When you realize that product launching is far away from the Hollywood version of instant success, it’s tempting to take the easy way out than march through the grind until it’s done. In this episode, host Mitch Russo interviews cloud-based application architect and Locate Chief Technology Officer, Nick Schiffelbein. Sharing his early entrepreneurial journey to finally choosing his life path, he explains the pains and the grind of perfecting a software product to the point that it changes how people do business. Learn the value of having mentors with a long-term mindset, delegating tasks to scale a business, and the power of knowing your customers by heart. Discover Nick’s advice to young startup founders with a brilliant idea and are ready to take risks and start their own venture.
Locate™: Changing the Way People Do Business With Nick Schiffelbein
Have you talked back to me yet? I’m getting several messages a day using Speak to Mitch. It’s a button on every episode page. Want to react to what I say? Go ahead, make my day. Seriously, let’s get the conversation started. This episode is sponsored by VEA, the Virtual Entrepreneurs Association. Finally, a place with all the tools, resources, discounts, education and community to help you on your entrepreneurial mission. Think of VEA as the triple-A or Swiss Army knife for business. For a limited time, you can get your free trial of VEA as well as a copy of the Founder, Daven Michaels’ new book, The Virtual Entrepreneur at VEABusiness.com/mitch.
Some of us get started at what we love at an early age in life. As a little boy, my guest’s dad taught him and his two brothers how to write webpages when they were just eight years old. They learned it in one afternoon what takes many adults weeks to acquire, but that was all it took to ignite the passions of a little boy into a powerful flame. He began programming at the age of fourteen. By high school, his programming skills have continued to develop. He became a voracious student of Computer Science in college. By the time he graduated, he knew he was ready to excel and when he met his mentor, he received the guidance he truly needed. Progressing through major projects led him to his company, LOCATE Inv, but immediately hit severe problems with the program and it almost shut his doors practically before he even got started. He recovered and he’s going to tell us more about that now. Welcome, Nick Schiffelbein, to the program.
Mitch, it’s great to be here. Thank you so much for having me on.
It’s my pleasure, Nick. I’m glad that you are here and I’m excited to help you tell your story because it is an exciting one. When you got this business started, apparently you are already pretty experienced in programming, but I want to go back to the beginning. I want you to tell me how things got started and tell us about those days of being inspired first by your dad and where that took you.
My journey started even before my dad, with both my grandfathers. One was working for Ford Aerospace and my other grandfather was a programmer before there were even programmers. He ended up with a Mathematics degree and helped build the first ATM machine and progressed through the army. My dad came along, he was the director of technology for a local junior college for 30 years. He was the one that kicked me off. He started me with building my first computer and then teaching me how to build web pages. It was something that he thought it would be interesting for me and my brothers one afternoon. After teaching us in the office, we went home. One of my brothers and I started to build our own World Wide Web because we didn’t have internet access at home. We built our own static World Wide Web leveraging encyclopedia CDs, which some people may not even be aware of before the days of Wikipedia. We would take pictures and books we were reading and write little articles about them and we had our own little internet that we built as an intranet.
That started my whole journey. From there, I ended up getting more into the hardware side of things. I started consulting as a systems administrator assisting small businesses. I connected up with a consultant in the area and did a lot of subcontract work and continued that up through college as a side gig. I saw where I was peeking out in the IT industry and went back to the coding side of things when I went to college. That’s where I decided that coding was my future. I began building applications and wrote my first large scale application between high school and college for an IRB or Independent Review Board. It’s a third-party that reviews drug trials. They oversee and have an extension of the FDA. I wrote a safety report management system for that company. Doctors would send in these reports about adverse effects that may be experienced during a drug trial. It was our job to catalog these to ensure that all doctors in the study were aware of the various adverse effects that were occurring to ensure that they were actively monitoring their patients.
