8 Startups Share their Biggest Stuff-ups to Date

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Entrepreneurs fess up.

Perhaps the saying should be, “to err is entrepreneurial.” Here, eight start-ups share their stuff-ups. From hiring a criminal to giving a client full access to their competitor’s (highly confidential) data…

“WE WERE SUED FOR COPYRIGHT”

What’s lamer than a crappy photo of Nebraska? Having to pay US$8000 in copyright infringement penalties for it. At my company The Contents Factory, we write thousands of blog posts every year for our clients and agency partners and although we try to catch everything, occasionally a mistake sneaks by us. On this occasion one of our writers published a blog post to a client’s site about finding great deals in Omaha, Nebraska (complete with an altogether underwhelming photo of the city, which may or may not have been taken by a drunken college student with a camera phone in 2005). More than three months after the post went live, the client got an email from an attorney who deals with one thing only: image copyright infringement. Fortunately our lawyer was able to negotiate a settlement – we ended up paying US$3000 instead of the original US$8000 in copyright infringement penalties. But it was the equivalent of several months’ rent at the office, or holiday bonuses for our staff. All for an image published on a website we could prove via Google Analytics that fewer than 100 people read. It was our fault but I’ll never make that costly mistake again.

Kari DePhillips, co-founder The Contents Factory

“I ACCIDENTALLY HIRED A CRIMINAL”

In a past role, before I joined the comparison website Love Energy Savings, I once opened the office door to be greeted by three armed-guards with sniper rifles. They barged past me, quickly tackled a member of staff to the floor, and arrested him. I later found out this member of staff had gone into McDonald’s, as he did every day. However this particular morning, rather than paying he decided to “pretend” he was holding up the fast food restaurant, insinuating he had a gun in pocket (I still have no idea what he was thinking!). The problem was, while walking away with his (unpaid for) meal, he failed to realise he was wearing a company lanyard bearing our logo and company name – a fairly obvious lead for the police. I now check references thoroughly, hire far more carefully and treat the recruitment process with the respect required. Your employees are the face of your company and it’s just not the worth the risk, taking someone on face value.

Phil Foster, CEO of Love Energy Savings

“I MADE TV ALL ABOUT ME”

As a start-up founder and life coach, as my brand grew I began to get invitations to appear on television shows as an expert. The problem was, in my excitement I was so focused on my own performance, that I overlooked the fact I was there to give value to the viewer. I’ll never forget being asked to appear on a segment of an American television show. In the greenroom beforehand, all I could think about was how would I look, how would I sound, how should I sit, would I be okay? After the segment, I approached the host to ask what she thought about my performance… then I approached the producer to ask the same question… then I called my mother-in-law to ask her too. It was during this last conversation that a light bulb went off. I realised the world doesn’t revolve around me – especially when it comes to the media – and television shows want guests who can entertain and educate their community, not someone absorbed in themselves. Since that experience, whenever I do a TV appearance I always make sure I give value to the host, staff, and viewers who are watching. It’s not about me.

Tiffany Mason, founder of Mason Coaching and Consulting and Leading Lifestyle Expert for The Modern Working Woman

“WE TRASHED OUR OWN TECH”

As 2014 was winding down, my company Clear Sky Apps [was] rocking it. All our apps were rated at perfect five-stars. At any given time we had at least 10 apps in the top 100 paid health and fitness apps, and five in the top 200 overall paid apps. Then I (the CEO) totally f**ked up.

Here’s how it went down: many of our apps were beginning to age, and a redesign was in order. Here’s the wrong decision: In order to make it happen, we decided to make the apps iOS 8 only, as Apple had just released it and we wanted to make use of the new functionality. This meant a conscious decision to give up the iOS 7 market share for a while, but we thought iOS 8 would catch up quickly… surely… wouldn’t it?

We released the apps, and they nosedived. Every single one of them. We went from a perfect five-star average on all our apps to harsh customer reviews like, “I used to love your apps and now I hate them.” It didn’t help that, amongst other factors, iOS 8 adoption was slow, which turned into a big slide-down in sales volume.

So how did we get past this? There’s not much we could do about iOS 8 adoption; we just had to sit tight and wait for customers to catch up with us. The apps are now recovered and back into leading positions, but one definite lesson is there’s no need to be out there first, when Apple puts out new technology. Now we patiently wait to see the adoption and stability of new iOS versions. [We] will never make these mistakes again (we’ll make new ones instead).

