4 mistakes that didn't kill our company | Building MarsBased

Building a bootstrapped software consultancy comes with unique challenges, unexpected financial gaps, and hard-learned lessons. In this episode of the Building MarsBased series, Àlex Rodríguez Bacardit examines four significant errors that could have derailed the company but didn't. Most startups operate on a razor's edge, but MarsBased was built on financial independence and optionality, allowing the team to turn these costly setbacks into fundamental business lessons.

The discussion covers the financial reality of working with long-term clients who stop paying and how a 100k€ loss eventually paved the way for a more resilient partnership years later. It also explores the hidden costs of starting and stopping the hiring process too frequently and why bringing in a dedicated specialist changed the company's growth trajectory.

Àlex also addresses the "unreasonable frugality" that often leads founders to wait too long before hiring operations and management roles. Finally, the episode details the importance of regular pricing reviews and how moving to auto-renewing contracts eliminated constant administrative friction. This is an in-depth look at building a healthy, sustainable business by learning to manage the mistakes that are often unavoidable in the early years.

Transcript

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Why Optionality Matters

SPEAKER_00 0:07

Welcome to Life of Mars. Welcome to the Building Marspace series, the series of episodes where we talk about the decisions we made, the mistakes we made, and the lessons we have learned by building a company like Marspace. In the past, we talked about signing NDAs, how to find your business idea, scaling remote teams, hiring talent, and other episodes that you could see right here. But in this episode in particular, we want to talk about mistakes. We want to talk about fuck-ups. But I have to start with a disclaimer of sorts. Marspace has never had a big fuck-up that could have killed the company. We've never had one of those. So that I want to be very upfront with that because a lot of companies are very close to shutting down. They have very costly mistakes. Sometimes they infringe like a patent or they run out of money or stuff like that. We never had one of this. We've had a few uh medium-sized mistakes that we can learn from. And I'm going to be covering five of this in this episode. But I don't think we've ever had like a big, big, big mistake that could have killed the company. But uh that also boils down to the fact that we are a company that's got a lot of optionality. We're a bootstrap lifestyle business. We don't have external investors, we don't have external share shareholders, we don't have BC money, we've never raised any kind of funds, we don't owe anything to anybody except to our clients and to ourselves and to our teammates and contractors. So that being said, we have a company that is in a very healthy position and we can afford to have these kind of mistakes. Also, I want to factor in the fact that we have also accumulated a lot of cash throughout the years. That is that was a driving force. That was a very conscious decision we made in the early years of Marspace. We always wanted to have some kind of economic cushion in the bank so that we can we could account for unpredictable events or maybe mistakes or maybe survive uh dry spells because market changes and stuff like that. We've never had to use that kind of backup money. We've never had to touch the money reserves. We've never had to fire anybody because we didn't have money to pay him or her, and we've never had to take drastic decisions because we were short on money. So, all in all, I think that this sort of context helps to explain why we behaved in one way or another and the following mistakes I'm gonna be talking about. But I think that not a lot of companies have got this optionality, not a lot of companies have got this margin. And um, and so that makes us uh well, it doesn't really make us like a very special company. There are millions of other companies like Mars-based out there, but at least we have created a very safe environment for us to operate in and we feel more comfortable. We don't have the stress of you know pay piling up on us saying or knowing that we have only two weeks to leave or that we have to shut down the company if we don't find a viable product uh by the end of the third month of this year and stuff like that. So we're very lucky, but at the same time, we have we have built, we have accumulated this luck ourselves. We have constructed this uh sort of mode ourselves, and that has created a healthier company, a healthier environment. And as a result of that, we can plan uh farther into the future. We can establish more long-term relationships, and also we can remediate a lot of these fuck-ups by actually, you know, paying for them and not suffering the consequences for too much. So, as I mentioned, this optionality comes from the fact that we began as a bootstrap company. We're a service-based company. For those that you don't know us, maybe it would be good to revisit the first episode of Building Markspace where I explain the origin of the company and how we were born. But essentially, we're a company that sells their uh time in exchange for ours. We build with design, we architect, we maintain software for other companies, startups, Fortune 500, scale-ups, corporations, SMEs, NGOs, uh governments, and stuff like that. And we have got, we are lucky enough to have clients all over the world, uh you know, medium-sized, uh large size, small size, one-man projects and stuff like that. So this variety also contributes to this independence, this optionality that we that we have uh that we have built. So while we haven't made a really big, huge mistake that could have uh brought the company down, as I mentioned, we have made a few mistakes. Some of them maybe will appear in other episodes, some of them I have already mentioned in episode number one, number two, number three, the and so maybe they ring a bell. I try to focus on a few ones that I haven't that haven't talked about them. But actually, you know, some of these mistakes are better explained through the fact that, hey, of course we could have avoided them if we had seen them, but at the time, they didn't seem avoidable. Let me give you an example.

