Two wrongs don't make a right

Awais Khan · February 9, 2009 · Short URL:

Brad Kayton, COO of 4Home, shares business model lessons

VatorNews clean tech correspondent Awais Khan speaks to Brad Kayton, COO of 4Home, in this segment of "Lessons for entrepreneurs."

AK: You've been working with 4Home within the last three or four years; you are one of the founders. So are there any particular lessons you have learned that you can share with the rest of the entrepreneurial community as it relates to this industry?
BK: There's two that come to mind immediately. One is when you raise your first VC round of financing, make sure you raise enough money. An old saying I get that everyone goes through is that it's important that you figure out where you're going to be. Raise the right amount of money because otherwise you can get into this kind of ugly cycle. And the other would be on the business model. I think all successful companies go through business model changes. And you've got to be flexible in the business model. When we first got started we had one model that was more rev-share based and we actually moved to an enterprise software model. And we're actually changing that a little bit and I think if you can pull it off with a couple of business models going parallel and let the market tell you what the best business model is, that's clearly the way to go. I wish I would've been more keen to that in the early years.
AK: That's great advice and I know you're a serial entrepreneur, right? Any particular failure that has made you switch or learn something very relevant?
BK: The last company I was at. we had a problem with the product. We were coming out with a next generation product. And we were having trouble with it. We decided, well here we are in business models but we change business models based on the problems we were having on the product development. That's never the way to do it. Don't make any two mistakes in a row. Two wrongs don't make a right. That was clearly something I wish we hadn't done before. If you're having trouble with a product, just keep at it. The reason we changed business models is that we thought we had missed the market for the next generation product. Turns out we didn't. We probably would've had two years to struggle to get the next generation product out. It did not pick up as fast as we had thought.
AK: I'm sure that was a great learning experience that helped you. Thank you for sharing.

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