Dealing with failure

Paul Boag

This week on the Boagworld Web Show we are joined by Dan James from Silver Orange to talk about what to do when things go wrong.

Skip to the discussion or this week’s links.

This season of the Boagworld show is sponsored by Template Monster and Lynda. Please support the show by checking them out.

Paul: Hello and welcome to Boagworld.com, the podcast – do you know, I can’t be bothered.

Marcus: Again?

Paul: I’ve drunk Sangria.

Marcus: Have you?

Paul: Yeah and I’ve been sitting in the garden and now I am just very sleepy and I don’t want to do the podcast.

Dan: That means it’s going to be the best podcast ever then!

Paul: Could be. Could go either way. Is that Dan James I hear?

Dan: It is Dan James, all the way across the pond in Charlottetown, Prince Edward Island.

Paul: What’s the weather like with you? Because the last I saw you were still photographing snow.

Dan: It is abysmal. It is 12° Celsius today and pouring rain.

Paul: Ahh, it’s nice for somebody to have worse weather than us. It doesn’t happen very often.

Marcus: You must get like, we always say we maybe get one month a year when it’s nice and you must get like one day?

Dan: Well, there’s probably one or two days are nice before the mosquitos come out. So in-between the snow and the mosquitos there’s about forty hours of enjoyable and bearable weather.

Marcus: And you’re probably working those days.

Dan: Yes it’s always a Monday and a Tuesday.

Paul: So as you can hear, Marcus is with us as normal. So Marcus, I was thinking you can do this week’s show?

Marcus: No. I’ve been doing actual work today, not drinking Sangria. It’s your responsibility Paul.

Paul: I’ve been doing work and drinking Sangria? Does that count?

Marcus: You posted a photograph earlier of you lying in a hammock.

Paul: I can work from a hammock! It can be done.

Marcus: Yeah, yeah.

Paul: Anyway. For those that don’t know Dan James, Dan was one of the founders of Silverorange which are a pretty well known agency over in Canada. Which you can tell from the way he said ‘about’ earlier.

We were talking about the first time we met you before we hit record, which was at a ‘Future of Web Design’ Conference. Where you gave the most amazing talk and announced to the whole room what your salary was as I remember.

Dan: Oh yes, yes. So where do you want me to start?

Paul: Tell us a little bit about Silverorange, for those that don’t know, because you’re weird aren’t you? You’re the basically the hippy commune of Web Design Agencies.

Dan: Yes, we prefer to call ourselves Communists or at least very right leaning, at least very conservative socialists when it comes to it. So Silverorange is sixteen years old this coming August 11th, which in terms of the internet is pretty much from the dawn of the internet, we’ve been around. It was about seven guys who got together out of high school and said ‘Hey this internet thing really could go somewhere’. And so we started doing local brochure-ware and we just started there and then we got really lucky with a few blog posts, so our Creative Director wrote a blog post criticising a small web browser at the time, called Phoenix that we then were invited to participate in rebranding it into Firefox. So the Firefox logo was actually first sketched out in the building I am standing in right now. And that led to bigger and crazier things and it kicked us off from there. So we’ve been doing Design and Development work for the last sixteen years for everyone from Mozilla to small companies who you’ve never ever heard of.

Paul: What’s really interesting about Silverorange beyond your work—which I am sure is fascinated, I am not knocking your work in anyway—is the way that you structure yourselves because everybody is equal or at least was last time we talked. Yes, and that’s really because the DNA of our company was a group of friends sitting around and starting a business and a large enough group of friends that you have to figure out that sharing and ownership stuff right off the get-go and when you have seven people in the room starting a company together, you kind of have to be equals. It’s very hard to find someone or a small group of people who are going to be absolutely in charge. So right off the bat we just didn’t know any other way that you could run a company. We thought it was normal to equally share everything. So when the first employee came on board, a year or two later, it just made sense to bring them on at the same salary.

So at Silverorange for the past sixteen years, every single person gets paid the exact same salary. One small caveat there is that if there is someone new, we have a wrap-up schedule that for the first year and a half where they are not at quite a full salary, but they quickly get there.

Paul: You’ve been also very open as a company, very open and honest with one another about what’s going on, what the financials are, how things operate and you are also open very publically about that kind of stuff as well.

Dan: Internally, everyone has access to all financial documents. So like our Annual Financial statements are available to everyone as well as… we have a group we call ‘The Board of Directors’ they are not technically or legally a Board of Directors, but they meet once a month and go over all our financials and the consequences and ramifications of that. And all those documents and actually that meeting is open to the entire company. All the notes from the meeting, all the spreadsheets, all that is available to everyone whenever they want. And we encourage questions and input into it from everyone. So we’re not necessarily 100% flat, but we are 100% open.

Paul: It’s funny, this is becoming a more popular way of working, isn’t it. I notice abuffer? take that kind of approach as well. That they are really open about it, to the point that they publish everybody’s salaries online and that kind of stuff. It’s interesting. It’s an interesting way of working.

