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netpreneurs on building a business, your way
lessons in leaving home

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I have some advice to give. When we started, we were doing face lifts and graphic design stuff, but now we do full-blown site implementation, database development, eCommerce and all kinds of good stuff. As a small company, you only have so much time and so many resources, so it is very important that the clients you choose are ones that are going to advance your company in some way. Right now, we are fortunate in that we are booked solid. We have people coming to us whom we really can't service for at least a couple of months, depending upon the projects. I have put together my five tips on how to choose the right clients to work with.

Number 1: Avoid clients who don't seem to have a clear goal for what they want to do or clear ideas of where they want to go in the future. We had an early client that we actually fired, a startup that we thought had a good idea of what they wanted to do. Halfway through the project they came to us and said, "You know that product we were going to sell? We are actually going to sell this instead. We are changing our name and we are going to do a new logo. That doesn't hurt the design at all, does it?" That was frustrating for us and we ended up parting ways because our paths had diverged so much that it was not a good working relationship. It was costly for us in time, something I would definitely make a real facet in your decision.

Number 2: Look out for unrealistic goals, whether it is a time line or budget. Getting involved with somebody who has a massive site they need to launch in a week is probably not in your best interest. Number one, you are going to have to commit so many resources. Number two, you probably are not going to be able to do as good a job as you want to. You are not furthering your company by putting out work that is going to be hurried, maybe even work you will not be proud of or want to show off.

Number 3: Make sure that your personalities match. That is a very big one, even if it doesn't seem like it. You're basically going to be bedfellows with these folks for quite some time when you work on some of these projects, and you don't want to be butting heads with people. You want to make sure that you are sharing a lot of the ideas they have. It obviously makes the projects go more smoothly and creates fewer management headaches. With a small business, that is what you are after.

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Number 4: Look out for people who come to you with very rigid, preset goals. I'm one of those creative types who doesn't like to be told what to do. However, I do understand that I have clients who are paying me money to do things to further what they feel are important goals for them. One thing that is difficult, though, is when someone comes to you and says, "We want a site that says that we are a professional and reputable business and it has to have red buttons on the side and the font has to be Verdana 12 point and we need to have these pictures and it is pretty much already laid out for you." There is not much I am going to be able to do with a client who comes with that kind of rigid mentality. I like to be involved in the process. What they are paying us for are our creative ideas and insight. When someone comes to us with something that is very rigid and that we don't necessarily like . . . that's happened before, by the way. We did a design for a company that came to us and said, "We really want it to be like this." We thought, "We don't know about that. We will put together our own designs that will really impress them and they will not want to do it that way at all." Well, we showed them the designs and they liked them, but they said, "We still want this." We ended up showing them a version of what they were looking for—that's what they wanted—and we hated it. We were very dissatisfied with it, but, of course, they were our clients and that's what we went with. It was unfortunate because we were so disappointed that we didn't use it in our portfolio and we don't even mention that we did it. The goal of doing these sites is to do something that you are proud of and something that furthers your company. Unfortunately, this was neither.

Number 5: Use and agree to technology that you can fully investigate before committing to it. One of the worst mistakes we ever made was agreeing to do work with a company that wanted to use a back-end programming tool that they swore was just like HTML. It was insofar as you could write your code, but, in order to get that code to work, you had to go through a convoluted maze of programming they had set up. We hadn't investigated it very much because they had said, "You folks do your own thing and just plug it in." The plugging in took months and months and months. It was not a pleasant experience.

The bottom line is that you have to use your best judgment in picking the projects you work on. You get a feel for it, just like a sixth sense. Ask yourself what the benefit is to you as a small business, knowing that you have limited time, resources and staff. Is it money to pay for my office space or hire a new employee? Recognition?

We got our first breakthrough when we worked with National Geographic, and we didn't get it by pitching them. Keith was interviewing for a job during one of his downsized periods, and they said, "Instead of a job, why don't we just outsource this to you?" Bean Creative did this as a project for nothing, really, but we knew that the exposure of working for National Geographic was going to be fantastic. It has worked out very much to our advantage, and we have gotten so many clients as a result. They can see that we are of a caliber to do their work, as well. We are now working with Carnival Cruise Lines and PBS. Both companies know that we are small, but they see that we can do high-end work.