That was one of the first big applications I wrote. I made two revisions of that app and learned many things, including commenting your code is imperative as my first staff had no comments. From there, I ended up getting a job at a mortgage investigation company. They specialized in investigating mortgages that had gone delinquent and their job was to see, on behalf of the mortgage insurance companies, if fraud had been committed during the issuance of the mortgage. This was leading right up to the mortgage crisis. I started there in 2009 as all these reports were starting to funnel down from the large mortgage insurers.
For that company, I did general IT work and then ended up building a post-closing quality control audit platform with one of my biggest mentors, Scott Parrott, at that job. From there, after building that platform, they sold that piece of software off. My former boss now owns that. I ended up switching over and starting at LOCATE after they sold that piece of software. I started out building small internal systems, which I had done in the past, a system to manage the delivery of reports for software. We are consulting on Fishbowl Inventory. That was my first foray into the inventory world before we ultimately decided that we were going to write our own inventory platform. We saw the potential as these small businesses were outgrowing the small business solutions and the next solution on their list was a full-blown ERP system. These businesses that are doing $5 to $15 million in revenue were suddenly being asked to fork over millions of dollars to implement, configure and maintain these very large pieces of software. That was the inspiration for LOCATE Inventory.
For our audience, define what ERP software is and what the difference between your software and generic ERP software would be?
An ERP or Enterprise Resource Planning system is designed to be the heart and soul of any large scale inventory business. It will maintain what stock you have. It will import orders and orchestrate fulfillment. It will do your accounting, your forecasting, reporting. It is the heart and soul of the entire business. That’s one large piece of software in a traditional ERP setup. It’s a very large database, very complex, with very configurable pieces of software. On the flip side, LOCATE comes in as a gradually growing platform. We have our own ledger, but we don’t do all of your accounting. We summarize it out to QuickBooks or Xero so that you can stay on a more comfortable, familiar platform like QuickBooks or Xero and still grow your business well beyond the limitations in terms of data volume that those platforms can accommodate. We also are modular in the sense that you could swap accounting platforms, you can have different eCommerce platforms integrated, you can have different shipping software, and you can move through these as end various processes as your company grows and you need better processes.
Nick, I’ve got to tell you, I wish I had your software several years ago because when we build Timeslips Corporation, we were shipping floppy disks. We were shrink wrapping and then putting into a box what amounted to a number of floppy disks. A manual, a bunch of other accessories, a little pad, all these different things would go inside a box and then that would be shrink-wrapped. In order to grow my company, I had to build the manufacturing organization first, which we did. The nice thing about it was we tried working with outside contractors and that became a nightmare. They were too expensive, they were too slow to respond. We said, “Let’s do it ourselves.” The challenge became the software to manage that.
Back then in those days, we found a program called Response. Response was a catalog inventory management and shipping system. It was never designed for the software business because software business was still too new. I saw how it could be adopted and I contacted the owner. I contacted him for two reasons. One is because I needed some changes made and two, because the software was so expensive, I didn’t think we could ever afford it. In chatting with him, we were able to negotiate a payment plan and he was thrilled that we would be interested so we installed it. There’s clearly a need for what you do, Nick. It’s taken you how long now to get to this stage? How long has the business been around? How long have you been involved?Grind is the best word to describe what happens day in and day out when you're trying to launch a software. Click To Tweet
I’ve been with the business for seven years now. We developed LOCATE for two years prior to hitting the market a few years ago. It’s been about five years that I’ve been dedicated to working on LOCATE.
Normally, we interview CEOs who started companies but I thought that I’d make this exception with you because you’ve been through the startup grind now to the extreme. That’s the lessons you have for our audience. Clearly, we don’t speak to tech people. If you talk about commenting code to my group, most of us would glaze over and fall asleep. However, the part that gets me excited and the part that the audience will be interested in is what you and the company went through when finally getting this thing going. Let me start with a couple of questions. When you conceptualize the product, you told me prior that you are the chief architect of the product, is that right?