Dan: Yes, a few weeks ago on Twitter there was this movement for everyone to share their salary numbers so other people can compare it. We’ve always taken the tack that more information is better and it allows you to make better decisions, and if we can share what we have learned financially or code-wise or design with the world at large, then someone can learn from that. And if everyone does that we can get better data and with better data you can make better decisions.

Paul: Mmm because I remember at ‘Future of Web Design’ you shared your salary there, on stage.

Dan: My current salary is $75,000 CAD with benefits on top of that. There you go folks.

Paul: That means nothing to me.

Marcus: That could have been a million pounds.

Paul: Yeah, you might have been the richest person I have ever met, or you could be a pauper.

Dan: I could guarantee I am not the richest person you have ever met.

Paul: But then you challenged the other speakers to do the same and I was on directly after you, thanks for that.

Dan: You’re welcome.

Paul: So I did. But I was the only one who did, wasn’t I? Which was fascinating. I can’t even answer that question anymore. I have no idea how much I earn anymore. My life is just so confusing since I left Headscape.

Dan: Yeah, it gets a little confusing when you start comparing salaried amounts to owners who take Dividends and the tax consequences of all that. But some numbers are better than no numbers I guess so… I am not going to make you say it out loud right here…

Paul: I will tell you, I am happy to tell you. I take out £4,500 out per month. At the moment.

Dan: Now I have no idea if you are the richest person I have ever met.

Paul: Yes, an absolutely wasted exercise. But no, I’ve always found that really interesting. I love the way you share openly and engage the community. So you seem the perfect person—now don’t take this the wrong way—but you seem like the perfect person to get on this week’s show because we are talking about failure. Now I am not saying you fail a lot, but I just thought you were very honest and very open so what a great person to have on the show. You’re not the kind of person that strikes me that you’ll talk about your failure and then somehow then you make it sound so wonderful that actually it turned out to be a success because you learnt an amazing lesson from it.

Dan: Yes that’s what people tell themselves to make themselves feel better.

Paul: Yes, that gets up my nose.

Dan: But we tried to connect on another topic earlier and then we failed, and then you said ‘Oh you’d be good at failure’ so I wasn’t sure how to take that.

Paul: Ahh whoever I invited on this week’s show was going to be deeply offended. There was no way around it, was there.

Dan: Ahh well, I enjoyed looking back and analysing the failures that I have had. The few that I have written down, at least.

Paul: Ahh yes, we’ve got one or two Marcus that we can share.

Marcus: Oh definitely. Most of last year!

Paul: One or two a month I was talking about.

Marcus: One of the things that I just wanted to mention was about the openness on how Silverorange is run, one of the things you talked about when we interviewed you—this is probably ten years ago now—the other thing that really interested me and Paul was the way that you worked with some of your clients. Which is basically this kind of ‘We’ll do a load of work for you in exchange for a cut of what you sell’.

Dan: Ahh right. We call that working on commission.

Marcus: Yes, as do we. But that kind of set up wasn’t very agency. We’ll go after a piece of work that has a set budget and we’ll win that piece of work and then we might carry on doing more work for that particular client in the future.

Dan: Well the model itself came out of absolute failure. It was born out of necessity where we were going after work as you described where you would put in a fixed price and would hope to win the bid. And we kept losing bids over and over and over again. And it turns out we were really expensive. Actually we weren’t expensive, everyone else was just stupid cheap. This was in the early days when everyone and their dog was a Web Designer/Developer and it was just driving prices through the floor. So we basically said ‘Well we have to win some business so what if we just offer to do it for free in exchange for a percentage of whatever they sell online’. At that point no one knew how big this whole internet thing was going to become, so we were really able to make some great bats early on and capitalise on those for a long, long time. We ran commission agreements, and I still have some running, for ten years – a decade with some clients.

Marcus: That’s fantastic.

Paul: Wow. Do you still do that anymore or have you moved on?

Dan: That gets into more of a nuanced question about what Silverorange is up to these days. But we do still have two contracts which have a commission on it with them.

Paul: Oh I like the sound of that – what are you up to these days? You’ve piqued my interest. Are you now running brothels, or…

Marcus: Oh that’s the other thing. You used to do building work as well. I forgot about that.