When A Reliable Client Stops Paying

SPEAKER_00 5:21

So for instance, mistake number one was working for clients who stop paying. And I have two different examples for this uh to help you understand the difference of when you can afford this kind of uh situation and when you can indulge in that mistake, and when you cannot or where you shouldn't. In the first case, we had this client that had been, you know, a customer of ours for three years on a retainer basis. Uh they gave us multiple projects. It was maybe not a very well-established company. It was like a startup, and as old startups, they raised funds and then they went through multiple rounds, and then we helped them to create one or two products and a spin-off and stuff like that. So for three years, we cemented a very good relationship, very healthy relationship. Occasionally, we had one month where the payment was delayed, or maybe they said, look, we're gonna pay this month, but we're so close to securing the financials, and the next funding round will come through next month. And they paid. Every time they promised something, they paid. But lo and behold, by year three, they stopped paying. And they said, Oh, next month, because we got like this funding round, and uh they were like the the company was actually not performing very well. And we said, Okay, uh, you made it happen twice or thrice in the past, and every time you promised, you delivered, so why shouldn't we believe you? And so the second month uh came and they didn't pay either. And they said, we need some extra weeks, no worries. We didn't have any other client at the time waiting. Of course, we were working for multiple clients. We were not the big, maybe we were around eight people at the time. Uh, so we had probably three, four clients, but they were our biggest client. And but we didn't have anything in the pipeline to kind of like replace them right away. And we said, it doesn't hurt us, they've been paying for three years. You know, the upside is better than the downside in this case. So we calculated the risk and we said, we can we can continue working for them. Um however, I don't remember the specifics, whether it was three months, it was five months, something like that. And when we decided to stop working for them because no more payments were arriving and it was training for too long. And uh, while we didn't have an alternative, we said, look, enough's enough. We will just we we can we can give m much more of our work for free. And uh, or maybe we secured another client. I don't know, I don't remember. But the fact is, hey, you have to put a an end to that, right? In this case, we decided to extend it or prolong it, and uh there were multiple months. I'm pretty sure it was not longer than five months, but five months is a lot of money. Like uh give or take, back then we were making like 20 grand uh or 25 grand from them. So it was a considerable amount of money. And so by by month number five, we're close to maybe, you know, uh 100K that was owed to us, and that's when we decided to draw the line. Probably we could have done that earlier on. Probably we should have done it before, but we had no real alternative. And you know, the upside of continuing to work with them and maybe going through another funding round, and it was worth it because maybe we would have gotten to working uh two or three more years uh with them. However, that decision didn't work, uh didn't end up working in our favor. And so we lost the client. But because we did this in good will, part of the company, when they split up, they shut down the company, they split up, and and and some of the founding team went to create another company, they hired us. And they hired us for five years or six years, and so it sort of compensated. So a mistake that uh, you know, it cost a lot of money upfront, it eventually paid off. But it really depends. So my point is many of these mistakes re are really mistakes depending on the precise amount of time or the precise moment in time in which you are uh analyzing and scrutinizing the situation, right? So when we were 100k down, that was a mistake. Before that, maybe in month number one, it was never a mistake. We've had this with all the clients, and and most of the times we've gotten paid. Um when we started working for this spin-off, it was like, okay, now it's been worth it. And almost 10, 12 years after that, um, in hindsight, it looked like a good decision. It could have been better. We could have managed that more correctly. Uh, we could have communicated a little bit better. Maybe we should have stopped working in month number two instead of month number five, uh, or month number three. Uh um, but no big deal. That year, of course, we lost a big part of our of our dividends, of our profit as a company. So year number three, Marchpace was not was not great. It's been the only year where we haven't given out dividends. Um But I'm not particularly uh unsatisfied by that decision. At the time it hurt, but I'm gonna give you another example to counterbalance this. More recently,

