The Tale of a “Failed” Entrepreneur

When I moved to India 11 years ago, I had been (somewhat) active on the startup/entrepreneur circuit, engaging with people who wanted to become entrepreneurs. The reason I say “somewhat” is because it seriously disturbs me that people think it’s a big cake walk. That someone gives you money, you start a company, and then magically, you’re a rich man. That couldn’t be farther from the truth. Now that I am in Myanmar, I’ve worked with entrepreneurs in three countries. I love risk takers. I love risk takers that bootstrap their companies, because the gamble is far more personal. This post describes one of these high-risk ventures that happened while I was still in India.

For seven months, I had been working deep in the trenches getting a new e-commerce business going. For those of you who want to be an entrepreneur, here’s my take on what is involved.

As a new initiative for the company, it was essentially a startup within an established firm. We had a very small development budget and an even more limited marketing budget.

What started as a nice idea for serving U.S. small business owners who needed help recruiting candidates, during the planning phase it morphed into something unique in the industry. Many staffing firms use outsourcing firms to provide cheap candidate sourcing and screening and we worked with many of the best of them. These staffing firms were too expensive for U.S. small businesses, so we decided that we could offer a similar service at a price point that was affordable to small companies. To make this successful, we were intent on providing a simple and easy user experience, and the site had to be intuitive – make it clear where to submit an order, feature an easy payment process and a dead simple, affordable and fast delivery process.

We started with a different name. When we went to research our service mark and domain name, many of the options we were looking for were already taken, but our favorite was still available. Within the next 30 days, we tried to register it, only to find out some company in Arizona registered it a few days after Christmas. Blurg.

LESSON #1: If you have a great domain name, register it right away. Before anyone else gets the same idea. This is good for SEO. The longer you’ve owned the URL, the higher its rankings.

We decided to hire a local development firm who insisted that they managed their development iteratively, but that did not happen. They did not have the right people in their organization like designers and UI/UX specialists. The project cost us twice as much and took twice as long as expected, even though the bulk of the interface had already been designed by me. Most of the content on the site was created using WordPress and a gorgeous and affordable theme that I installed and created myself. I only needed them to do the backend magic. They did not develop use cases, document their work, nor provide any ability to do design reviews because everything was programmed by them before the process flow had been agreed upon. A number of times. But at least we launched. And the site was pretty decently bug-free for a BETA site. Seriously. I’ve dealt with plenty of Indian developers who do ABSOLUTELY NO testing before launching.

LESSON #2: Sit on the developers. Meet with them regularly. If they’re not meeting milestones, meet them more often, even if that means daily. I didn’t do this faithfully due to other pending projects.

We did not have staff in place to market effectively. We needed people who could manage social media, connecting with Americans and speaking authentically. It took a lot of training and exposure, but our staff were working at similar delivery levels to Americans doing the same work. I was very proud of that.

LESSON #3: Train, train and train again. Monitor and provide feedback regularly. Ask them to evaluate each other’s work, mentor each other and share information. Make them feel safe in testing new ideas, even if they fail. Learning it does NOT work is just as important as learning what DOES.

Forecasting staffing levels is always a challenge when launching a site. Some sites take forever to gain traction, others never do, others ramp up so quickly that service suffers. Our pricing structure depended on volume. Our staff had been exposed to “P&L Lite”, also known as “justifying our salaries”, which gave them insight into how startups work and what you need to be mindful of when making business decisions. I demonstrated how much traffic was required in order to convert a small percentage of visitors into sales. We had tough targets to reach. Our traffic had to get to 800,000 unique visitors a month to predict enough orders to cover costs.

LESSON #4: Be as transparent as possible with your staff. If they know what metrics you are following as a business owner, this will be translated into their priorities (hopefully). Explain why each metric is important and what is required to meet your business goals.

At the beginning, our staffing was all over the place. We had a set of dedicated staff, plus additional employees on the bench waiting for job orders. While in BETA, this was okay, but we still needed to start generating revenue. The way to get revenue was to drive qualified traffic to our site.

I provided them with tools, training, and templates and sent them off into the “interwebs” to drive traffic back to our site. We found shortened Google URLs or bit.ly’s to be great at tracking each individual’s contribution and sharing these insights with the staff to increase their own effectiveness and make a contest out of it. (Google’s URLs, however, were automatically tracked in Google Analytics, so we preferred them at the time.)

