Ep. #725 - When to Fire Your Clients or Users
In this episode of Startup Hustle, tune in to Part 40 of “How to Start a Tech Company,” as Matt DeCoursey and Matt Watson discuss when to fire your clients and/or users.
Covered In This Episode
Asking when to fire your clients or users may sound ridiculous. But as a startup tech company, doing so may likely create more good than harm to your business’ health. So, when is the right time to go on separate ways with certain clients? Listen to Matt and Matt talk about when to fire your clients and users.
Matt DeCoursey and Matt Watson share their experiences when they have to stop providing services to some of their clients. They explain the major reasons why tech startups have to fire clients. Matt and Matt also highlight that firing clients can be an addition through subtraction.
Find out more about when to fire your clients and users in this Startup Hustle episode.
- Introduction to Part 40 of the series (1:08)
- When you are not ready for certain types of clients (2:03)
- Preventing “Clientitus” (7:29)
- How do you vet who signs up for your services? (9:28)
- You have to draw a line somewhere (13:19)
- When do you fire your clients? (19:11)
- Clients that don’t respect your team (22:16)
- Unresponsive clients? (24:58)
- You can’t serve everybody (31:00)
- Making a pivot (33:38)
- Addition through subtraction vs. loss (35:03)
- Key Takeaways (37:03)
- Wrapping up (44:55)
You got to figure out what you want to do and what scales. You’re like, hey, this is our focus. And we want to keep doing this thing. I mean, it’s no different than a restaurant with a limited menu. And a lot of times, what a restaurant does to improve themselves is taking things off the menu so that they can focus on a smaller set of items and higher quality within those menu offerings. Running tech businesses is very much the same.Matt Watson
Go and approach them and try to work out something that puts you in a spot where you’re not at a loss for letting them use your stuff. Because the best business relationships are the ones that stand on the mutually beneficial ground. If they’re not going to reciprocate any of that, that wasn’t a very good relationship. And if they’re willing to work something out, then there’s a possibility there.Matt DeCoursey
It’s not so much about firing a client. It’s about avoiding the ones that are not the best fit. Some of that is identifying your target audience in your niche, your go-to-market strategy, attracting the right kind of customers, and all those things. So just get yourself set up for success.Matt Watson
The preventative measure is don’t import the problem and increase it. You can learn a lot about a prospective client or relationship by just asking some very simple questions. And the challenge is that you have to be disciplined enough to identify the wrong opportunities in front of you.Matt DeCoursey
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Following is an auto-generated text transcript of this episode. Apologies for any errors!
Matt DeCoursey 0:01
And we’re back. Back for another episode of Startup Hustle, Matt DeCoursey, here, with Matt Watson. Hi, Matt.
Matt Watson 0:06
Hey, what’s going on?
Matt DeCoursey 0:09
I’m thinking about firing some of our clients at Full Scale. What do you think about that?
Matt Watson 0:14
I don’t know. Are they paying clients?
Matt DeCoursey 0:17
Yeah, but I’m actually just kidding. I have already fired some of our clients.
I mean, it sounds crazy, man, I sound crazy. You know, one of the things I’ve been doing is recording reaction videos to different podcasts. And by the time this one comes out, those will start appearing on YouTube. And I was talking about talking to the camera a little bit about that. And I was like, man, it might sound crazy thinking about firing your clients, but sometimes it can be the best thing you can do for your business. So I mean, I think everyone that’s been around for probably done it.
Matt Watson 0:56
Yeah, I mean, some clients are paying, and some of them don’t pay very much. And some of them are very demanding. I mean, sometimes it just makes sense.
Matt DeCoursey 1:08
Yeah, and that’s exactly what we’re going to talk about here on part 40 of 52 of our series about how to start a tech company. Before we get too far into that today’s episode of Startup Hustle is brought to you by FullScale.io, helping you build a software team quickly and affordably. Now, out I wasn’t getting, sometimes firing clients is actually the right thing to do. And, you know, I had a little time to, you know, kind of think about this. And, you know, it’s, I think at one point, this would have felt somewhat illogical or like something that you wouldn’t want to do. But not all business is good business. And you know, the last several years at Full Scale, working with all these different tech companies and helping them build teams, I’ve, you know, you’ve seen it occur we’ve managed to narrow down like, who’s a good fit for us and who isn’t. But when it’s not a good fit, man, it sucks.
Matt Watson 2:03
Well, and for a lot of different reasons, right? And sometimes, it’s just the wrong product offerings. For example, for a while, we were doing Salesforce development, right? So we had a client that wanted us to do Thai or Salesforce developers, and we did that. But then you come to the conclusion that that’s like the only client we have. And then if that client leaves, what do we do with these employees that are employees? Let me we probably don’t want to just fire them. And depending on the HR laws, you can’t fire them, right? Like, they didn’t do anything wrong. It’s just, it’s a struggle, right? Like, sometimes it’s trimming down the menu to be more successful as a company.
