By Frank Peters
Our guest insight this week is from Frank Peters, well-known in the angel and in the bicycle worlds for his podcasts and passion. His personal story is full of lessons for us all. – Dave
We’ve all heard the modern day mantra: Fail Fast. It’s good advice; the theory being that entrepreneurs can discover the flaws in their business models sooner, make course corrections and move in a more favorable direction.
In my case as a young software entrepreneur, I had a different approach: Fail Locally, one customer at a time. Perhaps like many businesses, mine started out painfully slow; wage-wise, I think it was three years before I earned $30,000. For me I had few alternatives; working for someone else had proved to be a frustrating experience. I became an entrepreneur by default. I was fortunate that I could write software and doubly fortunate that my despair at working for ‘the Man’ – and feeling compelled to strike out on my own – coincided with the dawn of the personal computer era.
[Email readers, continue here…] I’ve often looked back and said that you didn’t have to be a genius at that time. You just had to be lucky, write reasonably good code and land in an industry with some legs, and of course, treat the customer well. Prior to bombing out of corporate life, I worked as a management consultant and at a very early age I was dealing with the presidents of very large companies. This would serve me very well as my product moved from individual clients to entire Wall Street firms licensing my code. But there was something else at work here.
I can’t imagine encouraging an entrepreneur to follow in my path, but for me, operating alone with no board of advisors, no business plan and no outside capital, I was making it up as I went. I look back and describe the early days as ‘selling software out of the trunk of my car’. I would write code all night then get in the car around noon each day to make my rounds. On the West Coast, where I started, the stock market closed at 1 pm and that’s when my customers wanted to see me.
I was fortunate that these individual customers were well healed; they had the money and were looking for an excuse to buy a computer. As I look back, I can remember so many times where I benefited from good luck. Who would’ve guessed that a day would come when a major Wall Street firm would make a strategic decision to open high profile offices across Southern California? How would they populate these new fancy offices? They would lure the best and the brightest away from their current employers with fat cash advances – enough for a new car, and a new computer. I was a beneficiary of this development. When one of my clients was recruited away from a user, and all his new officemates saw his computer, pretty soon I was invited into the new companies for all those ‘me, too’ sales.
Oh, how I tortured these early clients! Ours was a 2-man operation in those earliest of days; I knew nothing of quality assurance. It would not be unlikely at all that a major update to the software would break critical features that previously worked fine. Flaws like these could cripple my clients, causing them grief, lost productivity and worse, a loss of good will with their clients. Thankfully, these mini disasters occurred in small sizes. I could fix the bugs and hand-deliver the repairs before I infected more clients. In this way I learned a great deal. I would take the slings and arrows of my disappointed clients face to face. And I would learn customer service.
Years later, when news of my product spread to Wall Street and I had my first appointments in these corporate offices, I was well prepared. My earliest job experiences had placed me in similar hallowed places; I was not overwhelmed. At this point in the company’s life, I had developed a mature product used by thousands of happy individual clients who were clamoring for the home office to build interfaces to minimize their manual data entry. But maybe best of all, as we arrived in Manhattan to move my officer to the source, I arrived with a good reputation and, as I like to say, I hadn’t pissed off anybody on Wall Street.
From this point the company grew like wild fire. People liked the product and by buying a license for everyone in their firms, these Wall Street executives were rewarding their hard working sale force. It was hard to believe, but this was a new concept back in the days of ‘green screens’ that only offered market pricing data to the people who made all the money for the firm. We became as popular as the hoola hoop. We went from our largest-ever sale of 3 licenses at one time to a thousand. In ninety days we sold three major firms; and this would only be the beginning of our rapid growth. I look back today and muse, “No one ever asked us if we could deliver all that software.” And oh, did we struggle as we learned all over again how to provide customer service to these large and demanding new clients.
Could an entrepreneur follow this same business model today? I suppose that’s what limited releases are all about. But in our case, our test clients consumed us for our first nine years of existence – no one would advise a similar strategy today. We were lucky that we were able to learn so many painful lessons on a small and local scale. By the time a large opportunity came along, we were ready.