In this blog I’m going to tell you about one badge and one scar that I’ve gained from running a tech company. I thought I’d start with the scar.
There’s the old adage that we learn more from our mistakes than we do when things are going swimmingly well and it’s absolutely true. There’s nothing wrong with stuff going wrong, it’s how you deal with it and what you learn from it that’s important.
The scar: cash flow issues
The reason I’ve picked this particular scar is because I think it’s something that probably every entrepreneur experiences at one, or maybe numerous, points during their journey and it’s all based around cash flow and how you deal with it. Not only how you deal with it technically, but also how you deal with it mentally. Making sure you have the right mental attitude, have that tenacity and don’t lose your cool. The right mindset is key, because otherwise it can get on top of you.
I’m going back to the early days of Cake for this scar, probably around 2002 or 2003, bearing in mind that we only formed in 2001. I’ve been honest when I’ve talked about the early days of Cake in the past in saying that we set the business up with a bit of an idea but no clear strategy and certainly no business experience or educational experience in relation to business because at that time there was nothing entrepreneurial in A-levels at school. Neither myself or my business partner Rob Harrop went to university either.
We didn’t have any experience in marketing when we first started either. But although we had no idea what to do, what I’d say is that we used common sense. For example, one of the things I did was went and knocked on every door in the office building we were in, which was home to around 50 small businesses. I said hello, introduced myself and dropped in a business card. That generated business for the company for the next two years.
But by 2003, we were running out of business and still didn’t have an effective marketing machine, or really understand how to do that.
On this occasion, we were a couple of weeks away from running out of money. I didn’t have a backup at that point. I had a family, a mortgage, very young kids and I didn’t have a Plan B. I had to put the wages on my personal credit card. As a business, we didn’t have much of an overdraft because we were quite a new company and we didn’t have any investment of any sort. In fact, in my opinion we wouldn’t have attracted investment at that particular juncture either. So the only way out of this was to battle through and win some business.
At this time, we only had one sales lead and we knew we had to follow it all the way through. Rob was the technical side of the business and he put a presentation together for the two of us to deliver to an organisation called NUSSL – the National Union of Student Services Limited. They were responsible for bulk buying all the products for the Students’ Union, so lots of beer basically. The project was for a system that was going to automate what they were, at that point, doing manually. It was a really interesting project.
We were a young company and we didn’t know how this would go, but Rob gave an amazing presentation and, to cut a long story short he knocked it out of the park and we won that piece of business. Now, not only did this solve our immediate issue with cash flow and very quickly make us solvent again, but it also became a springboard for even bigger projects. It also gave us more confidence and we were able to go out there with a bigger name in our portfolio, which helped our sales message.
I’d like to say that it helped us avoid that particular issue again, but not quite, although it certainly helped to minimise the number of times we had that problem. In fact, there was only one other instance in the whole 17 years where we came close to running out of cash.
The 2008 recession…
The second time we had an issue with cash flow was in the height of the recession in 2008. It was an unfortunate situation in that we had just won our biggest ever project, where we beat the likes of Fujitsu Siemens in a government procurement bid to win a software development project for a central government department.
We were ecstatic when we won that bid, because we were a small company. At that point I think there were about seven of us. But we went from being amazingly happy to almost running out of cash very quickly, through no fault of our own. There was a three-month delay to the project and we never did find out the reason why. That put a severe strain on our cash flow and that was the second time that I had to put wages on my credit card.
When situations like that happen, you just have to go with it and trust that you’re going to get out of it, because in 2008 the banks were no help at all. We’d been with our bank at the time for seven years and we went to them to ask for a loan. We didn’t need much and we had a letter to say that we had won this particular project, which was for a significant sum of money and by far our largest project to date; in fact it was our first potential seven-figure project. But the bank was unwilling to lend what was a relatively small amount of money over a short period of time. As a result, we left that bank.
These cash flow issues are definitely scars, but you learn from them and that’s the important thing.
Learning from the scars
One of the things that these particular issues highlighted was the need for us to get to grips with marketing. This got us thinking and was the precursor to coming up with the concept of building personal brands and really putting an effective but at that time very different marketing machine together.