Benny Shaviv, CEO of Clear Sky Apps

“WE REVEALED CONFIDENTIAL CLIENT INFORMATION”

My company OOPS, offers retail insight, analysis and trend reporting to companies. We are all about systems, strategies, facts, statistics and attention to details – which is what made this mistake even worse! After many years of paper-based Excel spread sheets, we decided to move our proprietary system online, which gave our clients the chance to login themselves and read their own reporting. It was a big step for us, as before this we had always been in control of personally handing the report to our clients.

It was a thrilling time for the company, particularly as we were celebrating bringing a big-name client on board, who we’d been courting for some time. Unfortunately, in all the excitement I gave that big-name client the incorrect login… not just the wrong login but another client’s login. This meant they saw all the results and analysis of their competitor, instead of their own. Every detail, every sale, every profit and loss, every insight and trend!

As soon as I realised, I was utterly mortified, had to ring their competitor and tell them what had happened, as well as try to convince both businesses the mistake was a one-off which was totally my fault, and they still could trust our service despite it all.

The incident still makes me blush to think about it, but enforced the belief that honesty is always the best policy and that, even with technology, you have to take personal responsibility. We can all sit back and laugh now as our systems are so much more secure, but the human element still plays a major factor. We now check and double-check and triple-check to make sure the correct login is always sent.

Michelle Pascoe, founder of OOPS

“ALL OUR STOCK WAS STOLEN”

Our business The Real Estate Style, offers a service where we go into houses that are up for sale and style them to attract buyers. Well, we once did a job – against our better judgment – that was a mortgage repossession. The house had already been left to fester by the previous owners, who were being forced to sell it. I had a terrible gut feeling yet STILL didn’t request payment upfront (can you guess where this is going?). After the auction we went to collect the furniture and artwork, to find a AU$7000 painting, a AU$2000 rug and, randomly, two cushions had been stolen overnight. But this isn’t the only – or worst – time this has happened. One Saturday morning we got a call from an estate agent just hours before the auction, saying the house had been cleared out overnight and was now 100 per cent empty. What did we learn? To always have good insurance; writing down everything you put into a house and keeping receipts! And to never ignore a bad gut feeling – if it smells bad, it generally is!

Sara and Amy Chamberlain of The Real Estate Stylist and The Artwork Stylist

“WE FAKED A FULL TEAM”

When I started my web development company Dotnet with business partner [and] friend Antonio, I thought that between the two of us we were not only the best marketers on the planet, but also the best at design… the best at accounting… the best at sales… the best at everything. And that we didn’t need anyone else. Whenever anyone rang to speak to these various departments – which were made up of he and I – we would put them on hold and simply pass the same phone over to each other. I’m pretty certain most clients noticed that each time they called it was the same two voices pretending to be other people. Since then, the biggest lesson we learned was – you can’t be all things to all people. The sooner you admit there are things you don’t know, the sooner you can employ the right staff to fill these skillsets, and the smoother your business will run.

Flavio Faccin, founder of Dotnet Webdesign

“I BELITTLED MY TEAM”

Early on in the life of a start-up, we were under heaps of pressure to get results and were working very, very long hours to try and achieve them. When one of our team members had to leave early (probably for a very reasonable purpose), I sent around an email copying in all staff, telling the team to be in the office, at their desk between 9am and 6pm. Every day. Thank you.

Not surprisingly, this email did not go down well with the team – at all. We were meant to be a forwarding-thinking start-up. They felt as though I didn’t trust their judgement.

What did I learn from that incident? Firstly, if you want to create an awesome, autonomous team that is passionate about the company, you shouldn’t try to manage people’s time down to the last hour. Secondly, email is a terrible way to communicate messages that leave open any type of misinterpretation.

I’m a pretty optimistic person so I generally look at these lessons as if they had a purpose to teach, but that being said, it does make me cringe a little… Did I actually think that was a good idea? I think this experience did cost us a back-step in terms of the company’s short-term progress but it also equally forced us to take a bigger picture view on how to build and motivate a team correctly, that can kick butt in the future.

Tim Fung, Co-founder and CEO, of Airtasker

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