Part 7 of the Shugo Story — the best decision I made

I was riding a high…we just had our first “sale”! Even though we were giving the product away free for a period of time, it felt like a major accomplishment.

It’s funny how “forces” work in mysterious ways but that meeting with Payroll Network altered the course of Shugo. Not even a few months old, we took a ninety degree turn.

2009 tax season feedback

Initially, our grand plan identified accountants as our target market. We’d revolutionize the accounting world by providing a simple, easy and secure way to send tax returns…or at least we thought.  My 2008 tax returns were delivered by my accountant through FileGuardian.  In fact, his office actually used FileGuardian to send a number of returns in early 2009.

In May of 2009, I went back to our FileGuardian early adopters and solicited feedback.  Most were extremely positive identifying its ease of use and how customers really bought into the security aspect. All were in agreement though of not seeing the necessity of FileGuardian throughout rest the year. They weren’t exchanging that much information outside of tax season with clients where a secure mechanism was warranted. Many were asking if there was a way to have free or discounted usage from May through December since they’re wouldn’t be any volume (and keep in mind, they were already using FileGuardian for free).

Ugh…this wasn’t exactly what I wanted to hear.  In fact, it actually scared the daylights out of me. These were close friends and colleagues and they were already minimizing FileGuardian’s use. I wasn’t sure what to do now: Close up shop and give up? Disregard their comments and plug on? Pivot and find a new market?

Hello payroll

I was still reeling from the feedback our accounting early adopters shared but determined to still press on. The good news is that we were preparing for our first conference sponsorship – the PayChoice 2009 Users Conference.

This conference was attended by approximately 100 licensees of PayChoice’s payroll software, one of them being Payroll Network who was our first payroll client. I rushed to get “marketing material” together. Being that I wasn’t a graphic designer, I did what any techie would do – looked for Microsoft Office templates online I could use to create our first product slicks. Lucky enough, I found a few templates I could use.

I was actually pretty proud of what I quickly threw together but looking back at them now they were terrible. You can view a few of them here and here and here. Pretty crummy eh? But at least I had something to put on the table in our booth sharing what we did and how Payroll Network was already a client.

The Best Decision I Ever Made

During this time, I also realized I couldn’t continue to push forward with Shugo myself. Sure I had some employees from the consulting company but they were focused on consulting now and actually one went AWOL. And I truly mean AWOL – just ended up moving his family hours away in the middle of the night. He never let me know and never told anyone.  I only found out days later and by that point my trust in him was lost and we parted ways.

So I needed someone to take the wild ride with me and I knew exactly who to engage. For the past few years I had worked closely with Rob Bacher at one of my consulting clients.  In fact, I was part of the reason he was hired by this client. We were interviewing for a position and Rob was one of the candidates. He didn’t fit the position we were looking for but after speaking with him for a few minutes you could see his talent and intelligence. We convinced the powers that be to create a position for him and bring him on board which to their credit they did.

They didn’t regret it as he instantly proved his worth. See Rob was the kid growing up that was toiling with calculators at a very early age writing programs. Back then I didn’t even know what a calculator was but Rob was the total opposite. To this day I always say Rob is the most intelligent and talented developer I’ve ever met.

I approached Rob in the summer of 2009 to join me. He was intrigued and after a few conversations agreed to join Shugo. At this point I had been the sole owner of Shugo but with Rob coming on board that was going to change. Owning a business is difficult and sometimes giving up equity is even tougher. For me the decision to bring Rob on as an equity partner was not difficult though. I knew I’d rather have a smaller piece of a big puzzle versus a big piece of a small puzzle.

Some people didn’t agree with that thought though and challenged me. They forced me to really think about my willingness to give up equity. I knew they didn’t know Rob though and the tremendous value he brought so I stuck to my guns. Rob was joining Shugo as a second owner in the business.

To this day it was the best decision I made along this journey. We wouldn’t be half of where we are today if it wasn’t for him. As I’ll share later, the things he does daily are astonishing. Some of the twists and turns we took would not have been possible without him. Sometimes things work in mysterious ways and that first interview with Rob is evidence.

A great decision but still no revenue

Still, Shugo wasn’t generating a lick of revenue as we approached the end of summer 2009. Consulting was still our financial support but we were hopeful as we prepared for the upcoming PayChoice conference. We would engage over 100 potential clients and start to see the fruits of our labor…or so we thought.


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