Cutting Losses With New Clients

SPEAKER_00 10:42

like three, four years ago, we were working for a company for a startup, and we signed a deal worth, I don't know, 70, 90 grand, something like that, in that ballpark of um of price for for the project. And midway through the project, uh almost to three-quarters of the project, they stopped paying and like they they kind of like went unresponsive and they started ghosting us, and we sensed uh something was wrong there, something was off. And as it turns out, we we found out that you know our invoices were not getting paid, and so we decided to stop right away that the project over there. Why? Because that was a startup, that was a startup operating in a sector that we didn't particularly like and we didn't particularly understand. It was a little bit far off from what we do. So it was not a far our core project. And and you know, out of these 70 or 90 grand, maybe we we got like 30, 40 percent out of it. But the upside of cutting the relationship with them was much better than the downside. So because in that particular case, we did have an alternative, so we could just onboard a new client right away. Uh we didn't lose a relationship that had been going for years, like in the first example. In this case, it was somebody who just had been working for them for three months, and so nothing was lost there. We've never talked to them again. Uh, we don't even know where they are. Uh we didn't even bother sending lawyers and stuff like that because it's like, what's the point? It's gonna be costing us more money than what they actually owe us. And um and in this case, it was it was better to kind of like uh get it like week number two or something like that. Uh um, that we were not getting paid, we decided to communicate. Hey, we're not gonna be working more on the project unless you satisfy these uh overdue and unpaid invoices that we sent uh one or two months ago. And because that received no actual answer, we stopped, we moved on, and that was it. Um never looked back. Uh now in hindsight, you know, we don't even care. We don't even remember this situation. We do remember the first client because that was a big gap. At the same time, it brought a big project afterwards. So all in all, it evened out. But in the second case, it was like, oh, we lost this client with like in a sector we didn't really uh like that much, and it was kind of like an MVP that you didn't know whether whether it was gonna fly. So the project didn't have neither potentiality towards the future nor a background, a historical background that sort of cemented a you know, a prospective relationship with the client that we that could grow in other directions, other contracts, other departments, other um partnering companies and stuff like that. So I think that this is one of the one of the biggest mistakes when when they ask me, like, oh, what's the most the costliest mistake you've ever done in the company? It's probably uh those gaps, those financial gaps that that some clients have uh have left

