Jason Anderson is the president and founder of Datagame, a survey “gamification” platform that makes online surveys less boring and more engaging by replacing the worst bits of them with interactive games. Clients use Datagame to improve user engagement and survey response rates.
Anderson founded the company four years ago to accommodate the needs of his family. He’s been able to build Datagame while juggling the responsibilities of single fatherhood.
Why did you start your business?
I had been happily working in the video game industry for a number of years in research roles like consumer insights or user research. I needed to relocate for family reasons to a side of the country where there weren’t any game companies that I could work for, and where my particular skill set was not going to be very well aligned with the local economy. I asked myself, “What can I do that will enable this move and still allow me to continue working in this space where I am skilled?”
It started with a consulting approach, working with people from my network of peers. I was continuing to do the same work, but remotely as a freelancer. That eventually blossomed into the service we have now. We’re three-people strong and have been doing it for four years this August.
How did you get the funds to get going?
I was able to use personal savings and I was able to live with my mother for six months, which was kind of a soft loan from family. That was a challenging phase, working pretty much full time doing sales proposals, the website, and marketing. I didn’t really see the cash flow start coming in until six months after I started.
Have you heard of business credit?
Yes. We use credit cards for cash flow management and to simplify our accounting. I have used a line of credit to smooth out cash flow bumps from time to time, because we tend to have a smaller number of larger projects, so sometimes we may go two or three months before an injection of receipts. We’ll be waiting for a $50,000 check, but in the meantime payroll still has to run.
Right now, our business cards are attached to my personal credit and not to the business credit. Getting credit established in the name of the business is something that is important to me. Your business credit scores are important to your business when it comes to funding. I would like to trade in the current cards we use to have them tied only to the business to build business credit. But, from what I have learned, that is difficult to do below certain revenue levels.
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Managing the Business
What’s most challenging about running your business?
I never have enough time. There are always more things to do than there are people to do them, so it’s a constant tradeoff between what is the most important thing to accomplish each day.
How do you finance your business to manage cash flow or growth?
We have some seasonality to our work—we tend to get pretty busy during the holiday period and in the summer. In managing marketing spend, for example, I tend to look at annual programs instead of month-to-month commitments because it lets me manage that a little more smoothly and pay for those when we’re at a peak cash flow moment.
We generally pay our card off in full every month, but it’s good to have it there as a buffer for situations where maybe we need to stretch it out by another week or two.
Do you use trade credit from your vendors or suppliers?
What’s the biggest mistake you made early on?
In the second or third year of operation, things were going very well. We were growing very aggressively, and I hired into that growth. That was premature hiring in that the growth bubble was not something that was going to continue year to year. That forced me to, 12 months later, turn around and lay off a couple of the people I just hired. Being more cautious and conservative with capital is something I learned from that.
The other decision I would have done differently is getting into an office lease at that stage. We had not been very careful with the lease terms. It was more challenging than I had expected to negotiate our way out of that lease for a space that was way too large for us. We were able to persevere through that, but it cost us another six months of rent.
What’s the smartest thing you did early on?
I feel like the smartest thing we’ve done has been to recognize a strategic shift in our particular market space and position ourselves to be ready for that. More tangibly, in the world of consumer research and survey research, there are two extremes: do it yourself or work with a full-service provider that does consultative work. We saw the trend coming that things were shifting back to DIY and internally-based staffing around this work. We were able to position ourselves away from being a consultant and service provider toward being a technology story. I think that’s why we have the success we have right now.
What’s the most rewarding thing about owning a business?
For me, it’s mostly about lifestyle balance. I have a complicated home situation. I’m a single father. I have my son about 90 percent of the time. It was really important to be able to have flexibility in my daily schedule so I could work 9 a.m. to 3 p.m., and then do my daddy hours, and then work a little bit more in the evening or squeeze some stuff in on the weekend. I need to stretch my work out over a weekly calendar that I could not really get from an employer.
I also really appreciate the flexibility to pursue opportunities as we see them. Probably the most frustrating experiences I’ve had while working for employers were around the internal sales process of convincing other people that something is a good thing to do. Today, if we see a new opportunity, we can decide to just go and do it. That nimbleness is something I really appreciate.
What does the future look like for your business?
We are planning for growth. We just came out of an event last week where we were exhibiting the newest version of our Datagame platform. It had tremendously positive feedback. We have a lot of activity in the sales funnel now with some larger deals coming from that.
We started the year with our software licensing as about 10% of our revenue. I’m expecting a year from now that we’ll reverse to where half or more of our revenues will come from software licensing. We’re very optimistic.
What advice do you have for someone starting a business?
Be confident in what you want to do. Don’t start until your finance health is in order and you’re really ready to go for a year without paying yourself. Don’t over-invest in marketing. And don’t hire until you really need to hire.