March 11th 2007 Posted at Stories
Comments Off on Start Up Stories & Whoppers.
This is a new category here at Thalasar. It’s called Startup Stories and it’s purely anecdotes from my own startups and with occasional guest bloggers with their stories. This story about how I have not eaten at Burger King since 1997.
Like most entrepreneurs I assume everyone loves my product as much as I do. We can’t fail, it’s gonna go like gangbusters. It was October 1996. We had just finished the rebuild on Hot Hot Hot, a hot sauce store. We has updated the site to include an affiliate program and had taken the feedback from Monica and Perry Lopez. Keep in mind at that point Hot Hot Hot had been online and taking orders for two years. (Little forgotten history here. The second Internet storefront in the world after wine.com was hothothot.com, designed by Presence Information Design). We had begun work on Chefstore which was run by Shel Brucker. That was our first real paying customers. Bill Drury and I were roommates and co-founders of Xao. Bill handled programming and I handled sales. Needless to say, Shel drove a hard bargain and cash flow was incredibly tight then. But we did a couple of things right then. First we started by co-locating a server with a local ISP. It was a Pentium 100 with 128 Megs of Ram running Redhat Linux. This allowed us to quickly scale up additional customers – remember back then hosting was expensive and an uncertain proposition. By committing to colocating a server and later adding to that capacity, we built a residual revenue stream, that would grow over time. Over time this would smooth out the rough patches.
We didn’t have a lot of cash so we had to conserve. This meant a lot of trips to Burger King. Why Burger King? Because at the time Whoppers were $1 and you could get them anyway you wanted which for us meant a lot of extras. I still remember our orders, Bill’s was a Whopper extra mayo and extra tomato and mine was Whopper, extra mayo, extra tomato and extra pickle. We fought off hunger through eating burgers with 1200 calories.
That was our lunch everyday for two months. Eventually we got additional customers but that first three months was incredibly rough. I can safely say Burger King helped us through a rough patch but to this day neither one of us can eat there.
What’s the lesson you can learn here? Well we had a few successful projects under our belt but I can certainly say I probably underpriced our initial work. So make sure you price yourself a living wage. Additionally maintain a relationship with your customers. Acquiring customers is an expensive proposition. By coming up a new product to your existing customer base, you already have a customer who is familar with you and hopefully happy with your service.
Sometimes you are going to eat Whoppers
In every start up there is a moment like this where you are in between taking off and falling. Eating Whoppers is one way of controlling costs. So instead of that vacation, how about socking that money away and keep in mind that convincing people to buy your product or service is going to take a lot more time than you think it is going to take.
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