Keeping The Sales Pipeline Warm

SPEAKER_00 13:49

us. Um but there's also something else that I want to talk about that you have to factor in here is like it's very hard, and it's still hard for us in year number 12 to keep the pipeline sufficiently warm and entertained, the prospective clients entertained, so that if this situation happens, then you can replace them. And while the theory is, hey, you gotta keep your pipeline entertained and warm while you're working for your clients, you know, the sales development team or business development team has got to talk to prospective clients and give them like dates and maybe like do some like small work here and there, sign a pre-contract and stuff like stuff like that. It is really complicated. It's really freaking complicated. And also because we want to be very transparent and honest, is we are a boutique based, uh boutique company, and therefore we are booked up for several months in advance. Sometimes it's been like six to eight months. Now that it's closer to two, three, sometimes four. And so if we have immediate capacity that works against us, because that means that we don't have enough clients. But if we are booked up for the next six months and we also communicate that, which is what we do, uh, we lose clients as well because they're like, oh, these guys are never gonna be available. So and I need the project right now. I cannot afford to wait for them. I'm gonna move on to another uh to look for another provider. So we do talk to clients, but we're very upfront about hey, we don't have any media capacity. That's not gonna change. It could change. We always say, like, it could change. There's a small nuance, could change because sometimes clients want to pause the project, they run out of money, they have some sort of blocking situation because of a change in legislation or whatnot, or like a um like a black swan situation like COVID or the closing of the street of hormones and stuff like that. So you never know. And I always tell prospective clients look, there is this probability that we stop working for a client overnight and you can be brought in as a new client. You can be on board, but don't count on it. It almost never happens. So as a result of that, we don't do it. We don't really uh keep them waiting and waiting and waiting because uh you're giving them false hopes and expectations. And so we want to be very transparent with that. I know that by being too transparent, um, we are losing clients, but that's our philosophy. So we we can sleep uh at night. At the same time, when that has happened, you know, that's an that's part of the decision-making process that we do when we are uh evaluating, when we're considering dropping a client because they are not meeting the payments or or stuff like that. Do we have a prospective client that's ready to start working right now? It almost never happens, it's very hard. It's almost like quantum physics to make those things coincide. But if you can do it, if you do have that uh line of clients waiting, that buffer of projects, it's worth doing. You can uh a trick that we uh you can employ a trick that we sometimes do is like, hey, give them a discount. Uh and we normally, and that that's something that we are that we have improved over the course of the years, that we are doing it right now. We haven't done it in the past two months, is whenever this happens, we first send out an email to all of our current clients saying, look, this happened. We're dropping a client because they stopped paying. We have these two developers and a designer that they are available for work in three weeks or in two weeks or right now immediately. If you want them, we're gonna give you like an extra discount for that project that you had shelved uh for a year, that for that project that was supposed to begin in September. Maybe we can start it a little bit earlier for than that, and we give you like, I don't know, a substantial discount. And that sometimes works, and they are happy to do it because first you service your existing clients first. Um, they get a substantial discount. Maybe they get more work in for you know for uh for their quarter and they haven't accounted for that, and so they they will meet the deadline they had internally. And worst case, if nobody wants that or nobody takes up on that offer, you can uh go to past clients or prospective clients. So that that also applies to them, and you can give them a discount to say, like, hey, you know, I know you want to start in September, but if we started right now in July, I'm gonna give you 25% discount on the price uh because this situation happened. You know, you want to be as uh as upfront as possible, but you're also signaling that you drop clients who don't pay. And not every company can do that. We can do that because we got a lot of reserves in the bank. We can do that because we're a bootstrap lifestyle business. We can do that because we don't have external investors. Again, you know, going back to what I mentioned in the beginning. So I think that is basically um the lesson here is stop working after X weeks of unpaid invoices or X months and uh keep people entertained, but not leave them hanging. And it's very hard to balance, you know, the prospective clients versus existing clients. So, you know, all in all, uh very expensive and costly mistakes, but at the same time, I think every agency out there has suffered from

