Ilya Rekhter: The road to 1,000 miners was filled with referrals

“If you build it, they will come.” It worked for Kevin Costner in “Field of Dreams,” so why wouldn’t it work for a startup? In my previous columns, I shared my “why” behind Megawatt, the challenges of finding a suitable location for our Bitcoin mining site, and using a local Bitcoin meetup as our team’s recruiting ground. We took the leap and built it, so now the question was: Will customers come?

In this column, I’ll walk you through how Megawatt found its first customers, why we turned down a multimillion-dollar deal, and how we grew to over 1,000 miners in our first year.

Zero to one

I’ve sat through numerous startup pitches where founders discuss multimillion-dollar growth plans, their strategy to outperform billion-dollar competitors, and the trillion-dollar markets they’re targeting. While impressive, this often signals that the startup has skipped a few essential steps—such as attracting a single paying customer or earning one dollar.

As a founder, I get the allure of big dreams and big numbers; they’re far more exciting than signing a small contract. The transition from zero to one is daunting. What if the product doesn’t work as expected or, worse, what if no one wants what I’ve built?

The good news for us was that Megawatt already had its first customer: me. I founded Megawatt because I had a terrible hosting experience and wanted to create a more reliable option, so I couldn’t wait to get started. A few bumps and internet outages later, it was clear Megawatt could deliver excellent service. We just needed more customer feedback to grow.

I knew several friends and family members who had experienced poor hosting for their Bitcoin mining equipment. My pitch was straightforward: I can’t promise perfection, but I can guarantee that my miners will be next to yours, and if this works, we both win.

We offered friends and family discounts in exchange for candid feedback. While profit wasn’t our objective, I found that when money exchanges hands, the feedback you receive is uninhibited and more actionable. Luckily, my friends and family were not shy about sharing their thoughts, which helped Megawatt prepare for the next stage: growth.

Growth

When Megawatt was ready to expand, I entered sales mode. I polished my Zoom setup, created a fancy slide deck and sought referrals from partner companies. To my surprise, the referrals came flooding in almost immediately. Apparently, I wasn’t the only one seeking a reliable Bitcoin mining host.

I was even more surprised when a potential client was ready to commit to a multimillion-dollar deal. A dream come true, right? Wrong. I knew we weren’t ready to scale that rapidly without compromising service quality. So I turned down the opportunity and referred the client to other hosting companies, promising to stay in touch.

For Megawatt, growing the right way was more important than growing quickly. We took on smaller clients who were a great fit for our existing services. Our strategy was to build a community delighted with its experience and to grow organically through referrals.

Word-of-mouth worked wonders for us. In fact, we even had to put several potential clients on a waiting list. One client went as far as driving his miners from Colorado to Indiana and helped our team set up his machines. I offered to take him to St. Elmo’s after we were done, but he insisted on Steak n Shake, saying, “I’ve been craving it since I was halfway through Kansas.”

Scale

“Steak n Shake clients” are the best. They’re as much our friends as they are clients, so it was rewarding, if not a little surprising, to be able to grow Megawatt to over 1,000 miners solely through their referrals.

Fast forward a few months, and my phone buzzed with an incoming email notification. It was from the same potential client who had offered that multimillion-dollar deal I had to turn down the year prior. He commended my honesty for saying no when Megawatt wasn’t ready to take on his miners. Turns out, he’d gone with another host but wasn’t thrilled with their performance. Now, he was interested in moving all his miners to Megawatt.

He flew out for an in-person site visit, where we went through all the logistics and pricing and, most important, set proper expectations. A week later, the deal was sealed, and he’s now one of Megawatt’s most significant clients and a vocal advocate for our business.

Conclusion

Growing Megawatt from its first client to over 1,000 miners in our first year was a rewarding journey. The question was, could referrals propel us to 2000, 5,000 and 10,000 miners?

Stay tuned for my next column, where I tell the story behind Megawatt’s new growth engine, a race car sponsorship.•

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Rekhter is co-founder and CEO of Megawatt.