I started my first business back in 1986 when I was in my mid-twenties. It was a typical software start-up. We didn’t have any money, so had to go about business the old-fashioned way – making profits from the outset. When I say ‘we’ I use that in the royal sense. Really there was only me for the first six months or so. I was CEO, VP Sales, CTO, CFO, Director of Customer Services and everything else at the same time. I was single, didn’t have a lot of commitments or overheads – so at least if I had a tough month, I was the only one who starved. During the day I would meet with prospects or customers, and at night I’d develop the software application that I had sold or write a press release that I’d send to anyone who would publish it – because that was the only marketing I could afford. In those days, a good sale was perhaps 5k, and I could survive if I got one of those a month.
After a few months I had a bit of rhythm going, but I’d had no idea about how I would grow the business. Then lady luck visited me. I met the General Manager of a new life assurance company who asked me to quote for a new business system he wanted to implement to help his sales team. I took a look at the requirements, priced the work (it happened to come in at 5k!), but then realized that I was fully booked, and if I got the business, I didn’t know how I could do it. On the other had, this was my opportunity to get my first marquee customer.
As serendipity would have it, I was at a family gathering around that time, and I related my dilemma to my brother (who at 30 years old was waaay more experienced that I was). In the knowing way of an older brother, he paused to consider, and then turned to me and said “Quote them 20k”. “Are you out of your mind?” was my immediate response, “I will lose the deal at that price.” He smiled and said “But why do you care? I thought you couldn’t take it on anyway. But if you get it at 20k, you’ll figure out a way to get it done.”
So, with utter certainty that I was wasting my time, I took my proposal, and multiplied all the cost elements by four, and there it was, a proposal for 20k. I knew I was wasting my time.
But I was wrong.
On reflection, this was one of the defining moments in my career. I began to understand something about why people buy, and the value that I could bring with the products, services and passion that I coupled with whatever inherent skills I had. My customer, the GM of the life assurance company, was one of those rare individuals you meet when you’re very fortunate. He was visionary, innovative, and prepared to take a chance on a young, small (very young and very small) company. He was also more than fair. Not only did he accept the 20k price, but he advised me that I had possibly underestimated the effort involved in a few areas and that we should build in an additional 25% contingency.
Many years and more than a million dollars in business later, we had built a very strong relationship. I learned that he had bought from me because (perhaps in my innocence) I had taken a very innovative approach to solving his business problem. Not dragged down by the weight of experience, I didn’t know how to over-complicate it, and the resulting clarity of my vision for his solution, matched where he wanted to go. Culturally we were very aligned.
The system I designed and developed (with a lot of input from my customer) helped his sales organization compete in a market that was new to them, and the life assurance company took a full 16% of their market in their first year.
I learned the difference between price and value. I learned that the full solution the customer wanted was a combination of my products and services and my passion for their success. I learned that an opening trusting relationship (See my recent post on this) could deliver tremendous mutual value. And, while I learned that sometimes it’s better to be lucky than good, I knew that, with structure, you could replicate good, but you couldn’t count on replicating lucky. So, I took to time to understand the value that I could bring, and practiced how to articulate that (See my post on Customer Value Proposition). And that has served me well, and continues to serve me well now as I lead The TAS Group through these interesting times.