6 Huge Mistakes I Made In My First Business.

I worked in my family’s music business from the age of 12 (probably not legal now!). Then I went to uni, dropped out after 6 weeks and took over the business aged 19.

I am a non-technical founder (I don’t code) but chose to digitise the brick-and-mortar business my family had been running for 25 years.

I saw the massive value in putting tech behind a “traditional business” to bring in more revenue and increase our efficiency and ability to grow (something I preach about a lot these days and see as a huge opportunity within the tech startup world).

We did take it from it being on its knees to doing well - but I made A LOT of mistakes. Big ones. Ones that I see founders making now.

I always want to show both sides of the founder experience, success and failures, so these are the huge mistakes I made in my first business.

PRODUCT DEVELOPMENT
1) I got burnt by multiple development agencies building my product.

Because I don’t code, the only route available to digitise at the time was working with a development agency. I had no idea what a tech stack was, what languages were the right or wrong ones, how to product manage or how much control I was supposed to have.

So, the inevitable happened. I committed to a fixed scope that inevitably wasn’t right, the agency did the product work or took my direction too literally so we didn’t build the right thing (they didn’t have a dedicated product team), they weren’t transparent and would come back every two or three weeks with their progress (or lack of)– there was absolutely no alignment at all.

Not only did this happen once or twice but three times.

I lost a lot of money and a lot of time– it was nearly catastrophic. It was a nightmare.

This is why these days I advise people (other than working with us, of course) to work with an agency that:

1. Challenges founder throughout and pushes back, not just building exactly what they are told. Uses their previous experience to inform their decisions with the current project.

2. Makes sure the founder is always in control, and has line of sight of what is coming up and daily updates.

3. Has a product team to advise on the best process to go through to make sure what is built is the right thing.

4. Has a track record of successful work with startups specifically. An agency-founder relationship is truly complex and extremely difficult. I experienced it the extremely hard way.

HR
2) I didn’t bring on a HR company straight away.

This mistake ends in a lawsuit, so it’s safe to say it was a pretty huge one !

I was young and made some mistakes, but this one was particularly stressful.

The ex-employee had been using our warehouse to store and sell their own stock and was incredibly toxic. He tried to turn a lot of our staff against the company.

My reaction was, I think, pretty natural - I let him go.

But the catch was, I didn’t have the right contract in place, and I didn’t follow the right processes. This left me open to being sued… and that’s exactly what happened. I didn’t think they would have the front after being so in the wrong to do so, but they did.

It was £10k, and a huge hit to the company. This was 15 years ago, £10k was a lot !

All because I was too lax on the boring stuff, which like a lot of founders is my least favourite thing to do.

My advice for founders/business owners:

Make sure you have the right contracts, processes and policies in place from when you hire employee number 1. There are a lot of good HR companies out there that are way less expensive than a £10k lawsuit.

Don’t avoid the boring stuff just because you don’t want to do it, that’s where it’ll get you !

PRODUCT DEVELOPMENT
3) I built in silo without speaking to customers.

When I was digitising my family’s offline business I would often have an idea of a feature/product that could be good for a customer– a dashboard, for example. One route we thought could work was digitising the musical instrument rental process.

But, rather than building it with our customers we just built it in silo, took too long to do it, and didn’t launch fast enough. When we eventually launched, customers were using it in a totally different way to what we thought, it had features we didn’t even need, and we’d wasted a huge amount of time.

Even in the very early days with ucreate (now Founder and Lightning), almost 10 years ago now we took too much guidance from the founder rather than from their users. We built a restaurant booking app that ended up having 360 tours, a splitting bill feature and a bunch of other features– we took on a load of competition that did these individual things 10x better.

We built this in silo too. The founder kept saying: “my investors will invest if we build this”, rather than building what the user really needed.

This founder didn’t even end up paying us either ! So all around not great !

Building in silo is one of the most common mistakes I see founders make. You need to build with users, it’s who the product is for. Get in front of them early and regularly and get as much feedback as possible, the good and the bad - don't hide from it.

FINANCIALS
4) I focused on revenue over profit.

In the music retail business, I became too focussed with revenue and didn’t look enough at the profit.

It looked like we were doing well, but because I had a business that sold stock, that stock just sat in a warehouse– if we didn’t monetize it, we had to pay for it.

I just laser-focused on shifting stock but when we looked at the numbers we didn’t have enough to cover our overheads.

It totally changed my perspective from that mistake. If you aren’t making profit, you are pushing problems further down the line.

Even for tech companies, ignoring profit is a big mistake and another mistake I see founders making really regularly.

Get to revenue as soon as possible and prioritise profit as soon as possible.

PEOPLE MANAGEMENT
5) I hired too many people and didn’t pay them enough.

Early days, I hired a bunch of people which meant I couldn’t pay them each enough to make them happy.

Inevitably it led to issues–I wasn’t able to hire great people.

My learning from that experience is to hire less people and pay them the most the business can afford.

People joining a startup won’t expect corporate salaries to begin with, but won’t stay with you long term if you can’t pay them well - and you will not get the best talent

Later on, I then made the mistake of hiring too many senior people who needed huge teams around them. They were thinkers, not doers, and it was costly to pay C-suite salaries and full teams of people.

Now, I’ve discovered something that works great for me, and the business - which is hiring really really good people who aren’t quite at C-suite just yet, and helping them get to that next level. Businesses need bold, brave, doers, who you can support to level up.

Hire less, pay well, and help the right people with the right attitude and talent get up to the next level.

PERSONAL DEVELOPMENT
6) I didn’t trust my gut.

With that first business I also wish I’d trusted my gut more.

We got bought out (not for very much !) because they wanted the tech. And the music school is still going too 10 years later - which also shows the strength of what we’d built. The tech and school were strong, it was the retail part that we couldn’t sustain.

We also had a site in Walthamstow and I thought about turning the site into flats and moving the music school somewhere else.

I could have bought it but the bank was being slow on lending and I didn’t push hard enough to get it done.

I drove past it very recently and someone has done exactly that– turning the space into flats.

I saw an idea and it was the right idea but I just didn’t go for it.

Many of these missteps have led me to now running Founder + Lightning, and supporting and investing in other founders. In general, we learn from our failures not our successes and there’s no shying away from mistakes.

If you don’t make mistakes you’re playing it too safe !

Again, thank you for signing up to my newsletter ! I’ll be sending it out every month.

Always open to feedback, content suggestions or collaborations. Tell me your thoughts.

All the best,

Matt Jonns