One of the things I got horribly wrong with Distil was that I didn’t focus enough on building a business. Sure, me and the other founders would talk about the enormously successful company we imagined we were building. But my actions weren’t those of someone building a sustainable business. Instead I was building a startup.
We had just closed our first investment round. The only revenue we had was from a single large sale. Our revenue projections (which showed the obligatory hockey stick growth) were less what I saw as happening and more what I wished would happen. Actually that isn’t true at all. They were bullshit, pure and simple.
Knowing the projections were bullshit, I struggled with what to do next. We had money that was meant to build a team to deliver on revenue that was pure fantasy. The truth was that we didn’t need a team anywhere near the size we had raised capital for until our sales team started closing deals. If I was building a business, I would have banked the money we had raised, kept me as the sole technical person, and hired the best sales people I could.
But I was building a startup. Startups are about growth. They are about momentum. And risk. They are sexy. We must look bigger than we are.
Then it hit me. Eureka! If I can’t control whether I meet my revenue targets, I’ll focus on what I can control — the expense side. I’ll make sure that I execute perfectly against the plan. That my quarterly expenses are dead-on what I forecasted. That I fill all the key positions with the best people to the timeline that we agreed with our investors.
I remember one time my VP of Engineering asked me if we still needed to hire a developer with data mining skills. The project we needed that skill set for was delayed because the customers for that project weren’t quite yet at the table. Should we maybe wait until the customers were there before making the hire? (By the way, my VP of Engineering had better business sense than me). “No!” I said. “We told the VCs that the product would launch next quarter and we still need to do that.”
At board meetings I focused on how well we were executing to our plan. Everything was running like clockwork. Products were coming out right on time. When the board asked about revenue, I explained that such and such a deal was delayed. Or that so and so was needing to get board approval for budget. Next quarter all of that missed revenue would come in. We were on track. And look over here — we have the ability to run 2 projects simultaneously through development. 2 projects! We were ready for when all those sales started rolling in. As they would. Next quarter.
Looking back, I built a great startup. But a crappy business.