Always challenge your employees

A startup is all about change. You will attract people who want to be part of that. I found out that you should always challenge them. Keep innovating.

Having a Tech start-up is hard work. Especially when you build a company without external investors: you are continuously chasing your customers to pay their bills, just in time to pay your own employees (and if you are lucky, even your own management fee). I’m proud that we made it work, and successfully grew our company to 40 employees and created one of the best adaptive case management systems in use within the Dutch Government.

Trying to build a sustainable organization takes time and you are lucky when you have a profitable organization within 10 years. At first you “fake it till you make it” to get those launching customers. You run from demo to demo, and pull all-nighters to quickly add those features to satisfy your first customers. Until the point that things starting to work out and you are able to look into the future. (…to find out that you created a big vodka-induced codebase which could quickly be identified as technical debt)

All doom and gloom? No…absolutely not, because if you got this far: YOU WILL FEEL ALIVE! Because you did it. With maybe 5 or 6 people, you chased your dreams and it looks like this is actually going to work. Because of the all-nighters you bonded with you coworkers. Or in my case: after every week of hard work, we emptied the liquor-cabinet and celebrated until deep into the night. Coworkers became our friends, families come in for the occasional rooftop BBQ (with a broken banister, because you work in the cheapest office you could find), and even our customers loved to come over for a beer. You got to create your own little world together, and people are starting to pay for what you love to do most.

After the hangover you get back together on Monday to figure out how to keep the funds flowing and how to keep adding new features while improving the code quality at the same time. Because, I’m writing this as a Tech-guy, I was always looking for time to improve the system, and thankfully, my business partner understood it’s importance and tried to make that happen.

Be the Apple for the Government

Our first product in 2010 was a mash-up of existing open source applications with some custom made data entry screens. We made this mashup look like a single product and made it “sexy” using the skills of a highly talented HTML/CSS guy. It looked great for the demos, and helped us get new customers. At the same time, this strategy made sure our product was stable, because we used already proven applications for storing our data. Our plan worked: this way we could quickly go to market, and it prevented us from creating too much technical debt at the same time. We used our customers feedback, and we eventually came to the conclusion that we had outgrown our mashup and needed something flexible. Something which also reflected our “Year-plan”. Yeah…we had a plan, but no worries: we could have written it on a post-it.

Our Yearplan:

In 2012 we:

• Have more then 250.000 euro in revenue
• Have more then 5 customers
• Are the Apple for the Government

End.

A case management system absolutely requires you to use more than “only one click of a mouse button”, but we did believe that we could make it simpler and appealing. We changed our technology (moving away from generating HTML templates) by choosing a JavaScript framework and a Backend API framework. Choosing a JavaScript framework was a gamble back then. We chose AngularJS over ExtJS (React, VueJS, etc were yet something of the future), and continued using Perl as our Backend language. Our system became a “Web 2.0” application, we attracted young talent (in both JavaScript and Perl) and our software moved away from the mashup we used, to a fully grown application. We organised sessions with our customers to keep them engaged and used their feedback in our new design. After finishing this process in late 2013, our customers loved this direction and loved the “new” application.

Things were moving in the right direction, and we didn’t have to worry about our competition much. Until that time our competition was trying to sell their “document management systems” as a case management system. And most of them giants dismissed our organisation as a joke, as they all do when a new kid on the block arrives. But after a couple of years, they finally understood that they really needed to abandon their old applications for something new, and now they were struggling to keep up with us.

Well… there was one competitor at that time which gave us the additional drive we needed to beat them. Hell, even the ball on our “Swingball” game was named after this competitor. It gave us the time to get to the top 3 of the market, a comfortable place. And that’s where mistakes are made…

Maintenance mode

Sure, we didn’t have a lot of customers yet, but after the renewal of our product I believed we were feature complete, enough features for sales to sell the product to new customers. I believed I could use this time to prepare the application for “all the users” yet to come. To make sure we didn’t have to throw hardware at it in the same rate as a monkey is eating peanuts. And although I had a point, I was forgetting a few important things. Besides that a product is never finished, customers always need more features and the world is always changing.