That is correct.
When you first came up with the idea and when you started coding, what was your projection for how long it would take to get the software ready to be sold and shipped?
I’m an incredibly optimistic person. I said, “One year and we would have the product ready to go.”
How long did it take?
Here’s the rule of thumb. Double anything a programmer says except if they tell you their net worth, cut that in half. Don’t double that. The bottom line is that it takes longer than we think sometimes to get something viable to market. Nick, once you finally did get it to market and you’re proud and ready to launch your new system and showcase this amazing product, I assume at that point it took off like a rocket ship. There were never any problems and off into the sunset, you went with thousands of new clients. Is that right?
Hollywood would have you believe so, but that’s not my story.
Nick, what happened when you launched this product?
We had an early customer that we’d worked with previously that was an early believer in us. They pre-bought LOCATE for four years before they even got to see the product. That was our motivation to get the product out. We launched in January, we on-boarded them and immediately they started telling us it was taking them an extra four hours a day to process the order volume they were doing prior to switching to LOCATE. Immediately, we were behind our competitor that we were comparing ourselves to. We also very rapidly were being told that there were features missing. Orders were coming back and there was no return order module. How do you handle these various rather common situations? Very quickly, we realized that our months of testing and preparation were failing us very quickly and there was nothing to do but roll up our sleeves and dive in.
The performance problem was an immediate threat to them. Their overtime was starting to go through the roof. To this day, I still applaud the CEO of that business. He was a saint communicating with us. He never lost his cool, even though I know there was a ton of pressure on him, but he walked us through every problem they were running into. We had daily phone calls to discuss what was working, what was not working, what was missing, what needed to be added faster, sooner than later. He helped us bring LOCATE along. It took about 30 days to get through that full process, to get to a product that was starting to help their business.Rely heavily on those that have been there before to help educate you. Click To Tweet
That was pretty much 30 days of me and my co-developer working night and day. We were in the office working late, pizzas, sodas, the whole stereotypical coder lifestyle you can think of. It was all happening for both of us. We were releasing a new version of LOCATE every single night. We backed off after those 30 days to weekly releases, which was still insane. Monday, we would review the list of features we were going to implement. Tuesday, Wednesday, we would implement. Thursday, we would test and then Friday, we would release it and we would repeat that. We did that for six months to get the software to a point where it had everything people needed and they weren’t quite clamoring to get things out of us. It was anything but a smooth launch. I ended up talking to several consultants. I learned a lot about databases very quickly. I thought I knew quite a bit but there was much more to be learned, that’s for sure.
Congratulations on it taking only six months. With my software company, we felt like the job was never over. We were adding feature after feature every single release. We didn’t have the internet back then. There were times, and unfortunately this happened more than once, we would release the software and then discover a bug that a product was being manufactured. We had to break everything down to remove all the disks and then throw them away basically because they had a label on them that had the wrong version. We figured out a way around that eventually. There were times when we were shipping to the same customer 2 and 3 disk sets in the first 30 days because we would continuously find bugs.
I understand the process and I can imagine what you went through. What I would like to do here, Nick, is I’d like for you to talk to my audience about what it felt like, about your mindset. I don’t know about you, but there were many times when we felt like giving up. We felt like, “It’s been a year. We hardly made any sales at all. Maybe we chose the market wrong. Maybe we didn’t think we knew what the customer wanted.” What was that like for you in that first year? How did you manage your mindset and even the team member’s mindsets of the people in your company?
It definitely was a struggle at times. After seeing those perfect Hollywood ask presentations of what software should be like or startup life should be like, you get very disillusioned into believing it’s, “Launch your product. There will be millions of customers and you’re going to be an overnight multimillionaire. Life is amazing.” Going through this, it’s a grind. Grind is the best word I can think of to describe what happens. Day in, day out over the long haul, building up your user base, it takes time and you have to be patient and continuously be moving forward. There were problems we ran into with the software. My co-developer and I, we always were looking on the positive side. We always fix the bugs. We never patch things or cover them up. We knew that if you fixed it, that problem wasn’t going to be there tomorrow and we would just fix whatever tomorrow brought.