The Hiring Start Stop Trap

SPEAKER_00 19:11

that. Mistake number two, something similar, but it applies to hiring, right? And again, this is something that uh in retrospect, it looks like a mistake sometimes. It looks like something that was unavailable, unavoidable sometimes. Why? The mistake, quote unquote here, is uh it's very costly for us as a small company. We're 30 people right now. But historically, when we were 12, when we were 10, when we were eight, we would start and stop the hiring machine too frequently. We need somebody. Okay, now we start moving towards hiring somebody. We post the jobs on LinkedIn and on job hunting platforms, we contact an agency, uh, we start interviewing candidates, you know, get the wheels turning. Um, maybe we had to interrupt that hiring process because, oh, the contract fell through or the client stopped paying, or there was a change in the market, or whatever reason. So we stopped the hiring machine. The cost of reactivating it was very high, especially when we didn't have a specialist uh for HAR in the company, and it was the founders or the people operations department or somebody else in the company doing this, right? That we had other things to worry about. We had financials, we had strategy sales, blah, blah, blah. And hiring was yet another thing that was spiling on top of our um lists of tasks. So it was not until last year that we hired an HR person into the company, and lo and behold, you know, it really worked. It's it's paying off the dividends. And um it all boils down to the fact that in 2025 we paid about 40 grand to hiring agencies. And the results were not great. So for that money, we said, like, why can't we bring somebody into the company, works for us, and can do this all year round? We don't stop hiring processes, no start-and-stop friction. Um, whenever we see somebody that's really good, has got a lot of potential, we just hire him or her, even though we might not have a project immediately, we'll find work for them, right? And so right now it looks obvious. In theory, you should have this profile. The practice is you cannot afford it in the beginning. You don't really know who you're hiring or where your candidates are and stuff like that. So too early in the company, in the life of the company, it wouldn't have made sense. But the mistake here is we should have always planned for a you know um some stable dedication to hiring NHR and the company, whoever that profile was, whether the founders or the CTO. The admin people or people operations and stuff like that. They should have had this one day a week work on hiring, irrespective of whether we're hiring actively or not, because the alternative has been pretty slow and costly. You know, costly because we paid agencies that didn't work, or because we spent too much time with candidates that really didn't qualify for us, and we had to weed out too many bad candidates and stuff like that, or we were just targeting the wrong profiles or advertising on the wrong platforms. And in terms of effort, because of obvious reasons, we've got too many things. And when you when you spread too thin, you don't really produce the best outcomes for everything. So as we could afford, as we could afford it, we started hiring more specialist people, like when we hired a marketing specialist in the company or this HR person both last year. And I think that that these paid off. So and likewise, another parallelism with uh fuck up number one is it's very hard to maintain the interest of potential candidates that we cannot afford to hire right now, or maybe it's not the right moment, but you don't want to drop them, but you're waiting to sign the contract to hire them. It is very hard. So, you know, we started being uh there's no remedy for this, there's no like silver bullet. What we've done until we hired this HR specialist in the company was to be very upfront, saying, like, look, uh, this happens, like uh, we have to make a decision by next week. However, this decision depends on this contract getting signed. If we sign the contract this week, we're gonna hire you now. If we don't sign the contract this week, maybe we can't afford you, uh, afford to hire you. And that decision will have to wait. And so feel free to look for something else. Uh, but if you really want to work with us and you can afford it to wait or you can stay in your current company for a little bit longer, we'll be happy to compensate for that. But um, so yeah, you really don't want to uh waste anybody's um time and money there, so it's very hard to kind of like you know keep the leads warm while you are uh managing other options in the company. So I think that both of these fuck-ups, they are easy to explain. And in theory, there's one thing, and practice is another thing you gotta account for uh for for all for all of these things. And it's funny that they share the same parallelisms, right? When you should keep the lids warm and uh when there's a cost of opportunity factor in and stuff like that.

