The Blade

…In which a successful founder turns down $250,000 to get what he really wants

In 2006, programmer Wes Aiken started Schedulefly, a clever online program that allows independent restaurants to organize employee work schedules. He invested no money to start it, but in 2008, he teamed up with co-founder and Harvard-grad Tyler Rullman to figure out a business model to make it profitable. Skip ahead to today, and Schedulefly is growing fast with nearly 5,000 indie restaurants loving the service.

But Wes’s moment of truth came three years ago, in 2011.

Wes’s second partner, marketer Wil Brawley, received a phone call from a restaurant chain executive requesting a proposal. He’d heard about how well Schedulefly was working at several locations and was interested in deploying the service to his other 1,000 locations. But to do so, he’d need additional technical requirements, perhaps integration down the road with the chain’s other computer systems, pilots, master service agreements, and lots of individual attention.

The Deal of a Lifetime?

Initially, Wes and Wil were elated with the big, breakthrough opportunity and started writing up a $250,000 proposal. But the proposal got them thinking about what all had to be done to serve this big customer and how it would change their business’s focus, which was serving the specific needs of indie restaurants. So they told the executive “no thanks” and referred him to their competitors. He was flabbergasted that they’d turned him down, so much so that he went dead quiet for a moment in disbelief. But then he told Wil he admired their position.

Be the Best At What You’re Good At

You can read more about Schedulefly’s decision in its blog post, “We left $250,000 (and a million headaches) on the table…” The crux for them was that they wanted to stick to what they’re best at — serving individual restaurants — and to maintain their own balanced lifestyles, which that tight market focus has afforded them. This has turned out to be a smart business decision because since then, Schedulefly has been able to keep its software simple for its users—which is exactly what indie restaurants want. Their customer satisfaction has fueled strong growth mostly through word-of-mouth. Could the company have added all those customers had it taken this big deal with a chain? Probably not.

Bigger Isn’t Necessarily Better

Taking on big customers isn’t always a good thing for start-ups. First, consider the dangers:

• The needs of this big new customer (BNC) may differ from those of your larger base of customers and lead to your larger base being less happy with your product.
• The BNC may start to dominate your time.
• The BNC may gain enough leverage to negotiate less favorable terms for future sales.
• If the business of the BNC goes away, you may be left high and dry.

The key takeaways for all aspiring entrepreneurs from Schedulefly’s moment of truth are:

• First, you can be successful without chasing each great deal that comes along.
• Second, serving a niche market allows you to cater to your customers’ specific needs.
• Third, you don’t have to grow exponentially; you can growth perfectly well from a strong niche base of loyal customers.

As the above referenced Schedulefly blog post concludes, “It’s 10:52 a.m. on a Friday. Rather than working through a rollout plan right now, I’m going to take my kids to the park.” I think that says it all.

Brian de Haaff’s recent LinkedIn post “Why This CEO Will Never Hire Another Salesperson” earned serious PR for his two-year-old roadmap software company, Aha!: half a million views and 2,300 comments. He says the post is his “first volley in a healthy debate.” Brian, chase down this top-spin lob if you can.

Instead of hiring commissioned salespersons who carry a quota, Brian says that Aha! has created a Customer Success Team, a group of well-compensated employees who take care of prospective customers. From my understanding, Apple Stores don’t compensate their salespersons with commission either, and for me, the experience there has been strikingly warm and easy-going. So it’s not a bad idea. But does that make it best for your firm?

Brian says buyers of emerging technology want relationships, authenticity, collaboration, and information, strongly implying commissioned salespersons can’t provide these things. Though he doesn’t blame them, saying “It’s not them though and they should not be blamed, it’s how they are motivated that’s all wrong.”

Many high-tech firms do push products by investing in huge marketing budgets for driving sales leads, and their Sales VPs must hit their revenue targets each month. This has created some brutal sales cultures. You know the drill, “… first prize is a Cadillac Eldorado … Second prize? A set of steak knives. Third prize is you’re fired.”

A friend of mine, who wishes to remain anonymous, worked as a commissioned sales rep for a well-known high-tech firm and had this to say: “Their ‘Core Values’ are meaningless. They certainly don’t practice what they profess, and all they care about are the numbers and not their employees. You don’t go home unless you have booked a certain amount of demos or made 150 calls. There was no value-selling. ” I couldn’t agree more that this way of working with commissioned reps is all wrong.

