LESSONS FROM A WATERMELON
Northern grocery fiasco a cautionary tale for all entrepreneurs, Ryan Holmes writes.
INNOVATION AND DISRUPTION
Years ago, a friend of a friend of mine was living in the Yukon. He spent some time north of the Arctic Circle, in a tiny community that was only accessible by plane (except when the ice road was open in winter). One day, an unexpected delicacy showed up in the local store: a watermelon.
It’s no secret that fresh food can be pricey in Canada’s far north. In this particular community, eggs are $8 a dozen at the local grocery store. Apples are around $6 a pound. Soft drinks are a luxury. But this watermelon was in a class of its own.
The day it arrived, the store put it out on the shelf for $85. Needless to say, this was out of reach for most residents. So community members came up with a logical fix: They asked the grocer to cut it up and sell the watermelon as slices.
The store wouldn’t budge. For whatever reason, it wouldn’t slice up the melon. But no one was willing to pay for the whole thing. So, there it sat, day after day in the produce section.
In the end, the rare and precious fruit was left to rot on the shelf — unbought and uneaten.
What does this story have to do with running a tech company (or any business, for that matter)? A lot, actually. In the saga of the Yukon watermelon, we see three of the worst entrepreneurial bad habits converge:
INERTIA
I’m not exactly sure why the store wouldn’t slice the melon. But part of it had to be simple inertia. They had a system in place and they were sticking with it. Inertia is equal parts laziness and complacency, and in the end it’s a surefire way to kill your business.
The past is no predictor of the future, after all. Successful companies are constantly questioning their processes. They’re always gathering customer feedback and finding ways to tweak their offering to better meet demand.
But this isn’t always easy. I’ve experienced the pull of inertia firsthand at Hootsuite. From the beginning, we offered an “enterprise-level” version of our social media management platform to large companies, with a price tag to match. For smaller companies, we offered a pro plan, with fewer features and a much lower price tag. The problem was that lots of companies were stuck in the middle. We’d get requests all the time for a mid-level offering that straddled the two plans.
But we ignored them. We refused to slice up our watermelon, so to speak. Because we were stuck in our ways, we ended up missing out on a big chunk of business. (Fortunately, after more than five years, we finally launched a set of social media plans for companies of different sizes — better late than never.)
EGO
I imagine the grocery store’s inertia was compounded by another factor: ego. The store was essentially the only game in town, and it had been for a while. They simply couldn’t be bothered by customer requests. Like it or not, residents had to buy from them.
This kind of arrogance has been the beginning of the end for countless promising companies. For years, BlackBerry executives insisted that they had a lock on the smartphone market. So what if some users complained that the buttons were too small or the software was clunky. RIM could afford to ignore a few naysayers.
Of course, we know how that story ended. The reality is that business is ruthlessly Darwinian. Even loyal customers will only put up with so much. In the case of the grocery store, there had been a long history of high prices. The $85 watermelon was the tipping point. Behind the scenes, I’m told residents got together and actually made a pact to boycott the melon.
We saw a similar drama play out at Hootsuite. Overtime, our user interface — the “dashboard” that users see each time they log in online and check their social networks — had grown seriously out-of-date. But we delayed updating because, well, we thought our product overall was pretty hot stuff and had bigger priorities. But when users began tweeting us to say our interface was “really just awful,” “needs to be on Extreme Makeover” and, even, was “a piece of sh-t” that “f--cks my personal sense of well being,” we realized we had to do something. Our engineers and designers went back to the drawing board and completely revamped the look of our dashboard.
FEAR
But maybe I’m being too hard on this Yukon grocery store. Inertia and ego aside, a big part of the reason the store wouldn’t slice up the watermelon was probably simple risk-aversion. Keeping the watermelon whole meant a longer shelf life and a surer chance of one big payout.
This kind of fear, however, can backfire when taken too far. Business is never a sure thing. If you’re not OK with that, then maybe you’re better suited for another career path. Sometimes, this means making the wrong bet and swallowing a significant loss. In my early days, I landed a big contract to design and implement software for a food franchise with hundreds of locations. To meet the demand, I hired 15 people, nearly doubling the size of my company. Then the 2008 recession hit, that huge franchise went down the tubes, and so did my huge contract.
But that experience didn’t stop me from taking a gamble just a few months later on another untested idea: a nifty tool my agency developed to manage multiple social networks at once. Long story short, that tool became Hootsuite, which now has more than 10 million users, including more than 800 of the Fortune 1000 companies. With any entrepreneurial venture, there will always be trade-offs and risks. The biggest mistake is to let this fear of the unknown become paralyzing.
Interestingly, the drama up in the Yukon didn’t end with the rotten watermelon. Not long after, the community pooled resources and decided to start its own co-op, with lower-priced produce. The melon fiasco was actually the beginning of the end for the grocery store in that town: A definite cautionary tale for entrepreneurs out there, regardless of latitude.