Dan: We do do building work. I actually had to ask some gentlemen to stop doing building work while I recorded this. There is a meeting happening six feet away from my desk right now. We own four buildings in Charlottetown, and we’ve been restoring them. They are old buildings – old for Canadian standards, they are 120 years old. And we’ve been restoring them back to their former beauty. That is a financially, a very long play. It might be longer than our generation but it’s very rewarding work. But for Silverorange, other than restoring Victorian homes, we really in the last five years and probably since the last time I had a really good chat with you guys, decided that having a whole bunch of clients was a big waste of time and we decided to focus in on a few core clients and deepen our relationship with them. So anyone who worked in an Agency knows that you’re really just scrambling from one project to the next and it’s hard to get your mind deep into the project and as a result provide meaningful work to the client. You’re kind of just skimming the surface across the top and moving projects through, well at least we were. And we decided that wasn’t great value for us or our client and the administrative and cognitive overhead for doing that was just not worth it, so we fired a lot of our clients or asked them to go away and focused in on three or four clients and asked if we could do more work and get more deeper involved in their organisation. And that’s gone really well now, to the point that we’re down to three and a half clients really, and have significant contracts and work with them and that might even shave down to even one or two in the next year or two.

Paul: Now I suspect Marcus is having the same skittish reaction I am. Every time I talk to you Dan, you always scare me.

Marcus: What if those clients go away?!

Paul: There you go. I mean if you lose one of those clients, that is a huge blow to your business.

Dan: It is, but here’s the other side of that. That’s obviously having a few eggs in one basket is always nerve-wracking. But we are so deep into our clients businesses now, there is no surprises. We don’t get a phone call that says it’s over. We see that coming. We are part of the planning team, we are the core team. There’s no real uncertain future. Or at least, having done this for the last few years, we are much more stable and know the future better than we ever have in the last sixteen years of doing business.

Paul: Yeah, I mean that is true, because you do have this kind of constant turnover of clients otherwise don’t you where you are going from client to client to client. Mmm I need to process that. I always feel like this, whenever I have a conversation with you it’s like… I need to go away and think about that, I don’t know what I feel.

Dan: Yes, we thought this might become an issue but as you start to limit the amount of clients you work with and let’s see you pick one horse and really deepen your relationship with them, your biggest issues aren’t financial they become cultural. How does that operate on a daily basis versus how your business operates on a daily basis? Surprise, surprise most of the clients we work with don’t operate how we do. So we are starting to sort out that relationship stuff at a deeper level than we have ever had to with clients.

Paul: Yes, but the flip side of this of course is that you get really embedded into the company and you become essentially their digital department, their digital team within the company, which I must imagine is incredibly satisfying.

Dan: It is, and I am able to influence things across the board. Everything from marketing to finances, to business development to the core stuff that we do which would be development and design. So it is really rewarding and you are able to effect change in a much more meaningful way than coming in as a contractor for an eight week project.

Paul: So have you done anything to mitigate the risk there of somebody disappearing or are you just kind of hoping it doesn’t fail?

Dan: Obviously we’re hoping it doesn’t fail and we’re getting into the core content here of the show, but the mitigation was in which clients we go after in the first place. So we sat down and analysed who we work with and said ‘Ok who’s going to be here for a long time, who do we really like working with?’ Life’s too short to work with jerks, so we did an analysis of all clients and all characteristics of our clients – potential clients and imaginary clients. Who do we want to work with at this level? And then whittled down the list from there. So that’s how we mitigated our risk and every year we review things and see how we like it and figure ‘Ok it’s time to move on, shall we figure something else out?’ And so far it’s gone well.

Paul: How do you broach that conversation? Dear Mr Client, we like you – give us more money, we want to work with you a lot more?

Dan: You’ve probably had a few clients too, that just seem to have an endless appetite for what you can do. And we’ve found that we can nurture that and supply that. And instead of saying ‘Oh we can’t get to that right away’ you say ‘Yes we can get to that right away’, so there is an awkward period. There was a very awkward period of having two dozen clients and going down to two and having to promise them more work while still jettisoning some of the legacy stuff you’ve been doing. We’re finally gotten over that hump and are able to actually get involved in. It’s a lot like employees, the best ones come to you and say ‘Is there anything else I can help with?’ And we discovered if you start doing that with your clients, you can drum up quite a bit more work.

Paul: Yes, that is so true. It’s like one of the things that I do that is part of this mentorship that I’ve started offering is that I try and arrange weekly calls with people to just keep pushing them forward. And it’s amazing what comes out of that, not just for me, but for Headscape and other people as well. If you can help the client get momentum going in their digital work, then additional work starts appearing. It’s just a matter of being proactive and pushing them.

Dan: Yeah, and we operate under the philosophy that nothing happens unless it intentionally happens. So we are very organised for a group of guys. We just say ‘this is what we would like to have happen, how we get there?’ And we lay out the steps and measure them, try things and see what works. And then adjust the course as we go on.

Paul: See we need you on next week’s show when we talk about sales. Basically we can just get rid of all those other guests. Just get you on the whole time.

Dan: I’ve been making a lot of sales calls lately on behalf of our client. I am doing some business development for the client.

Paul: For the client? That’s interesting.

Dan: For the client, yes. Well my job traditionally has been business development but when you go from two dozen clients, to having three, my time gets freed up a bit.

Marcus: Excellent.

Paul: That’s what all this has been about, hasn’t it, basically?

Dan: Absolutely. So I can lie on a hammock and drink sangria.

