Hustle Harder: Episode 19 Transcription
It was a bright a sunny day in August when a contract we were currently on crashed and burned… and along with that almost came the crash of our company.
So here’s the story of that event.
It Was Just the Beginning
Ali: So we almost crashed the company. Let's dive into how we did that.
Steph: So our bank account went from something to zero dollars in a matter of a week. It was really rough. But I guess we can start at the very beginning where in February of 2019, we received... a form submission.
Britt: And I remember Steph telling us about this form submission. She's like, I think this guy is kind of weird, really uptight. Because usually, the people that we normally interact with it's really casual emails.
Steph: The form was describing a project, but the one thing that made me reply was I was looking at the company where he was from. And I was almost taken aback because this particular organization was an organization that while I was in school I had read about in textbooks. They were much bigger than us and I was thinking, “why are you contacting the peasants?”
But I was excited about it. And so I thought, well, maybe this is the next step in our evolution. So Britt and I went to their office at nine in the morning. We walk in and it's this big corporate boardroom. It wasn't intimidating but it was a very different setting than what we're used to. And what we've realized since this client is that regardless of whether it's a corporate client or a startup client, most people are still pretty casual in the introductory meetings. But this first day was very intense. It was like we were getting interrogated.
We met the man who wrote the form submission. And it turns out he was actually a really nice human being, we all got along really well during that meeting. And it still kind of baffles me because the agency itself... like if you would have looked at our website, if you would have looked at the previous work we had done and it wasn't super corporate at that time. We clearly were a young company that didn't have a ton of experience.
Ali: I think that’s what they wanted, people that weren't that corporate and weren't in that space. And I think you could tell that from our website and the vibes that we give off as well. So I think that's exactly what he wanted.
Steph: Or so he thought.
We ended up bringing Ali into the fold, we did another meeting and it went really well. We created the proposal, we pitched to him, he loved it, everything was going really well. And we were all like oh my god, this is the biggest contract we've ever had in our lives. This is insane. The fact that we're under a year old and we're already working with these people is pretty crazy.
And what we realized quite soon after signing the contract was that the tables started turning. And what we thought the project was going to be, was very different from the reality of the actual project.
Put it in Writing
Ali: Something that I want to note for people to be cautious of is that we gave them a big discount because we were promised a lot at the beginning that we didn't end up getting. And that's something to be wary of when you're working with people - if they're promising you things like connections, introductions or certain things that you’re going to get in place of that money, figure out a way to make sure that's actually going to happen.
Put it in the contract, have something in place to ensure that you're going to get what you're being told you will receive in place of some of that money. And we didn't do that. And we ended up not getting paid how much we should have gotten paid because we did discount them and we didn’t get what we were promised. So overall, it was quite a big loss.
Steph: That's what makes me so mad and it still kind of irks me today. But at the same time, I'm glad we had the experience because now when it comes down to contracts, we know what to look for. We know that we have to put all of those requirements and we know not to be overly trusting.
I think the three of us were so excited and so brand new at this that we were so trusting of this guy and when it came down to writing the contract, we didn't care. We're like, “Yeah, you can put in whatever provisions you want, whatever”. And to give everyone some context, when the contract went down the toilet, what happened was we had given him a rate based on a flat rate of a price per person. So a salary model, and what they based the contract on was deliverables. And as an agency, you can't always control what deliverables you give to your client. And if those deliverables don't add up to the sum of money that you've been paying out on salary and your contract doesn't cover that, then you're screwed. And that's what happened to us.
Ali: And it was a big project, it was a lot of work. And it really took over all of our lives. And what that meant is that we also didn't have the capacity to start finding new clients. And I think that’s a large reason why our bank account ended up being zero dollars was because we had no other money coming in.
And then from there, we did end up landing other clients right away. But that day, it was really scary.
Britt: So a major lesson is don't put all your eggs in one basket. For us, this project was like a huge present given to us on the table and we were so blinded by the opportunities that it could hold. But once you open up that present it was just empty promises.
Steph: What was interesting is while we were on the project, like the three of us have really good chemistry as co-founders but there was so much tension. And I think a big part of it was because we knew that if this project fucked up, we were screwed. And we knew that that was what was gonna happen.
Red Flags and Lessons
Britt: Red flag #1, empty promise. Really get to know your clients and don't think that one project can really make your agency or skyrocket your agency's growth and success.
Steph: Red flag #2, don't take shortcuts. On that note, if someone is promising you a fast track in your business, it's probably the fastest way that you are going to crash and burn.
Ali: Red flag #3, there was a very toxic culture within the team and also just the organization in general that we ignored. And then a lesson is, it's okay to say no to projects if you know that they don't fit with you and your company because it's not going to be good for the client or you.
Britt: Red flag #4, a one sided contract. Lesson, get your contract read over by many professionals and see if it is a fair contract.
Steph: Red flag #5, if people try to control your team or tell you how to run your team - don't ever, ever let someone who is not in your organization tell you how to run your business because they don't know your business.
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