Running a Company
I’m not a career businessman. I don’t have years of successful / failed businesses under my belt. I’ve not run Silicon Valley startups or managed to get series F millions from top VCs. I’m just someone who has been part of semi-accidentally building a software agency which, at the moment of writing this, is doing relatively well.
I write about my experiences but in no context do I claim that my experiences apply beyond the specific case I’m talking about. My claims are purely unscientific and anecdotal. Your experience might, and probably will, vary. I’m also talking purely from an agency point of view. A product company is a completely different beast.
Are you thinking about starting a company? Don’t.
My resume (for context):
I’ve been in the IT industry since 2000. I studied Computer Science in University of Helsinki, (yes, the one Linux comes from). I’ve been programming since my early teens, starting with Pascal. For the first 10-or-so years of my professional career I was a Java back end / Java web developer. I worked in various Finnish companies as a consultant until moving to Munich, Germany and joining a German BI company to work as a Java back end developer. My love of UI design eventually drove me to join a design agency in Munich where as a stroke of luck I turned myself into an Android developer. Eventually, before starting my path as a founder I had worked in various very different companies and very different clients nearly 15 years.
I also experimented making a passion project into a real product. I spent a long time and countless hours building and iterating on the product prototype. Eventually, after a Kickstarter that reached the goal but failed to trigger enough interest to sustain the product it all had to be shut down. This whole adventure was one of the biggest learning experiences of my life when it comes to running a business. It taught me a lot from choosing your business partners to understanding the demand consumers put on a product once you ask for any money.
I sometimes think about a what-if scenario where I would have started my own company sooner. Would I have managed? Would I be further ahead now? Or would it all have come crumbling down soon after? In the end, I’m happy that I didn’t. All the experiences as an employee has taught me a lot and have made me look at things with a wider scope. Which, I think, is hugely important.
Finding a partner
Don’t go into business with your best friend. You will need your friends to keep your head above the water when the times are tough. You need to have a life outside your work.
I would not start a business with a complete stranger either. You need to know that your work ethic, habits are compatible and skills should be complementary. Look into your past for potential partners. Colleagues you worked together in a previous or in your current job.
Your network is the most valuable asset you have. Build it.
Find a partner you enjoy having beers (or any non-alcoholic counterpart) with. And when talking over those beers, the discussion automatically evolves into new, interesting directions and you could talk hours about nuances of your experiences in the industry or ideating about new directions and opportunities without judgement. Find someone with a complementary, but aligning skillset. Find someone who isn’t like you but isn’t an opposite either.
Finding the right partner is harder than you think. Be aware that your business partners might change. This doesn’t mean your business is doomed if things don’t work out with your business partners. Your ability to keep going in the face of such changes is a good sign of the resilience of your business. Snapp has seen 5 business partners choose to follow other interests as the business evolved from our early days of writing Smart TV apps.
Planning your business — doesn’t work
There is no such thing as a ready plan. You won’t know what parts of your business will succeed and which will fail. Just start. Start from something you’re good at. Passion wont drive you long enough, your skills will.
Snapp Mobile is currently the 4th or 6th iteration of composition of the management team depending a bit how you count. None of the people involved knew, or had a plan, where all of this would lead and we still don’t. We operate based on the current best bet. We have learned our strengths and our partners’ strengths.
Some people who started the initial company are no longer around, some new have joined. In fact, I wasn’t really part of the very beginning of the Snapp story either. I was lucky enough to be invited to join soon after the initial steps of the very first iteration. The company has changed its name and composition multiple times together with a direction. Many of the changes have been fairly organic stemming from the needs of our customers or interests of the founders. Some changes have been easy, some more difficult.
When you start with many people, it is inevitable that people’s expectations and life situations won’t follow the same path. Don’t be afraid to push the issue when your interests are not being met. Sometimes it will mean parting ways with others, sometimes it means taking new risks. Complacency and stagnation will lead into lack of interest and slow demise almost certainly.
You’re going to be stepping on some toes on the way even if you tread carefully. Conflict is inevitable. How you deal with the conflict is up to you. Don’t make enemies.
Your network is the most valuable asset you have. Build it.