Matt DeCoursey 2:45
Right. And we, you know, we went through this, you know, we’re here to talk about starting a tech company, and Full Scale is kind of a hybrid company, because, you know, we do tech services and have some tech of our own. But, you know, I also look at, you know, I was, as I was reflecting and thinking about today’s episode, I was also thinking about, like, the users at Giga book, and I know that it sacrifi, you had a free product for a while, you know, the so you know, one point at Giga book, when I looked through, and, you know, we used to offer, it was just $8, for every seat that you had all the way off the line. And the more and more we looked at it, we realized that, quite honestly, most of our pain in the ass came from the people that were only paying eight bucks. And, you know, so we double that price. And I don’t regret it, I actually do I regret that I regret not making $20 Instead of making it 15. And some of that, you know, sometimes you need to either decide if you’re going to raise your prices or fire your clients for the sake of being able to actually service them, you know, and that was the main thing is for eight bucks a month and a single seat, like I can’t even answer a phone call. I mean, the business is losing money when that occurs. And most of the time, those same accounts, just stayed at that value of eight bucks. So coming here, we’re saying like,
Matt Watson 4:11
I mean, you can’t afford to provide the level of customer service that you would want to provide or the quality of product that you would want to provide, like, you just can’t even do it.
Matt DeCoursey 4:22
Right, right. Now, in some cases, you know, regardless of what type of business you have, if you’re thinking about the customers and the people you do business with, I mean, what do you think about, you know, it’s kind of like, when you go to buy a home and you’re like, hey, this home is 400 grand, and then you go to look at all the truth and lending statements, and you’re like, Wow, I’m gonna pay $700,000 By the time I’m done making all these payments, so there’s like, kind of like, loans have Truth in Lending and I feel like businesses have like, truth and clients. And like, Yeah, well, it’s true. It’s like It’s like go go back to the Is $8 a month people that we had a giga book and it’s like you can’t afford to provide service for them. And if they’re the ones that are like really weighing down the whole process, and they’re driving up your costs, I mean, eventually, I mean, all everything, hey, look, you don’t have to listen to all 52 parts of the series to come to the realization that eventually your business needs to make profit. So
Matt Watson 5:23
and and sometimes it’s, you’re not ready for that type of customer. So for example, at a previous company, I was I was working at, you know, we had a web based offering. So clients would sign up, it was a SaaS product, right? So it was we hosted everything. And we had a large client sign up. And honestly, our system wasn’t ready for a client that large. So I think they were paying us like $5,000 a month to use our product, which is awesome, right? They signed a year long contract, it was costing us probably $15,000 a month to host it. Because the way we were storing the data and everything wasn’t ready for that level of scale, there were all sorts of performance issues; they were sending us more data than we thought they were going to send us. Like we were killing ourselves. Now. The good news is sometimes these are opportunities, right? It’s okay, we can figure out, we have figured out how to do this and figure how to optimize it. And sometimes the only way you do that is by just being thrown into the deep end, and you just have to figure it out, right? Because it’s hard to to plan and test for those scenarios until you’re in them. But in this case, the company didn’t really bid the customer the right way, we should have been charging the customer, you know, five or 10 times more money than than we were charging them probably to have a good margin. And that was painful. But at what point in time, can you fire the client, you signed an annual contract with them. So at the end of that annual contract, you’re like, Oh, we’re not going to renew the contract, or we’ve got to, you know, make the price significantly higher. And those are difficult situations to be in as a tech company, is sometimes you sign up these customers you just can’t handle.
Matt DeCoursey 7:05
How do you resolve that?
Matt Watson 7:07
Oh, they’re just paying through the nose for the AWS hosting bill. I mean, there’s nothing else they could do.
Matt DeCoursey 7:14
Dude, are you did you? Did you keep the client?
Matt Watson 7:18
Yeah, it’s tough to keep the client and we’re losing money on the client. I mean, we got to at least a 12 month contract with him. So we’re just stuck with it. We’re losing money on this deal.
Matt DeCoursey 7:29
Now, there’s a real easy way to prevent the need to fire your clients. Do you know what that is, Matt?
Matt Watson 7:36
Matt DeCoursey 7:38
Pick the right ones before their clients.
Matt Watson 7:40
Matt DeCoursey 7:42
I mean, that is the number one according according to Matt and Matt and our statistics about how to prevent clientitus, which is the new disease I just had I just invented that comes with taking any and all business that you can possibly see you’re like Pac Man for for client deals, you got to get to know who you want to do business with and who you’re best served and what your niche is. And you know, admittedly at Full Scale, we it took us about a year to figure that out, you know, we were taken, you know, we’ve really kind of resolved ourselves that we need to work with software companies that already have traction and have some understanding of what they’re doing. And not all day one startups Now, that doesn’t mean we don’t work with day one startups. But when they do, we got to have a pretty good idea that they have some experience some plan. And for us, it all stems around that they won’t treat our people like shit either, because that’s our biggest asset or our companies, our people.
