Our Journey To 1,000 Customers - Part 2: The Bad
by Tom Wright, on Nov 8, 2018 10:45:56 PM
Following my post last week about the best strategic decisions we've made on our road to 1,000 customers - it's time to flip the coin and examine some of the worst decisions we've made. Here's the series in full:
- Part 1: The Best Decisions We've Made Along The Way
- Part 2: The Biggest Things We Got Wrong
- Part 3: The Challenges That Lay Ahead
I'll be honest, I've not been looking forward to writing this post. Admitting mistakes as a company isn't all that easy. As a small company where my own voice carries such weight, it's even harder to admit, as the reality is there's no-one to blame for those mistakes beyond yourself.
The other thing that makes this post hard to write, is that many of our mistakes aren't entirely behind us. Things are never as clean as you'd like in business, and the bad odor from poor decision making can sometimes linger for quite a while. One other thing that I'll freely admit is that writing this post is actually a selfish act. Yes, I hope it makes for interesting reading and some valuable insight - but I also plan to use it as a way of owning up to our mistakes in a very public way. That in-turn will keep us ultra-accountable to making sure that we don't repeat them. Let's get into it...
1) Losing Sight On What Made Us Great
In part 1 of this mini-series, I talked about how our total commitment to inbound marketing not only saved the company but was also the platform for our rapid growth. The truth is, there's a little more to that story than meets the eye.
Around 18 months ago, we started setting increasingly ambitious growth targets. I'm talking true startup-scale growth of well over 100% year over year. Not only were the targets aggressive, they were also exponential - in that the percentage increase would move up every single month. And you know what? We hit them. It's actually one of the things I credit our own platform Cascade for specifically. We created a revenue dashboard and synced the data from our CRM to track revenue. Then in every single team meeting we'd fire-up Cascade and dive into the detail of our financial performance for the week.
As the targets increased, we felt more and more pressure to diversify our sales and marketing strategy. We started to do things that felt increasingly 'Un-Cascade'. Here are a few examples of things we either tried or at least strongly considered:
- Buying a marketing list (I know, I know...)
- Setting up booths at conferences
- Hiring third parties to outbound call (I'll never forget the day I noticed two new people 'working' at our company according to LinkedIn - people I'd never heard of. They worked for the third party we'd hired to do calls on our behalf, and it felt weird.)
- 'Paying' to receive an award for 'best software provider' in some random magazine
Some of those things are perfectly reasonable to attempt, but just weren't right for us. Some of them were just plain dumb. I'm not mad at us for trying new things and stretching ourselves. I'm mad at us for not giving credit to the single biggest asset that had gotten us to where we were today - our content marketing and our community (i.e. you). Not one single thing on that list takes advantage of those assets. That's not only dumb, it's also a little bit arrogant.
One of the best bits of advice I've received on this journey came, ironically from a venture capitalist (we don't have any investors, hence the irony). He told me that the startups who succeed are the ones who amplify what they have. The ones who take their strongest voice and then shout from the rooftops using that voice and that voice alone. We did the opposite for a while, and surprise surprise, it didn't really work...
The good that came out it...
The people that know me often call me an optimist. Well, I guess they're right because I couldn't bring myself to write this post without also looking at the positives that came from each of these bad decisions.
In this case, I think the good thing that came from losing focus on our strengths was that when we did realize what we were doing, it made us even more determined and committed to inbound content marketing. We've just invested a ton of cash into growing this capability within our team, and I can't wait to share some of the results of this with you over the coming months. Furthermore, we learned a lot from some of these experiences that we can apply to more organic sales methods in the future.
2) Not Growing Up Quickly Enough
A theme from last week's post was how little cash we had in the early days of starting the company. Without investors, we had to fund-raise by selling the platform to customers and getting them to pay annually upfront. This worked surprisingly well - but it did have an unintended (though in hindsight, rather obvious) downside.