Hiring Ops Help Too Late

SPEAKER_00 24:35

Okay, so now for mistake number three, I want to talk about hiring the operations people in the company. And I think every company hires this profile too late, especially if it's your first company. Why? Because as a founder of a company, uh the company is your child. And uh you know that you're playing with your money, especially if you're a bootstrap company, if you're independently owned, like we are in North-based. And so we know that every penny that we uh spend in excess or whatever amount of money that we pay extra for an extra premium or money that we squander, that goes against our final results in the year. So fewer and fewer dividends and stuff like that. And so we want to be very cautious. At the same time, this mentality, this frugality, prevents us from sometimes making better decisions. And one of them is hiring somebody, like a specialist in the department, and helping us to get some stuff off of our trace, off of our task list and uh and our duties as founders, because we think, oh, yeah, um, contracts or legal or administration or accounting. I could do it myself. Um maybe hiring somebody for that, it's uh it will require too much time to train them, to give them the access to everything, and the uh there's a cost. Uh maybe you hired the wrong person, and then you we have to start hiring again. So there's a lot of like wasted time and money and and knowledge there. So um it's really hard to do that. At the same time, then you keep company grows and you keep piling stuff and stuff on your plate, and then the outcome of your work is every day it degrades in quality and sometimes in quantity as well, because you've got too much to work on and you become overworked and stressed and stuff like that. So that that kind of like sums up the first three years we had at Marspace, where we went from zero to ten people in about a year, a year and a half. And while it doesn't sound like an explosive growth for a first-time company, it's big. And for us, it was like the first experience hiring people and managing people, and we we felt on top of the wall, the company was going great, and we we felt like we could do that, young and energetic and naive, especially. But the thing is, there came a time, there came a time in which we were doing too many things. We were spreading too thin, and while we kept Xavi, our CTO, focused on technical matters, and so he had like his department and and he was already overworked with technical stuff, but uh he was doing little admin outside of that. Um, Dordi and I, the other two co-founders, were doing a lot of stuff that could be bundled up and delegated to somebody else. We first started outsourcing part of the financials to uh to a bookkeeping company, but it didn't quite work out because like there were stuff that we didn't want to share, and um they didn't understand or they didn't have the access to our tools, and so it was kind of like a hassle to prepare all the documents, process them, send them this information, this other information, maybe filter out some stuff we wouldn't want them to know, and and and um the process was not efficient. So we decided after a long time, so after three years, to hire an operations person. Effectively speaking, it was the first office manager, even though we've been an office less company since our inception as a company. But we wanted to have somebody who do a little bit of so I remember the title was office manager slash executive assistant. Um, it sounds too fancy. At the end of the day, that office manager helped us in operations, logistics, um, you know, coordinating the team, doing a little bit of HR, doing a little bit of admin work, and finance. And so all of these kind of like bundle of things that were a little bit scattered here and there. It was good for a creative profile like her. And it took a lot of stuff from our plates. We could focus more on other things that really matter. Jordi could focus more on uh designing and defining the projects and managing them because he was the sole project manager in the company and running operations on a higher level and making more and safer and sounder financial decisions. And I could focus more on marketing and sales, which were my two biggest departments, because by taking stuff off my plate, like uh signing contracts uh or maybe uh reviewing the employees' uh perks or uh sending the newsletter for the company or uh creating the events of startup brand back then and just me contacting the catering provider, the peers provider, and stuff like that. I could focus more on actually selling projects because they brought more value into the company. Um, once we realized that, we were less hesitant to hire the second operations person that came a couple of years later. And then we also decided to hire a project manager. So, more or less every eight people we fired, we've hired uh somebody on the operations side. That could be first the office manager, then eventually that person turned into people operations because we didn't want to call it HR. So right now we've got two people operations uh profiles and we've got one HR working part-time with us. And then we also have got project managers, which came later on. Uh, I think the first project manager we ever hired for the company was in 2020. So six years into the company. Right now we've got four, and they really help us to focus more uh on the staff that really matters as founders. Because again, you're tempted to do it everything yourself. It's your child, you know you probably can do it better and quicker and more efficiently than one of your hires or employees. At the same time, this frugality, this unreasonable frugality prevents us, prevents you from working on grander stuff, on building more strategy into the future, on testing new things, on playing with AI, and maybe like, hey, um, making the right calls about um about the models that you're using, or having more conversations with clients, or just putting more value into the life of your company, of your clients, and also spending more time with your employees, which is something that really matters. So waiting for too long to hire operations uh profiles was uh also a mistake that in hindsight it was unavoidable. We could have done it earlier, we'll do it earlier if we ever build a second company. But for the first company, it was acceptable to drag that uh decision for that long because uh uh they always said also like hire slow, fire fast, or just hire when when it becomes extremely painful. It was excruciatingly painful for us at the time we made that call. Um, but I think that probably by hiring it too early, this profile, maybe we wouldn't have had that much work for her, or it wouldn't have been prepared, the company to kind of like accommodate for that kind of profile.