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One parting tidbit. We went into this company a little bit on the naive side. We had stars in our eyes and thought, "Wow, we are going to do Web development! This is cutting edge! This is great!" Well, you also have to be the bookkeeper and the errand boy or girl. You have to deal with a lot of stuff that, quite honestly, if someone had sat me down and told me I would have to do, I may have said, "I'm not sure if this is for me." However, I am glad I did it. It has worked out very well, but you have to be able to wear a lot of hats. The hats you don't wear, though, are things like having an attorney and having an accountant. Those are important things to outsource. Have an idea of what you can do in-house to keep your costs down, and what you absolutely have to send out of house.

Ms. MacPherson: Thanks, Layla. Now we move on to Patrick McQuown who is co-founder and President of Proteus, an Internet development and consulting agency with offices in Washington, DC, and Southern California. They develop dynamic, scalable Internet and wireless applications using Oracle. The company hasn't always been in multiple offices, however. For a while, they were in multiple rooms of Patrick's two-bedroom apartment—six people, fully networked. Those were the days, Patrick tells me, when they had the Proteus workout hour every day at 3:00 p.m. when everyone was made fit and energized to Metallica. Those were the days when he was very single, but they ended for good about two weeks ago. Patrick is just back from his honeymoon.

 

patrick mcquown: the unpredicted path

Thanks, Mary. I guess I'm the one guilty of starting the company out of my dorm room. We started in 1996, and now we are 30 full-time people with about 8,000 square feet of office space in downtown DC. It's been a very, very, very long road, and there are a lot of things I and my colleagues learned along the way. It's information we would like to share with you, but I would like to start off with some funny stories. Having been a dorm-based business, then an apartment-based business, then in a small office and in a larger office, there are just tons of war stories.

The first one was in the dorm. The company was founded by myself and our Creative Director, Timothy Shey. He founded the company with me on the basis that I was getting my master's degree in forensic science. That didn't really help me out too much.

I knew I was going to be a federal investigator upon graduation—and I was for a short while until I quit to do Proteus full-time. I was interning for the government back in the days when it was nearly impossible to get on the Internet. You used to have to buy what was called Internet-In-A-Box, hook people's PCs up to the Internet, configure IP addresses, do the little dip switches in the modems and the whole nine yards. I would get these jobs hooking people up to the Internet. There was an association I did this for, and I gave the guy a brief tour of the Internet through Netscape Version 1. I showed him my personal page, and, a week later, he called and asked, "Hey, do you want to do our Web site for $20 an hour?" Needless to say, I jumped all over that.

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At that point, I started worrying about paying my taxes. I knew I was going to go to work for the government and that they would be doing background checks. I didn't want to get disqualified for not paying my taxes, so I talked to some of the attorneys at the agency and they told me to get incorporated. I laughed. It was comical at that time. Then they told me, "Let's say you are driving to a computer store and you get in the accident. They can only sue you for the worth of your company." Back then, that was good; now, I hope it doesn't happen. There was an attorney whose wife owned a law firm and they needed some computer work. It was a barter arrangement where they said, "We'll incorporate you, and you can do some computer work for us."

We went through with that deal and found out that you had to have a bank account with $1,000 to be incorporated in the District. I was in college; I didn't have $1,000, so I told Tim Shey to give me $500 and he got 50% ownership of the company. That's how we started—out of room 512, Munson Hall, 21st and I Streets in good old downtown Washington, DC.

Our first client again came to us through serendipity. He was a just friend of somebody's who needed a Web site. I told him our address and to come see us. Tim is my business person as well as our Creative Director, and he is kind of an artsy guy. I sat him down and said, "Listen, Tim, you have to shave. You have to put on a suit and come to this thing top-notch. Okay, buddy?" He said, "No problem."

I figured I'd have at least a 30-second window from when this would-be client came to my dorm—I was an RA at the time—because he would have to call up from downstairs and say, "I am here, would you buzz me up?" That would give me at least 30 seconds to get the final preparations in order that you do when you are trying to sell something out of a dorm room. Well, what happened was that Tim was on his way over to my room, noticed this gentleman in his 40s in a double-breasted suit outside the dorm, and thought, "This has got to be the client." He introduced himself and let him in without using the buzzer. There was a knock at my door and I answered it with shaving cream still on the side of my face, no tie and the bed unmade.