In the early days of the company, if one of our largest clients asked for a bit of custom software development, we'd do it. We might even charge them extra for it, in exchange for them being able to heavily influence the specifications. I'm actually not going to be too hard on ourselves for doing that. It's not ideal, in that it can easily take you away from building your product according to your own vision. But it's kind-of just a necessary evil when bootstrapping a company without investors.
What I am going to give us a hard time about is the fact that we continued to do it even after we no longer needed the cash. Somehow, the culture of 'saying yes' had embedded itself so deeply into the organization that we'd find our development team working on 5 different IT projects at the same time, none of which had any connection to our overall vision for the platform.
Now don't get me wrong, it's critical to listen to customer feedback and indeed many of the best features of the platform have come directly from customer suggestions. But there's a fine balance between that, and becoming an unfocused custom development shop building a Frankenstein product that doesn't really work for anyone.
We've finally made a hard rule that we will not accept client money for custom development. We will absolutely listen to suggestions and factor them in to our road-map accordingly. But we won't charge for it, and we'll do it in a way that makes sense for the platform. This decision was tested just weeks after we made it. We were offered a 7-figure sum of money to make changes to the platform for a specific client. Trust me, that wasn't easy to say no to. But we did, and it was 100% the right decision.
The good that came out it...
Whilst it's not great that we had to actually build product features before realizing they weren't right (I'm sure a better company would have dismissed them far earlier in the process). The benefit is that it's made us more sure than ever about what features the platform should have.
3) Being a Control-Freak
Yeah...this one's pretty personal. And it hurts. Being a 'control-freak' is kind of a funny criticism. It's one of those things that people tell you to say in job interviews when you're asked the "What's your biggest weakness?' question.
"Oh, I struggle to delegate sometimes. Why? Because I have extremely high standards and can't bear to see a job half-done."
It's kind of an admission of a flaw, but at the same time, the people who say it (myself included) are often secretly thinking:
"Yeah, and I'm right to be a control-freak, because the fact is that I will do a better job than anyone else!"
There are two problems with this approach when you're in charge of a company trying to grow. The first is obvious - the second took a little longer to reveal itself to me.
In my case specifically, I believed that:
- I was the most effective salesperson at the company
- I was the most effective customer account-manager at the company
- I was the most effective product designer at the company
- I was the only one who could be trusted to properly set up the various systems we used (CRM, helpdesk software, etc)
- I was the best interior designer at the company (don't ask)
Wow, reading that list back makes me sound (and feel) like a complete ass. But it's the truth about how I felt, and the truth behind why I was such a control freak.
Let's take a look at the two major issues with this situation:
1) We Stifled Our Growth
Whether I was or wasn't the best sales person is actually completely irrelevant. The fact is I could only do so many sales calls in a day. So that number was defacto the maximum number of sales we could possibly do in that day. In the early days that number was ok, it represented growth. But as we succeeded, it represented slower and slower growth to a point of complete stagnation.
Of course, the real situation was far worse than that - because I wasn't just doing sales calls, I was also doing customer success calls, redesigning the website, buying the rugs for the meeting rooms etc. It wasn't that I didn't try to get other people doing those things. We actually did hire salespeople. I would throw myself into training them, tell them exactly how to run the product demos and then sit back and watch with grim 'not-quite-satisfaction-but-close', as they closed deals at a slower rate than me, and for lower deal sizes.
Well....of course they did. For starters, I'd been selling the product for several years and was judging their performance after only a few weeks. Furthermore, they were selling in my style of doing things, rather than using their own organic styles that they'd cultivated over years of experience.
This same pattern repeated itself in other areas of the business too - in customer success, marketing and beyond. And I'm ashamed to say that it took far too long for me to realize what I was doing and just how wrong it was for the company.
2) In The Long-Run, Founders Make Lousy Sales People / Customer Success Reps / [Insert Role Here]
Hang on a sec, didn't I just say that I considered myself the best in the company at these roles? Well yeah, I did. And the truth is, I actually wasn't too bad at them either. I knew the product like the back of my hand, I could make friends with most people quickly, and I was genuinely passionate about the product and its benefits.
But over the years, these same things that seemed like assets became liabilities...
