S1.E5: The PitchRoom: Customer Love, Not Charts: An Investor's Guide to Reading Early Signals
Why the earliest signs of success are always the same — people return, they tell others, and the founder keeps learning.
I am sure all of you have, at some point in life, either read or heard about Siddhartha Gautama and his journey to enlightenment. You might wonder what that has to do with startups and investing! If you follow his journey, The Budha, 2,500 years ago, built an idea that spread across continents — without money, marketing, or metrics. What can we learn from a monk in the 500 BCE?
Well, traction still follows the same pattern: people return, they tell others, they support you, and you keep learning.
In the past few posts, we have discussed how founders and teams lie at the core of early stage investing. Once we have crossed that metric, how does one evaluate the startup? Beyond TAM and people — it’s Product.
Is it traction? Is it revenue?
Honestly, early-stage traction is rarely about revenue. It is about signals — small, consistent signs that customers love the product and that the founder learns fast. In the investing world, we call it “customer love, and product market fit”.
To help us break this down. I have structured this as 4 pillars, which can also be quantified at the time of evaluation.
1. Repeat Usage = Behavioural Proof(the strongest early signal)
This is quantitative. It answers: Do people keep using it?
You can measure it — frequency, retention, daily actives, reorders.
What are we really evaluating here?
It is : Does the product become a habit or a necessity?
Examples:
People open WhatsApp every morning → repeat usage.
30% of users log workouts daily on a fitness app → repeat usage.
A B2B tool gets opened by the same team every day → repeat usage.
D2C skincare brand has 25% reorders → repeat usage.
Why it matters:
It shows that customers need the product — it fits naturally into their lives or work. It could also indicate a change in behaviour after using the product. It is the rational proof of product–market fit.
As an investor while evaluating a startup, ask two simple questions:
Do people come back?
Do they do the core action again?
Examples:
A fitness app where 30 of the first 100 users return daily → strong traction.
An enterprise tool that 5 teams open every morning → more valuable than 500 signups.
A D2C brand with 20% early reorders → real pull.
This lies at the core of any business. If users churn out as fast as they arrive, you’re not scaling value — you are refilling a leaking bucket, a revolving door that people come and go. This indicates that the product does not have the ability to create long term value for customers.
That’s where two simple metrics matter:
CAC (Customer Acquisition Cost) — how much it costs to get a customer.
LTV (Lifetime Value) — how much that customer spends before leaving.
Healthy businesses make more from a customer (LTV) than they spend to acquire them (CAC). Repeat usage pushes LTV up and CAC down — it is the most honest growth signal.
Signal: People need the product. Retention improves. Marketing spend drops naturally.
2. Early User Love - The Emotional Proof (small, honest signs of pull)
People show love before they show revenue. Look for:
unsolicited testimonials
WhatsApp messages asking for features
users referring friends without rewards
users hacking the product creatively
Signal: The product hits a real pain point. There is organic growth through referral and word of mouth.
User retention builds habit. User Love builds brand.
3. Early Money Signals (even small ones count)
At the seed stage, investors don’t judge how much you earn.
They judge if anyone pays at all.
Even ₹199 can mean a lot if it’s coming from a stranger.
Forms of early money:
one pilot customer
trial subscription
pre-order or deposit
B2B letter of intent
Examples:
When Groww users linked bank accounts, it wasn’t revenue — but it showed trust. That is intent, and intent always precedes income.
Signal: There is commercial value here. Customers are willing to pay for services offered. Free user growth could also be a red flag when monetisation is turned on.
4. Founder’s Speed of Learning & Shipping (often the real moat)
Traction is not just numbers. It is:
What changed in the product in the last 30 days?
Look for:
fast iterations
clear monthly improvements
quick fixes from customer feedback
founder talking to users every week
a product that evolves visibly every month
Examples:
A founder who ships 10 improvements each month → high-quality execution.
Zepto’s early speed — doing in 2 weeks what others did in 2 months — was their biggest advantage.
Signal: Fast learners find product–market fit sooner.
A Hidden Signal: Feature-Talk vs Customer-Talk
You can understand a founder’s product maturity in 5 minutes.
Just listen to what they choose to talk about.
When founders talk about features being built: “We built X, Y, Z.”, “We will launch A, B, C next month.”, “We want to add more features to stand out.”
What this signals: Founders are building from assumptions, not customer reality, and are too product focused versus being customer focused. This founder often has output, not traction.
However when the founder talks about customers and customer behaviour, and is obsessed about market feedback:
What this signals is a deep user understanding, real learning loops and a faster path to product–market fit.
This founder often has momentum, even without big numbers.
A Simple guide for New Investors
Features show effort. Feedback shows insight.
Investors should back insight.
How to Validate What the Founder Is Saying
Data may be thin at seed stage — but truth hides in experience.
Before you believe the deck, go live the product.
1. Be the User — Test It Yourself
If it’s a consumer or app-based startup, download and use it. Complete onboarding, make a transaction, even cancel it.
You’ll quickly know if the UX inspires trust or frustration.
Try a fitness app — does it build habit or fatigue?
Use a fintech wallet — does KYC finish in one go or need follow-ups?
These micro-experiences reveal readiness better than any chart.
2. Talk to Customers (or Imitate Them)
A good way to validate customer experience is to look at user reviews, reddit forums. If possible, DM a few customers. Ask: What breaks? What delights? Would you pay to use the product?
You’ll separate genuine adoption from founder optimism.
3. Buy Like a Customer
Order the product. Track the delivery, unbox it, experience customer care.
A D2C skincare brand that follows up with genuine education earns trust.
A food-tech startup that remembers preferences shows product thinking.
Being a customer always gives us a different lens than a founder.
Why this matters:
Founders who live close to their users design for detail.
As investors, living the product for a day gives you 10× more insight than another demo call.
Making It Real: A Life Example
I think all the talk about how to evaluate product and traction could become overwhelming for a new investor. For a moment, forget apps, dashboards, and growth charts. Let us go back to where we started.
Picture Buddha in 500 BCE — not as a saint, but as the founder of an idea.
He had no ads. No data. What he had was an idea that appealed to people.
What he had was repeat users — people who returned every day because the message worked for them. They found value in what he taught.
They shared it with others — pure word of mouth.
Communities offered him food and shelter — willingness to pay, in the only currency that mattered then: gratitude.
And every time he spoke, he adapted his message to who was listening — feedback turned into iteration.
Two and a half millennia ago, he scaled an idea through clarity, empathy, and listening — the same levers that still build lasting products today.
Real traction, in any century, begins when people return not because they have to — but because they want to.
I hope this helped you get started on how to evaluate traction while talking to a founder.
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This is very interesting from a loyalty pov in early stage companies. Companies need to plan for the customer journey before they begin selling the first product/service. Most companies plan upto seeling and then stop after that, thinking it can be taken care of later on. Not true.