Doing Business in The Right Order

Recently I celebrated my 10th year at Omedix, the company I started when I was 24 years old. At 34, it is a little hard to imagine I’ve done anything for 10 years!

The milestone has made me reflect on some of the early decisions I made when I first got started. There were many really good decisions, but there were plenty of bad ones, too. And of course when you’re in your early 20’s you have that perfect combination of extreme confidence and supreme ignorance. Sometimes that can be a good thing, and sometimes it can be as bad as it sounds.

One thing I didn’t appreciate 10 years ago is that most things in life have a certain proper order to them. You crawl, then walk, and then run. You become friends, you go on a date, you get engaged, you get married. You run a 5k, a 10k, and then a half-marathon. You get the idea.

But something about starting a new company completely obscures that right order. I don’t know, maybe it’s just that there are so many demands on your time and emotions, that people’s thinking becomes clouded. It almost reminds me of some of the tricks that Las Vegas hustlers use to gain an advantage against the house. One of them is to overwhelm the dealer with an attractive girl, outrageous banter, and extreme behavior while the quiet person at the table slyly takes advantage.

If Las Vegas dealers can get distracted enough to make bad decisions, maybe it can happen to business people, too.

When you really think about it, the proper order for creating a company has to be the following:

• Find a customer
• Make something people want (courtesy of YCombinator)
• Scale Maybe you can swap the order of #1 and #2. And maybe your vision or your passion helps you dream of something people would want really badly. But essentially, it’s just those three things, subject to the constraint that you have to bring in more money than you spend.

When I started Omedix as a medical website design company, I thankfully but unwittingly followed the proper order. My first customer was my father’s medical practice (thanks, Dad!), and my second customer was another cardiology clinic that saw what we did for him and liked it. We found a customer, we evidently made something people wanted, and then just like that we doubled our customer base (ahem, from 1 to 2).

In the beginning stages, one of the mistakes I made was that I had just graduated from UPenn/Wharton, where the expectation was that everything you produced — speeches, papers, homework assignments — was at or near A+ quality. So I naturally assumed that websites we built for customers should be of A+ quality, too.

The customers never complained about quality, but my profit & loss statement sure did. I had no concept of a margin, or sustainability. I just wanted to get some experience and work with paying customers.

Surprisingly, it turns out that, within reasonable limits, this is actually not such a bad way to get started. But trust me, this was not strategic cunning on my part. What I eventually — again, unwittingly! — discovered was that even if we didn’t make much building websites for our customers, they needed someone to host and maintain them, and we could provide that service at a reasonable price and a reasonable profit. There are some customers who signed on with us 10 years ago who still have the same site!

Another personal example of doing things in the right order came a few years later, when we entered the software game. We came out with a patient portal when it was considered a very early concept. My order for that product was:

• Fall in love with a patient portal vision
• Sign up different types of customers who don’t understand it but want to be on the leading edge
• Build what we can
• Deliver it
• See if they like it

Even writing that out makes me feel dumb, but that’s how the product got started. Frankly, I got lucky that my original vision was, with way too little customer feedback, still in the ballpark. But because we did things out of order, we built a lot of features which took a lot of thought and time and didn’t add a lot of value. We also got pulled in many directions because we didn’t choose a super-narrow customer segment.

It’s one thing to write about strategy, but it’s another thing to feel the emotional frustration when you realize you can’t build all the features that both sets of customers want. That’s the sign where one of your upstream decisions has led to downstream problems.

Over the years, as we found more and more customers, the customers started driving the features and things eventually evolved into their rightful order. But the initial phase could have been significantly streamlined.

I see examples of business in the wrong order all the time. Or businesses not even setup to execute in the right order.

I had a friend a few years ago who was very keen on building a service that would be useful for web design firms. He spent hundreds of hours creating a beautiful UI, created a blog with lots of articles all about the problem his product solved, but his issue was that the team to build it was never really on board. And there was a target market but no real paying customers waiting in the wings. His order was:

• Fall in love with product vision
• Build very impressive version of it requiring thousands of man-hours
• Try to promote it and market it He never made it outside of Step #2. He couldn’t build something people wanted, not because of lack of vision, but because he didn’t organize the right team to do it. He was young at the time, too. I guess “make something people want” incorporates a lot into it. It’s make something (actually deliver) people (a real customer) want (values enough to pay money for it). If you miss on any three of those, it’s as bad as missing on all of them.

Summing Up

The final lesson for me is to always be observant of the proper order of something I’m working on, to “respect the challenges” and to not be blinded by my own visions of grandeur.

Doing things in the right order isn’t always easy, or glamorous. And, paradoxically, it’s hardly ever linear. But it’s a good framework to keep in mind to make sure you can actually build something people want.