8 Mistakes we made in our Company’s First 8 Years

15,184 reads

When you’re first starting out, everything is a mistake. Everything is a failure and life sucks. But, the mistakes are actually a personal godsend, because you learn from them. You overcome challenges. You make a better thing, or service, because you made mistakes that helped you to grow.

reactions

Earlier this summer, SoapBox celebrated its eighth birthday — even though, because of some of these mistakes we had to reboot the company. So with that, here are eight mistakes we made in my startup’s first eight years. 😖

reactions

1. We Invented. We didn’t Innovate. Oops. Never again.

reactions

People want to invent something. We wanted to invent something. But in reality, seldom do things actually get invented. So many things need to go right in order for actual, real life, brand-new inventions to take off.

reactions

Look at the keyboard your hands are likely hovering over right now. The shift button is called “Shift” because, since 1878, a typewriter would physically shift the register. Yet it’s still in our 2018 iPhone X’s virtual keyboard because people don’t like change. You can’t just tell the world to have a new keyboard.

reactions

Me. Using a Dell. 🤮A long time ago

reactions

Eight years ago, we set out to reinvent employee feedback — by inventing a new digital suggestion box. But six years later, even though we had revenue, we realized that what we really needed to do is innovate how feedback was already flowing at workplaces. Not reinvent it. Just make it better. Make it faster, make it easier, make it cooler, step by step.

reactions

At that point, we revamped the product. We focused on the core problem that people experienced every day. That’s what we were trying to solve, not build a cool new thing we wanted to put out in the world. That’s the SoapBox you see today: get 10x better feedback at work. Simple. Easy for people to adopt. And gives us a foundation to invent from.

reactions

reactions

2. Being sales driven, not product driven.

reactions

I.e. We tried to create a finished product and focusing on growth too soon.

reactions

This might sound a bit controversial. When we started out we were bootstrapped, so that forced us to move fast on product and make sales. I think that’s smart and fine.

reactions

Once we got something working, we gained breathing room on our runway, but instead of taking that room and investing deeper on product concepts, we spent further on revenue. We focused on driving sales and unit economics. Looking back, we were too early for that. Should have listened.

reactions

By focusing on bigger contracts, we needed a bigger scaled product. Then, pushing further, we were selling multi-year contracts to increase our LTV.

reactions

The problem was, it would then take us two to three years to truly find out if our product could retain a large customer. It took us years to truly find out if we did a good job.

reactions

In other words, if you look at a retention curve, we were almost solely focused on 365-day retention and beyond. That was a stupid mistake.

reactions

Because before you can focus on that long-term retention, before you can even focus on your 14-day retention, you need to focus on the first five minutes. Make an amazing on-boarding experience. Even smaller — make an amazing first step of your on-boarding program. And keep iterating on it until you have 90% of people sticking around. Then move to the first day. Then the first week.

reactions

The common analogy is that a great SaaS product is a bucket. Your customer base is water. Marketing pours water in, and the goal is to retain as much of that water as possible. We were trying to plug a few tiny holes in the bucket — even though the entire bottom was missing. There’s no point in focusing on those tiny holes when no water is even reaching them.

reactions

What I’m talking about is ruthless prioritization of your product. Don’t focus on growth. Don’t focus on economics. Focus on getting the most retention in those first five minutes — then go from there.

reactions

It either sounds obvious or stupid. Start at the start and fail at the start. Learn, iterate, try again. Don’t learn after 365 days that you need x% adoption in order to retain an enterprise customer. It’s too late.

reactions

The focus of product driven companies is a strategy of faster feedback cycles — usually that means smaller, early adopter-type companies, because they can make decisions and give feedback faster. The focus of sales driven companies is a focus on increasing bookings — usually larger, slower, bigger deals.

reactions

3. Scaling with People

reactions

reactions

As a bootstrapped company, we were constantly chasing money. We built up a sales team that were constantly finding leads and moving prospects through the sales funnel. Partially because that’s what we did as co-founders and partially because this brute force method worked: once in a while, we’d get a hit and we’d cash the cheque. Pay payroll. Then we’d start the whole process over again.

