I’ve always felt that in spite of it’s many problems in the past that one of the things that made MySoti strong and likeable compared to other print-on-demand services (beyond it’s adoption by quality artists) was that you were really dealing with a person at every point of contact, and that they were open and honest at all times. Earlier in the week Steve wrote a great newsletter basically chronicling the history of MySoti back to it’s days in 2005 when it was known as Bountee. It’s a long story but definitely worth reading if you are interested in the business behind the tees, and it’s practically required reading if you’re considering running a t-shirt business and think you’ll be raking in the cash.
Strength Lies In Small Things
I hope you’ll excuse me whilst I take a break from the usual, ‘lacking-in-substance-other-than-marketing’ messages and instead allow me to indulge in something a little deeper. In all honesty this is a post that I have been trying to write for 12 months or so now but for several reasons haven’t been able to.
This is a fittingly brief story about being small; not necessarily in vision but certainly in stature. This is the story of MySoti.com and how trying to launch and grow a [purely] online business that actually sells product without the backing of major, private VC within the UK is neigh-on impossible within today’s climate.
Back in 2005 – when the business which was to become MySoti was known in my presentation slides as Bountee.com – I genuinely had the belief that I could launch something online that could compete with the best of the competition within our market. I was working at a large electronics manufacturer at the time and pushing boxes and arrows around the page on some pretty large projects; although I was but a small, minor worker within the sweatshop. But I honestly thought I knew enough to at least create this thing and see if it had legs.
Much like Costner in that baseball movie, I had the naive notion that if I built something useful and interesting that people would come.
And so I had the fortune to discuss my idea with a friend of mine – who knew of someone who knew of someone – and within a couple of months I’d secured a little financial backing in order to get this idea off of the page and onto the Internet. At the time this felt like everything to me, I had my own little angels sat on each shoulder (in the form of investors) and within three to four months Bountee.com was launched. And as a proof of concept it worked.
The idea was simple. On the one side of the Internet we had sites like Cafepress, Zazzle and Spreadshirt who were raking in money basically producing really questionable but custom/personalised ‘Uncle Bob’s 40th Birthday’ t-shirts and BBQ aprons… And on the other side you had the inspirational Threadless run by Jake and Jeffrey (and not forgetting Jacob) selling both amazing designs that were voted on by the community and up-selling the notion of crowd-sourced content. I wanted Bountee to sit somewhere in the middle.
We were going to allow decent designers the opportunity to create wonderful product from their amazing designs and to sell them – for free – over the Internet to lovers of wonderful product and amazing design.
And so that’s what we did…
And as a proof of concept it was working pretty well. Driving traffic and getting people to actually purchase shirts was tricky but not impossible; certainly nothing that a little grunt-work and a few well-placed emails to blogs and forums etc couldn’t conjure. And so, on the back of our moderate (and by moderate I mean, really small) success we went to various people looking for more investment. We went looking for money to take our proof of concept into the next stage.
It’s worth noting at this point that the company comprised entirely of just myself working nights and weekends on designs and ideas, with a couple of close friends doing much the same thing but with the other stuff like graphic design and coding. What we really wanted to do was to show people just what we could achieve if we worked on this stuff full-time… You know, like a proper job?
And this is where my first mistake was made.
I never had the big, grand notion of taking over the world. At no point within the development did I run from my college computer room; having had an epiphany shoe-horned into my story by a minor character uttering, their only real, meaningful piece of dialogue. I just thought that what we had was a pretty stable, cottage business that could make the few people involved in it a decent, solid income. So we spent a few extra months working hard and with a little extra finance from our angels we started adding more products – like canvas prints and lampshades – and turned into MySoti.com; the place to Make Your Stuff On The Internet (Good domains are hard to find ok!?).
Sadly what we had in enthusiasm we lost in timing.
