It's always better to have 1000 customers than 10
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October 27th, 2022

That's true even if the revenue is the same.

It's oft quoted advice that 10 customers is better but that's only true at the beginning. Because when we're starting out, it's more realistic to build something of value to 10 people rather than 1000. You can spend your personal time doing that cold calling and have it be worth it. But you really want the 1000 customers in the long run.

More customers makes your business less brittle, your revenue more diversified. Each one is a small sliver of your earnings. That means you will be safe if your customers have troubles of their own.

The exception to this is when all your customers are basically the same.

If every one of your customers is a high growth, capital burning, VC-backed startup, your revenue is not diversified. No matter how large it may be. AOL learned this the hard way back in 2002. The Dot Com era was full of intense competition just for eyeballs. Paypal paid users $10 for each referral because it was cheaper than a billboard. AOL charged startups a lot of money for privileged spots on their homepage so they could soak up attention. When those companies went belly-up, so did AOL.

So ask yourself: are there companies with extremely homogeneous customer bases like AOL? Is your company one of them?