Screwing Your Customers Is Supposed To Be Bad For Business

Posted on by

We are traveling to Florida the end of March. We booked the travel in November because it is Spring Break and traveling during the Break is always risky. At the same time we booked a car. This past week my grandmother called to offer us her car. No reason to spend the money on a rental, she said. We were grateful.

I called this morning to cancel the car and was told I rented the car under a no change, no refund policy. I couldn’t believe it. I’m calling more than three weeks before the travel and Hotwire is telling me I have no recourse. They said this was part of the agreement, which of course is only provided as a click through link when signing up, and then is buried in a multi-page agreement. I don’t remember the site ever once saying, clearly, booking this car means no changes and no refunds.

So I called Hertz. Here’s a company that supposedly takes care of their customers. No dice there either. They basically said I should have booked with us instead. Great. I have a $400 rental car in Florida that I don’t need. I love pissing money down the toilet.

It bothers me that Hotwire trusts their services so much that they bury important information like no refunds or changes. (Delta changed our flight and we arrive 7 hours earlier. Hotwire wouldn’t change our arrival time either — no changes — so who knows if we will have a car when we get there.) This makes Hotwire look shifty and underhanded.

I’m just as disappointed in Hertz, though. Here’s a company that supposedly takes care of their customers and they are basically telling me to pound sand. Why, if you want a good relationship with your customers, would you even rent cars through assholes like Hotwire? Could you imagine buying an iPhone at an AT&T Store and then Apple telling you they won’t support your iPhone because you didn’t buy it from them?

It’s not like I’m an amateur here. I’ve sold products to customers for 17 years. We have always tried to accommodate them even when they didn’t buy through us. This is particularly challenging in the App Store world, where we are given no recourse for our customers. I’ve given away tons of promo codes to customers who felt they bought the wrong product even though we have no means to prove a purchase was made.

I will definitely never book anything through Hotwire again. And as for you, Hertz, we’ll see if I get over this one. At the moment I wish a plague on both your houses.

65 Years of Honda Innovation In 2 Minutes

Posted on by

(I apologize if you saw this twice.)

Great commercial from Honda. It runs through 65 years of innovation by the company in two minute.

What really jumped out at me was how disruptive the company was, a la Clayton Christensen. Bolts to engines to motorcycles to small cars to bigger cars to… . Honda attacked one small segment of the market with each advancement, were laughed at with each step, until their motors were considered some of the best engineered in the world.

The Art Of Bootstrapping

Posted on by

Some great articles (or references to them) this morning about bootstrapping. Bootstrapping is the art of building a business from its own revenues or resources that you have to repay implicitly. This is opposed to a funded business, which grows based on other people’s financial resources.

Infinity Softworks has been both bootstrapped and funded. When we started in 1997 we received a small angel investment ($10,000) and then in 2001-2002 I raised a round of financing ($550,000). In 1999 I borrowed $10,000 to buy out my business partner. That was repaid in a year and a half. And then in 2009 we borrowed $120,000, which is still being repaid. Except for the funding round in 2001-2 and the few years after that in which it was used, I would argue that Infinity Softworks was bootstrapped the other 15 years.

First, I will point you to a great post by Justin Williams. Justin recently bought an iOS, Android and web service called Glassboard. In Getting Good At Making Money, Justin writes:

If there is one thing I don’t think I excel at as a business man, it is making money. That’s probably not a good thing to admit publicly, but it’s reality. In fact, I’d argue that I’ve gotten worse at making money in the past several years as the third-party software market has bottomed out. Making money was hard enough selling $25-$40 products. Try doing it when your most expensive app is $4.99.

I can relate. Making money the past few years seems like an afterthought. The only thing keeping most of us going is a love for the craftsmanship and product. I feel that way a little, too. After spending more than a decade charging sustainable prices for our products, I’ve forgotten how to value price and feel like the business side of my brain has turned to mush. I’m working on that now.

Given that, Justin (and I) are making money and do remember how to do it. Both of us have been doing contract development jobs to pay the bills. So it isn’t exactly a lost art, it just hasn’t been as focused on product as either of us would prefer.

Next, Theresa Shafer over at SKMurphy, a consulting firm, points to Five Serious Financial Mistakes Bootstrappers Can Avoid. It’s an excellent starting list. More on this later.