In a fresh startup, the founder is almost always going to be the main sales and customer success person. But in an established startup, you need to pull them out of those things as soon as you can. Here's what was happening:
- I was making far too many promises around future product development in sales meetings. It wasn't that I was being untruthful - I fully intended to go back to the team and have them adjust the road-map to help me close the deal. And that's a terrible, terrible idea! But as the founder, you can do it, and so sometimes, even though you know you shouldn't, you do.
- It made it almost impossible for any other member of my team to work with a client once they'd interacted with me. With me, they knew they were talking to the ultimate decision maker. They had direct access to the person who could fix their bug, or build their feature. So working with anyone else in the team felt like a compromise. Like a step down from working with 'the boss'.
- Every moment spent on a sales call or with a client is a moment less spent working on the strategy of the business. That's one job you shouldn't even think about delegating.
In summary, I was wearing the phrase 'control-freak' as a kind of perverse badge of honor, and it was crippling our company in many different ways. It took all the efforts of the people around me to show me that, and I'm eternally grateful that they kept faith with me long enough to help me figure it out.
The good that came out it...
I still work with clients and I still get involved in all of the things on my list-of-shame from above. But nowadays I'm highly selective and try to do it in a way that has a clear entry and exit point. I use those experiences to stay close to the product, and to the needs of our customer base. I also enjoy them a lot more than I used to, since they're interactions of choice rather than obligation!
4) Doing Too Much, Too Soon
I think this is one of those things that most companies go through, and therefore probably isn't much of a surprise inclusion on the list. Nevertheless, it's something that I think could easily have killed us had we not addressed it in the nick of time.
For us, this mostly manifested itself in our product and tech platforms. Broadly speaking, there are two types of tech company out there. I'm going to use an analogy from the mobile phone sector - not as it is today, but rather how it was a few years ago:
On the one hand, there was iOS / Apple:
Well designed, elegant and efficient. Limited customization options and a 'take it or leave it' out-of-the-box experience. It did what it did well, and if it didn't do what you needed it to, there was pretty much no way of hacking it to make it comply.
And on the other hand, Android:
Open-source, flexible and with limitless customization. It spent half its time inspiring us with all the things it could do, and half its time frustrating us with all the things it kind of did, but just not that well.
Now for the record, I'm a bit of a phone-nerd, so I've been pretty much Android all the way. But the reality is that whilst both of these approaches weren't quite right, it's been Android that has moved closer to iOS, rather than iOS becoming more like Android. The reason for this is simple - as a general rule, it's better to have a product which does 5 things well, and 5 things not-at-all than one which does 10 things not-so-well. It's kind of like strategy in that way - it's better to execute on one simple, moderately ambitious goal than to fail on a host of ambitious ones.
We were more like Android than iOS. We were trying to build too many features, and not really nailing any single one. We're still struggling with the legacy of that tradition today, though I'm happy to say that for the last 6 months our road-map has been focused and tight - with the platform all the better for it.
The good that came out it...
If you look at Android today, it's awesome. It's fast, slick, easy to use and yet still retains most of the flexibility that made it so attractive to phone-nerds like me in the first place. It's had a much bumpier ride than iOS and probably lost a ton of customers that will never come back. But I would argue that overall, it's a stronger platform because of those experiences. Hopefully, I'll be able to say the same about us in the very near future.
Phew...That Was Hard...
Reflecting on mistakes isn't easy. But one that thing that made this easier was knowing exactly what I was going to write before I started typing. A few weeks ago, we had a session as a team to answer this very question - 'What are the biggest things we would change about our business?' It was a frank discussion and we reflected on all of the above points (plus many more). We wrote them all down and created an action list to either address each one or at the very least, ensure we had the monitoring systems in place to ensure they never occurred again.
If we didn't have that kind of honest, no-bull relationship with each other - that discussion (and this blog post) wouldn't have been possible. I hope you've found it interesting. And I also hope that you won't judge us too harshly for our mistakes. We'll never be perfect, but if we get just a tiny bit better each day, that will be good enough for me.