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Management Sandwich: Why It’s Never Good To Have Your Investor Also Be Your Customer

October 24, 2013

We spent two years building it. We’d just had a brilliant rollout at Confluence Salt Lake City. We had ten companies who were signed up wanting to use our software for the coming year. Surely our products troubles were were mostly behind it, right?

Not exactly.

RESMARK started because a rafting company wanted some reservation software that didn’t exist. So, they went shopping for a programming house. They found Agile Studios with with me as the Executive Vice President. They paid us a lot of money to write this software. After a couple years, we spun off RESMARK as it’s own company. We hired programmers. We bought a domain name.

But, every month, it was the investor company paying the freight. The technical term is Angel Investors. But, these angels wanted their product.

When we finally shipped RESMARK on September 1st, 2006, I had ten customers in ten different areas around the country who were my customers. Some did mostly short trips. Some did multiple day trips through the Grand Canyon. Some had lodging. Some had train rides. The point was they all had different needs.

Anyone who’s ever built software can tell you that it is ALWAYS a tradeoff. You never get to include all the features you want. You have to prioritize each feature and figure out which ones to build first. And that was my problem. Once we shipped and I had ten customers, I had to balance their needs. The problem was that only one customer was paying me every month. My Angel Investor felt that since he was putting up the money to actually pay the programmers and keep the lights on, that he had some call on HIS features getting priority. And we tried to accommodate him, we really did. But, it quickly became obvious that if RESMARK was going to be a viable company, that the Angel Investor would need to go to HIS board of directors and tell them that they’d put a million dollars into this product and it couldn’t do what they wanted it to.

That’s not a conversation anyone likes to have. The Investor was a second generation owner, so there was no danger of him being fired, but I’m sure Christmas wasn’t too fun that year.

So, Dave’s prediction appeared to be accurate. The investor pulled me aside at our show and told me that they needed to make a change after the holidays. Now MY Christmas was kind of tense.

Ironically, I was the lowest paid employee at RESMARK. I was making $3,000 per month plus health benefits. I had a family of 13 kids at the time. Fortunately, I was able to do some consulting as well to make up the difference.

However, just because I was making peanuts didn’t mean I had no influence. I started preparing for my probable exit interview just as I would an interview to get a job. It remained to be seen if my investors were doing the same amount of preparation.

This is the fourth in a five part series about the birth and death of RESMARK, describing my time as president. Here’s how the rest of the week will look.
– Monday: My Brother Wouldn’t Lie For Me
– Yesterday: I Want The Jacks Not the Balls, How I assembled our team and managed to not screw up their careers too badly
– Wednesday: We’d Lost Before We Ever Started, how we launched the program to incredible good press
– Today: Being a Management Sandwich, When your customer is also your investor
– Friday: You Can’t Fire Me, I’ll Quit. . .When I’m Good and Ready, know how many bullets are in your gun before you go in

Rodney M Bliss is an author, columnist and IT Consultant. He lives in Pleasant Grove, UT with his lovely wife and thirteen children.

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  2. It’s rarely personal. It’s just business.

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