#56 Kris Sugatan – 3 Biggest Lessons From 2020: The Highs and Lows of Managing and Scaling Businesses

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In this podcast, Deividas and Kris recap on 2020, open up about their mistakes, and talk high-stake decision-making process when your business is scaling up.

Like for many people, it’s been a crazy 2020 for Sugatan.

When you’re drowning, it’s hard to see things from the seagull’s point of view, says Kris. Which is why she spent most of December getting a bird’s eye view of the agency. She took a step back and looked at the diseases that were causing the symptoms in the agency.

First, Kris says she was sifting through all the problems they had from growing too quickly. She says they started off with 25 team members at the beginning of 2020 and then ended up with 80+ by the end of December.

Few things become clear:

They had to change the business model.
They had to change the way they communicate to the entire team. Not having cross-departmental communication and a shared consciousness between all accounts, team members, and department leads, resulted in a broken culture.
When you have a fragmented culture, people start to form their own culture within their own departments (different from what Kris envisioned).

It’s difficult, especially when you’re a 100% remote team spanning across all international time zones to get people into one place, says Kris. One thing Kris says they didn’t do wall last year was orchestration.

Meanwhile, what really created a huge impact on the businesses they’re working with are the creatives, the offer, the product positioning, and the messaging arch.

So, when you distill it down to what key members you need to grow a business, you need a strong strategist. A strategist who knows how to position a product in the market place, advise the stakeholder on the offer, and work with the founder and CFO to work the numbers backward and hit their margins.

To go back to 2020, a lot happened in the agency. And Deividas wants to know about the biggest lessons Kris learned.

One of the key mistakes we made was projecting that ad buyers are automatically marketers, says Kris. We hired ad buyers, thinking that they could become strategists because they have the inside on the data.

This is not always the case.

Learning marketing is like learning a new language. You can’t just look at what someone else is doing and copy it word-for-word. It’s based on intuition, life long learning, understanding human psychology, and so on.

In a growing startup, you need people who are willing to be flexible and solve problems with you as you grow together. And this needs to be communicated to the team members properly to set up expectations for that role.

There are many changes happening everywhere. Especially in eCommerce.

Kris says it’s important to be in the eye of the storm and don’t let the fear overtake you.

For 2021, Kris recommends being in the eye of the needle.

You have to strip all of your fears, anger, resentment, and so on. It sounds cheesy, but your state of being is a critical part of being an entrepreneur.

This is her attitude entering 2021. She says she has no idea what’s going to happen. So, you just have to make sure you have your Type 1 and Type 2 decisions defined.

What does this mean?

Type 1 decisions are not reversible and you have to be very careful when taking them. It’s like walking through a door that you can’t come back out of. These decisions have to do with your business model, appointing your COO, building out a whole new team and so on.
Type 2 decisions, meanwhile, are reversible. If you walk through that door and don’t like what’s on the other side, you can always go back.

When looking at companies that thrived during the great depression, Kris says the ones that made it through decentralized decision-making and gave their team members the autonomy to make Type 2 decisions.

This way, businesses are able to adapt to changes happening on the micro and macro level.

Overall, if you’re going through a hard time, Kris recommends not taking it too personally as it’s not a reflection of your capabilities or your intelligence. It’s part of the process, she says.

The success you’ll have depends on how capable you are surviving the winter times and how you’ll be learning.

Here’s what we cover during episode #56:

04:08 – Why it’s hard to see things from the seagull’s perspective when you’re drowning
09:44 – How and why Kris changed the Sugatan business model in 2020
12:00 – The 80/20 rule for eCommerce products and services that generate the most revenue for businesses
15:55 Why assuming that ad buyers are automatically marketers was a mistake, according to Kris
21:47 – What to do as a new startup when your needs are constantly changing
24:04 – The conundrum of managing team members who always want to grow without placing them in a box (and managing salary expectations)
27:40 – Deividas on dealing with emotional stress, having a clear ‘Why’, and gaining a sudden boost in motivation
31:40 – Kris on 7 layers of depression and what to do when you feel like you’re approaching the edge
43:14 – Why most business books you read are during when businesses are in “peace” time (and the concept of “war” and “peace” time)
44:40 – What eCommerce will look like in 2021 according to Kris. What will change and what will stay the same
46:27 – The importance of your state of being and why Kris is having the most fun in business now more than ever
47:15 – Defining your Type 1 and Type 2 decisions during high-stake decision making (concept from Organizational Physics)
49:22 – The common patterns of all companies that made it through and thrived during the great depression and the 1 thing they all have in common
53:10 Type 2 decisions that went wrong (one of them ended up costing $30K) and the opportunity cost worth $90K
1:01:11 – Deividas on reading 40 books per year for 6-7 years straight
1:03:11 – Parting words of the podcast and the mastermind Deividas is planning to organize in Mexico to keep an eye out for
1:05:00 – Kris’ parting words and the importance of not getting bogged down by the details