Finally, an article in Inc. Magazine from Jason Fried of Basecamp (formerly 37signals) fame (via Manton Reese). In this three year old article, Jason writes about how to get good at making money. In it Jason discusses how he learned to make money and how, like learning any other skill, it takes practice:

One thing I do know is that making money is not the same as starting a business. For entrepreneurs, this is an important thing to understand. Most of us identify with the products we create or services we provide. I make software. He is a headhunter. She builds computer networks. But the fact is, all of us must master one skill that supersedes the others: making money. You can be the most creative software designer in the world. But if you don’t know how to make money, you’re never going to have much of a business or a whole lot of autonomy.

If I have quibbles with any of these articles it is that none of them pound us in the head with the only thing a bootstrapper needs to know: CASH IS KING. Nothing else matters and every decision needs to be made to maximize cash. Yes, all of these articles refer to revenues. But revenue is not cash. Here’s an example: I do a contract development job today for $10,000. When done I submit an invoice and the company takes 60 days to pay. Yes, I have $10,000 in revenues today but I don’t get the cash for 60 days. How do I pay my bills in the meantime?

I am relentless when it comes to managing cash. I have a spreadsheet that gets duplicated and updated with actuals and projections every month. This allows me to make cash flow decisions months before the negative shortfall actually happens, allowing me at various times in the history of the company to ratchet up spending, lay people off, cut payroll or minimize other expenses. Because of this work, I see the company very very clearly on a month to month basis and can make appropriate choices.

It isn’t easy, but I’d never put running a business and easy in the same sentence anyway.

Paul Graham: Start Small To Grow Big

Posted on by

One of the most influential thinkers in the world of startups has got to be Paul Graham. The founder of Y Combinator also writes some of the most influential essays, always excellent and thought-provoking. Recently Paul announced he was stepping down as the head of Y Combinator and then was interviewed at The Launch Festival about the things he has learned.

One of the most interesting and important comments, from this TechCrunch article, was the following:

In relating the ingredients or factors that are the secrets to — or most often point the way to — achieving that illusive hockey-stick-style growth curve, Graham said:

“Start with a small, intense fire.”

In other words, find a small number of people that want what you have or are making badly. In the beginning, Graham said, that number is going to be small, and that’s okay. Don’t be embarrassed. Graham related the example of Apple, which only produced a couple hundred units of Apple I, its first computer. However, Apple sold 175 of those 200 units within the first 10 months by finding and appealing to early computer hobbyists.

More so than identifying who you want your users to be, your ideal customer, you have to understand who your users actually are, and who is really clamoring for your product. “You’ve got to know who those first users are,” Graham explained, “and sit with them, spend time with them, focus on them — have a party with them.”

Your first goal is focusing on those first 50, 100, or 500 users, and make them really, really happy. If you can do that, you’re on your way, and you can go from there, he said.

I’ve been asked how we get started a lot lately as we applied to a startup incubator for Equals and did some practice pitches last year. What’s the marketing plan, they ask? I know what I’m doing in my head but I’m certain I’ve done a really lousy job of relating what I’m thinking to others.

Paul Graham put the right words in my mouth. Our goal is to get 50-100 extraordinarily committed customers using and excited about Equals. I want to understand these people as well as I can and then use that knowledge to tailor the product even further. I believe the marketing plan will flow out of this work.

The problem, though, is that getting “50, 100 or 500 users” is really hard and that’s one of the reasons we chose to work on Equals out of all the prototypes we wrote a couple of years ago. We have 1.5 million iOS and Android powerOne downloads, 230,000 of which use our software calculators — which solves a similar job to be done — on a monthly basis. Of those 230,000 active customers, 50,000 are using one of our paid products with the rest using our free ones. We have already queried a small subset about Equals (about 2,000 of the 230,000), showed them the site, a video and other materials and had some small conversations with a few. The email list stands at around 700 right now.

I’m betting that Paul Graham is right, that it takes less than a few hundred to start an inferno. I’m also betting that we will find those 50-500 amongst our existing powerOne customers. We will know more in the next few months.

If I Think I Get Hate Mail

Posted on by

Man, if I get hate mail I can only imagine what Evernote receives. Phil Libin wrote an article on the topic for Inc Magazine over a year ago. In it he says how complaints are his favorite kind of comment:

On the night before we first released the Evernote service, in 2008, I made a quick screen capture movie pointing out the features. Apparently the audio of my voice was not satisfactory, because the first comment we received was, “Whoever did the voiceover in this video ought to be found and beaten to death.”

I respectfully disagree, but even in a comment like that, there was an element of truth. The audio was bad. My narration was sloppy. We fixed it.

Classic Libin humor, too.

He’s right, though. I receive tremendous value from negative feedback and we have made many improvements to our products based on it. But all the same, I’ve seen negativity done well and negativity done poorly. Frankly, Phil, that feedback is negative done poorly.