You have to improvise along the way, and there are a lot of hurdles that you face.

Well, we got the client. He had seen our design and that we were hungry. We were honest with him. We told him there might be a lag time while we were going through our finals and finishing up our dissertations, but he decided to go with us, nonetheless. Coincidentally, that was one of the first online commerce sites available at the time. He sold office furniture over the Web and sold his company for quite a profitable amount. It worked out for us as well, but I kind of wish we had done that job on an equity basis. What can you do? Live and learn.

From there, we graduated and moved into a basement apartment. We lucked out with our first, very large corporate account, Omnipoint Communications. Again, we were quite honest with the client when we met with them in their offices in New Jersey. We told them that we were two people, but that we were very hungry for work. We showed them some of our designs. They appreciated it, sat us down and said, "We know you are low-balling the price compared to the other proposals. We know you want this work, but if you screw up once, you are out of here and we will bring in the pros."

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We did the job right, and it worked out very well for us. It led to other clients such as the Washington Post, which, in turn, led to a nicer apartment. At one point we had six full-time people working there. We had benefits, health care, the whole nine yards, but no office. Ethernet stuff was taped up all over the place. I started to notice that at about 3:00 people would start to doze off because of all the heat from the computer equipment. We would put on some Metallica and everyone joined in a Proteus workout. We had a design intern at the time, a student at George Washington University. Needless to say, when she graduated, she didn't come to work for us full-time. That summer we moved into our first small office, and, about a year later, we moved into our larger offices at 15th and L Streets.

There are just so many things you need to know to run a business. I'm sure that some of you are as naive as I was going into this, but there was one cardinal rule I knew I needed to follow, and which I still follow to this day. I knew that I needed to have more money coming in than going out. I didn't get an MBA for that, but somebody told me somewhere along the line that you had to do it. That was the rule we kept. We just made sure that we were always bringing in more money than what we were spending.

As far as advice on outsourcing to organizations like lawyers, accountants, you need to turn that over to experienced people. You think you can handle it yourself, you think you know your own company, but, really, it's just going to save you tons and tons and it is going to come back in spades if you outsource it. As far as choosing the right people, I would recommend talking to other companies that are about your size, entrepreneurs like yourselves, and talking to people at companies that are bigger than you. Ask them who they recommend. You will be surprised at how much useful information you can get out of them. I make my decisions based on recommendations. Not to rain on the networking parade, but I don't rely just on meeting somebody at a networking event who says, "We specialize in tech companies. Give us a call." Everybody does that. It's asking people like Layla and Lisa, "Who did you use? Why did you like them?" Then call their accountants and lawyers and get referrals from them by calling other clients.

The other advice is something both Layla and Lisa brought up and I would echo—customer service. Everybody says they do customer service, but it is especially important when you are a small organization or one based out of your home. You have to have top-notch customer service, and you have to be on the ball for your clients at all times. You have to go above and beyond. You are going to have to take it on the chin sometimes with revenue, working late and more, but I guarantee that it will come back in spades if you believe in yourself, your product and your service.

Not only do you have to believe, you have to make sure that your employees believe it as well. In addition to that, you have to take care of your employees. Even at 30 people, Proteus has 0% turnover rate. That is unheard of in this industry. It is because we make sure that employees come first. There is a good book entitled, First Break All the Rules, by Marcus Buckingham and Curt Coffman. It is one of the few books that takes a look at what makes employees stay at companies. Is it things like options or having a masseuse come in once a week? Is it having a concierge to take care of their watch when it breaks? What it really boils down to is: Who is their immediate manager? Does their employer care about them? Do they have the tools to do the job and do they know what is expected of them? It is fundamental, touchy-feely things, but a lot of organizations don't put them into practice. If you do, the sky is the limit.

There are a lot of things we have done and a lot of lessons we have learned. It has been a long road, a long journey and a fun one, too. It's a great economy and there is no better time to start off on your own than now. There is nothing more fun than starting your own business, being your own boss and watching something grow. It is really, really, really quite self-rewarding—if I can say that—something you can't experience anywhere else. It is such a great time and we are in such a great geographic location. I encourage you, if you have that idea, go for it, because you are not going to have a time like this again.

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