Keeping over-optimism in check
Recruitment software start-up NGA.NET faced a series of challenges in its early years, mainly driven by its own ambition.
NGA.NET runs a successful internet-based recruitment system that handles the process of candidate applications for high calibre clients including corporate and government bodies.
The Victoria-based business was formed in 1997 by Mike Giuffrida and Will Spensley, and Giuffrida says selling the benefits of NGA’s product initially proved very difficult.
“In the early days, NGA.NET were missionaries for ‘eRecruitment’ and spent a lot of time knocking on doors spreading the good word,” he says.
“We had to create the market before we could generate any revenue from the market.”
The company overcame this challenge not with expensive marketing campaigns but by positive referrals and word-of-mouth.
“At the end of the day, someone has to buy, use and vouch for your solution for it to catch on. From the time you get out there with a novel solution, you should always allow about three years before you start generating consistent revenue results,” Giuffrida says.
According to Giuffrida, the company made its first big mistake in 2000 when it introduced and lost control of its burn rate.
“We had been too optimistic about how ready the market was to embrace our new approach to recruitment and, as such, new sales were not converting as anticipated,” he says.
“Given the state of the market at the time, web businesses were also not the flavor of the month, so support was not readily available.”
Consequently, NGA.NET needed to downsize very quickly in order to reach a state of equilibrium on which to stay in the game and grow organically.
Two years later, the company experienced another mishap when it embarked on an aggressive product development plan, sparked by clients’ demands for new products and features.
“Overpromising on functionality meant that the development program was becoming more and more difficult to manage,” Giuffrida says.
“As a result, NGA.NET was in a position – well into the project – of recognising that the solution was undeliverable in the time specified. A full reset of client expectations needed to be completed and managed.”
Giuffrida says that entrepreneurs need certain qualities, including persistence, resilience and market understanding. More practically, he says that a clear leadership structure is also required.
“The structure of the company in particular was such that there was no single person that could make an operational decision,” he says.
“Conflicting points of view led to delays, which placed the company in a precarious financial position.”
“Following on from this experience, the leadership framework was consolidated and a single, lead decision-maker appointed.”
Giuffrida also emphasises the importance of only making promises you know you can keep.
“It is far better to underpromise and over deliver than to overpromise and under deliver,” he says.
“The other lesson learned from this experience is that you are only as good as your team… Take time to recruit well and then plan for success.”