As I wrap up my first full month of being back full-time in the start-up game at Wami, here are 3 insights/reminders that I think may help my fellow founders and early employees:
1. Always remember to ruthlessly prioritize.
I have a million things I could be doing right now, the most difficult (and most important) thing is figuring out the exact action that will keep me and my team around in 30 days, in 90 days, and in a year. When I was younger, I would often default to attacking the easiest tasks, and count that as being productive even though the larger, more important tasks remained wide open. The big difference today is my team now refocuses our efforts on accomplishing the single most important task, even if that takes multiple days or weeks to complete because ultimately that’s the only way we will survive.
As a team, we ask ourselves, “if we don’t do this one action, will the other open tasks even matter in 30 days?” For example, although we know we need to spin up our website, it’s more important at this stage for us to focus on generating revenue from potential customers from within our own network. With revenue comes the flexibility to hire incredible freelancers who would do a kickass job on the design with what we’ve budgeted at this early stage.
2. Understand your COGS or they will crush you.
Being that we’re bootstrapping our company, we are hyper-aware of the unit economics of our business model. As producers of an end physical product, we are simply not in a position to lose money on every customer. One of the most important parts of our business is managing and optimizing our cost of goods sold (COGS). Slight changes in materials cost, such as the recent rise in Forever stamp prices from 50 cents to 55 cents in early 2019, can have a monster impact on gross profit for a business sending 50,000+ handwritten notes in a single campaign. It’s our job as a company to understand where potential changes may come from an appropriately anticipate them in our pricing model.
In my former role at Bond, we threw in stamps as part of the single price customers would pay, sometimes a year in advance, to reserve our services. While this was great for focusing on pure bookings growth, we were essentially subsidizing the costs of new customer acquisition. This created strain for Bond as rising COGS put strain on gross profit and, without transparency in pricing, all price increases were met with strong resistance by our customers. Ultimately, this was not a sustainable business model and, I believe, was one of the contributing factors to the closure of the company. At Wami, we’ve broken stamps out as it’s own line item, and charge our customers only for what they actually consume. Thus, we are much more protected from potential shifts in our underlying COGS, and able to provide much more pricing transparency to our customers.
3. Embrace the roller coaster.
“We landed our first few clients and they paid us! Things are awesome!”
“The base of our stamp machine broke down and cost us thousands of dollars we had not planned for. Things are not awesome at all.”
The highs and lows happen daily, weekly (and often feel hourly), but we know, if we are going to build anything that lasts, we must stay focused on our long-term vision, celebrate the wins as they come, and buckle down during the hardships.