That’s been the slow march forward. As we add features, there are always the bugs that follow. On more than one occasion, I ran into doubts about, “Will this scale? Is there as much business as the statistics will have you believe? Is there a need for this product?” I turned to the CEO of our company, George Keliher, to reinforce that vision for me. He, from the very get-go, had this much longer-term vision of what was going to play out. He’s been remarkably accurate about this mid-market demand for inventory and how the large players are coming down market.
The small players are trying to go upmarket and here we are right in the middle designed for the mid-market, already prepped for these businesses. He saw this five years before anybody was making those moves. It’s only recently they’ve gone for that mid-market customer. He’s the one that reinforced when I was getting down on, “Will this work?” He was the one that would present, “It will work. I believe wholeheartedly in this.” There’s no doubt in my mind that we will be successful because this is a need in the market that he’d seen over many years as a consultant in the space.
In a way, forgive me for saying this, but you had it easy. You had a guy there who said to you, “I know this is going to work. This is the right market. If we build it, it will sell.” Am I right?
To a degree, yes. I was uncomfortable in my skillset, which is software development. I love solving problems. That’s what I’m very good at. I’m not going to claim to be that raw, “I always believe in everything 110%,” entrepreneur. I needed that side because to me as a comfort-set person, this is a risk. When you’re in it for 3, 4, 5 years and things aren’t exploding, it’s like, “Did I make the right choice? Should I keep doing this? Is it worth another year of youth to hopefully see everything pan out?” George has been there to reaffirm. He sold multiple businesses. I rely heavily on those that have been there before to help educate me because I haven’t. For me, I don’t know if what I’m feeling is normal or if I should or if I’m trying to take the easy, comfortable way out when this is the grind that people talk about. You can get through this. This is the thing that leads to success that you hear about and dream about.
Nick, in all fairness, you’re not alone. Many of us that get started work with venture capital and work with VC firms. That role that George plays for you is many times played by the managing partner to VC firm who’s in charge of your investment. I understand that and I’m happy for you that you had that person. I didn’t have that person. I just had my partner, Neil Ayer. Neil and I, we’re each other’s cheerleaders. There were times when the program was full of bugs and we were having problems, I was Neil’s cheerleader. I would say to Neil, “I know you can do it. I know that you’ve done this before in much harder things, so for me, it’s not an issue of if, it’s a matter of when. Hurry up, get it done.” For me, there were times when I was afraid we weren’t going to make our sales numbers and that we were going to go into debt and he would say, “No, Mitch, I know you can do it. I know that you’ve done it before.” We played that role for each other but here’s the bottom line. We all need someone in our lives who we can trust, has the viewpoint, the opinion and the background to advise us. Would you agree with that?
Absolutely. I’ve been very lucky with George and my former boss, Scott Parrott. He took me under his wing when I was working in the mortgage industry and established a lot of good baseline practices and standards in how to code and how to build large scale applications because he had come from that space. I’ve been incredibly lucky with the two mentors I’ve had over the last decade because they’ve been there. They shared all that experience and I’ve been able to leverage that and listen to it and use it to create LOCATE as it exists now.
Are either one of those gentlemen stockholders or investors in the company?
George, yes. LOCATE to this point is completely bootstrapped. It’s all friends and family money and George is the largest shareholder and the initial investor in the product.Don't cut corners or you'll end up building on top of things that you regret, and it could stifle your ability to expand rapidly. Click To Tweet
Of course, not everybody has the luxury of getting help from someone who can help bootstrap the company financially. Would it be fair to say that having some grey hair experience on the team can make a huge difference to both the timing and the success of whatever the development project is?
