14 Mistakes on Our Way to $88,000 in Revenue

Stephen Greet
Stephen Greet October 15, 2019
14 Mistakes on Our Way to $88,000 in Revenue

My brother, Justin, was an engineer at Google, and I was a data analyst at Chegg. In May 2018, we quit our jobs to start our business, BeamJobs. We knew we wanted to do something in the hiring space since we experienced firsthand the problems associated with both hiring technical talent and finding a new job as a technical person (specifically as an engineer).

At the time, that’s about all we knew. We had nothing validated, nothing tested, just a vague idea of the industry we wanted to start a business in and some of the problems we wanted to solve. I wasn’t quite making Google money, so I knew I could give this a go for about 15 months before I’d have to get another job, assuming I couldn’t pay myself any salary. 

Since then, we’ve gone through three pivots, changed our name, started a recruiting agency, and built three software products to make that recruiting agency more effective. Now, we have our first public-facing product coming out in November to help software engineers put their job search on autopilot, and we’re looking for beta users. Our monthly expenses are about $8,500 (including a salary for both co-founders of $36,000, which started in March). To date, we’ve made around $88,000 in revenue via our recruiting services, $78,000 of which has come in 2019 so far.

Over the last 14 months, we’ve made a lot of mistakes as first-time founders. Some big, some small, all of which likely could have been avoided. I’ve been a lurker in the IndieHacker community for a while, so this is my attempt at giving back. I’d like to make this a monthly habit since the only way to make progress in your business, I think, is to actually learn from your mistakes.

Here are the 14 biggest mistakes we’ve made and lessons we’ve learned over the last 14 months. Not all of these learned lessons are applicable in all situations, these are just things I wish we did differently. 

The Start of Our Company

Blue rocket launches to signify start of BeamJobs

Start with a name that doesn’t completely suck

The name of our company when we first incorporated (and still the name we use for our recruiting agency) was qualifIQ. Now, if history is any indicator roughly ⅓ of readers read that as qual-if-eek, ⅓ read it as qual-if-i-q (our intention), and ⅓ didn’t really know how to read it. And if you’re my parents, the way you pronounce it changes each time you say it. 

That means that this is a bad name. People don’t know how to spell it or pronounce it so you can be sure they won’t tell others about it! Also, four syllables. What were we thinking? 

I don’t think you should obsess over your name out of the gate as there are better ways you can be spending your time but at least make sure 5-10 friends or family members can pronounce and spell it. There is never going to be consensus when you ask people in your network if they like your name (believe me, we’ve tried) so the key when asking people for feedback is to hone in on if they get the spelling and pronunciation right. 

When we decided to change our name to BeamJobs, we wanted to accomplish three things:

  • Make sure the .com domain was available
  • Make sure people could spell and pronounce it (ideally two syllables long)
  • Make it relevant to the industry we’re in (hence the word “jobs”)

To accomplish this, we came up with a bunch of base words (like “Beam” and “Jobs”) and then programmatically checked combinations of those base words to see if the domain was available. Here is a great guide to getting that done using Google Sheets. There is a time cost of having to switch company names so it’s better if you can get it right the first time.

If you find a way to make money, double down

In April 2019 we met up with our advisors to check in and get their feedback on our company direction. We started working as a recruiting agency in November 2018 and to that point had made $32,000 in 2019. We had started to refine our processes to find the right engineering candidates for a given role and these processes were starting to prove effective. Furthermore, we knew we could build a tool to automate most of these processes to increase our efficiency by 8-10 times. 

We told this to our advisors, and then we launched into our idea for how we were going to build a subscription software tool for other recruiting agencies. This is how that conversation went:

Advisors: “So you’re starting to make money in recruiting, you’ve proved your processes for finding good engineers are working, and you have a tool you can build that can drastically improve your efficiency?”

Us: “Yup”

Advisors: “And instead of doubling down on the business model that’s proven effective where you have a distinct advantage over your competition, you want to sell a tool to give that advantage to your competition? Using a business model that you haven’t proven out?”

Us: “Sounds about right!”

Advisors: “Why?”

