Profit-sharing

Profit-sharing is a fun topic, but I want to take a look at a different meaning of the phrase.  Rather than look at the process of distributing a portion of a company's profit to involved parties, I want to look at the idea of publicly, transparently sharing internal company data on profit, revenue, and expenses.

Of course publicly traded companies do so, but there are a different set of considerations for a small, private company.

For starters, there's a generally-accepted rule that you don't share what you don't have to.  Keep your cards close to your chest.  Why hang yourself?  As Aaron Burr says in the hit Broadway show "Hamilton":

I learned this lesson myself at my previous job.  When a rift developed between two factions of management, there were a lot of words expended in accusations, arguments, and attempts to convert employees to their side.  What I quickly discovered was that it didn't matter what someone said--it would be interpreted a predetermined way by their opponent.

Side A: "I love puppies."
Side B: "Did you hear that?!  Side A hates kittens!"

What isn't said, can't be misinterpreted.  Often, the safest course is often to say nothing at all.

However, as both Aaron Burr and Johnny Tightlips discovered, there are repercussions to being opaque, usually involving someone getting shot.  Fortunately we avoided that outcome at my previous job, but it did cause my partner and I to have a deeper conversation about whether we wanted to share our company financials with the broader world.

Would we get robbed?  Would our company be denigrated?  Would a customer or partner refuse to do business with us because our numbers revealed that we were "smaller" than they were comfortable with?  Would our finances or lack thereof give leverage to the opposition in a negotiation scenario?  Would our money-laundering operation be exposed?

When you're a small company, you're already living closed to the edge and anything can tip you over. You don't make many decisions lightly.  In the end, however, we decided to publicly share our revenue because quite frankly, it was data that we would find valuable if provided by someone else.  Honest, live numbers from startups are hard to come by, particularly an unsplashy startup like our own that didn't start with $100M in venture capital and an established PR machine.  We're doing this the hard way: living on cold stewed beets, hunting a niche to work in, slogging through development, painstakingly building a customer base.

Our hope is that our numbers provide context, and maybe even hope for someone else.  "Oh, not every startup strikes it rich or wins the lottery?  Good, then I don't feel so bad.  If they did it, I can keep doing it too."

And if nothing else, maybe our numbers simply provide a little amusement!

How do you troubleshoot THAT?

One of our customers called us with an issue accessing our website, https://eFinalDate.com.  He was receiving a security issue, "Secure Connection Failed; the connection was interrupted while the page was loading."

First, it took us a couple back-and-forths to get the exact error message.  We ended up with an emailed photograph of the computer screen containing the message.

After that, we started asking about the operating system, browser version, whether it was up-to-date, whether it could be updated, etc.  We were just about to install some screen-sharing software and really dig in when he surprised us with the answer.

"An update to our firewall blocked all websites with the word 'date' in the URL."

Apparently they were trying to block dating services.  As eFinalDate is primarily interested in couples who are "Together Forever," it's probably the worst website on which to browse for singles.  We suggested he ask his IT department to give our site an exception.

But there you go.  One more thing to add to our list of troubleshooting questions.  "How does your IT department feel about dating?"

A Tale of Plumbing

This past week had me thinking about "customer relations."  I often find myself on the receiving end of business, and it really doesn't take much to make or break the experience.  A few companies I dealt with recently illustrate this.

On Thursday my wife took off for a wild party at a water park, including an overnight stay, with a gaggle of Girl Scouts.  It seems the bar has been lowered for what passes as "camping" these days.  Roughing it means sleeping on a sofa bed instead of the usual Tempur-Pedic mattress, and forgetting your swim goggles is a wilderness disaster  However, disaster can strike at home as well.  As my wife backed out of the garage, she sent me a cheery text, "The water heater is leaking!  I'll see you tomorrow night!"

"Water heater" and "leaking" are two phrases that when taken together rate fairly high on the "chilling" meter.  (If they rate high on the "heating" meter as well, turn off your tank's gas supply immediately.)  I started calling around to plumbers, and in the process I made a few observations on customer relations.

First, it surprised me how many plumbers didn't answer their phone.  I suspect that some or all of them were small one-person operations, but that was all it took for me to move on to the next phone number.  If they were drowning in business (no pun intended) then it probably didn't matter, but otherwise, being available is probably rule #1 in customer relations.