As I see it, we went in “maintenance mode”. A phase when you focus on your existing application, and stop building new functionalities. I love improving existing stuff, but I forgot to look around. By removing innovation from the equation, I was essentially killing the company. For the guys who joined in the last couple of years the company became a lot less interesting. We started loosing fellow coworkers who were always eager to work on “this new kid on the block”. People who brought in the vibe of invincibility, and that we could do anything as long as long as we put our mind to it. People who are willing to work their asses of for “the win”.

In the next couple of months, or even a year, it felt like we went in some kind of hibernation. We lost that “invincible” feeling, we got lazy, and even worse: it was contagious. Even our “tender team” (my business partner and one other guy) stopped feeling invincible. We stopped being proud of ourselves, and started copying our competitors. We wrote hundred of pages of project plans to win new customers, something we didn’t do before. We lost sight of who we were, and so were our customers. Yes, our product got more stable, but that doesn’t matter when you only have a few customers to test drive it. And more importantly: we couldn’t get our customers to pay “more” because we didn’t build new things. Because we were an Open Source product, we relied on customers to pay for the hours we put into our system. And try to find customers willing to pay for features they already have…

Bringing in new vibe

At the time, it was difficult for us to see how we could turn around and get into more exciting and profitable waters. We did know that our current mode wasn’t working, and that we wanted the old “vibe” back. But at the same time, we were afraid to change something not knowing if that would end up winning or loosing the last available tenders. Luckily, things turned around at the moment a certain person joined the company when we were recruiting for implementation consultants. This guy, let’s call him Bas, was not a success just because he brought in a great vibe, but he foremost had this unique blind spot: he believed that you always needed to be straight with everyone, including your customers. For the first time we had someone who really challenged us: He got us into a bunch of escalations with customers, because a direct “no” is not always what they wanted to hear. But more importantly, he also wasn’t afraid to point out problems with the company…or problems with us, the founders. Something we weren’t used to and it started some kind of competition. Maybe we felt that we needed to be equally bold, and before we knew it, we started to throw away our current playbook and defined our company again with people like Bas.

Gone were all those boring project plans. We started announcing our way of doing things. Go somewhere else if you want Waterfall, we do SCRUM. We also tried to get rid of all fixed price contracts: we can offer you an estimated price per sprint, and we will let you know what we can do for you in the next two weeks. Between 2015 en 2017 we started moving from Perl to Python, from server clusters to Kubernetes, from Angular to ReactJS. And from “maintenance mode” back to “World Domination”. We felt invincible again. We had won almost all Tenders in 2017, which brought in so much work that I even had to abandon coding just to calm everyone down, including our consultants: to let them feel that this tsunami of work was the best we could have ever dreamed of (“Just send me as a project manager if pressure gets to extreme, I will figure it out”).

When looking back, we can’t really point our finger on what action really turned around our company. I’m known to thrive in a big crisis, but this wasn’t just a short crisis. Somehow I believe it truly helps when you make sure you have people around you who want to take on anything to make a success of something, and that you have to make sure you give them enough fuel to be willing to do it.

But also:

• A product is never finished. Customers always want more, the world is changing, laws are changing. Keep that in mind when creating your pricing model.
• This means that you should implement a workflow to build quality features. A feature race in the beginning is alright, but there won’t be much time to get back to “old failures”. Yes, I got the product stable in 2015, but we added a lot of features after that which could have easiliy undone all the work I did at that time.
• When you are in the business of creating a product, make sure you generate recurring revenue. Even if you are able to let your customers pay for new features. You will need to improve certain aspects of your product in the future. And your customers don’t want to pay for “existing things”.
• Hire people who are different than you. It may be easy to find a new “you”, but in the end, you will need all kind of people to tackle all kind of (cultural) issues.
• A startup is all about change. You will attract people who want to be part of that. You will have to keep innovating, keep challenging them not only to fuel their needs, but also to keep it interesting for yourself.

Thanks for reading!

If you think these insights could be useful, and you think I could help you out, don’t hesitate to get in contact!