Us: ¯\_(ツ)_/¯

The truth was, being an effective recruiting agency wasn’t “sexy” to us. We had this grand notion when we started a business that we’d build a software product that would grow, and we’d sell at a 10x multiple in five years and post up on a beach somewhere, so we ignored the plain truth in front of us. We had a good business that had gotten some traction, a differentiator over our competition, with the capacity to significantly grow all the while paying ourselves a salary.

I value the freedom that comes with making my own schedule way more than I value being one of the “cool” companies. This meeting with our advisors was a real wake-up call. If your goal is to run a profitable business that is able to pay your bills and that challenges you then double down on whatever channel makes you money. This one hurt to write because it’s so painfully obvious in hindsight.

Mr. Krabs speaks into a microphone and says to reporter, "Hello, I like money."

Start your company as an LLC

People smarter than me have written extensively about starting as an LLC vs C-Corp vs S-Corp vs IDK-Corp for your startup. See here for an example. What I know is that we started as a Delaware C-Corp and if we could go back in time, we’d be an LLC. There are a few reasons for this:

  • It’s generally cheaper to start an LLC than it is to start a C-Corp.
  • There is more corporate governance involved in being a C-Corp (my least favorite part of my job) and the fees you owe annually are typically higher for states.
  • Lawyers and accountants are typically more expensive for C-Corps than LLCs and that includes year-end tax filing. These marginal increases in price are especially felt in the early going if you don’t have much revenue and have to eat into your savings.
  • You get double-taxed as a C-Corp. Your corporation first gets taxed on all of its profit. Then, if you opt to distribute some of those profits as a dividend to stockholders (aka the founders if you don’t raise money), the stockholders have to pay personal income tax on those dividends. As an LLC you just pay income tax one time on the profits of the company.

We started as a C-Corp because there was a chance we were going to try raising significant money to grow at some elusive future date. We should have started as an LLC because we could have saved the company several thousand in taxes and professional fees.

Keep in mind, you can always convert your LLC to a C-Corp if the need arises. If you expect your business to make revenue early on (and I hope you do!) and you don’t plan on raising money right away, then I would strongly recommend you start as an LLC.

Hard Lessons Learned

Cat holding magnifying glass & wearing blue cape with "error" and "404" messages about job errors

Don’t waste time on startup porn

I think most entrepreneurs (including myself) are guilty of this at one time or another. You spend a lot of time reading about and listening to stories on companies that took off like rocket ships or raised a big round of funding. The thought is that by reading these success stories, you can replicate their processes and achieve the same level of success.

I don’t want to call out any sites by name, but I used to spend far too much time reading a site that rhymes with bechcrunch. Now, for entertainment purposes that’s fine, we all need a way to let loose. This information is also likely useful for investors or people who sell to companies that are featured on those sites.

For me though, I just felt depressed after reading about another scooter company that does AI in the cloud with blockchain and raised $300M at a $7.9B valuation started by the first employees of Facebook, Spotify, and Google while we were trying to make our first $1,000 in revenue.

What these stories rarely talk about is survival bias. What about the other twenty companies that made cereal to fund their business (a la Airbnb) but didn’t succeed? By focusing only on the winners, we tend to treat their processes as infallible.

If you’re looking for more practical feedback or have questions you’d like answers to about growing and building your startup, I highly recommend the podcast Startups for the Rest of Us and the forum IndieHackers.

Cold emails can be an effective outbound marketing channel

We’ve grown to $78,000 in revenue so far in 2019 and all of our business has been generated via cold emails. Believe me, when we started out I didn’t envision this to be the primary way we’d grow and build our recruiting business.