Matt Watson 8:39
Well on, for example, if if I called you up at Full Scale today and said, Hey, I need you to build me a WordPress website.
Matt DeCoursey 8:46
I’d say no, and say no, that’s not what we do.
Matt Watson 8:49
Clearly, we could do it. Right. I’m sure there’s a whole bunch of people that could do it. But it’s like, just not the kind of work we want to do. Right? And you got to figure out what you want to do and what scales right. You’re like, Hey, this is our focus. And we want to just keep doing this thing. I mean, it’s no different than a restaurant that has a limited menu, right? And a lot of times what a restaurant does to improve themselves is actually taking things off the menu, so they can focus on a smaller set of things and higher quality within those menu offerings, right? And running a tech businesses very much the same.
Matt DeCoursey 9:28
I mean, that was pretty much the Ray Kroc McDonald’s approach, you know, like, hey, we make 90% of our sales and 90% of our profit off of selling hamburgers, french fries and shakes. Yeah, so why do we have all this other shit on the menu? Let’s not and, and that’s the case in point. Now. I think that I would imagine that you know, here at the tail end of the pandemic, that there’s probably a lot of people that got themselves into some shitty deals and contracts. Just trying to preserve and yeah, you know, the business. Yeah. And the thing is, if you don’t I don’t think you need to think of that as living, you know, living without forever. I mad I just did a call this morning with a, you know, a prospective client and it was a young company that didn’t have any traction yet, they didn’t really have any of the things that we needed. Now the thing was, I could see them getting there. And I think it’s okay to tell people that you say, hey, look, I’m just not sure you’re ready for us yet. Now. I mean, that might not always be the case with certain types of tech, you know, but I mean, really, in the end, the way to prevent needing to fire your clients is to bring the right ones in. So let’s talk about that for a second, like, as this is a tech company, or a software platform, how do you do that? How do you vet who signs up for it?
Matt Watson 10:51
Well, it’s, it’s qualifying the customer, right, trying to understand the problems they have the problems we’re trying to solve. And if it feels like something that we can solve, you know, at Full Scale, somebody just comes up a call said, Hey, I have a PHP app, it’s, you know, uses MySQL, it’s a, it’s a web application, I need a couple of developers to help improve it, you know, I’ve got other developers already on the project. It’s like, hey, this sounds like a good fit, right? But, and then a lot of other cases, maybe it’s not, you know, like, Man, this is just not, this is gonna be difficult, it’s gonna be really difficult to work with this client. And just setting yourself up for success.
Matt DeCoursey 11:31
I think sometimes you have to with tech and software, you also have to try to identify some usage parameters, which sounds like what you didn’t do with that other client is like, how is this really going to affect us, like, you know, you look at Giga book, and it costs like a penny, every every text message we send as a reminder. So if you’re sending 1000s of them a month through our system, then that’s, that’s a negative thing. So we just created some logs and went and looked at the people that were like, we’re like, Okay, we are losing money on these clients, or these users. And here’s the thing is go and approach them and try to work out something that puts you in a spot where you’re not at a loss for letting them use your stuff. Because yes, I mean, really, in the end, the best business relationships are the ones that stand on mutually beneficial ground, you know, and if you go and you say, hey, look, this is killing us. And I’m not going to be able to do this anymore. But I want to work with you. So can we find some common ground? Now? If you get someone that says no, then you aren’t working with the right people all along? I mean, if if they’re not going to reciprocate any of that, that wasn’t a very good relationship. And if they’re willing to work something out, then you I think you have you, there’s a possibility there.
Matt Watson 12:49
You know, the worst clients that I’ve ever dealt with, were the ones that we gave our product to for free. And I don’t know why. But they are always the ones that bitch about everything, and they don’t even pay. And it’s just like, they don’t really appreciate or respect what it is you’re giving them? And partly, I guess it’s because they’re not paying for it. And they are just always the giant, most giant pains in the ass. Is that the same experience you’ve had?
Matt DeCoursey 13:19
Yeah, I mean, it was back to that $8 user. I mean, we had a couple people like, and I it’s funny, because it’s been years since I’ve been like, I don’t I’m not involved in the day to day Giga book anymore. But, you know, I can remember the people’s names, we have a couple of different people that were paying like eight bucks a month. And the problem was, they were just blowing up our support. And then they weren’t even treating the people in the support department. Well, so I mean, I just emailed them. I’m like, hey, at first off. We had one lady at one point, that was like, 90% of our support tickets. One person was 94. Do you remember that? Do you remember me telling you about that years ago, and I mean, I just emailed her and I was like, I just need you to know that like your 90% of our support tickets, and most of the stuff is not 99% of this is not as not because something’s wrong with what we’ve built. Treat it you’re treating our people poorly on top of it, too. And you know, we had people that just wanted to do a good job. We’re client and user obsessed. You know, we want to try to help people succeed. You got to draw a line somewhere.