Paul: Yep, absolutely. Hey before we get too deeply into…

Marcus: I just want to ask one more question. Can you give me an indication of what sort of clients, what you are selling, for example? Are they huge companies?

Dan: No, the company I am currently doing some business development for are called Hippo Education and are one of our biggest clients and they are in Medical Education. And they have some new products and I was doing some preliminary market work to see what kind of pickup it would have. And I discovered very quickly when doing cold calls, especially sales calls, you talk a lot to voicemails. You had to be like a master message leaver to be a successful sales person.

Paul: I can’t stand cold calling.

Marcus: Me neither. Hate it.

Paul: Anyway, that’s next week.

Discussion about failure

Paul: Let’s quickly mention our sponsor before we get into the main topic which is, as you have gathered, talking about failure. Our sponsor this week as every week of this season of the podcast is Template Monster who have been incredibly supportive of Boagworld generally, not just the podcast, but they’ve been doing some stuff on the blog and I am doing some video content for them, so they are my favourite client at the moment. And they pay for the transcriptions of this show, and for my sangria and hammocks, which is very important, so please make sure you check out their website, otherwise I might run out of sangria and hammocks.

They have an amazing collection of templates on their website, something like 46,000 templates with some really funky stuff in, including parallax, lazy-loading, gorgeous animation stuff. If you are not in a position where every website you can build is bespoke, if you are looking for a website for your own organisation and you can’t afford to hire the likes of Headscape or Silverorange, then definitely check them out – they are a wonderful option. As well, when you are faced with 46,000 templates, that can be a little bit overwhelming, but they are organised into lots of categories and you can find categories that relate to your business. But they also have a service that will help you find the template that best fits you and they even have a customisation service if you are not a coder and want someone to set all this up for you. So check them out at Boagworld.com/Template Monster. I really do appreciate their involvement in the show. And they are very prompt payers as well, in case you want to know. That’s another good thing. In fact I chased them today for a payment that was overdue, and they paid me ages ago, I just didn’t notice. Now that is an embarrassing conversation to have.

Marcus: Yet another failure, Paul.

Paul: Another failure! Which brings us on beautifully to the topic for today. I do seem to be somewhat of an expert in this area. Did we talk on the podcast Marcus, about what Rob said at the Project Management conference he was at recently?

Marcus: We did, but we didn’t go into any detail. We were going to save it for this week.

Paul: Oh were we?

Marcus: And interesting, you spoke to me earlier about the Case conference. I think it was the Case conference where you had been booked in to give a talk and you thought it was on let’s say, the Thursday and you were preparing yourself early in the week to get up there for the Thursday. You got up Wednesday morning and got a phone call saying ‘Where are you Paul? You are on stage in half an hour.’

Paul: No it was worse than that – you’ve told the story completely wrong!

Marcus: This was 500 miles from home.

Paul: Yes, so I was in Dorset, this was in Liverpool, which is a long way. I was sitting there at my desk, happily getting on at my work and a little pop up notification from Twitter ‘Looking forward to introducing Paul in half an hour’.

[Laughs]

They hadn’t even noticed I wasn’t there! So that was massively embarrassing, yes. Just one of my many failures.

And our first question is, ‘I would love to hear some examples of your failures and what you learnt from them’.

I think I learnt that I am an idiot basically. I think that was about as much as I learnt from that one.

Dan: You probably learnt the value of brown pants as well.

[Laughs]

Paul: Yes, yes quite possibly. So go on then Dan, it sounds like you’ve got some failures that you’ve made a note of. Would you like to share any of them?

Dan: Oh boy, would I ever. There is nothing better… I have like three categories of failure as I started to analyse them. There’s relationships, just straight up normal everyday relationships..

Paul: Are we talking about business here or are we talking…

Dan: Well that’s my next category. I am talking like romantic relationship failures.

Paul: I want to make it clear, this is not a therapy session.

Dan: Oh crap. All my notes are just useless now. Then I have business failures and personal failures. So personal failures would be failures about myself that don’t necessarily affect other people directly.

Paul: yeah, ok.

Dan: We’re going to skip over the relationship ones. That’s not good – this topic. But business failures… two really jump to mind. And these are in the bankrupt failure category so when I was in college/university, my room-mate and I decided that—this was 1999—this internet thing was going well. Silverorange hadn’t quite started yet, but I did have another web design company with another friend of mine. Two guys that I had two separate companies with. So we decided to start a travel website for Prince Edward Island which is the Province of Canada that I live in, which is a very prominent tourism destination. So we thought ‘wouldn’t it be amazing—and this sounds so funny 16 years later—if you could go on the internet and book a hotel room and a golf tee off time at the same time?’ We’re a big golf destination.

