In this study, we seek to answer the question: How do emerging market SMEs (ESMEs) use customers as a source of learning to develop a cycle of improved knowledge management capability in the early stage of their development? We base our research on the capability lifecycles perspective and learning literature from a customer’s perspective. Using a multiple case design with a sample of five SMEs from the Software-as-a-service (SaaS) industry in Vietnam, the study introduces a mechanism that we call ambidextrous international customer learning that can be used to provide an explanation for the heterogeneity in the exploitation and exploration behaviors displayed by the investigated case-firms. We find that ESMEs internationalize early to acquire knowledge and capabilities that help them fit into a global standard. Firms which connect their exploitative and explorative learning processes to strategic customers are more likely to develop dynamic capabilities and survive their first years. We aim to contribute to the capability lifecycles perspective with a mechanism to increase the understanding about how ESMEs can develop capabilities that can move from an ordinary level to a dynamic level.