Matt Watson 14:28
Well, haven’t we had some weird experiences at Full Scale to and we’ve done some work for free or like, gave away some work like to startups and, and they’re like, Yeah, can you work for two hours today? And then nothing for the next three weeks? Because that money you’re giving us the free credits you’re giving us? We really want
Matt DeCoursey 14:48
really new stores have it today? Yeah, yeah, we have. So yeah, so at Full Scale. We don’t really worry though. Do we don’t have long term con tracts. And, you know, that’s meant to give you some assurance when you come in. So we provide value and we gave away. I mean, we’ve given away a couple $100,000 worth of free work to startups as part of just local things that were going on. Yeah, we had one, we had one person with their free credit that would add someone to their team, and on that same day, give 30 days notice. So they could just get 30 days worth of work. And I put a stop to that, like, instantly, and you know, that was the thing. It’s like, Hey, I’m not gonna, I’m not going to be told or manipulated about how I’m going to give you free shit. So I’m out. I’ve got it, I’ve got a couple scenarios of common common reasons or, or why you might want to fire a client. And before I get into that today’s episode of Startup Hustle is brought to you at FullScale.io dot io, where hopefully, we won’t have to fire you as a client after helping you build the software team quickly and affordably. Not so new breaths, our new brand message. Now Matt knew you’d probably be hang on let me let me put that on the on the banner of the website, because that’s gonna bring him in? Well, that’s the thing you don’t want it like normally say you’re like, hey, well, we might have to fire you as a client. I mean, that’s only happened a couple of times. But I mean, it does happen. So first off, you know, are you I believe you are familiar with the Pareto principle, the law of 8020.
Matt Watson 16:30
Yeah, mostly this that it’s called the 8020 rule, for sure.
Matt DeCoursey 16:35
Now, I want to say something about 8020. Like, if you really like to have some time with it, you can pretty much shape at 20 to be about whatever the fuck you want. Like, you really can’t deep Matt, do you know that 80% of the time you only do 20% of the sponsor reads?
Matt Watson 16:55
Matt DeCoursey 16:57
Meaning you don’t even finish them. That’s true. Yeah, but I also know,
Matt Watson 17:02
but you also know that 73% of all statistics are made up.
Matt DeCoursey 17:07
Yeah, and that 20% of statistics are correct. But 80% of the incorrect statistics make up fake news.
Matt Watson 17:17
Matt DeCoursey 17:18
I mean, I got that off of Abraham Lincoln’s Twitter. So I mean, yeah, but so anyway, Vilfredo Pareto, and yeah, I knew that without even needing notes, created the 8020 rule. And that’s, you know, it’s the thing is, is that oftentimes, you’ll say 20% of your clients or users will give you 80% of your support tickets. Also, 20% of your clients will likely give you 80% of your profit. Now, the question is, is where to whoever you’re talking to dealing with? Or like any of it? Where do they fit into that graph? Because I put a poll up in the Startup Hustle chat on Facebook, oh, man, it was a month ago, it was like, does your ability or willingness to put up with shit dramatically increase when the dollar size of the opportunity does as well? And for me, the answer is yes.
Matt Watson 18:09
Yeah, absolutely. Right. Right.
Matt DeCoursey 18:13
So the question is, is where where are these folks from? You know, where does where does this fit in. And, you know, like, and I don’t want to give the impression that like, we sit around and fire clients all day, because we haven’t, it was just a couple back in the day, and it was about fit. That’s actually the next thing, the the bad product to customer fit. So the number of customers you have is not is not the only important thing, it’s also important to make sure that the solutions you provide meet the problems your customers have, you know, customer needs, and accounting management software, and you offer website optimization services isn’t a very good fit.
Matt Watson 18:51
Yeah, and sometimes it’s just you have the wrong, you know, primary user at the company, you know, like you’re talking to the wrong persona. And the person you’re talking to just doesn’t understand, like, you should be talking to one of their co workers, or it could be a lot of different things, but it’s just not the right fit for whatever reason. And at the end of the day,
Matt DeCoursey 19:11
that’s that’s been why we fired clients at Full Scale. I want to say fired, we wasn’t like you’re fired, but it was like, Hey, man, this isn’t working out. I think it’s time for us to maybe go in a different direction. How do we how do we do that? And not sink your battleship?
Matt Watson 19:25
Yeah, yep, sometimes just not a good fit.
Matt DeCoursey 19:29
Well, for us, it was, you know, because so many of our employees are senior in nature with in their experience, is they just don’t want to work on they want to do things that challenge them. And then at Full Scale for us, it was really figuring out where we could build long term solutions with companies that needed long term solution. So some of the things I talked about finding the right clients on the way and like some of that’s just qualifying and asking questions, man or your needs, short term or long term, long See, that’s an example of a qualifying question. And that is a good answer for us at Full Scale. Now, let me ask you another one, which of the following are already on your team? A lead developer, a project manager or product owner?
