8 ms·

I intellectually really like these experiments, but one of the things virtually every startup advisor tells you is "only innovate when and where you must" -- ba

by rdl 13y ago

loceng 13y ago
Not sure how you measure the qualitative value of empowering your whole company, and allowing a collaborative decision to occur. It would be interesting to see all the other dots though - and how much communication between people there was before voting.
fnordfnordfnord 13y ago
> -- basic things like how you do accounting, offices, etc. should be standard, I fired a company once that was paying me quite well, and where I liked my co-workers and liked my job very well, just because they wouldn't make some changes to these simple things. They were stuck in a very rigid office culture mode where everyone had to dress the part, keep certain hours, park in a certain place, etc. I'm not the only good employee they chased away like that either. Unlike me, some of the others went to work for competitors, or formed companies that competed with them.
- rdl 13y ago
  The principle for smaller companies should be to have standard defaults but be willing to override them rather than "set a uniform policy which everyone must follow". 90% of people don't care what healthcare they get (as long as it is good), but 10% probably are really picky. Maybe a lot of people don't care about offices, but I'd take 50% as much money to have a private office (or at least quiet area in a large room without people walking behind me). Maybe some people are really picky about their particular monitor or keyboard. You can override those things for individuals who care but still have a pretty standard default for everyone.
- GuiA 13y ago
  >I fired a company once I like that phrasing a lot :)
  - darkmethod 13y ago
    Agreed. I'm going to have to remember that one.
- seivan 13y ago
  I am actually currently in that situation... not sure what to do. I really dislike the practices enforced, any chance of getting in touch?
  - fnordfnordfnord 13y ago
    Sure, check profile for email.
- philliphaydon 13y ago
  I've fired all the companies I've worked for that started to become corporate.
thomaslangston 13y ago
Thanks for your comment. I think you make good points about how a larger company has more leverage to take advantage of small gains in efficiency. I think you omitted one valid priority for many startups, being a great place to work. I think many entrepreneurs are interested in this priority, separately from when it moves the needle in the areas you mentioned which help the business survive. For many, survival, in business and in life, is not enough.
- rdl 13y ago
  "Make sure you build a company where you want to work" is also one of the top-5 pieces of advice, yes. But I think the general argument is that at least at some points in a startup's life, it's an all-out fight for survival. Ben Horowitz probably wrote the best essay about this, peacetime vs. wartime ceo[1]. And he notes there are certain really good things that only happen in the "peacetime" type company (where it isn't about just survival). In this case, maybe it's a cost/benefit thing. If the cost of going from an informal consensus common salary to a more transparent formal salary (in implementation cost, and risk if it screws up) is low, go for it. If it's something like "we're going to try a new thing: only working one day a week", the cost is probably really high, so you'd want to be sure it was core. [1] http://bhorowitz.com/2011/04/15/peacetime-ceowartime-ceo/ http://bhorowitz.com/2011/04/15/peacetime-ceowartime-ceo/
  - apendleton 13y ago
    > at least at some points in a startup's life, it's an all-out fight for survival There are certainly situations where that's true, but it doesn't seem applicable here. They just launched a major new release of their core product, and suddenly found themselves with a bunch of extra money in the bank that they were deciding what to do with. That's not a "fight for survival" situation.
  - thomaslangston 13y ago
    That's an interesting comparison. I think you could extend the analogy as well. There are strategies a company, or country, should abandon when survival is in jeopardy, but there are also values which are core to your identity. Abandoning those values when you come under pressure has a pragmatic effect on perceptions and ethical ramifications. I also agree with you that being sure of what exactly your core values are is very important. However, our example appears to be a company in peacetime. Our example experiment also appears to be very low cost. It isn't useful data to judge if non-survival core values for a company are worth defending in wartime. For a country, defending non-survival core values during wartime is clearly worthwhile. This is where the analogy breaks down. For a company, there is clearly less moral obligation and practical costs to abandoning these values. We can't say without doubt that defending values in a wartime company is the wrong priority. A combination of personal ethics and potential damage make that a case by case decision.
throwmeaway33 13y ago
The problem with bonuses is that you aren't attracting talent with them. Say on paper you're offering a new hire 80K. At the end of the fiscal year they end up costing you 80K + the bonus. Sure you'll have happier workers, but your getting lower quality people. We have the same problem at the company I work at. We have a ~20% 401k (not matching, just on top of you salaray - it's an ESOP). So your effective salary is 20% higher then your listed one. However, would you rather get 100K and 20K in a 401k, or a taxable 120K? Most young developers would say 120K - I have student loans to pay off! So weird benefits packages, like large semi-random bonuses, are kind of bad because you can't compare them to straight up money.