1. Be Available (duh)

Second, one company surprised me by refusing to give a quote until they came out in person.  This was for replacing our home's pressure regulator, a necessary prerequisite to repairing the water heater and a simple, common, straight-forward job that should have had a standard price.  Worse, they weren't available until the evening of the following day.  No one else had a problem giving a quick quote over the phone, so that company immediately lost the potential business as well.  Lesson #2: be helpful and informative, rather than a hindrance.

2. Be Helpful

Third.  I finally got one company to replace the water pressure regulator, and later the original company who had installed the water heater to come out and inspect it.  The first plumber was friendly, open, and even suggested it was a simple job that he could walk me through if I wanted to do it myself and save some money.  The second plumber was a bit shady, quoted a price that was suspiciously high, and quickly dropped the price 30% when I expressed hesitation at the amount.  Far from hooking me, the price drop made me suspect I was dealing with a scammer.

I went back to the original, honest-seeming plumber to get a second opinion. His price came in lower than the shady plumber's original estimate, but higher than the lowered price.  I went with him anyway, because I preferred to deal with an honest person.

Customers can sense your intentions.  The technicalities of the interaction or resolution aside, the impression you leave can be far more valuable.  Think long-term: is ticking off your customer and losing their business, not to mention the negative word-of-mouth, worth sticking to your policy or proving you're right?

3. Think Long-Term

Inception

Two and a half years ago, I left my job at a robotics company along with two fellow employees, so we could form our own company.

Boy, was that a big mistake.

The robotics job was enormously interesting: we got to play with a dozen robots from different companies, add intelligent behaviors to them, integrate a wide variety of sensors and controllers, and go out to the testing field and get dirty.

There were also a few downsides, however.  When you're an employee, you aren't master of your own fate.  You aren't at liberty to chase your own interests with as much freedom as you may like, and you may not have as much say as you may like if you disagree with something.

My whole life I've been attracted to small companies because I liked the high level of involvement and freedom, so I supposed forming my own company was the logical next step.  I was extremely fortunate to partner with Curtis and Kevin, two expert software developers who shared many of the same values I had.

Our first project was a 3D mobile puzzle game involving alien drones and mysterious mansions.  Puzzle House: Mystery Rising took us about 8 months of our own time and money, plus $50,000 from (family) investors.

 

I'll admit, we had grand dreams of becoming overnight (well, eight-month) millionaires and making the sequel from our volcano-based computer lair on our private Caribbean island, but shockingly, things didn't turn out that way.  It turns out there's a lot of competition in the mobile game market.  Even though our game was the most awesome one in the app stores^{[citation needed]}, getting it in front of people was a different matter entirely.  People who found it, loved it, according to the good ratings, but it was hard getting people to find it among all the noise.

To date, our app has had about 105K downloads, and made about $39K.  Although it sold for $2.99 a download, there was a large chunk of "free" downloads in there.

As you could imagine, those numbers are pretty crushing.  With 90% of that money divided among the three of us, and 10% going to the investors, it didn't go very far.  Although we had a vocal group of supporters clamoring for the sequel, we had no money to make it.  At this point, we had two choices (three if you count 'start a life of crime,' which we did not consider at all according to any paper trail).

One, we could go back and get a "real" job.  Many failed entrepreneurs do, and there's no shame in that.  You do what you have to do to feed the family.

Two, we could exercise our God-given gift of denial, tighten our belts, start buying spam instead of caviar, and adjust our sights for a more modest private island in Second Life.

I don't mind spam.

The point of this blog is to detail our journey from nothing to filthy-rich, island-owning millionaires.  For better or for worse this won't be a quick trip.  I've come to realize that unlike every news story I've read (confirmation bias much?) we're not going to strike it rich overnight, or get bought for billions of dollars, or invent some magical solution that solves world hunger (or will we...duh duh DUH!).  Instead, this is going to be a slow, steady slog to success.

I can promise you it won't be a boring slog, however.  There will be drama.  There will be excitement.   There will be mistakes.  There will be disagreements, and even the occasional fisticuffs (there will be no fisticuffs).  We'll open our books and show you hard numbers on revenue and expenses.  We'll give you the inside look at our product development and production.  We'll show you every ingredient of our secret sauce once we figure out what it is.  Hopefully we'll amuse you a little as well, although our company balance sheet could probably do that on its own.

So come along for the ride.  Feel free to recommend topics, and we're always open to guest bloggers.  Our initial plan is to post every Monday.  Check back soon!