Matt Watson 20:18
Matt DeCoursey 20:20
Okay, so now if you said none, that’s that’s not, that’s not a good, that’s not a favorable response, cuz we find that our most successful accounts have one of those three, that already has experience and is in motion.
Matt Watson 20:36
Well, so another great example of this would be actually trying to raise capital, right, like you’re trying to raise capital and VCs don’t give you any, well, you’re not a good fit for them. And what a lot of the times that you’re too small, I mean, if you’re KKR, and you’ve got a $10 billion fund, and you need to raise $2 million, or like, why would they waste their time writing $2 million to you, when they could find somebody else that would take 200 million, like, there’s just doesn’t make sense for them waste their time with a small opportunity either. And, and a lot of cases in business, it’s just comes down to being the right fit the right, you know, type of customer you’re targeting.
Matt DeCoursey 21:12
We’ve talked about that time and time again, when it comes to raising capital, that if you have a service company, and you’re pitching to a company that only invests in enterprise software, it’s the same example, you’re not getting a check. It’s not the right fit, you know, and then some of it’s like, so here’s another thing. So depending on what you do, like in our case, at Full Scale, we have a high level of expertise and experience. And if a client wants to just ignore anything you say, or insist on working in a way that you know, isn’t right, it’s probably not a good fit.
Matt Watson 21:49
Yeah, there’s nothing, there’s nothing more frustrating than working with people that you know, you know, how things need to be done, and they just, they don’t listen, or they just always want to do it the opposite way. It’s very frustrating. And sometimes when you’re working with your clients, they’re just, they’re just not using your product the right way, they’re trying to do the wrong things with it. They don’t do training, you tell him though, your employees need to do need to do training, you know, whatever it is, and it’s just gonna be very frustrating.
Matt DeCoursey 22:16
Well, I mean, I tell our clients and prospects at Full Scale at Tom a lot, I say, you know, it’s your business, you got to make the decisions. Now, based on a success formula, we’ve spent four years developing and have provided over a million hours of service through, you know, this is what people are doing that they find successful. And then sometimes, you know, they just want to go the other way. And yes, also, you know, I mean, that’s, it doesn’t mean that they always need to listen to you. I mean, people need to make their own decisions. But the problem is, is if you tell people, hey, try this, try this, try this. And then they’re emphatic about trying something else else, and else, and then it doesn’t work. And it’s somehow your fault, or your service sucks, or something. I mean, that’s like, kind of like complaining about shit you get for free. It’s just, it’s frustrating you paid. So here next, man, life is too short, to deal with abusive clients. And this has been this is a thing, and this rarely happens. But when it does, I take it really seriously at Full Scale. Because, you know, our team becomes your team. And if I find out that someone on a client’s team, or the client themselves is treating our people like crap, I will move swiftly to, to stop that shit now, because come on, first off, it’s not a good way to try to get what you want out of the people you’re working with on your team. And the next question is why? You know, like, and that’s, I mean, that can happen, man, you get people that did, I’ve been an adult in the workforce for a quarter century at this point, man, I’m getting old. But you know, you get you get people that just tear into you, like you can count on it. Like, all the time, every time. It’s one thing for someone to be upset. And you know, sometimes you gotta let people vent it out. And that shit happens. But, I mean, some people 100% of the time are just dickheads and those are the people I don’t have time for.
Matt Watson 24:17
Yeah, I’ll never forget there was a time at VinSolutions is like 15 years ago, that we had a customer call up and it was a car dealership. And so they’re calling us up and talking to one of our support people and they’re just MF this MF that you know, f this f that just like oh my god, like, No, we’re not gonna deal with this. It’s just it’s just it’s crazy how inappropriate some people can be. And you’re absolutely right. There are some people that just love to bitch like everybody knows somebody on the at the homeowners association group that’s this way, a pitch about everything. And the HOA doesn’t matter what it is. They find something to bitch about. Yeah, it’s not fun having a person as a client.