Never doubt the experience. Take it with a grain of salt if you need to or whatnot. George, it’s so fun to go to conferences with him because it’s such an odd pairing. Here you have this guy in his 70s that looks like Einstein with his gray crazy hair. He’s got all these young, late 20s and early 30-year-olds running around him pitching inventory software. It’s no secret that inventory as exactly the shining social media type of site product out there. It’s a hard thing to dress up. We’re all incredibly passionate about it because George has shared his life experiences. We’ve all been in the trenches building this product and we’ve seen the impact it can have. Having a mentor like that is invaluable.
Just to be clear, that person in your life is someone who has a stake in believing in you, which is great and not everybody is going to have that. For the audience, if you don’t have that person, find someone who you trust, even if it’s a paid coach or consultant, get somebody on your side who really understands your market and understands you because that is going to lead you exactly to where you want to be. Nick, tell us a little bit about what you’ve learned. You’ve been doing this now over five years. You must have learned something and particularly from the standpoint of building the business. What would you say to a new entrepreneur who has a great idea, may have a little money saved and is about to get going? What advice would you give that individual?
Don’t cut corners up-front. If what you do ultimately succeeds, and this is more from a development perspective because that’s my background, you end up building on top of things that you regret and it could stifle your ability to expand rapidly because you never know when you hit that tipping point where enough people know about you and you need to very quickly innovate. If you cut those corners up front, you won’t be able to meet that demand. That’s where a lot of people, especially in software, stumble and fall. That’s been my mantra from day one. We don’t cut corners. George has never said, “Get this out fast. We need it now.” It’s, “Do it right and it’s done when it’s done.” That’s been part of the reason LOCATE has been successful and stable with such a small team to this day.
When I sold Timeslips Corporation, I became an employee of Sage PLC. I remember sitting in the boardroom with the members of the board. Understandably so, they didn’t know my customer base as well as I did. I’m sure many of your customers intimately at this point. I sold my software to the first 10,000 of my customers, either by presenting on stage or by picking up the phone and calling them or receiving a call from them. I understood and knew my customers. When my company was acquired and my board said, “Mitch, your upgrade has to ship on July 15th,” I said, “No, it’s not ready.” They said, “We don’t care if it’s ready. It’s going to ship because we have to make our numbers for the quarter. We’re a public company. If we don’t make our numbers, then we’re in trouble. Your software is going to ship.”
When I came back to them and said, “No, it’s not going to ship. You’re going to end up with a class-action lawsuit if you do. My customers are lawyers. Lawyers like to sue people. You ship this product late or worse if you ship this product and it’s full of bugs, it’s not going to go well.” They disagreed. They didn’t care. This whole idea of integrity in a product is super important. In particular, when you’re dealing with something that controls an element of another person’s business, such as you do. Can you talk a little bit more about that?
I feel a deep responsibility to our customers. Every day, they log in and many of them look at LOCATE for 8 to 10 hours a day. That’s not something that any of our team members take very lightly. It’s been a weird phenomenon as we’ve slowly grown going into stores and seeing products that your customers made and shipped on LOCATE. I have a very unique position in that even though I create a virtual product, I get to see the physical manifestation of what my product facilitates on nearly a daily basis. As we grow, it’s only becoming more and more apparent. Walking into a Target and going, “I know that those clothes were shipped through LOCATE,” that’s cool to me.
We are talking to the amazing Nick Schiffelbein and he’s describing his startup experience building and growing his company, LocateInv.com. The thing that I’m getting most about what Nick is saying is that number one, it’s not easy. Number two, it takes a lot of hard work. Number three, you must have the integrity to ship a great product on time. The other part that makes a lot of sense is getting the experience of seeing how your customers use your product. Now that you’re at this point and that you’re at the crest of 1,000 customers, what is the difference between working with clients after you’ve hit this number to back in the beginning when you were first getting started?
