My parents raised me with a certain set of values and morals, which I stuck to. As an early founder, I always assumed others operated similarly. But as my entrepreneurial journey progressed, I learned that wasn’t always the case.
A few of our customers took advantage of us. We sold automotive parts to consumers and had customer-friendly policies around returns and other service situations. They were great for most of our customers, but they also attracted fraudsters. We got hit with a rash of fraudulent transactions in the early days. Caught off guard, we didn’t know what to do to fight them. In the end, they cost us a significant amount of money I didn’t have. We learned we had to be more aware of what was going on with our orders. We implemented systems and processes to identify suspicious orders. I also had our team take an aggressive stance vis-à-vis orders that we deemed fraudulent after they were shipped. Fraudulent transactions dropped sharply, to the point we rarely saw them. Fraudsters knew we’d fight back and weren’t an easy target.
And a supplier walked all over us. This company was orders of magnitude larger than my company and our main supplier at the time. Knowing this, they used their scale to push us around. They’d change our payment terms on the fly, which affected our cash flow. They’d change our pricing on a whim, which made us less competitive and reduced our revenue. They’d limit our ability to sell certain products, too. All these moves were made to optimize the relationship for the supplier at my company’s expense. Once I realized this company was looking out for itself—and only itself—I changed our strategy. I instructed our team to take an aggressive stance with them. We pushed back strongly on one-sided changes and even cut them off as a supplier. That company began to reverse their decisions and operate with more of a partnership mentality. They learned we weren’t a customer they could push around.
From these situations and others, I learned how important it is for a founder to be situationally aware. You can’t count on everyone to be honest and fair all the time. Your business, your people, and your money are on the line. You have to pay attention. You must understand when you’re in a situation where bad actors could prey on you or parties you’re involved with could do harm if given the opportunity. And you have to figure out how to protect yourself.