How Our Design Company Survived a 40 Million Shilling Lawsuit
The allure of entrepreneurship is truly a marvel that should be studied. It’s almost comical how easy it is to daydream about running your own business when in actuality, you really just end up becoming well acquainted with all kinds of nightmares. I personally didn’t give much thought to the business side of design when I started out in 2008; I was just a passionate creative who could write code equally well. But as me and my team at Skyline slowly clocked 3, 4, 5 years in the game, one kind of nightmare was quickly becoming a possibility: that you could slowly and carefully build Rome only to have it burnt down to the ground in one day.
No venture is exempt from this. I mean, just take a look at the towering giant that was Nakumatt; as Vusi Thembekwayo put it, “The elephant is on its knees.” How much more susceptible a small design company?
Our first 5 years had been turbulent (as expected), but our major achievement was that we’d managed to carve out a niche and a name for ourselves designing and building bespoke digital products for discerning clients. In 2013, we sought to up our game, double our rates, and go for much bigger projects. We ended up being broke for a few months because the kind of clientele we were attracting had to change, but then, slowly by slowly, the kind of work we were looking for began to trickle in.
Then it happened … our big break came: a reputable international organization was so impressed with our work that they wanted us to take on a major project for them. We were so excited! Why?
First of all, a client from a Western country meant that our street cred was gonna shoot up like crazy. That’s just the way it is. Bragging rights from here to Timbuktu.
Second, did you know that if you get paid by a client outside Kenya, VAT is not charged? This means you can round things off and essentially “eat” the money that you would have paid the government as VAT. The higher the quote, the more you get to “eat.”
Third, this was the first project for which we crossed the million shilling quote barrier. I’m not at liberty to tell you exactly how much the project actually cost (and it may not seem like much to some of you socialites out here) but man oh man! Do you even know how crazy it feels to start your own business when you’re 19 years and eventually getting to a point where your professionalism is so evident that you can quote money like that and a client happily pays?! Man, it was a big deal for us! In fact, it happened during a time when we had broken up with my girlfriend and I felt like calling her and saying, “Babe, I made it! I’ve got potential, see? I’m not completely useless …”
So the terms of reference were sent to us; We went through them and figured we could do this; We thought it was gonna take a few months; A contract was drafted by the client; We signed it without even having met in person prior; Bank details were sent; Boom! Money hit our account the next week; Project kicked off.
Then we entered the gates of hell! Wueh! 😂
The first deliverable was in a month’s time. We thought we were on track, and so we sent the client’s representative a link a few days before the deadline. I’ll never forget the email response. He said something like, “This is not even 20% of what we were expecting!”
So we had a long Skype call to clarify things. As it turns out, we had understood the specification document almost completely differently on major points! There were about 7 pages outlining the required functionality. However, because of the way it was written, there was so much equivocation that it was possible for us developers to interpret a feature in a simplistic way while the client expected the complete opposite. I was so stressed coz I was the one who had signed the document and gotten my team into this mess, and now we couldn’t back out because the project we were working on was tied to real events and conferences that were imminent … and happening in several cities across Africa! Sema stress!!!
We hardly slept in the weeks that followed, trying to cobble something together in time. We missed the first deadline. We missed the extension. Life was miserable. Client was furious! Other projects suffered. Then to make things worse, our lead developer who suffers from chronic migraines was having an increasingly difficult time because of the stress.
Then I got the phone call.
“Huston … My boss is really, really angry … Flights have been cancelled, events have been postponed, hotel room bookings have had to be shifted … You know he’s a billionaire, and he feels that at this point he has been personally embarrassed. He is so upset that he has sworn to sue you for damages worth 40 million shillings. Of course he knows you can’t afford to pay that and the legal fees (ouch!), but he’s hell bent on completely bankrupting you guys, and then he’ll spend as much extra money as is necessary after that to smear your name and ensure you guys never get any more tech work ever again. So get your lawyers ready.”
Hehehe! Wah. 😅
I’m laughing coz … what else would you have done? My throat was too dry for me to swallow saliva. Plus my hands were trembling and I was feeling cold, yet my back was sweating.
What does one do in such a situation?
I felt the life force drain out of me that afternoon. In a daze, I called my partners and told them it was over. 6 years were going down the drain, just like that. New careers ahead people … in farming or something. Man, it was devastating. I think I just went home and slept early that day.
So how did we survive?
Simply put … the best way to survive a lawsuit, is to avoid a lawsuit. Through God’s providence, things worked out for us in ways I couldn’t have orchestrated myself.
1. Mentor to the Rescue
See, after my initial night of self-pity and despair, I talked to as many trusted advisors as I could about the issue, and looking back, I’m so grateful I did. One of them was Erik Hersman, who is one of my business mentors and Skyline’s longtime supporter. I explained the situation to him, owning up to my part in the whole fiasco. As it turns out, he actually had met and knew the billionaire in question, had his phone number, and was on a first name basis with him! First, it was scary: the client’s billionaire status was legit! But then again, it was reassuring: I felt like I had a giant in my own corner when Erik said, “Don’t worry too much about this. If push comes to shove, I’ll talk to the guy one on one.”
2. Undercover Mission Underway
The second thing was that Erik advised me and my team to keep working on the project as hard and as quickly as possible, and to keep pushing updates, essentially taking advantage of the organization’s bureaucracy because such large outfits can take months before lawsuits are initiated. And that’s exactly what we did! For the next several months, we were frantically pushing system features and updates days before they were needed by the organization.
As someone once said, “When you find yourself in a hole, the first thing you need to do … is stop digging.”
And that is how we survived a lawsuit that would have run Skyline into the ground.
I’m sure you have already inferred several lessons from this experience, but for me, the lesson of accurately estimating project scope and effort is something that I’m still learning, even to this day. It’s so easy to get pressured by some “hard deadline” that the client has, to the point where you provide a timeline for the best case scenario instead of being realistic and anticipating that things will definitely go wrong at some point and you’ll need to have factored that in. Funny thing is, in my experience, every single time — and I mean every single time—when a client has an unrealistic timeline because of a “fixed date,” things end up going sideways. And the immovable “fixed date” … moves.
No matter how much you need the money, ask yourself, “Can I really get this done on time? Are the fixed dates really fixed?”
Sometimes the need to pay the next bill is so pressing that you’re essentially stuck between a rock and a hard place. But my advice is, after 9 years doing this … If things don’t add up, walk away. Better to be broke, than bankrupt and slandered.
So here’s to a successful 2018.
May your year be filled with timely deliveries.
Update: Several readers on Twitter have wondered what the resolution was. As mentioned before, we continued to build out the features and roll them out as was needed (the project had 5 phases), which the client used till the end. They ended up withholding the final payment, which was about a fifth of our fees. I was just happy to have walked away with an intact company 💪