In late 2007 my investors had suffered hugely at the hands of the global economy; by their own admission I was just a little plaything to them; spending money that would ordinarily have been spent on a few extra meals out and perhaps a new sofa for the office. And so – quite understandably – when things got tight and they needed to reduce spending, then naturally my vision for extending MySoti was the first to go; alongside any money to pay for our designers or coders. We were now a team of one. Me.
And so – like a fool – my first point of call were the banks.
Initially the bankers seemed very impressed. Certainly at that time – and using some very useful connections – we had just launched with our virtual shirts within the new-fangled world of PlayStation Home; this was a really big deal. And somehow (despite cocking up the delivery of it completely) we had also managed to secure a deal selling t-shirts for a personal hero of mine Stephen Fry – who at the time was president of Twitter with about 500,000 followers. All of whom unfortunately for us had decided to buy one of his shirts at exactly the same time following his announcement tweet and in doing so used all of our bandwidth trying to get in to our store. Then of course – when they couldn’t – they all collectively retweeted that MySoti had crashed which resulted in a relative tsunami of page requests. It wasn’t pleasant. But it was – perversely – quite fun.
Oh and let’s not forget about certain suppliers going bust due to the economy, and in doing so taking a lot of our already-purchased-but-not-delivered-goods with them. As well of course the cease-and-desist letters from companies who were upset that some talented designers decided to produce parody t-shirts and threatened us with all sorts of legal shenanigans. Oh and then count up all of the missed (and subsequently refunded) orders that these two combined catastrophes caused. On paper we were exciting but in reality we needed help to recover.
But we had done all of this on a budget of zero and with nothing more than a few well-placed phone-calls, emails and a do whatever we can attitude. It really was lean, boot-strapping start-up at it’s best.
Only without the sexiness.
Despite the banks saying that they were interested, the few larger VC’s that I met with wouldn’t touch us because we didn’t quite have it (whatever it is). But ‘we have proven revenue’ I protested… ‘It doesn’t matter’ they replied, ‘revenue is easy… Where is your exit? What’s your plan for the next 3 years?’.
My plan was to sell more stuff – to add more product and to get more visitors to buy more things. In my mind this was how business worked. But, clearly, as a pitch for Venture Capital I didn’t have a world-changing vision; at that time if you didn’t have some sort of geo-locating, twitter-based food delivery network who’s only plan to make money was from the exit to Google in 24 months time then you were a nobody [or so it seemed to me]. My little business wasn’t attractive enough. And you know what? They were right. That kind of VC wasn’t right for us and they were right about something else too… We were actually closer to a manufacturing/production workshop than any sort of ethereal ideas engine.
And so we continued our dance with the banks.
As I say – initially they were impressed. We had some good (if not brilliant) revenues and whilst we didn’t have a lot in the way of profit – we were still paying off our development debts that weren’t covered by our first round of investment – we did have strong growth and some great projections for the coming 24 months.
If this is what were making with no investment and no profit to spin back into the business just imagine what we could do with a measly fifty-grand!
The banks agreed in principal but there was a problem, I personally didn’t have any capital or collateral for them to lend against. I was in the middle of a horrible and expensive divorce that was moving me closer to bankruptcy (MySoti may have been taking money but it wasn’t turning a profit and it sure as hell wasn’t making enough to pay for my food bills, let alone those of the Barrister used to try and gain me decent access to my children) and there was no chance of me being able to use our house as security.
But what about the company itself, couldn’t MySoti as an entity offer any security?
Well, with hindsight this was another mistake because – again – I had naively assumed that building a business that could create revenue, and do so without any requirement for spending money on holding stock or owning office buildings and having to only rent some virtual space for hosting would be on to a winner.
I mean, talk about running the perfect business…
Ah, but let’s pitch that another way. The bank’s way… MySoti doesn’t own any buildings, we don’t have a warehouse, own any stock or delivery trucks, or even computers other than a couple of servers and an old iMac. “I’m afraid that without this security the banks won’t lend the business anything, Mr Hunt”.
But I had heard through the news and various sites like Techcrunch Europe that there was another way.
