When I started this blog, I decided to write about all things positive. I wanted to encourage others to start their e-businesses and I wanted to motivate them and give them optimism. But it’d be unfair not to write about the other side. Because while running a startup, there’s no way you won’t go through the dark side.
Honestly, I didn’t want to write about this for as long as possible. At the same time, I knew I will write about this someday as it continues to bother me 6+ years later. But mainly, I decided to write about it as I spoke to someone yesterday, who is also a victim of these criminal digital agencies of Pakistan. And it’s just a reminder that nothing has changed in over 6 years.
Koolmuzone’s Closure
In 2013, I closed my first ever commercial project ‘Koolmuzone’. Since closure of operations, it has continued to serve content accumulating 15 million+ pageviews causing me ad revenue loss in the range of 10s of thousands of dollars. I did it because I was put into a difficult situation where I had to choose whether I will continue to conduct business with criminals, or move the heck on. I moved the heck on, and I’m happy that I did it. I was able to put my time into better projects where my business could flourish without having to deal with these agencies.
Why It Happened
Till 2013, I worked with one of the digital agencies that frequently advertised on my blog and represented clients from telecoms, consumer-goods, food & beverage etc. Delayed and unpaid dues was routine. The promised payment time was net-90 after the conclusion of campaign, which was already 60 days longer than the industry standard net-30. But unfortunately, they didn’t ever honor that either. The average delay was 18 months after the net-90.
Startups are often cash-strapped & cash is everything to a startup. And a delay of 18 months translates into a slow death for a company. One of the days, after following up with them for months, I had an argument with the then manager of the company. After exchange of hot words, I was given the ultimatum that forget delayed payments, I will never get paid.
On hearing this, I was left with no option but to reach out directly to the client that advertised on my blog. After speaking to the designated employees in the company, I was told that I’ve no business speaking to the client. Because client doesn’t work with me. They work with the agency, and agency works with me.
I don’t want to get into details of what happened next, but after reaching out senior executives in the company, I got paid at one condition: no future business. I said my goodbyes and moved on.
Other Instances
It wasn’t just one digital agency. There are others that contributed to this criminal cause. Another agency that represented an ISP, declined to respond or make payments altogether. After speaking to client, I was offered a dinner to make up for it which I declined.
Yet another agency that represented a multi-national restaurant brand declined to make payment and stopped responding altogether.
Another agency that represented a local snack brand did the same. I was neither paid, nor given a response.
I fought for the larger payments and was able to get those by reaching out to clients. But small clients and small campaigns stayed unpaid forever.
It Affects Everyone
I’m not the only one affected by these agencies. Almost every independent publishing company in Pakistan has to go through the same process. If you’re not big enough to have legal teams to challenge big agencies and even bigger clients, just keep your head low and move on.
Yesterday, I spoke to someone who has not been paid over 5 million Rs in ad revenue for months by these same agencies.
The Bigger Picture
While it may sound like a story of only bad business practice, there’s a much larger impact happening. Just like traditional employment “brain drain”, where talent exits the country in order to find better employment opportunities, similar thing is happening for entrepreneurs too.
It’s already less profitable to choose to work in a singular market like Pakistan instead of reaching global markets, and that coupled with these practices make business nearly impossible in Pakistan. As a result, entrepreneurs exit local markets and make products that serve global audience where the revenues are higher, and payments are instant.
Even for e-commerce, those serving global markets have a 3-day payment cycle. While those working in Pakistan on cash-on-delivery and local gateways, have to wait for weeks if not months to get their cash.
Conclusion
These agencies are startup killers. They killed my startup and will continue to damage and destroy many other indie publishing companies in Pakistan. I want to conclude this with a popular quote by the founder of Seagate who said
It is important to remember when starting and growing a new company that cashflow is more important than your mother
Alan Shugart
and everyone knows mothers are really really really important.