L adies and gents, Founders and Fails, welcome to the next evolution of Founders@Fail. We’re dropping knowledge from the startup trenches directly to your desktop. In addition to our monthly meetups, we’re kicking off a streaming web show. Every week, we’ll release a new episode. So pick up the Ben & Jerry’s, settle in, and enjoy a good kick in the teeth from today’s most inspiring entrepreneurs. I can promise one thing: we don’t pull our punches and don’t shy away from asking tough questions. This isn’t 60 Minutes. It’s real advice from entrepreneurs who are struggling with real challenges. There’s no spin and no press releases. The stories aren’t always pretty, but they’re the ones worth hearing. For those of you out there trying to build a business- if you don’t walk away thinking about what you’re going to do differently, you’re not listening.

How To Handle Disagreement: The Habidy Story

Critical product decisions are usually the result of heated debate. Opinions run strong and everybody has one. Brendan Mangus, Habidy’s co-founder and COO, shares his advice on how to navigate the internal politics of these decisions…

The Consequence Of A Closed Community…
When I look back on my two plus years as COO of Habidy.com, an opinion-focused social site, there were many tricky decisions. But the hardest ones came late in the game on the eve of our launch. We spent a little over a year creating our site, but just six months after launching, we were done.

I can point to one major group decision that most pointedly lead to our demise – and it had to do with our signup process: whether to keep the community open or to close it and require a signup.
To understand the decision points, it’s important to understand the point of the site.

The goal for Habidy.com was to create a community where highly opinionated people could come to discuss news, politics, music, videos… whatever… and have thoughtful discussions with other like-minded people. Habidy would not be about your “friends” – it would be about ideas. And anyone could come to the party.
We rolled out our alpha testing in early Summer 2012 and moved quickly into Beta testing. But we were divided as to whether to keep the site open or closed upon launch in September.

Keeping it open would allow for our content to be indexed and searchable via Google and other search engines and would allow people to immediately check out and surf our site.

Keeping it closed would protect the content of our users and their privacy (at a time when Facebook was catching hell for its privacy settings and policy) as well as ensure that those on the site had created an account.
At face value, I could understand some of the logic of keeping it closed. But as a veteran marketer, it seemed obvious to me that people might be unlikely to signup for something that they couldn’t see, touch and understand. After all, there’s a big difference between “telling” and “showing.”

While I co-founded Habidy, as COO, my vote was trumped by the CEO critical decisions like this. It’s never easy to disagree with your co-founders, especially about such a fundamental product decision. In moments like this, it’s important develop data driven evidence to support your opinion and to be honest about your point-of-view. But, at the end of the day, the decision maker is the one who gets to make the decision – your job is to provide that person with all the info to make that decision and give your POV. You then have to execute, whatever the decision.

Whether you’re at an agency, a startup or do consulting, the person you report to gets to make the final call, they can take or leave your advice.

It’s a tricky thing being the chief advisor – you can only be so hard in your opinion without pissing off your “boss” so you need to be careful. Relationships can end because a client or your higher us feels you’ve been too assertive – but on the other hand, it’s part of the job of a top exec TO be assertive.

So we kept the site closed and required a signup for anyone to view its content. As a result, our growth stagnated for months. No matter what we did to get people to the site (Google AdSense, Facebook ads, etc) less than 5% would move past our signin page (they would look, but not “touch”).

Six months later, we finally opened the site, so that a la Yelp! people could surf our site but could only comment and create content with a signup.

But it was too little, too late. More than $500K had been invested in the site and our runway was all but depleted.
So – lesson learned – make it easy for people to learn about your offering on their terms and understand the consequence of creating barriers to entry. While you may think, “Everyone’s going to love this site – of course they’ll signup,” the fact is that people have very short attention spans and will move on to something else if you ask for a commitment too early.

Test drives are given for a reason.

PR ain’t the same thing as Marketing. You might as well compare crutches and a car. Yeah, they both help you get around, but that’s about all they have in common. -Schuyler Brown

People’s reasons for buying things often don’t match up with the company’s reason for selling them. -Jason Fried

I have a degree in finance, but I don’t remember taking any classes that even remotely taught me how to make money. -Jason Fried

As preconditions to be creative, one should know something well while having the utmost focus on it. Someone who knows little about aerodynamics can’t come up with the idea for next concord. And focus has two aspects: knowing a specified area well (focus area) and being able to bring most of those neurons to work on it. How do you achieve the latter? I found isolation to be very effective (as have numerous famous people). -Mansour

Until you’ve understood how your majority opinion could be wrong, you should strongly question whether your opinion is right. Until you’ve understood how a dissenting opinion could be right, you should strongly question whether it is wrong. A great and simple test is whether you can argue both the majority and dissenting opinion well — irrespective of which one you hold. -Larry Cheng

If you fail too hard or succeed too easily, I’m not sure how much you really learn. -David Sacks

