I have well over 10 customers. I want to take my startup to the next level

Where I come from, we call the later a "prospect."

Not someone that pays for your apps, and where would that leave services, goods and other things that people pay for?

I was speaking in the context of app development. Obviously, if you are a shoe retailer, your customers are the people who buy your shoes. If you are a publisher, your customers are the people who buy your books. Note that the people who read your books in libraries are not, strictly speaking, your customers-- although the acquisition librarians are.

So, technically the guy has a sales funnel with 1 million people in it that need to be converted to paying customers. If that distinction did not exist we'd never have to use the word 'paying' attached to customers in that context.

I'd argue that the "paying" in "paying customers" is pleonastic-- it is used as an intensifier, as in "my personal friend".

Sure, but in some business models, that value is negative-- take the case of a non-paying user who demands a lot of support resources, for example.

If you have a free ad-based application then maybe this is only some cents per user. In this case it does not hold that the 'first ten customers' is what is important. Maybe the first 10.000. On the other hand if you are selling dirt expensive stuff then the first 10 customers is a big deal.

I disagree. Having ten (paying) customers is a good milestone, regardless of the cost of the product. (Remember that in an ad-based application, ten paying customers would mean ten advertisers, not ten users.)

The point of the original article is that if you haven't reached that ten-customer milestone, you haven't really validated your customer development work. "If you build it, they will come" is a cute phrase, but hope is not a strategy. If you build it, and ten people come and pay, you're on your way.