Tailscale’s $113M success with Avery Pennarun

Finding the right customers—especially ones who choose your offerings over an industry favorite—is one of the most important challenges for business-to-business (B2B) startups. Avery Pennarun, CEO and co-founder of VPN serviceTailscale, has first-hand experience with this criticality after launching his first startup, Net Integration Technologies (Nitix) back in 2001. (The startup was later acquired by IBM in 2008.)

“We did great at [previous] with early adopters, but we had a lot of trouble turning them into real, pragmatic buyers,” says Pennarun. “A pragmatic buyer wants the same thing everybody else buys. We never got to that point with that company.”

Luckily, Pennarun is a quick study.

In this week’s episode, Pennarun talks about the lessons he’s learned from his first startup and how he applied them to Tailscale, his current software startup that raised over $2M in Series A funding and $100M in Series B funding.

Here are a few of his key takeaways.

Focus on solving one problem perfectly

Instead of solving multiple problems pretty well, Pennarun advises focusing on solving one specific problem very well.

“The mistake we made at my previous company is that we solved a bunch of problems pretty well,” recalls Pennarun. This prevented his team from having a product that solved prospective customers’ issues perfectly.

As a result, Pennarun stresses the importance of learning from his previous experience and encourages businesses to spend more time understanding prospective customers.

“At Tailscale, we’re really trying to narrow down our customers and understand why our product is the perfect fit for them.”

Have a conversation instead of trying to sell

This may not come as a surprise, but talking to your customers goes a long way. Having a conversation with prospects and customers not only ensures that you’re building the right product or service with the right features, but also affirms that there is a need for your offerings.

But the Tailscale co-founder emphasizes that conversations with customers shouldn’t just be sales- or product-driven—they’re a helpful way to facilitate an open dialogue and foster a budding business relationship, too.

“It’s very easy to talk to people when you’re not trying to sell them something in the first place,” Pennarun says. “It turns out that a lot of people are willing to spend half an hour talking about their problems as long as you’re willing to actually listen.”

Allow customer feedback to build your product

One of the earliest and best pieces of advice Pennarun and his co-founders received from investors was to make sure that customers love their products—not just like.

Upon investigation, Pennarun realized that his potential customers didn’t love the product as much as he wanted them to, which prompted Tailscale to spend 12 months on perfecting the product.

“When you get people to really love your product, then they tell others about it,” Pennarun says. “So Tailscale has been really fun because we’ve put everything into [refining the product], and now we have this huge word-of-mouth [following].”

Pennarun also mentions that checking for customer feedback on social media or specific news outlets is very important, as that’s where most customers share their experience using the Tailscale product. He also mentions the importance of gauging customer loyalty, satisfaction, and experience by collecting information with a Net Promoter ScoreⓇ (NPS).

After determining NPS metrics, “You just want to get rid of the people in the bottom who talk negatively about your product and move the people in the middle to the top,” Pennarun explains. “The top [are] customers who talk positively about your brand. It all comes down to their experience, and how we can improve it.”

Net Promoter, Net Promoter Score, and NPS are trademarks of NICE Satmetrix, Inc., Bain & Company, Inc., and Fred Reichheld.