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What Pepperoni and Cheese Taught Me About Starting (and Keeping) a Successful Business

By Ryan Holmes | 8 months ago | No Comments

Photo by Robyn Lee.
Photo by Robyn Lee.

This post was originally published by HootSuite CEO Ryan Holmes on the LinkedIn Influencer blog. Follow Ryan on LinkedIn:

Back in the summer of 1998, I dropped out of college and started a pizza restaurant called Growlies in my hometown in the Canadian backcountry. My start-up fund was a credit card with a $20,000 limit.

The lessons I learned from those first years helped me avoid some major pitfalls later while building a global social media company with 400 employees and millions of users. For resourceful business people, finding start-up capital may come easily enough, but making the best use of it is another story. Here are a few tips:

Lesson one: Resist the urge to be a baller when you’re getting started. It’ll pay off in the long-run.

During the early days of HootSuite, when social media was still seen as a fad and few companies ever thought they’d need tools to manage it, I made the decision to treat our funding as if it were my personal bank account. That’s not to say I blew it on fast cars and fancy dinners. Exactly the opposite.

I looked at those dollars as if I had personally earned them and wasn’t about to give them up without a fight. My team and I had a choice: live the rockstar startup lifestyle for a year or so or build something for the long haul. So we renewed the lease on our grungy offices in the worst part of town. We traveled on the cheap. We kept salaries low and took the bus to work.

Lesson two: Don’t be a cheapskate, either. Make smart investments on some quality ‘ingredients’ for your business.

There are some corners that shouldn’t be cut. Cheap ingredients (processed cheese, pre-made dough, watered-down tomato sauce) will sink any pizza joint, no matter how good the marketing. The same principle holds true for tech. We made a strategic decision early on at HootSuite to focus on product over promotion. In other words, our goal was to actually build the best social media management tool, not just dish out extra funds to build the hype.

That might not sound profound, but hype is the currency on which lots of startups trade. I saw competitors—most of whom are no longer around—spend $60,000 on launch parties at the annual SXSW Interactive conference in Austin, the Super Bowl of startup-dom. They were probably doing it to generate buzz, attract investors and project an image of success. In reality, they were getting a lot of people drunk for free.

Of course, some promotion is important, but be creative and sensible. Instead of hosting a catered blowout at SXSW, we rented a bus for a fraction of the cost and fixed it up to look like a giant owl, our mascot. By the end of the week, nearly every investor and tech reporter at the conference knew who HootSuite was.

Lesson 3: You gotta sell dough to make dough. Identify revenue streams early and focus on getting in the black.

After a few months at Growlies, my credit card was maxed out. The only thing that saved me was selling lots and lots of pizzas. Basics like revenue and financial viability are too often taboo topics in the startup world. But I feel it’s critical to have money coming in and to hammer down income streams sooner rather than later.

Raising capital can become an addiction, and I’ve known my share of addicts. They raise one round, binge on hiring or advertising or new offices, raise another, splurge again and on and on. There’s the illusion of growth but very little revenue to back it up. In the end, the house of cards almost inevitably tumbles.

In the end, I learned another lesson from pizza: You’re never going to get very far selling Hawaiian slices at $2.50 a pop. I sold Growlies after a few years for a very small profit, left my small town for the big city and poured my savings into a brand new venture—a little agency that designed web pages and web tools. As fate would have it, the tech bubble burst right after I opened shop. But luckily all those nights pounding dough and chopping pepperoni imparted one last lesson: persistence.

For more social media insight and to learn more about my company, follow HootSuite on LinkedIn

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2 comments
Chris Pergantis
Chris Pergantis

Great piece! Sounds similar to my past work/learning experiences, but I am a bit older.  I have heard what you describe as "starting a business on a shoestring". I have not ever had the benefit of large sums of money to fund any of the eight different businesses I have started over the years. 


Even with my own money I kept it to minimum until it was needed to push a portion of the concept. Mostly leaving a company to produce its own cash flow. No better way to make sure everything is correct going forward than to make sure it is correct looking back.

eric_dwhite
eric_dwhite

The HootBus!!! Such an awesome idea and a really creative approach to marketing at the saturated SXSW event. Ah, I remember my first ride like yesterday...