There were lots of learnings in this period and they contributed to our personal development and consequently to the development of the company on an ongoing basis. This particular issue in 2008 resulted in us coming up with an idea to help us deal with it, relating to email marketing.
At this time, email marketing wasn’t massive, but we could see how it could be of value, especially if you had a decent database, which we were building. We’d been smart enough to collect names and email addresses when we spoke to people at networking meetings or whatever and we were building up a decent database and were beginning to market to people regularly.
At this point, we scratched our own itch and came up with and built a product called Easy Emailer. It wasn’t software as a service as these systems now are. It was a server-based product, but it was a mass marketing and email system that you could use to create templates and build emails. This was in the days before Mailchimp or Constant Contact and all the other online marketing systems that are available now. We didn’t take that product much further other than selling a few licences to it, because we had to concentrate on our main business.
All of this came out of the scar of having issues with our cash flow.
The badge: developing personal brands
I’ve alluded to this already when talking about the scar, and I’ve talked extensively about this topic in a previous blog, but I want to put a slightly different slant on it now because this concept came out of our early days of Cake, whereas what I’ve talked about previously goes into more detail about how we developed the concept from 2009/10 onwards.
The badge I’m going to talk about comes from 2003 and came off the back of us really struggling with our cash flow, not having a strong enough pipeline of business and trying to come up with a viable marketing plan. I’ve mentioned Easy Emailer and knocking on doors, which was really effective, but there are only so many doors you can knock on. It’s not a scalable solution in this day and age.
It’s fair to say that we stumbled across this rather than it being part of the plan from the outset, but when we realised how effective it was, it became part of our plan.
I’d like to rewind a little further to 2002, when Rob Harrop, my business partner and the business’ technical expert, became really interested in a new framework in the Java world. The framework was called the Spring framework.
At this point, Spring wasn’t even a 1.0 version, it was a 0.5 alpha version working towards something that could become commercially viable. It was an open-source project, which means you get many contributors working on these projects most of whom did it in their free time. They don’t get paid for it and at the end, the product is made available to the software development community for the good of the community, using an Apache licence.
Rob began spending time on this project. He was a really smart software engineer/architect and he became one of the core contributors. We started to use it commercially as soon as we were able to. This became a key differentiator for Cake; it became the most downloaded framework in the Java world and it helped ensure that we followed our mantra of always staying at the forefront of software engineering. The Spring framework was our first opportunity to differentiate ourselves on that mantra.
This developed to the point that Rob and one of our other software engineers (who later became our CTO) Jan Machacek decided to write a book on the Spring Framework. Rob had already made several smaller contributions to books and the Pro Spring book, which was all about the Spring framework, was the fourth one he was involved in. But this time he wasn’t just involved, he was the lead author and Jan was supporting him. It was the first book that was purely written by Cake employees and the first example of where we used the premise of producing expert content to share with the community as a way of promoting ourselves.
I’ve spoken about this on a number of occasions and it became one of the key attributes in the Cake arsenal and the main way that we generated sales. We didn’t have a sales team, it was all about generating expert content and building personal brands. This book was the precursor to that.
Pro Spring became a really popular book. It was published by Apress and Pro Spring 2 was published in 17 different languages, including Mandarin, which was really cool. This was definitely one of the badges that we got and the technical team became quite prolific book writers, which then led onto the blog writing and all the stuff that I’ve talked about in previous blogs.
More badges and scars
In my second blog about the badges and scars of running a tech company, I’ll talk about the badge of punching above our weight. I’ll share some examples of how we started working with some major brands even though we were still quite a small organisation. The scar I’ll discuss in the next post will be about losing a business partner, when Rob had an opportunity he couldn’t refuse and decided to leave the business. I’ll explain how that affected things.
I’ll also talk about the ever increasing larger cheques, in relation to how we were working with bigger and bigger organisations that provided us with the financial platform to really scale the business and achieve high growth in the last few years.
Guy is an experienced individual with over 20 years in the tech, software & consulting/advisory industries, as a founder, director, investor and advisor in a number of companies.