Matt DeCoursey 24:58
So Diego buck and I have licensed everyone there to treat people with the same level of respect that they’re being treated with, meaning if someone tells you to fuck off, and I find out that you told them to fuck off, I’m not gonna cry. What I prefer that you did that? No, not really. But I think that you get you get what you give. And it happens, man. So all right. This next one on the list is one of my favorites. And this is actually probably the biggest reason that we’ve moved on from client relationships at Full Scale. People are non responsive, you know, like you. So especially with building software, and the way our model is set up is it’s so heavy on the back and forth and the communication. And, you know, I’ve had people I had, we had one client, he’s like, Oh, we’re not making the progress that we need. And I’m like, Well, let me look into it. And I went, and I talked to the people on the team. And they said, sometimes it takes him two weeks to reply to simple questions. And I’m like, wow, okay, so that’s not really something I can put us at fault for him. And the next question was, actually, are you continuing to try to get a response? Yes, every day, sometimes multiple times a day. And you and your mat was silence? More so than not? Yeah, I mean, how are you gonna be successful doing that, you know, it’s like,
Matt Watson 26:29
well, and a good, a good example of this we would face at Netro is doing proof of concepts, you’re trying to do a POC with some big client. And if you can’t get them to work with you to do the POC, the proof of concept work, like, it’s just never gonna go anywhere. And it’s like, why should we invest all of our time, because it takes us a ton of time to do the POC, and work with them and set it up and all this stuff, hoping that one day they will pay. And if they’re not responsive, and not very interested, like, Why waste my time chasing them around,
Matt DeCoursey 27:03
then that tells you that your what you’re offering isn’t a very high priority on that, that office. Yeah. And that’s, that’s not a strong buying signal. I mean, it’s really not. And like, the opposite of that is working with someone you’re doing like a proof of concept. And they’re like, Hey, this is this is Mary, and she is assigned to helping you with this. Until we figure out if this is if this proves out or not. And then that person is responsive, they care that give you a list of what they need. And like, that’s the thing when it comes to building tech, especially when you’re building software solutions for people, if you don’t know what those people need, and what they need to do, then it’s difficult, it’s a lot harder. All right next on the list. And this is one that in some companies. So you know, I’ve openly admitted here on the show that one of the one of the weaknesses at Full Scale is that it’s driven by people. This means that the while that’s also Our strength is our people are awesome. At the same time, those people can only provide a finite amount of output. And that’s why your tech company could potentially be worth multiples of, really, of your revenue, because software shows up every day. And in some cases, you can have a shitload more users without having a bunch more people at your office. But if resources are limited, and you only have so much bandwidth to provide service, and you’re sucking it all up, with your lowest margin, lowest growth shittiest accounts, that’s not really the right way to run your business.
Matt Watson 28:38
Well, and back to the example earlier of the proof of concept stuff, it’s like we can only do so many proof of concepts, right? So it’s like, we have to pick the ones that are the best opportunities. And the biggest clients, like the little guys that don’t want to spend any money. Like I’m like after decline, like Sorry, we can even do a proof of concept with you. And, you know, at Full Scale, you know, for example, it’s hard where a client Sanfeng client wants to sign up, and you’re like, you know, what, we can’t even get, we’re not even going to start with you because we don’t have the talent available, or it’s not the right, you know, kind of talent, or we have other clients that are ahead of you in line, right. Like, sometimes it’s just frustrating. And it’s like, well, maybe we have to put you on the backburner and hopefully we can work with you later. Whatever, right? Like that can be very frustrating.
Matt DeCoursey 29:28
I’ve got a long list of those Full Scale. I mean, honestly, and it’s fair, and you know, the thing is, man is I, I’m just really transparent and I tell people that and, you know, another thing too is is when you know you have a finite amount, amount of, of output that you can generate. You need to use it wisely. And sometimes if if it’s scarce, and we just just the the demand for our services has been huge. So some of that is, you know, the nature of people. One thing I can guarantee you is, whoever you employ now, or wherever you work that won’t last forever, because at a minimum, one of us gonna croak. And then it ends. Like, that’s the longest term of whatever you could have. I mean, unless, unless your tech company has created infinite living, you know, then you’re gonna there, you are guaranteed to have some change. So like, part of it, too, is like, not overcrowding, your client less to the point where you can’t provide the support and the results. I mean, that’s another reason, and sometimes that’s where you think you might have to send things down. And I think really, in the end, you just need to, like, be reasonable and communicate, communicative. And I think people that that I mean, some of them might get passed, and Shetty, alright, that makes a decision pretty easy. And then some people, I mean, I think a good relationship with the client, they want your business to be successful too. Because if you’re helping them be successful, they want you to stick around.
Matt Watson 31:00
Well, and another example of this, that isn’t tech related, but like the the guys that were mowing my grass, they had so many clients that when I would call them to ask them to do other things I needed to be done and like doing, they couldn’t get it done. Because they had too many clients to deal with and like, well, I can help solve that problem for you. somewhere else, that gives me the level of service I need. But to them, they, to some degree sort of limited the amount of clients they have, because like, you know, then they can’t provide a high level of service to all your customers is the point, right? Like, they’re spreading themselves too thin, and all of a sudden, they’re gonna lose all their business because all their customers are unhappy, or happy. And yeah, I mean, it’s like going to a restaurant these days where nobody has servers. And next thing you know, every customer you have is mad because you’ve got one server trying to help the whole damn restaurant, like, it’s a crazy world we live in right now.