Pricing Mistakes And Contract Friction

SPEAKER_00 31:40

Mistake number four, pricing. And that is a big one. So I'm gonna be uh I'm gonna be very fast about this one because it really deserves another another episode. And I know I talked about sales in in former episodes, so I'll try to be as succinct as possible. But basically, pricing a boutique consultancy like Marspace is very fucking complicated. Why? Because on the one hand, you want to be perceived as a premium company, you want to be signaling this sort of like luxury brand. Uh, you want to be like a premium partner for the company as opposed to the generalist offshoring companies. So while we price ourselves higher in our hourly fees compared to the rest of players in one market, in the Spanish market, we are cheaper and most of other markets uh in the target markets that we are considering. Like in the US, we're cheap. In the UK, we are cheap, in the Nordics, we're cheap, in Germany, we are cheap, right? You don't want to be perceived as an offshore company by somebody from the US. At the same time, maybe they perceive you as an offshore company because you're significantly cheaper than the companies they're usually working with. And so even though we spend a lot of time uh saying, like, oh, we're not an offshore company, like this is a premium company that uh in Spain, you know, works with the best brands, who are for FC Barcelona, HP, Ford, and and stuff like that. Um, they are like, yeah, but you're offshore, like you're on the other side of the ocean and you're significantly cheaper than the companies I'm working uh with here. So it's very hard. Um also, you all you can't really afford to price your company or your services based on each target market, because if we did that and we said, like, look, in the US, we're gonna be charging, I don't know, 150 or 200 an hour. Uh, they'll be like, yeah, but you're not here. Like, I pay for companies who are established here, and they've got a delivery team here. So it's pretty hard. So we're not an offshore company to them, but the same time, we are. So it is very complicated. Look, um, pricing has got many, many uh mistakes to talk about. Um, some of them have been like uh extending legacy contracts for too long. But I think the main mistake is not reviewing conditions on a regular basis. Um let me give you two examples. So one of them is um one year we decided to not increase the prices, or maybe it was more like three years, to be honest, because we expected a lot of friction uh when we did that. It was early in the company, and so we went from at the time we're charging 50, we decided to to increase it to 60. A couple of clients said yes, most of the clients said no, right? Oh, it's because we asked. And that was that was a mistake. You you don't ask, you just say, like, look, next year, and since maybe it was too big of a jump, um, and that's something that has happened, and I have already talked about it in other episodes. Like, if you do it uh every X years, then the distance you have to cover, the gap you have to cover between your current price and the price you want to increase to, it just gets too big. If you do it every year, that incremental price, it's kind of like more gradual. And so it can be like two to three to five bucks per year, which is something understandable. And most companies will say, like, oh, you know, a price increase of five percent, uh, it's acceptable. Um, something bigger than 10%, it's not acceptable. So even though that you might go and say, like, but I haven't increased it in three years. So if you kind of like divide it, they're like, yeah, by what I see in the contract is an increase of 17% or 20% this year. So you really don't want to do that. So that being said, what I what I wanted to talk about is like, hey, uh, it's okay that you don't increase the prices for one year, or you decide to keep a price for a client and honor that at like a discount or like a legacy contract uh for a client for whatever reason, but you have to review that um accordingly. You have to revisit this decision and don't let it just freeze there because otherwise, when you when you really need to increase that price, it will be too late. On the pricing subject, you know, it can be like we gave a this super discount to a client that was in financial distress, but they had been a really good client and they always sped, even though when they were in financial distress, we said, uh, look, we're gonna be dropping the price for you guys for uh like a you know a substantial amount, maybe it was like 18 to 20% for a year. And then the next year we're like, uh we should keep it. Like we're okay with it, they're happy. Um and we said, like, maybe they cannot pay, like we didn't even ask. And so it stayed like that for five years. And the moment when we went to them and said, like, hey, uh, we actually uh uh we need you to pay more because like uh we I know that we gave you this discount uh five years ago, and uh and uh but we need to get back to you know the prices have increased and everybody else is paying a lot more, and uh and at least you we should compensate for that and we should you know adjust our rates accordingly, uh maybe not to the top of our you know our pricing uh schema, but you should pay more. And they're like, yeah, fine, it's okay. And so, you know, because we never asked, we never increased the price. So maybe we'll have a lot a lot of money on the table. So they took