After 20 years, I sold Sageworks last year to a private equity firm based in California. Since then, I've had some time to reflect on my experience building the company and some of the more important lessons I learned along the way.
The truth is, I've learned every wrong way to do things, which at best makes me an expert in reverse. Hopefully these lessons will help you avoid some of the mistakes I made.
1. Employees matter.
Employees matter--a lot. The term "ecosystem" is overused but it is still helpful in setting up certain constructs. In an entrepreneurial ecosystem, you must satisfy investors, customers and employees.
Because customers essentially pay the bills of the enterprise, I assigned the highest value in this ecosystem to them. Starting out, I knew employees were also important, but I did not fully appreciate the significance of their part in the ecosystem. My poor thinking manifested itself in losing my temper and generally being a jerk at times (still a work in progress).
I should have put them closer to customers in terms of their value. A lot of the way I used to view employees was born from when I was a kid growing up in a working-class family where my dad was usually just glad to have a job. Over time, I corrected this mistake, not perfectly, but the correction made a substantial difference in the last five years I ran Sageworks.
2. It is nearly impossible to build a market.
The decision to enter an established market or a new, unproven market is also vitally important. It greatly affects the ease with which a company is built. At Sageworks, we started with an artificial intelligence product, ProfitCents, that converts financial numbers into plain language. Neat idea--we were first to market, but it was extremely painful to develop a good business model in a market that wasn't proven.
If I am ever delusional enough to start another business, I would start one with a big and known market, with a vanilla product that is similar to other products in the market, but one which I can quickly enhance to beat the market. Being a "first mover" in the market was a big mistake for me. Scott Cook of Intuit says they had "47th mover advantage" when they entered the checkbook balance market. There is great wisdom in this, and business schools still don't get this right.
I'm not arguing against innovation; I'm simply advising that you might want to ask yourself why the market, which is efficient, does not have an existing solution to the problem you have identified. The bottom line is that while it is difficult to build any new business, it is near impossible to build a market. I am always happy that there are competitors in a market because it means you are charged with out-flanking them, rather than creating something from nothing.
3. Love your customers.
Despite not giving employees enough value in the ecosystem early on, I did highly value our customers. If you screw up everything else, you can still win if you get customer service right.
If you can develop a culture of true love for your customers and serving them, this will tend to wash over every other mistake you might make (and you will make mistakes). There is not a company on the planet that doesn't claim to love its customers, but do they? My answer is no.
You really must be vigilant on this aspect of your business because all of us will tend to blame customers, not directly, but adroitly on the margin. Look for little things that you and your employees say about customers to blame them for unhappy things in your relationship with them. We were vigilant at Sageworks in making sure that, at the very least, the customers knew we wanted them to be happy. If you do this and back it up with a great product, because this is so rare in companies, you will probably be OK.
Finally, don't beat yourself up too much about the mistakes you make because I don't know a successful entrepreneur that has not made them. It is very difficult to build a business, so you have to recognize the problem, own it and get better.