Now, we don’t want to incessantly spam people to use our services, so we follow some rules to make sure we’re being as above board as possible. If you want to try cold emails for your business, I suggest following these rules:

  • Qualify your leads. As a recruiting service, our leads are people hiring for roles we help fill (engineers and data scientists). To qualify our prospects, we first identify smaller companies (we work primarily with companies with less than 250 employees) that are hiring for roles in our wheelhouse in locations we work in. Then, we use LinkedIn to find 1-2 decision-makers at those companies who are likely to play a role in the hiring process. For senior engineering roles at a small company, that might be the CTO and Head of People, for example. Now, the spammy approach would be to get the contact information for all people in a specific city with the title “technical recruiter.” Just because someone has the right job title doesn’t mean they can necessarily use our services right now if they’re not hiring. Ensure the people you’re emailing likely have a need for your product or service. 
  • Customize your message. It’s easy to spot a generic, non-custom message when it arrives in your inbox. If you’re like me, you mark these emails as “spam” without a second thought. To prevent this, show you’ve done your research in your cold emails! For us, we can read about the company we’re reaching out to and the job they’re hiring for and say specifically how we help find engineers that match what they’re looking for. For example, if they’re looking for remote engineers, then they likely want people who thrive when working independently, and we can talk to that. Avoid being marked as spam by not mass-sending spam.
  • Don’t send too many follow-ups. This is a judgment call but we just feel uncomfortable sending more than one follow-up when we send cold emails. The reason is that when I get several follow-ups from cold emails I get annoyed and when I get annoyed I’m likely to flag an email as “spam.” There are people that will vehemently disagree with this because follow-ups can work but this is just a personal preference for us.

Another benefit of following these rules is that you won’t hurt your email deliverability. When you regularly get marked as spam by people you’re emailing, then email providers will start sending your emails right to the spam folder for email recipients. This tanks the rate at which people open your emails (because they’re not hitting the inbox of recipients) and therefore drastically reduces the efficacy of your cold email outbound. Follow best practices to keep your email domain in good standing!

Someone will have to get good at sales (especially for B2B companies)

Sales come naturally for some people. I can comfortably say that I’m not one of those people. I studiously avoid eye contact when I see someone on the street that I kind of know because the thought of making small talk gives me undue stress. It’s safe to say that I don’t have the gift of gab and that is why sales scared the hell out of me!

Unfortunately for me if I didn’t start doing sales, then our business wasn’t going to make any money. My co-founder was the CTO after all, so I felt the obligation to make sales was mine.

When I first started doing sales calls, there were some VERY uncomfortable moments. I’m talking, “will haunt me randomly while I’m in the shower 20 years from now” levels of uncomfortable. What I can promise you is that like with anything, you’ll get better over time.

Here’s how I made an effort to get better at sales calls:

  • First, I started with a general script. All of the talking points I wanted to hit during the call were included. I listed questions I would need to ask. This should not be something you read verbatim (believe it or not, I made that mistake once). Think of it more like a study guide for class. The process of actually creating the study guide is the most beneficial part of the process! By writing this script, I had more confidence because I knew what I would talk about during the call.
  • As painful as it was, I recorded and listened back to calls that didn’t go well. I tried to pinpoint why they didn’t go well. Did I not properly answer a question? Did I lose their interest because I rambled on too long?

Eventually, after following this process, I got pretty good at sales! Whereas we used to sign contracts with 30 percent of companies we got on the phone with, that number is now around 60 percent. The best part of it all though is I no longer get nervous about these calls. They’re just another necessary part of growing our business. If you’re nervous about a call, just try to remember that the call won’t go worse than some of my calls did!

Employee in glasses & suspenders with mouth open & hands on hips saying "Well this is awkward"

Don’t recede into your area of expertise

Everyone wants to spend time doing what they’re good at and what they love. Unfortunately, in the early going, neither engineering nor data analysis was going to help our business.

In my job at Chegg, I spent a lot of time building out revenue forecasts for new products and doing product funnel analysis. This may seem obvious now but in order to build out a reasonable forecast you need some data! I spent far too much time projecting user and revenue growth when we had neither users nor revenue! Justin is one of the best engineers I know, so this leads to my next point.

Don’t engineer too early

Two separate times Justin spent at least a month developing a product only to find that by the time he finished those products, we knew there wasn’t a market for them. We convinced ourselves these products were a great idea before we validated whether companies would pay for them.

If we could go back in time long before we engineered anything, we would have offered the products we envisioned as a service and then built a product after companies paid us for that service.

Again, one of our early ideas was to help companies assess candidates for data analysis roles. One of the skills needed for data analysis is to write SQL queries to pull and clean data.