Gordon Brown and later Mr Cameron were talking extensively about government subsidised help for small businesses and a scheme called the Enterprise Finance Guarantee [EFG] that seemed perfect for someone in my situation. Hell, Cameron and his ilk were even name-dropping the ‘Silicon Roundabout’ and his vision for some UK-based entrepreneur-driven technical dream – somewhere in which I worked in a small capacity for Songkick.com doing some Information Architecture work in their early days.[I was using this money to fund both my divorce and my business and in hindsight was a complete wreck for most of the time – sorry Ian, Michelle and Pete… I hope you’ll forgive my flakiness. But it paid the bills and kept my little dream alive; and you seem to be doing ok out of it so I don’t feel too bad].
The EFG is essentially a government subsidised loan that is designed to help people start-up or maintain their own companies when they aren’t in a position to fund or secure any external funding themselves. Put simply… a pitch is made to the bank who then decide if there is a suitable business to support and then they send their recommendation off to the government for approval. If that approval is made then 75% of the proposed loan is secured by the government itself with the remaining 25% being covered by the bank; the idea behind it being that small businesses are essentially supported by the government and help to boost the economy.
So this was it…. The big chance for MySoti to really clear itself of the cash-flow problem dragging it to it’s knees since all of the production problems that plagued it 6 months earlier. And finally a chance to really grow.
I prepared my pitch to the bank like a warrior.
Seriously, I was so in the zone I deserved my own three-minute, pop-anthemed montage. Management accounts were prepared, re-prepared and double-checked. Profit & Loss spreadsheets were everywhere and my business case for the additional funding was bulletproof.
The bank said no.
I couldn’t quite understand why. If I’m honest I still don’t fully understand. They mentioned something about my personal liability (understandable) and the [correct] fact that the company had been technically loss-making whilst we cleared our development debts. But our forecasts showed us making a tiny profit in 2011 – regardless of any funding – and with the additional and applied for funding we would have been able to pay back the £35,000 loan in next to no time. Certainly quicker than the 10 year repayment terms within which we had been told to apply for. I was devastated.
Devastated because this would mean that – without any bankrolling of the business – MySoti would barely be worth the time and effort of carrying on. With the refunds stacking up due to the undelivered orders caused from our ‘cease and desist’ legal threats and the fact that we couldn’t afford to pay twice for all of those orders that had been delayed because our suppliers had gonebust , well… cash flow would have killed the business within months.
And so here we are today then… Just a couple of months later and MySoti is still here.
It turns over a small, but relatively healthy amount of money a month but it’s not enough to really keep things [and by things I mean me] going.
But because I can’t just let it collapse and take our wonderful community of designers’ money with it as of this month I’ve had to go off and get a full-time gig to pay for my food, divorce and the petrol to travel over 500 miles a week to visit my daughters. MySoti is now a virtual company of one server and some code that’s had to mark off all of the non-essential (read: development) duties off to the great drawing-board in the sky. But it still lives.
And one day it’ll break even and then begin to turn a profit…
I want to assure you that MySoti is going nowhere. We have too many wonderful designers making amazing things and selling them for astounding profit for me to just give in after these past few years of glorious fighting.
And in testament to that I hope you’ll continue to support us the way we’ve tried our best to support you.
However, what I can promise you is that, with all honesty, this survival and success will have been despite empty promises of banks and despite the supposed help of the Government.
The truth is that – for the majority of companies – without money to start you really can’t make money. And the only way to get money is to have something worth more than just the promise of an idea and some code in the first place. You need to be rich to be rich.
I confess to not knowing how to even begin solving that problem.
Maybe I need another angel?
One thing for sure is that it’s going to be a fun few months here at MySoti HQ and I for one can’t wait to see where it takes us all. But for now I leave you with a print-on-demand service that has the largest T-shirt print area of any other major service out there on the Internet today – and artwork prints of the best quality and sturdiest frames available. And not forgetting you guys – one of the most amazing creative communities I’ve ever seen!
Here’s to the future – love you, bye!,
Steve – MySoti HQ x