(Editor’s note: Chad Little is the founder and CEO of FetchBack. He submitted this story to VentureBeat.)
As entrepreneurs we tend to beat ourselves up over the tiniest mistakes – but sometimes we make big ones. I’ve been part of four ventures over 20 years, but some of the biggest I’ve made came when I launched Sandbox Entertainment. We had millions of customers – but little revenue. I was the founder – but ultimately, I was fired. We had roughly 100 employees – but no team.
The good thing about mistakes is you can learn from them. Here’s what I did wrong.
Mistake #1: Not prioritizing the company culture – At Sandbox, I was so focused on things like fundraising and acquiring customers that culture wasn’t on my priority list.
During the course of building the company we acquired another entity, whose employees had a culture that didn’t match ours (or that of a startup company). Through no fault of their own, they continued working as they always had, which unfortunately didn’t mesh well with our existing way of running things. It’s something I should have paid attention to, but didn’t – and that was a huge screw-up.
By the time I realized there was a problem, the internal culture was completely out of synch. Trying to re-synch the process was so burdensome that it began to take time away from innovating the product and creating a sustainable model.
My takeaway from this was to spend time building a company culture that contributed to the overall success from the very beginning. I also learned to pay attention to the symptoms of a workforce that isn’t working and deal with it swiftly.
Mistake #2: False sense of financial security – The ability to raise capital and high valuations was completely out of hand in the 90s and we all know how that ended. Like so many dot-coms, we were handed a pile of money that made us feel secure, but it was an illusion.
Because of that influx, we spent cash like it was guaranteed to keep flowing. Because of a ripe market and some really smart viral marketing, we had an amazing growth in our user base early on, but that didn’t mean we had a sustainable revenue plan (something we considered to be a minor detail at the time, thanks to the cash infusion).
I knew that it would take years for the organization to drive big revenue, but we could have easily implemented another model to curb some of the mounting costs, and probably would have made the business cash flow neutral. Here’s the kicker: without a large bank account, we might have been forced to come to that conclusion, or another creative way to keep revenue coming in the door. This effort may have even saved the company. But we didn’t feel the need to go there, since our bank account was padded by VC dollars. Ultimately, we realized we shouldn’t have taken the big round.
Mistake #3: No clear vision – Sandbox had no clear vision – and, at the time, no one realized how problematic this was. Before you talk to an investor – hell, before you talk to your first prospective customer – pull your partners and executive team together and come to terms on this. Take as much time as you need here because this will be what you go back to when things go awry (and they will go awry).
I was rightly fired from the company I had founded and I believe it partly goes back to my failure to take this step. After I was dismissed, Sandbox was merged into another company – and the remaining executives weren’t able to stand their ground on how the company should grow, because they had no ground. Had we built a formal vision and stuck to our guns, things might have turned out quite differently.