Bootstrap Business - What we absolutely nailed

The following is an excerpt from my new book, Bootstrap Business that tells the story of my latest startup venture. This is the answer to the question "What were the three things that you absolutely nailed?"


The first one is easy. We absolutely nailed the product requirements for RoadEscapes.com. We filled a gap that exists for people who travel by car—marrying trip planning, booking, mapping, routing, and navigation. While each of those things exist independently and you’ve got sites like Travelocity, Expedia, and Orbitz on the trip-planning side and you’ve MapQuest and GoogleMaps and even AAA’s TripTik that handle mapping and GPS devices doing the navigation, there was nothing that did it all in a single integrated tool. I told our patent attorney that this is a little like coming up with the iPhone—taking individual components, such as a phone, a camera, a GPS unit, and a personal organizer and coming up with something that together is just unbeatable, as well as integrating them for maximum productivity and ease of use. The patent for our product also covers a
new type of personalization and intelligent search capability, which corrected another major flaw in how travel search has worked for the last thirty years.

The second one was a little bit painful. We elected to listen to consumers when we first finished the product and conducted usability testing before going live. Many people do that just to tick a box that they have done it. What we found was that we had been really enamored with the original user experience that we designed, but it just plain didn’t work. The consumers couldn’t figure it out. While that cost us another four months and another couple of hundred thousand dollars,we took the time and invested the money to get it right. That one was, as I said, a mixture of the bittersweet and the sweet.

Lastly, and again, this was another painful lesson, was what I will call “knowing when to fold ’em.” After launch, within days, I knew that the original business model and hence the projections were wrong because the product was geared for e-commerce (e.g., converting visitors to a sale) versus advertising (e.g., monetizing traffic to the site with ads and sponsorship). While people were using the tool and we got good feedback, we just weren’t seeing any conversion at all. That error required retooling the business model and the product, but by that time, we just
didn’t have the funds to keep going without the projected revenues.

Although it was a very painful decision at the time, less than forty-five days after launching our first online product, we had to basically close down the company and look for either a buyer or a strategic investor.

The good news is that we kept a small team on board, I stepped back into the company on an active basis, and we retooled everything. In the process, we discovered a third, highly differentiated and unique way to monetize the system. Plus, during that time, we were able to do limited tests of what the “right” consumer traffic looked like and saw amazing metrics that proved to us that we had accomplished the retooling goal. Now, once we are able to get the proper investment to get the company over the last five yards to the goal line, I am confident that the product will perform even better than originally designed to a broader market with more sustainable results.

We are fortunate that we don’t have to have a “fire sale” or worse yet, just watch the product go to the Internet graveyard, never to be seen or heard from again, chalking it up as a very expensive learning experience. We still have a very powerful and unique product as an asset to be sold or relaunched when market conditions improve and we find the right strategic partner.

Bootstrap Business - The Three Big Mistakes

First, I believe that mistakes are the biggest gift that we have as entrepreneurs because they force us to focus on what to do right the next time. Plus they humble us, which is also a tremendous gift that helps us grow—if we are smart and pay attention to the bigger lesson!

Lesson number one for us was about how to manage the build-out of our technology, both from a people and a partner perspective. In this day and age, there are many ways to build a business. You can build and own every one of your technology components or you can use a mixture of your own intellectual property and/or that of other firms. In any venture that relies on technology to succeed, you have the choice of outsourcing not only development, but also using external components to “accelerate” development, or to bypass development altogether
and use existing services to provide those components. If you choose to build and own the intellectual property as we did with LeisureLogix, don’t be fooled into thinking that you will save money by deferring the hiring of the CIO or CTO role. In a technology business, this really should be the first position that you fill.

Because I had a lot of technical expertise myself and had some very good product development people on board, we entrusted this role to an outsourced technology provider. That’s a little bit like letting the wolf guard the hen house. Even of you have a competent partner, you don’t have a way to make sure that the architectural decisions that are being made are in your long-term best interest. An internal CIO or CTO would have taken responsibility for building a product
that could scale and that was affordable moving forward. It’s easy as an entrepreneur just to look at the up-front cost and not to concern yourself about the long-term total cost of ownership.

I am happy to say that I have now learned this lesson and in starting Solutionz Media Group in 2009 and launching the Internet-based radio network known as Solutionz Live!, I determined that this time around I did not want to own the technical infrastructure necessary to deliver the shows. I am now using BlogTalkRadio.com’s highly functional platform. And did I mention that they are well funded? More simply said, this lesson is “let others do commodity functions
that they do well and keep the core competency and differentiation of the venture (including the management of the partners) inside.”

The second lesson, and the most interesting one to me personally, had to do with the role that I played with my first non-consulting venture from beginning to end. There is often a conundrum, particularly with outside investors, of what role the founder should play, particularly if the founder is also an inventor. Quite often, the founder is the visionary and also deeply in love with the product and sees its capabilities both in the short-term and in the long-term. It is not unusual for that person to be a bit of a free spirit, without some of the professional discipline that would come from being an operational executive. I was no exception. Although I had been the CEO of my consulting firm for ten years, I didn’t have experience as the CEO of a corporation and hadn’t had to manage an investor or a board of directors. In the end, at the leading of our investment bankers, once I had seen the company through the initial build phase, we brought in an external senior management team, including a new CEO, to take the company to the next level.

In short, even though the people we hired were highly competent individually and they had tremendous experience in the travel industry, put simply, I moved out too soon. And, particularly since we had hired individuals without significant startup experience, it left the company without the much-needed entrepreneurial spirit when we hit the inevitable bumps in the road, not meeting the original projections and missing the mark on the key business model elements.

In my new media venture, I will be using the knowledge gleaned from this important lesson to craft a seasoned entrepreneurial team moving forward, but will see it through to profitability before handing over the strategic leadership of the company.

Lastly, I didn’t recognize the importance of putting an external board in place that could propel us forward through making key introductions and providing the added credibility we needed beyond getting the launch client signed. We did this as an advisory board, but I don’t believe that advisory boards have the same strength or motivation to actually build a company. If I had it to do over again—no wait—I do have it to do all over again! With Solutionz Media Group, I’ve asked two highly seasoned broadcast executives, each of whom has tremendous entrepreneurial spirit, to be on my board moving forward.

This is an excerpt from Bootstrap Business, being published in August 2009. The book features best-selling authors Tom Hopkins (How to Master the Art of Selling), Jack Canfield (One Minute Manager), and John Christensen (FISH!). Chicke Fitzgerald, Hopkins, Canfield, and Christensen are joined by other well known authors and speakers, each offering time-tested
strategies for success in frank and intimate interviews.