Founder's Blog
Posted on by Justin Couto

Bootstrapping Ain't Easy: You Can Only Win if You Keep on Pushing

Noodle the Doodle struggling to push through a brick wall.

No one starts a business to have it fail, but unfortunately, that is what happens all too often. I know I certainly had many close calls with business failure while running my former companies, and the weight of those seemingly inevitable failures baring down on you is crushing. It can be kryptonite to the point that your paralyzed and utterly ineffective at finding a way out. I believe there is always a way out, and the key to finding it is just to keep pushing forward. My Dad used to say,

"There's always another way, and if you keep looking, you'll find it."

His advice was something I was fortunate enough to hear many times growing up. He always inspired me to do my best to continue on, and in every case I can remember, I'd find a way to overcome my challenges.

Even though I've experienced being on the brink of failure, and then suddenly turning what seemed impossible into a breakthrough many times in my life, it is never easy. The reassurance I got from my Dad, the reminder to keep pushing forward, coupled with the success that followed, has instilled a confidence that enables me to stay focused when these situations arise. I realize that I was fortunate to have this kind of upbringing, and I know that not everyone has this type of support. It's why I wanted to share my experience in hopes that my post could serve as the same type of reminder my Dad used to give me for someone struggling through it.

In 2008, when the economy was crumbling like a house of cards, I was two years into running my second company. The first two years started amazingly well. We were mainly doing consulting work, we were profitable, and we were growing. We had hired several people, and we had just moved into our very first legit office that wasn't attached to my house.

Then, the economy crashed, and over the course of 2008, nearly 100 percent of our revenue came crashing down with it. At the time, we were in the middle of a strategy to move away from consulting by building software add-ons that expanded the functionality of a popular community platform that was growing at a fast clip. It already had a vast customer base and a market we could easily reach and sell into.

In early 2009 when our revenue completely disappeared, I wasn't too worried about it. Prior to launching this company, I did consulting work for two years and saved every penny I could. We also had been profitable from the beginning, so I had built up enough cash to get us through a little more than a year with no revenue. That's something I thought would never happen, but then it did. We planned to accelerate our transition and focus on building our software add-ons. I was excited and looked at the loss of our consulting revenue as an opportunity to double-down on the new direction we were headed. So we marched on!

During that year, we built several innovative add-ons we knew communities on the web were clamoring for. We created an event management add-on that would enable communities to host paid and unpaid events.

The add-on provided event registration, payment processing, name tag printing, the ability to see and connect with those attending, and it had a file, photo, and video gallery feature that enabled communities to capture and share all the event's happenings. Also, we built an e-commerce add-on that enabled online communities to sell their merch, and we developed a subscription add-on that would give communities the ability to manage paid and unpaid memberships. It was awesome!

During this time, we had partnered and were working closely with the company that made the community platform our software plugged into. We had regular meetings with them to demo our progress. They always offered positive feedback, and we were excited about what the future held. During this period, the founder of that company hired a CEO to run the business so he could focus on the product vision. At the time, this sounded like a smart move, and we thought it wouldn't have any impact on us. We were so wrong! Little did we know the new CEO would take the company in an entirely new direction, nearly destroying any chance of our survival.

In the summer of 2009, just three weeks before the scheduled launch of our products, we were blindsided. The company we had partnered with had been working on a top-secret project led by the new CEO to turn their community platform into an enterprise-focused platform. With this came an entirely new business model that didn't align with the add-ons we were building. To make matters worse, they took a product that had a free entry-level version, and a $20,000 max cost enterprise version and changed the pricing structure to having a base price of $150,000. This move literally alienated 98 percent of their customer base on the day they announced it. The bad news kept coming. In addition to these changes, they also rewrote the view layer of their codebase, rendering it utterly incompatible with the add-ons we were about the launch.