Matt DeCoursey 31:53
Yeah, and that’s not I mean, that’s a good example. I mean, the same thing with the lawn, like I mean it your business, you need to assume that shits gonna happen. Like in the lawn example, it might rain 10 days in a row. Okay, now you’re 10 days behind. And if you are already behind, it’s gonna get real ugly. Cuz, I mean, on some of that, it depends. How replaceable Are you? You know, like, there’s a lot of places that mow lawns,
Matt Watson 32:16
I called somebody and they were here the next day. And they
Matt DeCoursey 32:19
probably killed it.
Matt Watson 32:21
They killed it. Yeah. So, all right,
Matt DeCoursey 32:24
so here we are, at part 40. And, you know, we’ve talked about not getting stuck in the middle, what sales channels are user support, learning from feedback, a whole lot of other stuff. And, you know, overall, like now that we’re, our assumption in this series, is that you’ve got something going on, and this is one of those decisions that and directives and accompany that can begin to make you more profitable. And, you know, that’s that this is important stuff. I mean, it really is, and giving that consideration, you know, like, sometimes you have to make tough decisions. I mean, we’re in, uh, this is gonna be a real, it’s gonna be real interesting. We’re recording this in 2021. But 2022 is, I think, gonna be pretty wild, because you’re looking at, like, the costs of a ton of stuff look like they’re going to shoot to the moon. And comes inflation, it’s going to, yeah, it’s going to change. Well, that’s what happens when you give away trillions of dollars for free. And, you know, some of that, and supply chain issues and a bunch of other stuff. It’s like, I think a lot of people are stuck, and they’re having to make these decisions, you know, like, because selling more isn’t always the most profitable solution.
Matt Watson 33:38
No, sometimes it’s just optimizing the book of business you have. And since we’re talking about a tech startups, and you know, potentially firing your clients, you know, another subject that we haven’t brought up that I think is highly relevant is kind of making a pivot, right? Like, sometimes you’ve got a bunch of customers, and you might have multiple products, and you decide to make a pivot, you’re like, Look, we’re not going to do this service anymore. We’re gonna go focus on this other thing. And sometimes you just have to kind of give up a whole product or part of the business. And, for example, at VinSolutions, you know, this was like, 15 years ago, you know, we were selling a software product for car dealers to track their inventory and stuff. But we were also providing a service that was labor intensive, or we’d go out and take pictures of their cars for him. And we had employees in 20 different states. We were going around taking pictures of cars. You can imagine that was a nightmare, by the way, like, Joe in Denver doesn’t is sick today and can’t show up or quits, like what do we do? Now one of us has to go out to Denver and take pictures of cars, like Screw that. That’s why selling software is awesome. And, you know, we decided at one point in time, you’re like, Yeah, we don’t want to do that anymore. We actually sold off that part of that business. So we could focus on just the software. But being when you’re a tech company in your startup and trying to figure things out, I think one thing to really keep in mind is sometimes you got to make a pivot and you got to pivot way from a whole different part of the business.
Matt DeCoursey 35:03
Yeah, and we did that a Full Scale to like you were mentioning earlier, Salesforce. And, you know, Salesforce is a huge platform, but it wasn’t particularly easy for us to source the right people. And when the pandemic hit, you know, we just decided to narrow our service offering now we still work, we honor the commitments that we had. And, you know, like, it is what it is, but we decided we weren’t going to we weren’t going to add, we weren’t going to pile on to that mess. Yeah. And I think that that’s part of it, too, is like, if you don’t feel comfortable with like a hard stop and a relationship, or you know, because there’s thing it is significantly more expensive to find new clients and keep the ones you have. But in the end, though, if you have a bunch of unprofitable relationships, like really, you just need to come to the reality that you’re not really losing anything. Like you’re actually gaining, when you get it’s addition through subtraction. And, you know, now, there’s a lot of different ways to look at it. And I don’t think you can just always, you know, like I mentioned, some of its hidden, you know, like, what’s the support cost here? Or in your case, Matt, for the different things you’ve owned, it’s been so centric around cloud computing costs, yeah. Which, which are, were difficult, probably difficult, in many cases to really narrow down as far as like, who’s driving this up?
Matt Watson 36:25
Well, especially when you’re building a new product, right? And you really don’t know how many server resources it’s going to take to support this thing. And that at stack phi was very data centric, like we knew we were capturing like billions of data points in our hosting costs were a big thing. We’re like a giga book, it’s probably less of a thing. It’s okay. We got appointments, but it’s not like, it’s not every user has a terabyte of data or something, right? Like, no, but but if and they’re
Matt DeCoursey 36:50
not turned on a million pages or anything like that. It was about text messages, emails, and support. The support, which was very, very difficult to track without logging, who’s asking for help, and how long it took? Which, by the way, it makes it even more expensive. Yeah.
Matt Watson 37:08
Yep. The easiest way
Matt DeCoursey 37:09
as asking your support people All right, who’s a real pain in your ass right now? Oh, they know that? Oh, they do? Oh, trust me, they know, like, through and through, because, you know, some of it’s like holding people’s hands. So, I mean, all right, man. So here we are, we’re at the end of this episode. I mean, what are the things that really stick out? What are the lessons learned that we’ve got here?