reactions

But, in order to grow we then had to throw salespeople at the problem. And in order to make sales, our team would spend time customizing their pitch to be relevant for each lead. Ultimately that would lead to different expectations per customer…which meant that our dev team was so busy fine-tuning the product to each customer that they didn’t have time to actually make an something magical. And, our marketing team couldn’t find a consistent enough theme to scale... and so we relied on more sales people

reactions

At the start, you don’t even notice this is a problem because it feels great. And it gets great reactions. People ask, “How big is your team?” and it feels good to keep saying large numbers.

reactions

We think companies with 500 employees are cooler or more successful than companies with 50, or 5. Perhaps. But it’s only half the story. What’s cooler: a $1B company with 10 employees or a $1B with 1000 employees? I’m super curious about that 10 person company. How on earth did they do that?

reactions

I just got off the phone with a company interested in purchasing SoapBox for the entire company. They’re an old school business. 500M Revenue and 23 people. 😳

reactions

In today’s tech, you definitely want to scale your business with electricity, not people. Let your people figure out how to do that.

reactions

4. A killer hiring process… a little too late

reactions

This was when how the world came crashing down on my head a few years ago.

reactions

Because getting anything done as a startup is like setting up a big Rube Goldberg chain-reaction machine. To get revenue, you need customers. To get customers, you need leads. To get leads, you need salespeople. So, if you’re starting with revenue goals for the next few years, all you have to do is work backwards and know your conversion metrics and you’ll realize…crap, to hit that number in the next 12 to 18 months I need to hire people now.

reactions

OK — so talk to your board. Lock in your revenue goals. Lock in the hiring goals.

reactions

Then something weird happens.

reactions

Those two things become separate slides in the board package and become different responsibilities of different people. And all of a sudden people forget your company is an invisible interconnected Rube Goldberg machine and it becomes just some tasks that need done.

reactions

So you’ll spend each morning pushing that deal forward and the end of the day sending some recruiting emails. And…oops! It takes a week longer to hire that rep. And two weeks longer for the next. Then it takes you six months longer than you expected to get the team hired.

reactions

And Boom 💥 You’re screwed. All of a sudden, you’ve missed your revenue target. But you don’t know it yet.

reactions

A couple quarters later once you’re team is fully ramped up I’ll bet you’re talking about laying people off.

reactions

Why? Because I thought I could do the hiring myself, because I didn’t put a hiring process in place, it took us too long to hire — and that made it impossible for us to reach our sales goals. And because we missed our sales goals, we didn’t have the cash flow we needed to survive — and I ended up having to fire six sales reps in one day.

reactions

And so many startups go through the exact same process.

reactions

You need to have a hiring process in place. You need to have someone to help you recruit. It’s the crucial first step. Otherwise, you’re hiring too slowly or on-boarding the wrong new hire — and either way you’re hemorrhaging money as a result.

reactions

5. Not trusting my gut

reactions

As a first-time founder, and CEO, a large part of your job comes down to recruiting people who are better than you at a bunch of roles.

reactions

I know that sounds crazy, but it’s easy to get impostor syndrome and self-doubt when you’re starting out. And when you’re feeling that unsure, you stop listening to your gut — the thing that got you to where you are. Because not everyone is cut out to be a founder. Not everyone is cut out to start a company. And if you’ve gotten this far trusting your instincts, you need to stick with it.

reactions

This gets tricky though: I’m not the expert of everything at our company. We have engineers, and marketers, and designers, and they’re better at what they do than I am. So you get into the mindset of, “Oh, let’s just do whatever they think.” And in a way, giving your team that kind of ownership is important to get them to grow and learn. But at the same time, there’s a reason why I’m here too.

reactions

Same with our investors — I felt like because they’d given me money, I should do what they say. But they didn’t invest in themselves — they invested in us. If they wanted someone to do exactly what they wanted, they could just start their own company and hire someone to run it.

reactions

Take it from me.

reactions

Your gut, as a founder, builds in a lot of data points and experience and information that no one else has.

reactions

Your gut contains thousands of thousands of little data points that you might not always be great at vocalizing — but they’re there.

reactions

And if you listen to your gut, and trust it, and use it to lead your team, you’ll be much better off in the long run.

reactions

You won’t be sitting around, eight years later, with a list of things you’d wish you’d done right the first time. No one is smarter than you at your company.

reactions

6. Thinking it will get better

reactions

It doesn’t get easier with time.

reactions

I can remember sitting at my desk, thinking 💭 if I only could get five employees, I wouldn’t have to code and sell by myself and I would have more time to spend with my mom.