We were 19 years old at the time, this was 1999 so the bubble was just booming and hadn’t quite popped yet. And we came up with this idea that we were going to go and secure inventory in golf courses and hotels and sell that inventory online to all of the millions of people who were on the internet at that point. The problem was both of us… I was a designer to start, I could write HTML and he was a business student so we had to hire some people to build it and to hire people cost money. So we used our boyish good looks and charm to go raise $250,000 CAD from friends, family, investors and there were some local entrepreneur-ship programmes that pitched in as well. Then we hired a team of people to build this website. And we went and we secured at the time—I can’t even believe they gave it to us, being 19 year old guys full of piss and vinegar—they gave us inventory at all the golf courses, the top golf courses in our Province which are some of the top ones in Canada and most of the hotels, some of the biggest hotel chains in our area, gave us almost full access to their inventory to sell online.

And so we built this site, we spent $250,000 CAD, we bought a full page ad in Golf Magazine or Golf Digest, and got this website up and running and we sold in the first six months, a single package.

And here’s the best part. The person who bought it didn’t feel comfortable using their credit card on the internet and so they had to call us to make the reservation.

[Laughs]

Marcus: You were ahead of your time, that’s all.

Dan: And that’s my note on that. We actually executed it very well, at the time the market was very fast, we developed pretty well, the product was very good, but we failed to time it properly in the market. We were just ahead of ourselves in that thing. The silver lining in all of that story, is that the team that was brought together to build that project for that company is the team that became Silverorange.

Paul: Ahh ok. Well then that turned into something good.

Dan: It did turn into something good, but I mean $250,000 CAD for two 19 year olds, it took a while to dig out from underneath that giant financial wet blanket.

Paul: Yes. I mean to be quite honest I am impressed you managed to do all of that as 19 year olds. I think back to when I was 19 and no, that wouldn’t have happened with me.

Dan: The impressive part was that we were able to do all of that, but I played video games for at least 6 hours every day.

Marcus: It’s not a million miles from our story Paul.

Paul: Which one are you talking about?

Marcus: Our previous existence, which wasn’t really our failure, so I guess I will very briefly mention that we used to work for a company called Town Pages. Which was a dot.com that was going to make millions from kiosks in venues around the country. That didn’t work out which wasn’t really our fault, so it wasn’t really our failure but the team that built it went on to become largely Headscape. So there is a similarity there.

Paul: The difference I think between Town Pages, Town Pages was basically to provide local information via the internet and touch screen kiosks. So it was a bit like Foursquare or Yelp or that kind of thing. But they recognise that not everybody had internet at home so they decided they were going to do these touch screen kiosks. But all of these kiosks they put all over the place—they did deals with local governments to put these kiosks in—they all had to be connected via ISDN lines.

Dan: Oh my goodness.

Paul: Which cost a fortune. They had to be repaired because they got vandalised, and had to be cleaned… just a huge amount of debt. The funny thing was because they were going to get their revenue back through advertising – that was the logic. But I once sat down and worked out how long it took us to put each advert online onto the website and the cost that they sold the advert for, and that alone didn’t add up. So it cost more money to create the ads than we earnt for them, without taking into the touchscreen kiosks or the hundred people that worked there at one point. It was just fantasy. But at that time, people gave you money at a drop of the hat. You managed to raise $250,000 CAD and that was a couple of 19 year olds.

Dan: A couple of 19 year olds in very poor fitting suits and a basement of a very cheap hotel, doing a sales presentation.

Paul: Yes. Do you have any other failures that you wish to get off of your chest Dan?

Dan: Do I ever. About five or six years ago, something weird, it must have been coincidence, or it must have been timing on the internet. A bunch of us at the office here all had these photo galleries up and there was just a little piece of software we wrote as Silverorange to host photos and share them with our friends and families. Flickr had already started and it was really popular but we had built this before that and were still using it. But a bunch of us sold photos, so we had taken photos of everything from a Condor in Peru to a messy desk and in a span of a few months we had sold five or six photos as individuals. It opened our eyes to the photo buying and selling marketplace. And we decided to wade into that marketplace, as we all know there are stock photo sites that charge a dollar or credits for use. And we realised that photos were going to become this endless commodity. There is just going to be so many of them that you can monitories them at a cheaper price point. And allow people to sell them directly from one person to the other and set their own licensing and all that kind of stuff.

So we started a site called Clustershot and we poured our own evenings and weekends into it for months and we launched it and it was actually, we had people using it. A lot of failures in this space launched a product and no one ever used it, so we had thousands of users and then on top of that we had a Pro-subscription for extra features that pro-photographers can use. And we managed to secure an APIQ with Flikr, so you could just type in your Flikr username and password and it would automatically ingest all your photos and pricing based on that. And it was a really great service and a lot of people like it, but it just wasn’t great enough. And after about two years of giving it a go and it was only generating thousands of dollars in revenue, we decided to pull the plug on it and we actually just sold it auction style for $17,000 pittance. It didn’t even cover our hosting probably at the time. But we had poured a lot of energy into that thing and came away with virtually nothing.

