Do Venture Capital Funded Companies Give A Crap About Customer Service?

by Tim Jahn on June 28, 2010

I saw a tweet yesterday that got me thinking about companies funded with venture capital.

Jason Fried, co-founder of 37signals, suggests that companies funded with venture capital have to spend money from day one.

You have two companies, one that’s bootstrapped, one that is self-funded, and one that’s got venture capital money in the bank. The primary difference is this, on day one, a bootstrap company has to make money. On day one, a funded company has to spend money. They have money in the bank to spend. That’s their first task is to spend. To hire, to get a great beautiful office, to do all that stuff. That’s what they have to do, they have to spend money.

I agree with Jason’s thoughts here. Companies that concentrate on raising venture capital more than anything else have their priorities out of whack.

But what about customer service? Does a bootstrapped company care more about providing excellent customer service and a great customer experience, because they NEED those customers to survive? Without the customers, they’d go out of business because they wouldn’t make any money.

One could argue that companies funded with venture capital don’t have to worry so much about customer service or providing great customer experiences because they don’t rely on customers to make money. They get money from investors. Investors are the ones these types of companies concentrate most on pleasing.

What do you think? Do venture capital funded companies care more about pleasing their investors then their customers? Are bootstrapped companies more likely to provide an excellent customer experience?

I’d love to get your opinion in the comments below!

Photo credit: isforinsects

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http://www.mac-live.com Shane Mac

At Gist, the customer is first. We listen, react and talk to every single customer no matter how long it takes. Without them, we are nothing.

Sure, we have investors, but they leave us to decide what we should and shouldn't do regarding these types of issues as I would suspect any good investor would.

With that said, I see how one could easily worry about an investor to the point that they forget about everything else which would not be ideal in any scenario.

-Shane Mac
http://www.BeyondThePedway.com Tim Jahn

Glad to hear that the customer is first for you guys, Shane. I like what you said there – “Without them, we are nothing.” That's very true for most businesses.

Are you guys solely funded or do you generate revenue on your own now? I'm curious if you were always so focused on customers, regardless of your financial roots.

Thanks for commenting!
http://restlesslikeme.com Norcross

If it's simply a strive for VC capital, then I doubt they care much about anything else. That being said, the bills need to get paid and good customer service costs money to depending on what product / service you are providing.
http://twitter.com/startupstella Stella Fayman

As a company that just got seed funding, I can tell you that our priorities at TransFS have not shifted a bit: the customer always comes first.

Our customer is our main evangelist, our main marketer, our cheerleader. Especially with companies providing service and hoping for growth, maintaining a happy and referring customer is the key to growth.
http://www.BeyondThePedway.com Tim Jahn

I think you summed it up perfectly, Stella: “Our customer is our main evangelist, our main marketer, our cheerleader.”

No matter where your funding comes from, I think that's so important to keep in mind. Glad to hear you guys are!

Thanks for the comment.
http://www.BeyondThePedway.com Tim Jahn

Thanks for the comment, Andrew.

I think that good customer service can sometimes be more expensive, but other times I think it's all about the small things. For example, you might not need to provide every other customer with free shipping randomly, ala Zappos.

But you can still be very personal in all communication with customers, give them a reward or freebie every once in a awhile, and generally make them feel wanted and loved. Basically, do everything Comcast doesn't.

Do you think some companies compromise customer service to get the bills paid easier?
http://restlesslikeme.com Norcross

I think a lot comes from who the founders are, and what they are all about. A lot of tech folks aren't 'people' oriented by nature, so a lot of what we consider good customer service doesn't come naturally to them, if at all. They just wanna code. I think bringing someone in who can handle that makes a big difference.
http://restlesslikeme.com Norcross

If it’s simply a strive for VC capital, then I doubt they care much about anything else. That being said, the bills need to get paid and good customer service costs money to depending on what product / service you are providing.
http://www.BeyondThePedway.com Tim Jahn

That's a great point I hadn't thought of. I think you're spot on – bringing in somebody with more “people skills” might make a world of a difference.
http://twitter.com/startupstella Stella Fayman

As a company that just got seed funding, I can tell you that our priorities at TransFS have not shifted a bit: the customer always comes first.

Our customer is our main evangelist, our main marketer, our cheerleader. Especially with companies providing service and hoping for growth, maintaining a happy and referring customer is the key to growth.
http://twitter.com/startupstella Stella Fayman

As a company that just got seed funding, I can tell you that our priorities at TransFS have not shifted a bit: the customer always comes first.

Our customer is our main evangelist, our main marketer, our cheerleader. Especially with companies providing service and hoping for growth, maintaining a happy and referring customer is the key to growth.
http://www.BeyondThePedway.com Tim Jahn

I think you summed it up perfectly, Stella: “Our customer is our main evangelist, our main marketer, our cheerleader.”

No matter where your funding comes from, I think that’s so important to keep in mind. Glad to hear you guys are!

Thanks for the comment.
http://www.BeyondThePedway.com Tim Jahn

I think you summed it up perfectly, Stella: “Our customer is our main evangelist, our main marketer, our cheerleader.”

No matter where your funding comes from, I think that's so important to keep in mind. Glad to hear you guys are!

Thanks for the comment.
http://www.BeyondThePedway.com Tim Jahn

Thanks for the comment, Andrew.

I think that good customer service can sometimes be more expensive, but other times I think it’s all about the small things. For example, you might not need to provide every other customer with free shipping randomly, ala Zappos.

But you can still be very personal in all communication with customers, give them a reward or freebie every once in a awhile, and generally make them feel wanted and loved. Basically, do everything Comcast doesn’t.

Do you think some companies compromise customer service to get the bills paid easier?
http://www.BeyondThePedway.com Tim Jahn

Thanks for the comment, Andrew.

I think that good customer service can sometimes be more expensive, but other times I think it's all about the small things. For example, you might not need to provide every other customer with free shipping randomly, ala Zappos.

But you can still be very personal in all communication with customers, give them a reward or freebie every once in a awhile, and generally make them feel wanted and loved. Basically, do everything Comcast doesn't.

Do you think some companies compromise customer service to get the bills paid easier?
http://restlesslikeme.com Norcross

I think a lot comes from who the founders are, and what they are all about. A lot of tech folks aren’t ‘people’ oriented by nature, so a lot of what we consider good customer service doesn’t come naturally to them, if at all. They just wanna code. I think bringing someone in who can handle that makes a big difference.
http://restlesslikeme.com Norcross

I think a lot comes from who the founders are, and what they are all about. A lot of tech folks aren't 'people' oriented by nature, so a lot of what we consider good customer service doesn't come naturally to them, if at all. They just wanna code. I think bringing someone in who can handle that makes a big difference.
http://www.BeyondThePedway.com Tim Jahn

That’s a great point I hadn’t thought of. I think you’re spot on – bringing in somebody with more “people skills” might make a world of a difference.
http://www.BeyondThePedway.com Tim Jahn

That's a great point I hadn't thought of. I think you're spot on – bringing in somebody with more “people skills” might make a world of a difference.
http://www.beyondthepedway.com/how-jun-loayzas-laser-like-focus-could-lead-to-a-multi-million-dollar-exit How Jun Loayza’s Laser-Like Focus Could Lead To A Multi-Million Dollar Exit | Beyond the Pedway | Video interviews to discover what drives creative entrepreneurs!

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