Long before we built an automated data analysis SQL assessment, we should have offered that service and done it manually (via something like CoderPad) then when we had the requisite number of paying customers, built a tool to handle that for us. We built the automated solution way too early. You have to walk before you can learn to run!

Don’t waste time on things that don’t move the ball forward

In the early days of our company, we weren’t really sure how to spend our time. Our first product idea was to help companies assess candidates for data roles (data analysts, data scientists, business intelligence analysts, etc.). We knew we had to validate our idea but we weren’t sure how. I decided to reach out on LinkedIn to most any senior person with “data” in their title and ask for a coffee meeting.

I had a decent response rate so I would travel all over NYC to these coffee meetings. They were rarely productive and that was entirely on me. The people I was talking to were not the people I needed to be talking to (so poor lead qualification on my part), and I was a bit aimless in these meetings so I would spend half my day on two meetings largely just shooting the shit.

I was able to convince myself that I had a productive day but in hindsight, I learned little and didn’t move the ball forward in terms of idea validation! Another example of this is spending time in the early days on things that don’t really matter yet like logo design.

Your goal when you have a product idea is to get a sense of whether the people you’re building for will use that product and if it solves a real pain point. If you’re doing things that aren’t in service of that, you’re likely wasting your time.

Child with outstretched hands misses catching an orange ball
“Can I pick your brain?” meetings

Don’t waste money on paid ads to validate your idea early on

Fifteen minutes. That’s how long it took for us to lose $150 on LinkedIn ads. I read a few guides online about how to do LinkedIn ads and felt ready to jump in. We had no insight, no optimization plan, and no signups after lighting that $150 on fire.

Unless you really know what you’re doing or have a big enough budget (I’m talking $1,000-$2,000 a month) to figure out how to make online ads work I wouldn’t recommend this as an early way to validate your software product.

This advice is not true for all readers, but it was certainly true for us when we targeted other businesses. On LinkedIn, our cost per click was around $10. So if you plan to spend $100, you will get 10 visits to your website. You just won’t get any sort of signal with 10 visits.

Now, there are cheaper advertising platforms like Facebook, but unless you’re experienced with the platform you’ll likely be targeting the wrong audience for your product, especially if it’s a professional one.

Some Solid Advice

Advisor in purple shirt points to charts and gives solid advice to entrepreneur in yellow jacket

Maintain a regular schedule

One thing you hear early and often if you read posts by other startup founders is that there are inevitable periods of ups and downs. We’ve had periods where we were convinced we were going to IPO in the next four days and periods where we thought we should have shut our business down months ago because everything sucks. Okay, the ups and downs aren’t that extreme, but they do feel that extreme.

I played poker in college for my beer money, and when you’re analyzing your decision-making about hands you played in you’re not supposed to be “results-oriented” as they call it. That is, regardless of the outcome of the hand you should analyze your decision-making by using the information you had at the time of the decision.

So, for example, if I had a 90% chance to win a hand and I called a big bet but I wound up losing the hand that doesn’t invalidate the decision I made to call the bet. It was still a good decision!

For us, working consistent hours has helped us to be less “results-oriented” in that we know we can only control so much. In recruiting, contracts fall through all the time so as long as we’re working hard and sending our goal number of qualified candidates to a company it’s easier for us to stomach the failed contracts.

When you’re working 60-70 hour weeks, and there’s not an immediate payout, then, in our experience, it’s easy to fall into one of the “down periods” where you only put in 20-hour weeks. I know this isn’t an issue for everyone, but my brother and I both have some anxiety, so by working regular, consistent hours we mitigate the impact of the extremes that naturally occur in the lifecycle of a business. This regularity also helps avoid burnout.

Note: This is not to say you have to work a normal schedule, just put in regular hours of hard work. Justin regularly works from 12 pm to 4 pm then from 9 pm to 1 am!

