Sramana: It was mentioned that in the early days you did a lot of freelance work. This is a common strategy employed by entrepreneurs. We recommend it heavily in 1M/1M. Would you talk more about that?
Wendy Tan White: During the first phase of our business, we learned that if you have too much money and hire a lot of people, things can go wrong fast. If you are not clear what you are going to use your stuff for, people are not going to be satisfied working that way. If people are not satisfied internally, you can wind up wasting a lot of money. That means you don’t get a return for the paychecks, which ends up burning your cash.
When you enter freelancing, you are forced into a relationship with someone. The delivery is very clear and the cost of that delivery is very clear. It is also a variable cost. If you need more, you expand the relationship. If it is not working, you just give notice and cut it off. If you have a good working relationship with someone, then you can pull them in full time.
Joe White: The challenge in the tech business when it comes to freelancing is keeping control over how the software is written. The danger is having disparate teams is that you have disparate coding styles. Some code may be poorly written. People may have just written it to do the job and then get out. With any tech business, you do know that whatever you write today is your problem tomorrow and the next day. Rewriting cycles are a part of business.
Sramana: Perhaps if you are building a pure technology business you will need a core technical team?
Wendy Tan White: What is interesting is that some of the people who freelanced for us were former employees who were very loyal to us. We just could not pay them anymore, so they went out and freelanced for other people and worked part time for us. We were lucky that even though the first business was killed, they were still willing to freelance for us. We did eventually pull two of them back in full time again.
Sramana: How long did it take to build the brand up to the point that it was profitable again?
Wendy Tan White: It took two years. We were profitable with seven employees at that point. I would say 2003 was the year we were profitable and growing. We had not taken any more funding, so our growth was all organic.
Sramana: Who was your customer base? Were they primarily British customers?
Wendy Tan White: At that point it was still predominantly a U.K. client base. It was very organic.
Joe White: We stopped doing all advertising at that stage. We could not afford it.
Sramana: It is amazing how clear decision making becomes when you do not have any money!
Wendy Tan White: Yes, indeed! The thing that we did have was a strong community. We always created forums for our customer base, and what we found was that they were helping each other. Those customers became our advocates. We still have some customers today who were with us 11 years ago. They are power users and our strongest advocates.