Paul: That’s an amateur failure. We can do better than that.

[Laughs]

Marcus do you want to tell them about GetSignOff?

Dan: Oh I remember this product.

Marcus: Just as a bit of preamble towards that, and this goes back to when we first met you Dan and all these ideas came out and I’d say my biggest business failure has been not being able to make these new ideas happen. Like you say, you decided a few years ago that you were going to reduce your clients to two or three. That I know for a fact, if we decided to go down a similar route we would just fail at it. We carry along doing the same thing, and it continues to work, so it’s not a dreadful failure, but we had never really managed to break out of what we have been for the last thirteen years we have been in business. But this story though is a very good example of that.

We had listened to many people saying ‘What you need to be doing to get away from that endless cliff of what the next project is going to be, what will we be doing in six months’ time, is to create some kind of product. Something that will give you consistent revenue’. And at the time we thought, what can that be? And we sat around at Southbysouthwest, you Paul, Chris and I sat around having a beer and going over a few ideas and we came up with the idea of Signoff which was basically a facility for designers to help sell their design work to their clients and give the clients the ability to comment on them and that kind of thing. So a really good idea.

Similarly to you Dan, we did manage to get people to sign up for it. But it just took too long. That was the problem. It took far too long to get to market.

Paul: Yes it was almost the opposite of the problem you had Dan, with your first idea. That by the time we executed the idea, the industry had moved on, or at least our own thinking had moved on and we weren’t tending to deliver static comps anymore. We were designing in the browser and we were prototyping and these kind of things and so we missed the window. Add to that I think we were rubbish at marketing it.

Marcus: Well yes, we spent a lot of money.

Dan: I tend to agree that most of new business challenges are a marketing issue, not a technology issue or a product issue.

Paul: But it’s funny because in other ways I am actually quite good at marketing through reputation building and all those kind of things, but I couldn’t make the mental switch for some reason, to go to promoting a product. It was a weird one. And I think that by the time we managed to execute it I’d lost interest, which probably didn’t help.

Dan: So back to the core of the both of those stories of our photo-selling one and GetSignOff is there’s an enormous pressure on Agencies to become a product company and I think if I was to put my finger on it, it goes back to 37Signals who started as an Agency at almost the exact same time we did. We knew Jason, we hung out a few times and got to know him and they made this miraculous switch from being an Agency to being a very successful product company with Basecamp. And we had a similar product to Basecamp at the time that we were using internally, so we always for years, probably seven or eight years, we always had that philosophy that we are going to be failures at the service industry so we have to make a product. There is a cap at how much money you can make as a service company, either work more hours or charge more per hour. And eventually after Clustershot failed, we had a very honest conversation that said the DNA of our company is a service company. We need a client. That is how we operate. Let’s stop trying to be something that we are not and ever since we made that decision things have gone much better.

Paul: We did exactly the same, didn’t we?

Marcus: Yes, absolutely. I often think with 37Signals, where would they be now if they hadn’t come up with Basecamp? Would they be having the same conversation that we are having now?

Dan: They would probably be talking to you now today instead of me.

Marcus: Could well be, but if you have a massive hit—to the point that they dropped all their other products a couple of years ago—they realised that was what they were all about. Without that massive hit, they would have probably ended up being an Agency a bit like us, maybe more product focused, but still working for clients.

Paul: Both what they have done recently in dropping a load of products and what we’ve just said about realising we were a service business, we didn’t have the mentality for a product. We are a service based business. But this brings us quite nicely onto the second question, which is not so much of a question but a comment. ‘There is a lot of talk about failure being a good thing. That seems ridiculous to me. Why would you want to fail?’

I don’t think it is necessarily that you want to fail, but by pushing into other areas, by pushing outside your comfort zone, be it creating your photo sharing app or our design signoff app or even in 37Signal’s case, to branch out from their core product and look at other things, you get to know what you are good at. You get to learn more about yourself through your failures. So I think that is a big part of why failure is not necessarily a good thing. You shouldn’t set out and say ‘I am going to fail today – I want to fail!’ But when you do, I think there is a lot to learn from it.

Dan: Definitely, but everyone talks about failure is a good thing, but it’s clear to say those people talking about it are people who have then gone onto success. There have been a lot of people who have failed and now they are working to support their families in jobs that they hate and haven’t been able to get over the repeated failures or massive failures that they had, and are just not part of the conversation.

Paul: That’s a very good point.

Marcus: There is also the old adage and I think this is what’s being referenced here, the adage relating to skiing ‘If you don’t fall over then you are not trying hard enough’. Relating that to business is if you don’t take any risks or you don’t try anything new then chances are you are going to stagnate and fail. So you need to try risky stuff which might involve failing to get to the better place at the end.

Paul: And I think there is a degree of how much you risk as well. With GetSignOff we didn’t bet the business on it. With your photo-sharing app or an even better example is the very first venture that you undertook, you were young, you could afford to take those risks and the consequences weren’t as enormous.