Companies are built on top of their founders’ reputation and network. Building your personal brand, as stupid as it might sound, is essential. You’re literally selling yourself and trying to convince the people you hang out with are also worth it. Your reputation is the currency in play.
The chances are that you’re part of the Android world if you’re reading this. The Android community is a fantastic starting point compared to many other technologies. Personally, I’ve been active in the community for years before my entrepreneurial beginnings. I’m one of the organisers of the local Android user group (actually, together with Markus Junginger we restarted the sleeping group in the early 2010s), I’ve been talking in conferences about Android usability from a technical perspective and wrote a book about the topic. This all stacks up. I remember one of the very early phone discussions with a potential customer where the “interview” was quickly sidestepped by the customer telling me that they have my book on the table in front of them. Don’t wait until you have a company started before you start to look for customers or potential customers.
Marketing is difficult. I find it much easier to do good work and that way I keep getting invited back to work with previous customers. There is no silver bullet for finding customers. You either need to be cheaper, better or more reliable than the competition.
And you need to get the word out there to your potential customers. They need to know that you exist.
Dealing with customers, permanently temporary
For agencies, customers are everything. If you run out of customers, you run out of money sooner or later and it is all over.
As an agency, the commitment between you and your customer is often one directional. You commit to deliver long term, they commit to pay only your next invoice. But that is fair. You, as an agency, provide the scalable workforce. If things go badly, you’re the first one out the door. That’s the deal. Every contract you have is always coming to the end. A renewal will be negotiated. You’re permanently temporary.
Your own employees, however, are permanent. When you hire someone you must sincerely commit to them, long term. This is, of course, different if you live in the US where the culture is different. I’m talking about my experience, Europe.
This is a balancing act between customers and employees. As said, commitment to your employees must be absolute. But so should be your commitment to the customer. You’re hired because your customer believes that by paying you the product they’re building will be better than without you. If you want to have a long running company, you have to make that belief to become reality.
While some customers dodge commitment, the reality is that the more your customer can commit to you the better product from your side, your team, you can provide. A long term relationship allows hiring talent from your network your customer could only dream about as well as bringing specialised expert contractors with little or none margin to push the product being worked on way beyond where it would otherwise go. Some customers will realise this better than others.
It’s all your fault
If you’re a company founder you not only sit on every chair and take on every role but also take blame for everything. After all it is you, who is in control.
Prepare for this mentally. If things are going well, you might feel invisible, when not, you’re the center of the attention. That is what you have chosen. The things really are your fault! As a founder your main role is to make sure that others are happy and can do their work.. and get paid.
Personal conflict, financial trouble, customer dissatisfaction, everything is on you to solve. If you’re lucky and have great business partners you will be able to lean on them to solve some issues with you. At the very least you need to have people to talk to and come up with solutions.. or if nothing else, you have someone to drink beers with and curse the world together.
Success is luck, timing and hard work.. But mostly luck
I hate business-self-help books. Reading them feels like reading a lottery winner giving tips on how to win in the lottery. There are so many variables, so much is dependent on factors outside your influence that no matter how hard you work, your success is likely mostly due to luck.
That’s not to say that you don’t have to work hard to make things successful. You do. A lot. But the luck factor alone can turn your hard work into a failure. This is important to remember especially if you happen to be lucky enough to make your hard work into a success. People who aren’t as successful as you are at that moment aren’t lazy or not working hard enough.
There’s a great YouTube video about the topic. I think about this all the time:
A founder = a recruiter, a sales person and an accountant — and the leftover projects — with many bosses
I hear people saying “I want to be my own boss”. Sure, but then don’t start a company. As a founder, you don’t have a boss, you have many. Every person you hire comes with their demands and needs. Fair enough, that’s part of the deal. But that also means that you are constantly playing whack-a-mole dealing with demands and requests. Each one of your employees feel, justifiably, entitled to your attention and getting their individual issues sorted in a timely way. As an employee you only see your reasonable requests but don’t see everyone else’s equally reasonable asks. These things pile up.
You will soon be overwhelmed and start “dropping packages”. Your email has more unread than read emails and you fail to answer things like to job applicants. While you are working hard, you start to look a bit like a dickhead to people who don’t know you. All they know is that you couldn’t even be bothered to respond to the job application they put a lot of effort into writing.