LESSON #5: If you have staff on the bench, train them to do marketing and sales activities. Everyone should be able to express who you are as a company. If they can’t, you have failed them and your business. Many mindless tasks can be assigned to people, like directory submissions, article submissions, link building, etc. Other disciplines, like social media, take more training. Expect it to take six months to see any success.

Life is challenging when launching a startup. My life was all about the new business venture for those months, from the moment I woke up and checked my emails, to the moment just before I went to sleep after checking my emails and traffic reports. I’d wake up in the middle of the night to send emails to myself about ideas on tweaking the web site, blog post ideas, etc. I skipped meals to accommodate yet another training meeting, or to visit my developers. I could not find a decent illustrator, so I created the images on the site myself. The entire user interface was designed by me, because I simply could not identify anyone, nor could our developer, nor anyone in our online networks, that was good enough to do the work. I wrote the bulk of the content myself, with feedback from the CEO.

I checked the quality of the backend code along with my fearless Operations Manager, who was leading the operations for this initiative. She spent weeks testing countless job orders, and broke the system many times, identifying lots of work for our developers. The Marketing Manager and the Social Media team were working night and day, establishing the right connections on social media. Every single person involved with this project dedicated themselves more than full time employees. I feel confident in saying that they were partnering with me to build this business. I was not merely trading a paycheck for their completion of certain tasks. They were with me. They knew the mission. They understood the excitement of launching a business and I shared with them throughout the process how I went about doing this. It wasn’t the first time I’d launched a business, in Myanmar, in India or in the U.S., so I hoped my background could help them learn the best practices I’ve learned, lo, these many years.

LESSON #6: Do as much as you can in-house. Use external contractors only when you don’t have internal people willing to try. If they try, and complete the task well, it’s cost you far less than a contractor would charge and your employee also gains confidence and learns new skills.

We had very little traffic in spite of our marketing efforts and I am convinced that it had everything to do with the backend tech. We were at one time blacklisted by our web host because the software was autogenerating PDFs and we had hundreds of thousands of documents on our web site. They were sure we were spammers. The load times were very high due to the number of plugins and scripts they had loading on the home page. Many times, the payment process would time out and the user would not only lose their payment information, but their job description and the entire order would be lost as well, requiring them to start all over. We had a bounce rate of 36%, which wasn’t bad, many reading the blog posts and starting orders, but the “built-from-scratch” cart coded by the tech company was killing us. Our abandoned cart rate was over 88%.

Our backend tech required entering resumes line by line by line into database forms because we couldn’t parse documents and have it identify correctly what field the data should go to. (Like I said, we had a crappy tech company working on this project). Whenever we had five or more orders in one day, it was all hands on deck, including me, entering resume data to ensure we got 15 resumes to the consumer for each order. Essentially, we lost money on every order. We investigated looking at Google ads and if we had actually had a click-through and a sale, our profit disappeared. We could have rebuilt the technology and we explored that opportunity. It would have cost an additional $150,000 to completely rebuild the service to the original specifications. We could have increased the price, but the staffing firms using our service were already asking for bulk discounts and complaining about the existing price, saying it was already too high. We did not see a clear way to move forward, and after a year, we decided to close to service. The “Sunk Cost” fallacy would have convinced us to reinvest and rebuild, but the prototype did not prove the concept was worth it.

LESSON #7: “Fish or Cut Bait” or learning when to pull the plug.

So would I do it again? Yes. In a heart beat. We all learned a lot. I would hire the right development firm. Use a tested e-commerce back end. I would not create a custom database backend with 50+ fields per resume. I would automate the resume entry process and the Resume Book PDF generation process. My staff worked really hard to make this a success and they knew the orders were just not coming. They knew it was just a matter of time before we closed it down. They were concerned they would lose their jobs. However, that turned out to be a turning point for the organization. We kept those staff who were doing well at marketing and created a marketing plan to promote our existing services. The operations staff went back into operations at the same level they’d been before. No one lost their jobs, although some left on their own.

Was it a failure? Absolutely. Did we learn a lot? Absolutely. But not taking the risk would have been far, far worse.

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