Matt Watson 37:30
Yeah. So you know, we’ve been talking a lot about how, you know, firing your clients. But honestly, it’s not so much about firing a client, it’s about avoiding the ones that are not the best fit, right? So it’s not all about firing them. It’s also just about avoiding them. And, you know, some of that is, as we’ve been talking about in other episodes, right, is identifying your target audience in your niche, and, you know, your go to market strategy and attracting the right kind of customers and all those things. So just get yourself set up for success. And honestly, one of the biggest problems for young tech companies we talked about this, too, is just trying to solve problems for everybody. Right. And one of my favorite things is is SWAT sell what’s available today? Right? Where a lot of
Matt DeCoursey 38:17
news that’s a news
Matt Watson 38:18
Yeah, it’s an acronym for you sell what’s available.
Matt DeCoursey 38:23
Look at look at Watson holding out to the third was something new. That’s why you got to listen to the whole episode, folks.
Matt Watson 38:30
And, and sometimes, especially in early stage startups, your sales and marketing team will promise the world and you get all these customers that are not happy, you can’t deliver the right product to them. You spent all of your energy trying to make shit work that isn’t even really what you want to do. You know, you’re you’re you’re going towards your North Star, but your sales team keeps selling shit that goes due east. And just remember that sell what’s available today. And that will you’ll be successful with and your customers will be happy with their support team can support it. Otherwise, you end up in a clusterfuck of like, selling shit that we don’t even do the customers are mad the support team hates their life like everybody wants to quit. I’ve been there. You don’t want to be there?
Matt DeCoursey 39:17
Well, I’ll tell you, the A couple things stick out. Well, first off, I think we’re in agreement that the preventative preventative measures, don’t import the problem and increase it like if you can qualify. You can learn a lot about a prospective client or relationship by ants asking some very simple questions. And the problem is is you got to be disciplined enough to identify when the wrong opportunities in front of you now depending on how big your company is, some of that could like you mentioned, salespeople and marketer in your marketing department if you’re if you have one can get you in a lot of hot water. Um You know, like, nothing drives me crazy more than salespeople that over promise and under deliver just to get a deal. That’s not great. I think that overall though, when it comes to, you know, if you can prevent that, then you’re not going to bring in more pissed off people or the wrong kind of people now when it comes to, you know, getting rid of abusive or shitty or just like negative clients like I’ll tell you what, go do that and you’ll be a hero inside your organization. Yeah, I mean, yep, you’re going to show your people that you went over and above. And, you know, we did that at one point, we realized at Full Scale, we realized we had a client that had just driven our team to, like work way past capacity. And we literally said, Hey, we are paying these people for all of this overtime, and you’re paying for it. We’re not making money off this, but this is just simply fair. And we were here us, you know, internally, that went a long way. And that had a lot that was very early and in our timeline at Full Scale. And, you know, now if we ask our employees when polled, what’s the one thing that stands out about us as an employer, they say, we, the company, care. And I mean, what’s that worth? Cuz it’s worth a lot. I mean, you can, literally, yeah, that is literally that item on your balance sheet that is listed as goodwill, and you’re like, what’s the value of that? Because the thing is, is like, you look at that, and then you consider the fact that most of our employees that we had, at one point, were referred to the company by other employees, they wouldn’t do that if they didn’t think that they’re not going to tell their friends, colleagues, family members to come work for the company, if they think the company treat is going to treat everyone like shit. So you can be a hero. You can turn this in. And then the last thing is, dude, do you know how much better I’ve just felt in life? Like literally, like, I don’t need your money, lady or sir. Like, I don’t need it compared to the agony and the bullshit that you bring into my life. Like, and the thing is, is without peace of mind, nothing else has many flavors. So if it’s not worth it, it’s not worth it. And that’s okay. You know, like, I mean, yeah, because if you’re going to continue a relationship that you’re not happy with, and it’s the same thing, man, it’s, it’s like real life relationships. Like, no one’s like, you know what he treats you like, shit, you guys should probably get married. Nobody does that. The advice you’ve ever given anyone? Yeah. All right. So think of it the same way. So you got a lot of a lot of ways to be a hero. And yeah, now Matt, by the way, you know, I like I like landmarks, you know, we provided our one or 1 million client service our at Full Scale.
Matt Watson 42:55
That’s crazy, man. That’s really, do you think of a million hours?
Matt DeCoursey 43:00
I mean, a million hours of time. Like, I mean, wow. And look, me here’s the thing is that’s back to that whole like culture and all of it and knowing that having our employees know that we care because they aren’t going to show up and do a million hours anything. If it’s that shitty, there’s a lot of opportunity outs all that so I mean, that’s a key ingredient. Well, Matt, I’m gonna go review our client less now. Thanks for joining me.
Matt Watson 43:30
All right, see you.
Matt DeCoursey 43:32