The marketplace is far harsher than I am and I’ve seen signals from the marketplace that entrepreneurs better heed: there are too many startups, too many things to try, too many apps that really don’t do much more than Google. -Robert Scoble

Maybe you just ran out of road on that route. -Dave Trott

Well, we’re all in showbiz now, walking on eggshells, relentlessly tending our customer base. We’re all selling something today, because even if we aren’t literally selling something (though thanks to the Internet as well as the entrepreneurial ideal, more and more of us are), we’re always selling ourselves. We use social media to create a product — to create a brand — and the product is us. We treat ourselves like little businesses, something to be managed and promoted. -William Deresiewicz

That company was once even more screwed up than you are. -Pierre Lamond

The real revolution is that you get to make waves, not just ride them. -Seth Godin

Why in the hell would I do that? -Joe Yevoli

A list of questions to ask when something goes wrong:
1. How are you going to handle the problem for the customer? Think about an immediate solution, delivered with the right attitude and a sense of urgency that will restore the customer’s confidence in you.
2. Why did it happen?
3. Has it happened before? If it has happened before, why did it happen again?
4. Can it happen again?
5. Can a process be put in place to prevent it from happening again?
6. Can you catch it before the customer calls you?
-Shep Hyken

He pulled me aside and bluntly said “Josh, stop doing stupid shit. -Josh Infiesto

Given this stress, CEOs often make the one of the following two mistakes:
1. They take things too personally
2. They do not take things personally enough
-Sarah Lacey

Welcome to the show. -Sarah Lacey

Writing a post mortem is hard, particularly when the result is failure: a failed deal; a failed investment; a failed concept. That said, without a post mortem, without deep reflection, honesty and introspection, how can we get better and do better the next time? Quite simply, we can’t. -Roger Ehrenberg

Kirill’s rules of investing: 1) Don’t submit to peer pressure (Know thy market). 2) Don’t invest in things you don’t understand (Know thy product). 3)Don’t invest in people you don’t like (Know thy people). 4) Make the deal simple (Know thy deal). -Kirill Sheynkman

We started the company because we liked the idea and wanted to do something entrepreneurial. We weren’t in love with the idea or market we were going after, and weren’t core users of our product. -Ariel Diaz

I will never forget my first deal. It was tiny, but it was going to be my startup’s first paying customer and you fight for those pennies… After months cold calling, hundreds of calls, countless meetings, this was the only deal I had to show for it. We were halfway through a 3 month trial and rather than sit on it, our team decided to push for the long term commitment.

Keep in mind, it was November of 2008 and the fallout from the financial crisis was palpable. I was calling prospects only to find out that they’d been laid off…I had to close this deal.

The negotiation
I flew down to their offices to close the deal in person. I was nervous as hell but knew that I had them on the ropes. I had invested the time to develop rapport with my contact there, the Marketing Manager responsible for operational execution.

Our team had handled this account with kid gloves. Before the launch, we made sure to give ourselves wiggle room in case we underdelivered by discussing how it would take time convert their target audience and we may not see results until several after several campaigns had been run. This negotiation tactic is typically called planning a way out. I made sure to speak with my contact at least once a week during the campaigns and sent reports on our progress before every call. I established credibility by setting clear expectations and surpassing them in each and every interaction. I was early to meetings, sent updates before she asked for them, and addressed any issues head on without shirking responsibility.

She was pleased with the early indicators and more importantly, we’d become friends. This wasn’t some clichéd sales tactic. We talked about our families, our weekend plans. We were close, so close that she was advising me about how internal conversations were going, where the pain points really were and what buttons to press.

With that confidence, I attempted to assume the close by talking about how glad we were to continue working together. I opened aggressively: a 5 year commitment with a mid-tier price. Not the most aggressive pricing, but not cheap either. This would be a profitable deal for us. Now 5 years is a long time. Most people don’t even stay at the same company for 5 years. It’s an especially long time when your track record as a company is counted in months, not years. By starting with this highball, I hoped to make any incremental give seem reasonable in contrast. 3 years? That’s nothing…except a lifetime in startup years…

The three of us sat there, going back and forth and ultimatel, we ended exactly where I expected we would. I came down to 3 years after hemming and hawing, I came down on price a little, but not much. And then I made a fatal flaw. I shook hands and walked out. Without signing the papers. I hadn’t prepared the documents before walking into the room. None of that crossed my mind as I walked out of their offices.

I flew back to New York. Shared the good news with the founder of the company and our investors. We had our first client. And then waited. And waited. After three days passed without receiving the executed agreement, I called my contact. “Oh, it’s no problem, we just need final approval from our CEO.” Red flag. Big. Glaring. Red. Freakin. Flag. I had never spoken with this person. Had never teed up our positioning. Had never even known he would be involved in the decision.

And the deal never got done. If they don’t sign on the dotted line you don’t have a deal. Never forget that.

Schuyler