Cost of Educating Customer Plays very Important role in Success of your Startup

Shailendra, MD of Sequoia India is a good friend of TheMorpheus and ours as he has given us some good advices and he is one of the very few VCs who are very reachable and doesn’t have the cockiness which many other Indian VCs have.

So during one conversation, he said iYogi (Sequoia porfolio company which provides remote support, later on they raised money from Cannan Partners too, I am not sure if Sequoia has exited from iYogi or not) has spent 60M in customer acquisition and marketing which to me is a mind blowing number and made me think about the cost of educating the customer/end user about your product ? most of the startups will never think about this when they start their journey (people only think about how to build it, not how to sell it) and most don’t even think about it when they start spending in marketing (by then, it gets too late with no other option).

It is fairly obvious that the businesses which have no overhead of marketing budget of educating the customers will make more profit, will grow faster and are in better position. It is also very difficult to sell to US market from India, specially in B2C domain (I can’t find a single successful example which has become a market leader in US running from India).

So the bottom line is – “Your profits are inversely proportional to how much time/resources you need to spend to educate your customer about why they should buy/use your product

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