But I’ve hired dozens of commissioned salespersons who’ve been great relationship-builders, authentic, collaborative, and informative. I’ve started two firms, First Research, provider of sales and marketing-friendly industry profiles, in 1999 (sold in 2007 to Dun & Bradstreet), and Vertical IQ, a similar firm, which launched in 2010. These sales professionals are patient and don’t push products. We don’t hold them accountable each week, month, or quarter to hit some arbitrary sales number. They work hard to make sure customers are successful, which is why Vertical IQ has a 98% renewal rate. And guess what? They earn commission for making existing customers happy as well. But they also have challenging jobs because we don’t raise capital, and therefore, we have small marketing budgets. They must work hard to find their own leads, cold call, listen carefully, run successful pilots, and manage the complexity of a negotiation. Selling like this is a unique skill, and most aren’t cut out for the difficulties that go along with it. I doubt I could attract this type of salesperson if they worked for a set salary. I doubt they’d think it was worth the heartache and disappointment that come along with this type of job. In a way, they’re entrepreneurs themselves—constantly battling risk versus reward—perfectly aligned with the goals of the company’s owner.

So if you’re an entrepreneur or an aspiring one, think about the perspective of those who provide you advice. For this issue, you now have two perspectives: Brian de Haaff’s and mine. I have no problem sharing the revenue I receive as an owner with the salesperson when they land another happy customer. And guess what? Our customers are happy. So are we.

In her 2002 song, “21 Things I Want in a Lover,” Alanis Morissette lists among them, “Do you derive joy when someone else succeeds? Do you not play dirty when engaged in competition? Are you uninhibited in bed, more than three times a week, up for being experimental?

She wants a lover, but she wants a certain type. Likewise, many entrepreneurs want a co-founder, but a certain type. In a study I’m conducting about how good ideas become successful firms, 85% of the successful start-ups had more than one founder. So there seems to be an advantage in having one, but how you do you find a co-founder with the traits you want? Alanis provides us a helpful hint, noting that her “21 things” are “not necessarily needs but qualities that I prefer.”

When it comes to choosing a co-founder, as with any meaningful relationship, you can’t always get exactly what you want. Let’s face it; all human beings have weaknesses and differences. However, you can do a better job if you take the time to consider the traits that are most important to you. For example, is he or she aligned with your way of thinking about business and the future?

To mimic Alanis, here are 21 things I choose to choose in a co-founder:

Do you derive joy by solving problems? Do you like working 40-hours a week because that’s enough work to still succeed? Do you have lots of intellectual capacity but understand that it alone does not equate to building a great company? Do you see big corporations as the enemy but still respect their roles in society? Are you passionate and flexible, open-minded, and don’t believe in taking advantage of employees? Do you derive joy from diving in and seeing a project through just for the love of it? Are you independent and self-motivated, like adventure, and offer skills that I don’t have? Are you creative at work, more than three times a week, up for being experimental? Are you honest? Are you thriving in a job that helps your associates and customers? Are you not money hungry?

If you ‘re looking for a co-founder, I suggest you make your own list. And keep in mind that while it’s impossible to find a partner with all the qualities you want, you can find one that has most of them.

Here’s an acoustic version of Alanis’ “21 Things I Want in a Lover” if you’d like to check it out: https://www.youtube.com/watch?v=z9u5MQqaG0o

I stumbled upon a book the other day, The 1,000 Most Important Questions to Ask Yourself by Alyss Thomas, a psychotherapist. Is it just me, or is that a lot of questions?  I’m sure pondering answers to questions can be good therapy, because contemplation helps us understand ourselves. But the process can also overwhelm us. This also happens all the time to aspiring entrepreneurs, who are constantly asking themselves questions. Here are a few:

Is my product idea a good one? Where do I begin? How will I get it built? Should I quit my job and pursue my idea full-time? How much will people pay for it? Will it make money? Should I seek a partner, or go it alone? If I seek a partner, then who would make a good one? How much money will it take to get started? Can I even afford it? How will I go about marketing and selling it? Should I seek a patent? Should I write a business plan? How much research should I conduct before starting?

Questions like these, and 985 others cause conundrums on our minds, can paralyze us, stopping us from taking action. How could anyone possibly answer all these questions? We can’t. During the past year, I’ve interviewed dozens of successful entrepreneurs, and one trait they each share is that they try not to allow 1,000 questions to slow down their action. Instead of pondering questions, they take action—and see where the journey takes them. A New York Times article “Do You Suffer From Decision Fatigue?” says suffering over too many decisions saps all your energy and even has long-term health consequences. So instead trying to answer all these questions, save your energy to get real work done. I say, go chase your idea. You’ll figure it out.

Furthermore, I’d prefer to ponder more serious questions such as: What should I have for lunch today? Will my beloved N.C. State Wolfpack win their basketball game tonight? What would my wife love this year as a Christmas gift? Actually, I think I know, but it’s a little pricey. Hmmmmm.