Dan: Yes absolutely. As a 19 year old, the financial consequences seemed enormous at the time, but life was this long journey ahead of us that we could make up on any mistake that we made. It’s much different now being 36 years old and having a child. Most of the people in the office are in that situation with families and it’s different from being a bunch of young guys.

Paul: It is.

Marcus: You are still young guys. I need to make that point now. You are young guys.

Paul: You make a good point as well, when you talked about how some people have failed and never managed to get over it and so we are not hearing from them, one of the questions somebody asked is ‘Mentally, failing can be really quite tough. How do you stop yourself getting demoralised after repeat failures?

Now a great example of that, on a micro level, is what you’ve just been doing which is a load of cold calling. And cold calling is failure after failure after failure. It’s one rejection after another after another. How do you deal with that?

Dan: Poorly. I actually find in that specific case, I find just not caring is the best way to do it. In cold calling it’s not that you’ve failed, it’s just that you’ve not made the connection that you’ve needed to make. You are hunting for that needle in a haystack. It’s not technically failing. That’s what I tell myself so I can sleep at night.

Paul: Fair enough. So what about when you did the photo site, that didn’t come off. Did you find it hard to rebound from that and find your direction again?

Dan: A little bit but like I said, this was a side project of Silverorange, so a lot like you folks we didn’t have the mourning period after it because we had work to do in our core business. There was definitely a ‘we should have tried this, we should have tried that’ and we had a pretty extensive post mortem that led to some healthy things for the company but I didn’t really have a lot of sense of… I wasn’t demoralised, I guess. And I think the other important thing is that not everyone is suited for trying things that can fail at that kind of level. Some people just don’t want to try that or don’t want to get anything out of that. So this isn’t for everyone. Being an entrepreneur isn’t for everyone. And I think you guys would know that just as well as I would.

Paul: That brings us onto another slightly different scenario. It’s quite an interesting question somebody asked and I don’t know really whether I have got an answer to it. This person says ‘I work for a big company which seems to have a culture of fear, how do I as a Manager make failure acceptable within my team?’ The truth is that when you are working on any digital project, let’s say you are working on a website, if you want to improve that website the only way you can improve it is to come up with a hypothesis, you put that online, you test it and see whether it flies or not when real users use it. That’s the basis of good web design. That means a big chunk of those ideas are not going to work and if you work in an organisation where that kind of ‘failure’ is unacceptable because you have wasted effort in something that hasn’t flown, that’s a really difficult environment for digital to flourish in. And it’s quite difficult to know how to deal with that.

Dan: My notes on that is that you have to trick your company into letting you do that kind of stuff. And I think it’s all a semantic issue. If you can start to use terms instead of saying ‘we’re going to try a new project’ you can use ‘pilot project’. Try and avoid using words that indicate long term commitment, so if you are going to do something you are just going to try it for a few weeks and see what happens. And try to minimise the effect of that. If you are in a big company it’s very unlikely you are in the position to sink the whole company with your digital experiment. If you are in that position, then you should definitely ask for more compensation.

I think you just have to use more soft terms, use words and terminology that can excite wonder and exploration in people. Because people tend to want to discover things, so if you can use language and tact that leans that way you will probably have a bit more success.

I don’t work in big companies, I never have, but I have worked for big companies as an Agency. I think you do have a little bit of an onus to demonstrate the constraints of the test you are going to run. ‘This is why we are doing this, this is what we hope to gain from it, and this is going to be the cost of doing so’. I don’t know if we skipped over it or not.

Paul: We’ve skipped all over the place.

Dan: Yes.

Paul: I’ve randomly let the conversation go.

Dan: I think you have to define what failure is, and what success is. And then you have to aggressively monitor it. At Silverorange we do pre-mortems and post-mortems on projects and we talk about how things could go wrong before we even do the project to make sure we can imagine our way around some obstacles. Then after a project is done, we do a post-mortem. Some of our project post-mortems are entire days or two days of most of the team sitting down and talking through. And we try and boil off the water to get down to the substance to see if there’s any lessons we can learn for the future. And I think if you can document that and show that to your boss or the organisation and say that you are hoping to learn some key things about our business to make ourselves more profitable in the future or to learn these key things that will avoid these pitfalls, it will be a more sellable idea.

Paul: Mmm. Yes, absolutely. Do you know, we haven’t touched on half of the questions we have got on this issue? I think people have this real…they know experimentation is a key part of web design and there is associated risks with failing doing that but they are quite unsure about how to encourage that in people. One of the things I like about this question is ‘How do I as a Manager, make failure acceptable within my team?’

