Startup. com shows the perils of going into business with a shaky business plan. It shows the initial excitement, the rise and fame, the bumping of heads and the eventual downfall. Such is the story of govworks. com, the documentary, startup. com covers it’s first, and only, year in business. Long-time friends, Tom Herman and Kaleil Isaza Tuzman, had a great business idea, with a large market, and little competition. They took something that nearly everyone goes through, and marketed it in a more efficient way.
They wanted to make the DMV more efficient, specifically; they wanted to allow consumers to quickly and securely pay their traffic tickets online. This business plan parallels Netflix in many ways, as it took something that we were already doing, renting movies, and making it easier. With the internet booming and more and more people having access to computers and internet, Govworks. com soon exploded. They went from a one-room office with a tiny staff to over 200 employees and a net worth in the millions.
However, like many internet startups of that time, Govworks. com was not a success, and by 2001, the company had let go of almost all its employees, and it was eventually overtaken by another company. “GovWorks’s failure is a textbook example of the perils of grandiosity”(footnote1) . Over and over again we have seen examples of companies that have gone too big too fast, and GovWorks was one of them. Rather than just focusing on one aspect or one city, they wanted to spread out in as many places as possible as fast as possible.
A similar plan was used by Fresh Samantha, in that they wanted to spread in as many places as they could, as quickly as they could, which may have led to their eventual overtaking by Odwalla. Tuzman wanted to claim the first stake in the online government payment firm. He wanted to be the forerunner, the one who set the standard, and ultimately, the one that brought in all the money. What he failed to realize is that every great business takes time to develop, to tweak and to find its niche.
Although I understand the reasoning behind wanting to be the first in an industry, the risks of going under far outweigh the rewards. A company that conversely was very successful in finding its niche is Geek Squad. When given the opportunity to expand they were hesitant, and took their time. They built their brand, then expanded, while GovWorks expanded before having a chance to see how the company would grow in the long-term. Another thing that led to their downfall was that Herman and Isaza Tuzman found themselves butting eads in the way the company was run. They displayed a lack of training about the fundamentals of making an Internet firm work; Herman’s low-key personality clashed with Isaza Tuzman’s business-first approach, and eventually Herman was forced out of the company he had helped to found by his longtime friend. While going into business with another person can be an asset, it’s always key to remember the boundaries of business and friendship.
When two people don’t meet eye to eye on the basics of how they want their business to run, it’s a recipe for disaster. Going into business doesn’t just involve a good idea. It involves planning and knowing how to use the right people in the right resources. Bill Stewart explained how although he knows a lot about packaged foods, he doesn’t know everything, and he knows when to bring in other people who know what they are doing to help further his company. It also involves knowing what parts of your business to expand, and when.
One huge factor that Herman and Tuzman missed was having a trial run of their project, to forecast how it would pan out in the future. Again, Geek Squad is a great example of knowing when to hold back and when to expand. Knowing all of these things now, it makes sense that their firm failed, however at the time, I can only imagine how they must have felt while their dream was spiraling downward.
1 Kuemmerle, Walter. Harvard Business Review. “A Test for the Faint Hearted” p. 6. May 2002. http://www. pencom. gov. ng/download/seminars/A_test_for_the_Fainthearted. pdf