Mitch's Blog

I bought a drill from Sears on their web site yesterday.  Buying online meant a small $7.50 savings, so I opted to buy it online with “Store Pick-up.”

At 9:20 am this morning, I got an email from Sears saying my order was ready for pick-up.  I went to the store around 2:00 pm in the afternoon.  If you’ve never picked up an order from Sears, it works the same way as when you buy an appliance in the store–you go to the Merchandise Pick-up area and scan your receipt at a kiosk.  This puts your name in a queue and your name appears on a TV monitor.

In this particular instance, I stood waiting for 4 minutes and 30 seconds.  A guy came out of the warehouse and called my name.  He said, “your order will be out in just a second,” and then he closed my name out of the queue.

I stood and waited.  In fact, I waited for 30 minutes.

I had enough time to see that Sears has a large poster in their waiting area.  This poster was about their customer service metrics.  It indicated that in the last 30 days, 100% of their customers didn’t wait more than 5 minutes.  (This poster was in the style of those “Accident free for X days” posters at other venues.)

So there’s at least two scenarios here:

1. Sears staff members are lying to management.
2. Sears management has a policy to lie about their metrics to customers.

Presumably there’s hire/fire or bonus incentives around these metrics for someone in the chain of command.  In any event, honesty about metrics is critical to evaluate your business.  Lying to yourself and your customers about your metrics leads to wrong decisions internally and insults customers.

While I was waiting, another fellow was waiting for a patio set.  He observed that he had been “served” in under 5 minutes, moved out of the queue, and yet he had to wait another 10 minutes.  He saw the monitor and I made sure to point out the metrics poster, so that he got the full experience.  This was a fellow of retirement age who (probably) wasn’t drafting a blog post in his head while he was waiting.  But he wasn’t impressed with the overt lies.

Be careful how you apply metrics in your business.  You might get the numbers you want, but will your customers get the experience you thought those numbers reflected?

I get this question a lot. I wrote this down as my standard answer.

First, you need to be sure you are building a product people want. This means doing market research and talking to potential customers before you do anything else. It sounds obvious, but building something people want is the hardest part. When you’re evaluating whether or not people want what you’re building, you need to hear people say, “OK, when can I buy this? I need this right now.” Potential customers who say, “Yeah, that sounds like a great idea” are misleading–that kind of response means you haven’t gotten them to the mental finish line such that they want to buy. It is crucial to understand the difference between these two reactions.

If you are serious about starting a company to the point that you or your partners are quitting your jobs, you need to go ahead and legally form the company. You can “do it yourself” but I recommend finding a respected attorney familiar with the law of where you are starting your company. In particular, you should have employment contracts between all partners and the company, and you should have intellectual property assignment agreements between all contributors and the company.

Without these basic agreements in place, your company can suddenly be in a position of being (1) un-fundable by VCs or other capital sources, (2) un-acquirable, (3) sued by a partner who has dropped out or feels he has been wronged. And of course, without some non-compete agreements, a partner can leave and potentially take know-how of your business to start a competing company.

Do not depend on a ‘gentleman’s agreement’ of what will happen when someone leaves–even if everyone trusts everyone and everyone has known everyone else for many years. In every company I have ever started, someone has left before the first product was ready to go to market. In one case, that tanked the company and the remaining partners, including yours truly, lost many thousands of dollars.

Setting up a company and getting these agreements in place is relatively cheap, even with a high-end law firm in an expensive city. The cost is essentially zero compared to other start-up costs and it will save you serious stress and money down the road.

Hire an attorney who specifically deals with business. I would not hire a “front door attorney” who “practices whatever comes in the front door.” Ask for references from businesses that were once starting out like yours. Also, you will need a CPA to keep you in-line with the IRS and other government agencies. The CPA will cost you much less and, in some ways, be a far greater value. I wouldn’t start a business without either of these people on my “team”. I’ve done it the wrong way and the right way–and the right way is MUCH better and less stressful.

When you’re just starting out, it can be very easy to fall into the trap of thinking that what you’re doing isn’t going to be “big” or “maybe it’s not important enough” to be worth protecting. But if you have quit your job to do something, it must be big and important enough to justify taking some basic precautions such as these. Chances are living expenses while you build your product will dwarf the costs of protecting yourself–there’s just no reason not to.

Of course, if you’re building a company alone, you might not need much of the above–I am really referring to scenarios involving 2 or more people. If you’re going at it alone, you might still need protection from contractors you hire, though.

See also: Top Ten Legal Mistakes Made by Entrepreneurs. I also recommend this book which covers the above scenarios and many other issues.

Finally, this is not legal advice.

(This is from my office FAQ; it felt more appropriate here.)