Startups - Supplier Lock In and Team Work


A few years ago I joined a company that had been trading for almost three years and had a small but established customer base. They were involved in document management and a few odds and sods projects that didn't really fit into the core offering of the company. The company was tied to one supplier from the US, supplied their product and made its money from the associated consultancy work.

The company was doing quite well but it had to change and drop the dependency on the one vendor and it knew this. This became more apparent as the US company changed there pricing structure in the US which unfortunately did not fit very well with the UK market.

I joined the company as Technical Director with the aim of taking the company beyond the position they were at with the partners to selecting a suitable solution for moving forwards.

It was a small company with six developers in the 'team'. I use that word very loosely because they were not a team but a group of individuals and didn't work together. Most of them had come from big company backgrounds and hadn't worked in small companies before so didn't understand the difference of working in a small company. They also didn't appreciate that in small companies often it is all hand on deck to get things done.

So the first six months saw two challenges;
- Find a new suitable solution to continue document management, which would free the company from the current US supplier.
- Review each member of the development team for suitability for moving the company forwards.

The first task of reviewing suitable solutions wasn't too bad. To cut a long story short I looked at the build / buy options and came up with something in between. At the time Oracle was in the process of releasing it's first framework, which would support document management called the Internet File System, iFS. It was based on the Oracle database. We went with this solution which meant that we could build ontop of the system and make it much more flexible. This worked very well and we were the first company in the UK to partner with Oracle with this product and we made huge progress with Oracle at the time. Also with the ability to sell Oracle licenses the margin on each sale was much better than the original supplier deal we had.

The second task was a challenge in itself. Of the six developers working there within the first five months five of them had gone. It was a mixture unsuitable skills, personality, lack of commitment and above all the lack of team work. The people were recruited by the MD who is a finance guy but thought he was technical! So when the staff used the right buzz words they were in. The only person that I kept on was more of a designer who had good skills but also recognised that there was an opportunity at the company if he changed his way of working. I went out looking for the right people and replaced the five that left with just three better quality people. This worked extremely well. Naturally the owner of the company had a few extremely nerve racking times when he thought we had so few developers around but once I built the team backup it soon paid dividends and we had a great team.

The next couple of years went very well and we made a lot of progress on the product front. Once the product was established we continued to look at other revenue avenues especially as we were dealing with Oracle software. This is where the company started to loose some of it's focus.

The range of products in Oracle was and still is huge. At the time certain products generated much higher margins due to the deal we had with Oracle as a supplier. Being that the MD of the company was a finance guy he immediately focused on that area and as a result the development of the original document management solution started to suffer. Over the next few months the direction of the company was certainly heading towards the supply and configuration of the Oracle software and this is something that was not of interest to me and it was at this point I decided to leave the company. The way I saw it, was the pricing levels could not be sustained by Oracle and eventually the licensing side of the business would start to suffer and that the company would have to continue with the document management solution and further developing that.

A couple of the other developers left the company as well and for a while it looked as though the company would not survive. Fortunately the MD finally saw the light and could see where things were heading and managed to turn it back to what the original plan was. At this point the company started to move forward again, but by then it was too late for myself.

The company is still trading today and doing very well which is pleasing to see and great that the original product I put a lot of effort into researching and designing is still going strong.

So as far as I am concerned the company is very much a success, the MD is the person who put up the original financing and he is now starting to see the dividends paying.

So what did I learn from the experience?
- It's so important to ensure that you have people working as a team and not individuals.
- If you don't have the right people change them don't be afraid to remove everyone and get the right people in. Can be very hard to do and is a challenge in itself but if you have the wrong people working for you then it will fail
- If you are the MD / CEO of a company and employee technical people then make sure your recruitment process is right. If you're not technical don't pretend you are otherwise you will end up with the wrong people
- Be careful not to look too short term and forget about the medium to long term.
- Be prepared to change direction if need be and react to competitors and new developments in the markets.
- If you can build strong relationships with big companies like Oracle then do so as they can give you a lot of help financially and in the marketing.
- Keep your staff up to date with what is happening, treat them with respect and you will get much more from them.
- Be careful not to loose focus and become blinded by the $, short term may look good but it can affect the longer term.

Probably the best experience from that company was being able to develop the strong relationship with Oracle in order to make something happen and at the same time building a new team.