Before hiring a lawyer, do as much legwork as possible

When we first had to hire a lawyer, there was quite a bit of sticker shock. $1,000 for five hours of their time?!?! Don’t they know we don’t have that kind of money to spend?! The reason we had to pay for so much time was that we didn’t do our homework. We’ve had to hire a lawyer four times so far for BeamJobs (we incorporated via Stripe Atlas without a lawyer):

  • To register as a foreign corporation in NY since we are a Delaware C-corp (Cost of $509.25)
  • When we issued a SAFE to get $37k in investment (Cost of $813.76)
  • We needed to issue advisory shares to our two advisors (Cost of $1,000)
  • We brought on a contractor who would be issued equity as a form of payment (Cost of $1,020)

For those keeping track at home, we paid a total of $3,343 in lawyer fees when we had right around $88,000 in revenue to date. That’s 3.8 percent of our total revenue! In my estimation, we could have cut this cost roughly in half if we did our homework.

For each of the tasks above you can Google and find templates that you can fill out. If I could go back in time, I would have familiarized myself with what to expect in each of these processes more carefully, taken the first pass at the templates I found online, then hired a lawyer to review the templates I completed.

We used UpCounsel to find a lawyer each time, and with UpCounsel you can solicit proposals (including fee estimates) from lawyers to get an idea of how much everything will cost.

Another upside to doing your homework is you’ll be able to answer your lawyer’s questions to best help them help you.

Have hobbies and an identity outside of work

This is the biggest mistake we made in the first few months of starting BeamJobs. Our identities were completely wrapped up in the success and failure of the business. In the first six months, there were a lot more failures than successes, so the mental toll this took on me was harsh. I felt depressed and unmotivated, which is completely counterproductive for the business!

Your business is going to be on your mind almost 24/7 when you’re the one running it. I’ve accepted this. When you go to sleep, when you shower, when you eat, in the back of your mind you’ll be thinking about your company.

By embracing hobbies and spending time with friends and family, the goal will be to put the business on the back burner. This is not to say you’ll be able to stop thinking about it, but at least it won’t be top of mind while you’re running or playing board games with friends or BBQing with your family.

This space from your business and the problems you’re mulling over is healthy! In fact, you can more effectively make decisions using unconscious thought than when you deliberately attend to them in certain cases. This is called the Deliberation-Without-Attention Effect. Outside of just the improvement in problem-solving, you’ll also reduce your risk of burnout by maintaining a life outside of work.

Finally, I started a business to have freedom over my choices and my time. If you want to read a book for an hour in the middle of the day or go exercise for 30 minutes then do it. You’re going to acutely feel the downsides of starting your business so it’s my philosophy that you should actively try to enjoy the positives that come with it as well.

Don’t get locked on the roof of your office building

The title kind of says it all! Our first office building had a roof with a door that locked from the inside, and we got stuck on the roof. Justin had to American Ninja Warrior himself down to a neighboring building to get us out. Try to avoid this.

American Ninja Warrior in blue shirt scales warped wall
Justin escapes the roof to freedom

What’s Next for Us?

Entrepreneur in blue shirt looks between two potted plants with binoculars to see what's ahead

We have a great person on our team who essentially runs our recruiting business at this point once we sign a contract with a company to fill a given role. Using tools we built to automate a lot of the manual tasks we had to perform when running this business, she’s able to operate about eight times more effectively than we did when we did that job.

Now, we’re building out tools to scale up this business. First, we’re building free tools to organically build our audience with engineers. Next, we’re building tools to scale up the way we get new companies signed up with us.

The first free tool we’re building will help engineers put their job search on autopilot. Developers want to keep an eye out for new job opportunities, but the only way to learn about these opportunities is to spend time scrolling through job boards or managing incoming cold messages from recruiters.

To solve this, we index 25,000+ engineering jobs and, based on your skills and job preferences, match you with the 5 jobs each month that best match what you’re looking for. It’s a way to learn about new job opportunities without the time and effort required by other platforms. We match based on things that matter to you, like the industry, tech stack, role type, etc.

So, for example, are you looking for a back-end role in Austin, TX, at a startup that does social good whose backend is built on Rails? We’ll send you five jobs that you’re qualified for that best match those criteria.

We’re looking for 20 engineers who want to use the very first version of the tool, which will be ready in about a month. If you’re interested, you can sign up here.

If you have any questions, comments, or just want to chat (I love the NBA, running, my dog Lila, Chipotle, and HBO, among many other things), please email me at [email protected].

Thank you, and happy building!