Adam Root, co-founder and CTO of Hiplogiq, has managed teams in interactive design and development for Fortune 500 companies, mid-size agencies, and startups.
In business, mistakes come with the territory. Too often, entrepreneurs try to minimize the weight of their errors, refusing to believe that a slight misstep could kill their professional objectives. They tell one another to embrace failure--fail fast and fail often. But sometimes, even the smallest oversight can have disastrous consequences.
For example, my company is an idea factory that builds marketing technology. Our large company division was only growing about 12 percent from month to month, and our agency division was growing at a rate of 66 percent.
Based on that, I assumed that we should sell our technology to big businesses.
While it's a logical assumption, I failed to consider most corporations' desire to customize, and we ended up building highly tailored features into our applications for each client. The result was a large revenue stream at a very high cost to us. Basically, we had to spend $2 to make $1. And because the customized features were so specific to each client, we couldn't recover the cost by reselling the technology. It's like building a house with no kitchen. Just because you eat out all the time doesn't mean buyers can live without a fridge or stove, so you lower the resale value of your home.
The impact was having to put on one of our apps, SocialCompass, to sleep and focusing all our efforts on our small business app, SocialCentiv.
In many cases, making such a drastic change results in disaster. But in our case, dropping SocialCompass and narrowing our focus actually boosted our business. We're now growing consistently more than 100 percent month after month, and in the past 60 days alone, we've grown 405.5 percent.
It took a lot of work and some mistakes to get there, but luckily, mistakes come with life lessons. Here are the things I learned, which I hope can save you from making the same bad decisions I did:
Learn to say no to a big paycheck.
For a cash-starved startup, one of the hardest things to do is say no to cash. You see a contract worth $50,000 with dollar signs in your eyes.
But consider the repercussions of a potential deal. How much is it going to cost you to make that money? Is taking a loss worth adding a big brand to your client list? Or could a big deal with a big brand alienate smaller businesses?
Focus on your company's purpose.
Our purpose is to equip small businesses with tools they wouldn't otherwise have access to. Early on, we lost sight of this and began pursuing large corporations, and our technology and new target audience clashed. Without a product-market fit, we had to realign the company with the original purpose of our technology to gain traction in the marketplace. Always remember the original purpose of your products or services.
Keep communication constant.
Communication is critical to fixing mistakes.
When you're moving at the speed of the Internet, you're going to hit a few speed bumps. We had everyone running in different directions, but communication solved that and had us running as one massive force.
We improved our communication by opening everything up to our teams and investors. Everyone involved gets daily financial reports, access to our engineering summaries, and details on product deadlines.
If your employees don't share or understand your purpose and goals, you could have people working in opposition to your company's mission without even realizing it.
Cull the herd.
When team members fall out of alignment with your company's purpose, you need to reevaluate their culture fit. When we started pursuing large corporations, we hired people who had experience with big clients. But as we refocused our company, these team members weren't equipped to handle smaller businesses. They didn't support our purpose, so something had to change.
Offer opportunities for team members to prove themselves, but be willing to let people go if they don't share your vision, purpose, or core values.
Understand how you arrived at the mistake.
The best way to avoid future problems is to understand how they happened in the first place. Write down the process that got you to the undesirable results and use it to guide your actions moving forward. In my experience, process is to blame 80 percent of the time, communication is the culprit behind 19 percent of problems, and people are at fault 1 percent of the time.>>>