And that makes me think back to some of the things that we’ve done in Headscape over the years. We have a Muppet award. Which is a stupid thing that I don’t even know how it started—I think it was Rob that started it—anyway we have this Muppet from The Muppets and every time you messed up, you got the Muppet. The Muppet would sit on your desk. And it became our way of giving permission to people to mess up. Having the Muppet wasn’t a thing of shame, it wasn’t like going to the corner and wearing a dunce’s cap, it was almost a…

Marcus: It was Paul. It’s just that you won it so much, that’s what you are saying to yourself.

Paul: Is that it? So I am going to end on that note.

Dan: I just thought of another answer for your listener’s question, is that what I would do then is try and create the incentives in my organisation to be more process orientated. So instead of focusing on the end result, focus on the process. Do you go through a proper process when testing this idea? And if so, let’s reward that. And encourage that and then the outcome becomes that it doesn’t not matter, but it becomes secondary to doing a good process. If you do a process that’s ideal and gets fine-tuned over time, you are going to have the successes eventually.

Paul: Yes absolutely. I spend a lot of my time with my clients helping them establish a framework within which to do digital. Because having those kind of processes and frameworks in place it provides a place of safety and a set of criteria to work within.

Anyway, we must move on. For a start I want to mention our final sponsor of the day before we get onto the most important part of the show. Dan I don’t know whether you are aware of this, but we do end with Marcus telling a joke and it is a special moment and just prepare yourself for painful laughter.

Marcus: Or disappointment.

Dan: I only have one joke and it’s about a Proctologist, so I will leave it to your imagination.

[Laughs]

Paul: You’ve got a young daughter, surely you have jokes you tell with her?

Dan: They are horrible, she’s only eighteen months so not quite used to language yet.

[Music]

Paul: Anyway, right, so. Our second sponsor on this show is Lynda.com – a wonderful sponsor who is supporting the season. They’ve got over 3000 on demand video courses on business, creativity, technical skills, and stuff like that. I think they’ve been around almost as long as Silverorange have. They are a great place to learn new skills, design websites, coding, applications, running businesses, whatever. In fact I went along and had a look today on what they’ve got on failure. I thought ‘They’re not going to have anything on failure’. But actually they’ve got loads. Here are some of the videos they’ve got on failure:

*Design for failure

*Planning for failure

*Moving past business failure

*Putting failure in its place

*Celebrating success and accepting failure

*The importance of failure

*Learning from failure

*Embracing failure

So if you want to know more about failure, then go along to Lynda.com. They’ve got thousands of courses that you can stream on demand and learn at your own schedule. The courses are broken down into bite size chunks so you can do as much or as little at one time as you want to. You get access to all of that failure for one flat fee. Ten days free trial. You can find out more about them at Lynda.com/Boagworld.

Dan: It sounds like you should listen to all those things or watch those videos before you listen to us rant about it.

Paul: Yes, I think you will get a much more cohesive discussion of the issue than us rambling about it. But no, it’s been really interesting. Failure is a really difficult one, because on one hand you want to create an environment where failure is ok but on the other hand it’s not desirable. You don’t go out of your way to fail, so there is a balance there somewhere.

Marcus! Talking of failure, do you want to give us a joke that won’t make us laugh?

Marcus: I’ll do my best. This one carries on from the joke from a couple of weeks ago which we felt wasn’t really that appropriate.

Paul: So you felt the need to carry on anyway?

Marcus: Yes, it was to do with the guy getting rid of the son – that joke. Anyway that’s not this week’s joke.

Paul: Anyway I don’t remember previous jokes you’ve told. I blank them from my mind.

Marcus: ‘I was digging a hole in the back garden today when I found a pile of buried treasure. I was so excited I ran inside to tell my wife. Then I remembered why I was digging the hole in the first place…’

[Laughs]

Paul: That’s terrible! That’s like right at the 1970’s. ‘Take my wife. No really – take her!’

Dan: Can I tell my Proctologist joke? I don’t get many opportunities to do it.

Paul: Go on then, go for it.

Dan: So everyone knows what a Proctologist is I imagine, if you don’t you can take these four seconds to google it.

‘So a Proctologist walks into an examination room and looks at his patient and reaches up into his pocket and pulls out this thermometer and looks at it and says “Oh no, some bum’s got my pen!”’

Paul: Aaaarrggghhh no.

[Laughs]

That is as bad.

Marcus: Yes. Excellent. That’s the proper level of joke we like on this show.

Paul: That’s disgraceful. So that’s it for this week. Dan thanks so much for joining us.

Dan: My pleasure, gentlemen.

Paul: Absolutely brilliant.

Marcus: Great to talk to you Dan.

Paul: Next week we are following up on the subject we talked about earlier – we are going to be talking about sales leads and winning that work and closing those deals and all those other kind of things. How to go about that. How to make it not too painful a process. I have no idea who is going to be joining us next week on the show so it might just be me and Marcus if we can’t find anyone to discuss sales, or we get Dan back on to solve the problem!

Dan: A regular columnist.

Paul: Exactly. All right, thank you guys for joining us today. Have a really great week and we will talk to you again next week.

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