Ideology vs. commercial success

Learning lessons starting a startup

We've recently been learning how mentors can help and/or hinder our progress through the startup maze. Here’s what we've discovered about picking and choosing their advice.

Like many other early stage tech companies we have mentors helping steer our work in the right direction. If you’re in a similar position I’m sure you do too, or if you’re thinking about getting in to the startup world I’d recommend you get some. You can’t be an expert at every aspect of your business, but you can find people who’ll help you learn pretty fast.

That said, I've become increasingly conscious of the need to pick and choose the advice we take; it’s easy to be awestruck by ‘older & wiser’ influences and to forget the reason you started the company in the first place.

Specifically, the advice I’m currently struggling with is that you should split what you believe to be right from doing what will make you the most money.

Whilst I appreciate our mentors are there to guide our company to success, I strongly believe that success is about more than just a big number in a bank account.

I'll give you an example from the software license world. From a purely commercial perspective annual contracts are preferable to rolling monthlies. Your accountant will tell you it’s about financial security - once the customer is in you know you have that guaranteed income for the year.

But, there are countless examples of successful companies who ignore this advice. FreeAgent and 37Signals to name just two- great products that our team couldn't do without, excellent company ethos, businesses doing very well. In short, the kind of company we would want to emulate.

The real way to keep a customer is to make a product they love, and offer it on terms they aren't challenged by. For us that equates to free trials, and easy entry/exit routes. It doesn't mean they have to promise to pay you for a whole year even if it turns out they decide your software wasn’t right for them after 3 months.

Making your customers sign for a year may mean you don’t lose money if they hate it and stop using it early, but what you do end up with is a customer who can’t get out of their contract so are stuck complaining about paying for something they don’t want.

To my mind, designing a contract to keep people even if they want to leave is a negative starting point. Of far greater value than keeping one client for the minimum of a year is losing one early that is still positive about their experience with you. This particular product wasn’t for them, but others may be and the experience was still good enough for them to recommend you to others.

If, like us you’re starting-up or doing the freelancing thing, one of the main reasons you chose this route was to not have a boss and to run things the way you want. You don’t always have to agree with your mentors.

Written by

Product Managementing @redgate. Can also be found parenting / cycling / cricketing / allotmenting.

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