reactions

But I got those five employees, and there was a billion other things to do — like manage those five employees. While coding. And selling. So then I sat there thinking, 💭 if I only had 15 employees…

reactions

This is a big lesson I’ve learned in the past couple years — and the lesson that early founders are always shocked to hear.

reactions

It doesn’t get better. So don’t delay things.

reactions

Don’t keep waiting for there to be more time. I have racked up so much relationship debt, so much personal debt, so much family debt because I’m waiting for things to be less crazy. It’s never not crazy. You have to make the rest of your like work at the same time — and if you can’t do that at 10 people, you’re not going to do it at 100 or 1,000 people.

reactions

I’m not saying it’s easy — it takes some reprogramming. So often you start your business as a hobby on personal time— and then your hobby becomes work, and all of a sudden you’re working seven days a week and squeezing in dinner with your wife once in a while and telling her it will get better in a year or two. I’m not alone here. It won’t get better, so you have to shift your thinking — and your work-life balance.

reactions

7. Not investing in myself

reactions

I think this is super common — as a founder, you’re so busy in building and scaling your company, you forget to scale yourself.

reactions

SoapBox grew in stages. First it was just me and Graham McCarthy, and it was very simple. Then it was three people and we’re pretty much just sitting together and talking through what we’re doing. Then we had 10 employees and all of a sudden I was a manager. And I became focused on investing in my team. Investing in the tools they needed, investing in their learning, investing in their growth. And somewhere along the lines I developed the mindset that I didn’t matter.

reactions

By not investing in myself, I stunted the growth of the company. The company was limited to the pace of my own learning and know-how. Yet I neglected that.

reactions

At certain point, a company can only be as successful as the capabilities of the founder.

reactions

So you either need to invest in yourself — or replace yourself.

reactions

8. Not leveraging my network

reactions

Most things in life are win-lose — someone gains, and someone loses. But networks are one of the few things that are win-win.

reactions

If you ask someone in your network for an introduction or some guidance, you’re going to make them feel good too — people do want to help each other. It’s win-win.

reactions

I think the trick with networks, though, is not to abuse the system, and to make sure that you’re fostering those relationships long-term. Because if you continually strengthen those relationships, the payback is huge.

reactions

My mistake was not cashing in that payback.

reactions

Because asking for help is hard. You kind of get it in your head that they’ll say no, or be annoyed or offended — so you don’t bother. And so I hesitated to leverage this extremely powerful tool I had — only to discover later that it was ready and willing to help.

reactions

PS: on the topic, I’m not going to say that every startup founder needs a mentor. But it’s just so much easier if you have one.

reactions

9. Not having 1:1s

reactions

YES 9! I promised 8! But I gave you 9. 👏

reactions

I know this sounds insane for the founder of an employee engagement tool. But employee retention wasn’t top-of-mind at the beginning — and that was a huge misstep.

reactions

The first employee who quits because of you is a wake-up call.

reactions

So is the first time you have to fire someone.

reactions

Because in both cases, you think, Oh s***. This is happening because of me. This is happening because I didn’t talk to them enough.

reactions

That’s when I started doing one-on-ones with everybody.

reactions

As a first-time manager, I wasn’t sure at first. I wondered, is it really productive for me to take 10% of my time and distract people from what they’re doing to ask about how they’re feeling?

reactions

It turns out the answer is yes. It was a hugely productive use of my time.

reactions

It fixed like 90% of the problems we were having. There was a lot of pent-up feedback, and I found a lot of red flags.

reactions

But I also realized that we’d built this culture of not sharing by default. Even though it was only 10 people we weren’t sharing. So one-on-ones were also great for building that rapport, and encouraging them to share feedback with each other — and myself.

reactions

A couple years later we would end up building an app around that learning.

reactions

You made it to the end!

reactions

I hope by compiling this list, I can help a few younger versions of myself start to navigate the startup founder journey. Have others that should be added? Respond below.

reactions

Brennan

reactions

p.s. If your startup has hired a few employees (or you’re a manager), you should really check out our product SoapBox now.

reactions

reactions

Brennan is the CEO & Co-founder of SoapBox, the #1 place to work in Canada. SoapBox, is an app and assistant for managers to have better one-on-ones, team meetings, AMAs, town-halls and more, with their team.

reactions

If you liked this article, you should give it 9 👏’s (one for each mistake) to help others find it!👇

reactions

Tags