I was devastated. The timing for this announcement couldn't have been worse. I couldn't believe they didn't give us a heads up that this was coming. The CEO must have been punch drunk in the Jobsian iPhone era of secrecy that he thought it was a good idea for them to withhold this information from their partners. It made zero business sense. Had we known, we could have built our products for the new platform and launched alongside them, enhancing their offering. Instead, they hung us, their other partners, and their existing customer base out to dry. Our once plentiful bank account was running on empty, so by this point, my wife, who was our CFO, and I had already quit paying ourselves. We were out of money, and we could not afford to rework our code to make it compatible with their new platform. We were done.

For a few days after that, I was spiraling in fear of losing our company. I thought it was the end of the line and everything our team had worked so hard for was for nothing. I thought there was no way out. The only thing I could think to do was call my Dad, who we had just learned a month earlier, had an inoperable brain tumor. The world was closing in on me, and my stress level was at an all-time high. I was already worried sick about my father's health, and now I was on the brink of losing everything I had worked so hard for. I will never forget the conversation I had with him. My Dad, a land leveler, had no real understanding of software development, but yet he always wanted to hear about it. When he picked up the phone, he immediately asked what was wrong. He could sense the worry in my voice. So, I dove into every painstaking detail of what had transpired. He listened and didn't say much. I went on and on. When I finally ran out of things to say, I asked him what I should do. "There is only one thing you can do," he said.

"You have to keep on pushing forward and find a way to continue. There is always a way forward, and I know you will find it."

That's all it took. My Dad's confidence in me got my mind back on track, and for the first time, I started to think clearly about the different options we had to move forward with our launch. Then, like a lightning strike, it hit me. I suddenly realized that nothing had changed. The same exact number of potential customers that used the community platform compatible with our add-ons before the devastating announcement was the same number after the announcement. There was no upgrade path or a pricing structure that would work for 98 percent of those customers that were essentially marooned on the old version. The only thing the announcement changed was my perspective.

Once I realized that the opportunity in front of us had not changed, I got right to work planning our launch. With a barrage of social media and online marketing, we launched our add-ons a few weeks later. It didn't take long before we were closing sales and landing new customers. Things were moving in the right direction, along with our bank account. Just when I thought we were out of the woods, I got a call from our partner's lawyer. As soon as I answered the phone, I got an earful of threats informing me that I must immediately cease and desist using the companies name in our marketing efforts, or we'd be hit with a major lawsuit. It caught me completely off guard. I fired back that we were partners, and had the right to use their name in my marketing efforts. It turns out that our partner was worried that we were keeping people from upgrading to the new version of their platform because we were offering them new features on the old platform. I ended the call telling them to proceed with their lawsuit because we weren't about to stop selling our add-ons. They left us with no choice but to sell to customers on the old version, and we needed to do this to survive.

A few months later, after multiple meetings and several demos of all of our add-ons with a potential customer, something unexpected happened. As I was closing in on the sale, the customer informed me that his company was using the newer version of the community platform that our add-ons were not compatible with. I was confused by this because I usually started my pitch by explaining that our add-ons were only compatible with the older version of the platform. Immediately I began to apologize, thinking that I had wasted this person's time. He quickly stopped me and reminded me that I did inform him that our add-ons wouldn't work with the version they were on. This confused me even further because I had no idea why anyone would waste their time learning about something they couldn't use. Next, he asked me if we had any plans to bring our add-ons to the new platform. Quickly, I responded with, "Not at this time." Then, he asked if we would be willing to upgrade our add-ons if his company paid us to do it. I was stunned. Would they really do this, I thought? A few weeks later, I learned that it wasn't a joke as we negotiated our deal and signed the contracts.

This period started as one of the toughest times I've had as a CEO, but it ended as one of the most successful. We went from selling add-ons for $3,000 each to $30,000 each. Our client list grew to include Microsoft, The March of Dimes, SlimFast, Lexmark, and many others. We were even able to successfully repair our relationship with our partner. When I reflected on this trying period, I realized that my company only survived because I kept pushing forward, just as my Dad suggested. Nothing magical happened. I just kept pushing forward, and I found a way. If you are in it now or are ever in it in the future, just keep pushing forward, and you will also find a way. You can only win if you never give up. I believe in you!

Have a good one!

You may also be interested in...