You thought that you, as the boss, will be getting to pick the best projects from the top but soon you realise that it is the exact opposite. You have to take, and deliver, everything that others would dislike. For an agency, every customer matters. You become worried about potentially losing customers, or even worse, losing your employees if you make them work on irritating projects. So it’s you who takes all of these.
But at least you make a lot of money, right? No. You don’t. You get paid if there’s money left after everyone else is paid, taxes are paid and all the other costs. This means that it is highly likely that you will go months without a single salary and, especially in the early phases, your own salary is likely going to be smaller than most of the people you pay to work for you.
On top of that, your main work is no longer writing code and learning the platforms you care about. No, your main task is to track down receipts, get money sent to the right place at the right time and figuring out who you can hire. Effectively, you will be a combination of an incompetent accountant and a bad recruiter.
The best thing about running your own company is that you get to surround yourself with people way smarter than you. The most difficult thing about running a company is trying to find those people.
Hiring the right people is a key factor in success in most companies. In Agency work hiring has added difficulties due to the special nature of the work.
Cost of people
In a very basic form agency business boils down to this simplified equation:
RATE FROM CUSTOMER — SALARY = PROFIT
While simple in theory, in practice it becomes quite complicated. Rates your customers pay vary. Project durations vary. People’s salaries don’t and you have to pay them whether they are on a project or not. So what is a justified profit you can make? If you try to make too high profits, you might not be giving people the money they deserve. If you don’t make enough, the whole company might go under after losing a customer or two and nobody has a job.
Permanently temporary customers and instant urgency
Customers hire agencies to solve problems. Often these problems are very urgent in nature. A launch deadline might be coming up and the product isn’t ready. Or the end users might be complaining about bad quality and the brand is in danger. The customer usually needs help, now. But where do you find the people to help them now? It’s not like you can have a team of heavy hitters sitting on the bench waiting to be called in to a project. No, you have to start making decisions about expanding your team.
But of course, your customer doesn’t want to commit to a long term partnership. If they would be able to, they probably would be building an internal team instead. So do you hire someone? What if their notice period is 3 months? How do you know if any of your customers are going to be needing the matching speciality of the new hire at point? You simply won’t be able to know. You either decide to take the risk and go for it (and if things fail, it’s your salary that won’t get paid) or you pass on the opportunity to hire someone fantastic to expand your team. It’s a constant tug of war between risk and stagnation.
By my experience customers often go directly from “we don’t know when things might start, maybe in 6 months” to “we should have started yesterday”. Again, this is understandable. It’s the nature of our fast moving industry and changing demands. This urgency is also what allows agencies to operate. We provide the rapid scaling the customers can’t achieve with their internal teams alone. That said, customers who are able to provide a longer, more stable relationship are likely going to be reaping the benefits of much better team fit from the external team as the agency is able to plan and provide much better fitting people for the tasks in hand.
Parting thoughts and future (TL;DR)
Running a company has been a wild ride. There have been ups and downs. Successes and failures. I feel that I’m still in the very early state of my career with this. I learn something new every day. Some days are hard, some harder. But I don’t regret going this way.
I’ve also re-evaluated some of my past experiences as an employee. Some situations I thought were simple or incompetence by my managers might actually have been bound by constraints invisible to me or even by constraints that I didn’t know existed. I’m happy I accumulated a lot of experience in different companies before starting my own. I would not have been ready earlier.
I feel lucky to be able to do this. We have built a fantastic team at Snapp Mobile and at We Are Systematic. We’re currently financially stable enough to be able to hire some of the people I’ve dreamt of working with while helping the existing team to grow into something amazing. I pledge to keep on working hard to push us even further and keep the good things rolling. I want to expand our team into more diverse cultural backgrounds by adding new nations to the Snapp’s already long list of nations as well as build an inclusive, diverse team from the nations we already have hired from.
Thank you to everyone working for Snapp, everyone who has worked for Snapp in the past including all the fantastic freelancers who have joined us for a project or few! Last but not least, thank you Jasper for being a partner and a mentor on this trip from b.telligent to Snapp-TV and Fat Robot and eventually Snapp Mobile and beyond. Let’s keep on kicking ass!
Are you thinking about starting a company? Do it!