Notley Ventures describes itself as a catalyst for social innovation that aims to unlock new opportunities with today’s impact organizations and changing communities. Notley’s mission is to fund and support businesses, non-profits and programs making positive change and social impact in the world. It does this by creating ecosystems like the Center for Social Innovation where social good organizations thrive. Notley was co-founded in 2015 by Lisa Graham and Dan Graham, founder of BuildASign.com, as a way to leverage their own business and investing success.
Not doing enough due diligence.
Over the years, I’ve figured out that mistakes are the secret ingredient for success and that success is the gap between a whole bunch of failures. So over time, there’s been this mentality shift that repeated failures are the way you do succeed although early on it doesn’t feel that way. At the time, mistakes feel very much like critical life-changing events.
When we first started BuildASign.com, an online commerce platform for selling custom printed products online, my business partner and I had a computer science background and came in with a lot of hubris and ego at first. It started out as a site and early on, we were outsourcing the manufacturing and printing to a local company. We thought we saw a lot of things that we could improve upon.
Historically, the process of creating multicolored signage was historically slow and we thought we had a great way to shortcut that process and save money on the manufacturing side by bringing them all in-house. We put all our money into new machines, including a fancy new printer. We had a guy come set it up and went to print our first set of signs. Coming off the printer, they just looked amazing but when we went to peel our first signed, it just wilted immediately. The ink had eaten away at the material in a way that we weren’t expecting. So, I thought we just needed thicker material and asked our supplier for it. He told us that what he’d provided was the thickest anywhere in the world.
Here we’d sunk all our money into this printer that we thought we could print more cheaply on, and thought our business was over. I remember sitting on the floor with my head in my hands (we had no furniture at the time). My partner and I sat there trying to figure out what to do for hours and couldn’t come up with a solution.
Someone else came in for an unrelated thing and my partner was crying on the floor. We told him what happened, and he looks at me and says, “I have thicker stuff in my car,” and it worked great. But we felt like the experience was sort of a double failure. First, we didn't do any research on the printing process printing to know it was problematic. We also didn't know enough to know we were being lied to by supplier that there was a thicker alternative. It was very humbling. We realized we did not know what we were doing and took things slower in the world of manufacturing. Eventually, we re-launched. It was a process in learning the importance of due diligence for us.
After that we started to grow, and we had a problem with our bank. About six months before when filling out our bank application, we estimated what our credit card volume was going to be. But we really had no idea at the time. We put in $20,000 a year for credit card transactions. But three months in, we were bringing in $20,000 a week and the bank got paranoid and started holding our money. I spent days on the phone to get them to release our funds to us.
We were very hand-to-mouth at the time and needed the money to pay suppliers and vendors to purchase and make products. I was scrambling to find a new bank as this one was holding $50,000 from us in a reserve account as a risk buffer. We were pushing back on our suppliers, who were threatening to sue us. We tried to explain to the bank that we were a real business and not defrauding anyone. Long story short, we realized we had not read the contract with the bank carefully enough to understand that they could seize our funds like that.
Again, we thought we were out of business. Vendors were about to leave us and we were in a bad place. But we switched banks at the last minute and got everyone paid as the orders were growing. The first bank kept our money for nine months until they gave it back to us. We felt like we were being penalized for growing too quickly. It was very scary.
I’ve figured out that mistakes are the secret ingredient for success and that success is the gap between a whole bunch of failures.
Today, BuildASign.com has over $100M in revenue and more than 600 employees. It all worked out but there was definitely a lot of naiveté there, and an ego of thinking we could come in and do it better. The lack of time spent doing the more careful walk-throughs and due diligence taught us a lot. Now, we have whole teams making those kinds of decisions. We would never bet the whole company on a purchase without an insane amount of due diligence. We learned that by being hit in the face with a baseball bat a bunch of times. When you are a startup, you don't have as much to lose, and the feeling of big risk is perhaps not there as much as when you’re a larger company.
We got lucky but very easily all of it could have meant the end of the business very quickly for us. I see entrepreneurs make that mistake a good bit.
But ultimately, I hate the idea of mistakes discouraging anyone from starting an enterprise. Sometimes, a little bit of ignorance is helpful but there has to be a balance there. I think sometimes, especially very early on, too much due diligence is not a good thing. Sometimes it’s better to try, and make mistakes than not try at all for fear of what might or might not happen.
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Pictured is Dan Graham. | Photo courtesy of Notley Ventures.