it as a favor, um, and we're happy with that because they're super nice clients. Actually, you know, they're our longest-standing client for 11 years now, uh, without interruption. So we're fine with that decision. We're not here to make uh uh a lot of money or to rip anybody off. Um we we we can sleep at night with this decision. But the other thing I wanted to talk about is contract renewals, and this brings a lot of friction because for the first year or the first five years, we're running on annual contracts, right? And so um annual contracts have got this thing of like, hey, I want to I want to renew uh the contract. Uh, you know, we've run from natural years, sometimes September, sorry, uh fiscal years and stuff like that. But after 12 months, you go there and you and you you review the conditions, you increase the price, and you decide whether you want to renew or not. So uh inherently, these kind of contracts, at least from our understanding, they had to have these explicit approval. And we just had a in-person meeting with the clients and said, Do you want to renew? Yes or no. And of course, most of the times it was yes. But it was understandable that once per year we did have this friction of having to negotiate the renewal of the contract, right? Since 2022, when the downfall of the of the tech ecosystem came around, and so the budgets were lowered, like the uh investment in companies plummeted and the uh budgets were cut short, and also the project uh lengths and phases, they were just like uh chopped in half, and uh, and there was a lot of start and stop. And so contracts were shorter as a result of that. We started signing three three months-long contracts, and uh while companies kept renewing it, it was really absurd that we had to go every three months or every two months actually, uh saying, look, next month the contract is expiring, do you want to renew or not? So there was a lot of s friction, like this conversation of the renewal of the contract, we had them four times a year. And so after, you know, so it was a couple of months ago, one of our clients said, Why don't we why don't we sign an outer renewal? And we're like, Of course. But we we tried having out renewals in the past, it never worked. And they're like, Yeah, but it's you know, we've been working together for like five or six years. Uh, you know, it's easy to cancel a contract like that. We make it really easy. And so we said, yeah, you're right. So we tried and we reached out to six other clients. We had an I sort of like this kind of retainer uh without auto-renewal and said, uh, look, we're gonna be doing this. Are you okay with that? And all of them said, like, yeah, of course. And so, because we never asked, because we just accepted that that was the new normal in 2022. We didn't revisit that in 2023 or 2024. And so four years later, we were sitting and in a in a non-desirable and not very efficient way of operating and managing our the renewal of our contract. So, you know, I think that uh these, while not a huge mistake, it just added a ton of admin, uh, a ton of stress, because sometimes, you know, the prospective, also the client um uh held that held the decision until the very last minute, or maybe the day of expiring the contract, they were like, Yeah, yeah, we'll renew it. And and or sorry, I was on holidays and I couldn't see it, and and for whatever reason they they didn't get the sign-off. And and so for us, it was like, why why should we worry about you know, five, six, ten contracts at a time every three months? It felt like every week we were working on the renewal of our contract, a contract that was pretty short and that didn't deserve that kind of attention, that didn't deserve this kind of admin, right? So while maybe they didn't want to extend it, they wouldn't they didn't want to come commit for one year and advance, we could do this ultra-renewal of three months, and there's a you know a notification period of two weeks or a month if you want to cancel. Good. But by not revisiting this decision, we felt like we lost a lot of money. So, anyways, these have been uh four mistakes I wanted to share with you in this episode of Building More Space.

Safety Nets And The Core Lesson

SPEAKER_00 41:03

Uh, you know, in hindsight, they make sense. As I mentioned, some of them at the time they didn't make sense, or we could have done differently, but we don't really regret many of these decisions. Um if we could start all over again, maybe we would change one or two things, but we wouldn't do them significantly different. So uh all in all, um the maybe the the the underlying uh concept of this episode is hey, if you are sustainable enough, if you have the financial independence, if you have the optionality, you can afford for more mistakes. Having that safety net maybe made us make more mistakes at the same time. We have taken also safer decisions, we have taken uh maybe a more thought-through uh commitments, and we have had a longer-term vision. Uh, we could commit to longer contracts with clients, we have retained employees retained, we have maintained our team for longer precisely because we have this sort of independence and optionality, and we have built a much healthier company. And so, if you want to learn more about how to build a lifestyle business, bootstrap business, or an agency like Mart Space and the boutique space, uh, feel free to subscribe to the channel. And I'll see you in the next episode.