The biggest thing is that you can’t multiply yourself. Our team has remained incredibly small. It’s only grown by a few members from the onset of the creation of LOCATE. The biggest thing that has been a push for me and my team over the last couple of months is building tools to help ourselves. Don’t get so focused on the customer’s needs that you lose sight of your own because if you make yourself more efficient, as you’re making your customer more efficient, you’ll be able to better help your customer. Don’t ever forget to look in the mirror and go, “What do I need so that I can help five more people a day?” Whether that’s a tool, a product or service, whatever it might be, maybe another person on your team. That’s something that’s been very critical to us over the last couple of months.
Nick, what I’m hearing is that you had to learn how to delegate.
That’s been very hard for me because I am a perfectionist when it comes to things. I try to control a lot more than I should.
You’re not alone. Most startup founders are perfectionists. For me, it was so hard. I had to get someone to help me to learn how to delegate because I knew I could do everything in the company except program better than everyone who I already hired. That was the problem. Luckily, I was able to get past that milestone in my life and the people, in fact, were so good that they were able to eventually do things better than I could, which is what you go for. The idea is always to hire people who are smarter than you. It makes your job easier, it makes your company better and it generates more revenue. Nick, you learned that. It’s an important skill and anyone reading this knows that without delegation, a one-person company never becomes wealthy. I’m glad that you said that. Nick, at this point in the show, I’ve got a couple of questions I want to ask you. These questions are designed to help my audiences get to know you a little bit better. The first question is a hypothetical question, but at the same time if you give it a little thought now, it will help us get to know you. Who, in all of space and time, would you like to have one hour to enjoy a walk in the park, a quick lunch or intense conversation with?Don't get so focused on the customer's needs that you lose sight of your own. Click To Tweet
Given my background and that I haven’t gone through maybe as many failures or struggles at this point yet in my life, the one thing that I remember the most that I’ve learned over this time is from the intense discussions I had with my former boss, Scott Parrott. Way after hours, we would stay up for 3 or 4 hours past 9:00 in the office discussing future abilities we wanted to bake into our software. How we could implement those and the elegance with which we could architect those solutions. We would go back and forth trying to one-up each other until we found that pinnacle solution to the problem we were facing at that point. To this day, I reflect on those conversations and I’ve even leveraged some of the things that we came up with in LOCATE itself architecturally. Those conversations helped me grow as a developer and as a person more than anything. I’m lucky enough about once a year that I still get to see my former boss and have similar conversations, but those particular ones several years ago are the ones that I hold dear and would love to go back and repeat.
Don’t you wish you recorded those conversations?
That would be very cool to have that.
This is what I think of too sometimes. I think about those conversations, about those moments in time where whoever it was, whether it be a direct mentor for me. I remember once at a conference I heard someone speak that made such an impact on me that I wrote 30 pages of notes during the days that we were together. Let those things make those influences on you and let them change you because that changes for the better. Hopefully it’s uncomfortable, which means it’s working. For the grand finale, the change the world question, what is it that you were doing or would like to do that truly has the potential to change the world?
In a way, I feel like I’m already doing that as I described. LOCATE has that potential and is doing it every day. It’s definitely changed my world. It’s changing other people’s world on a subtle level. As I mentioned, I’ve gone into Big Box stores or restaurants and I’ve seen a product that I know was shipped on LOCATE. For me, that has been a source of great pride. People in the stores may not realize it. They may not even think about it. In fact, most people don’t, “The piece of software helped this get here.” From my perspective, it’s fun to watch people in a store and it’s like, “You’re going to buy that product. I know that my software helped that product get here through routing and shipping software and tracking numbers and whatever was involved in that process.” In that way, I feel I’m already changing the world and LOCATE is that vessel I’m doing it with.
Nick, it’s been a pleasure chatting with you. You’ve shared some incredible wisdom here that I know my audience will appreciate. Thank you for being on the show and I am looking forward to the next time we get a chance to speak.
Thank you so much for having me. It’s been a pleasure.