the long term.
Frederic Kerrest is the executive vice chairman, chief operating officer, and cofounder of Okta. You can listen to Zero to IPO and the full “Slack and Pigeonly” episode wherever you get your podcasts.