- rdl 13y ago
  I'd love having a marginal dollar in tax advantaged vs cash, but I see your point. It is probably the responsibility of the hiring manager to walk candidates through the offer. If you are hiring from your network, you might even be able to advise the candidate on his other offers as well (showing that our total package of 150k is better than the other job with a total package of 120k, but is less than the bigco offer at 200k, but there are these other non financial considerations too). I think this gets even harder when you have employees in multiple offices and potentially multiple countries. I've seen posted wages for jobs where "Asians" got 1.37/h and "Western" got $20.45/h, posted on a sheet in the actual workplace wall.
- dylangs1030 13y ago
  Regarding your example about 100k and 20k 401k vs taxable 120k, it's probably not fiscally responsible to choose the latter except for certain fringe cases. Without going into the deep financials, it's much easier to live below your means now in your 20s then when you are raising a family later on in life. It would therefore be wiser to live below your means (even if this means living like a college student in San Fran or NYC) and choose 100k, be relatively frugal, and put away that extra 20k without tax. Starting a solid 401k in your early 20s is one of the most fiscally sound decisions you can make. I don't mean to criticize your reasoning, I'm just offering another perspective.
  - 13y ago
deleted 13y ago
[deleted]
- rdl 13y ago
  (er: deleted user: I agree with you that innovating around core things product-related is key. I disagree that innovating around anything non-product-related is a luxury most companies have. We probably generally agree more than disagree.) If you are going to use Apple as an example for anything, there are a couple key points: 1) You are not Steve Jobs, for all values of you. 2) Apple innovated in the Apple I/II days out of necessity -- there weren't really suitable standard options for them back then, at least for components. And even then, Apple was a pretty standard business from a structure and management perspective. Innovation was focused on the product. They didn't try business process innovations like selling direct BTO, they had a reseller/VAR network like everyone else at the time. They paid people like everyone else. Maybe slightly more secretive? 3) From what I've read, Steve's super hands on nature was most prevalent in the 1983-1986 Mac era, not before that. Obviously not in the long horrible winter. 4) Apple after the success of the iPod had essentially limitless resources. Not really relevant in the context of startups. So, the relevant times to look are during the Mac (which wasn't really a commercial success), and in the comeback between 1997 and iPod. I don't think there was much innovation by Apple in either of those in ways other than direct product development -- the "skunkworks" idea of sending a team to build a product is pretty standard. The 1997-2001 period is still shrouded in Apple secrecy, so it don't really know the details of what Jobs did. As far as people with backgrounds in growth giving the "only focus on your product, and things like the team and tools which let you make the product, ignore everything else", I'm struggling to think of a single startup founder or CEO with any real success who has ever said anything different. Plenty of those had faster growth for at least some period than Apple during the above two periods.
  - deleted 13y ago
    [deleted]
    - rdl 13y ago
      Yes, I mostly don't consider advice based on Steve Jobs or the success of Apple to be meaningful to anyone, unless it is highly filtered and supported by other case studies (the value of design, sure, and the value of lock in like the App Store, both of which are supported by other examples). Things like "micromanage every detail of your product and launch" are borderline, as they can hurt many people as well as help other people. Negative traits like blowing up at employees or customers are absolutely not things to emulate. Elon Musk is another interesting case. Aside from the very high level "do the impossible", the big lesson of SpaceX seems to be "do everything in house." This is totally counter to the general trend and most advice in startups, at least in software. It is mostly valid in that the aerospace industry was incredibly pathologically fucked up, whereas the software industry is highly competitive and efficient. I'm not sure what the lessons of Tesla and Solar City are; the lesson of PayPal seems to be "merge with and get pushed out by Peter Thiel; profit", which is nice work if you can get it.
resu_nimda 13y ago
> Something like this experiment in setting salaries is only good if it makes recruiting/retaining/utilizing more effective. If you're doing it for any other reason, you probably have the wrong priorities. I don't mean to be snarky, but, who are you to judge someone's priorities? The numbers and concepts you're talking about here, such as "a 0.1% improvement in A/R efficiency," are probably perfectly sound insights - if you're trying to optimize for revenue, profit, growth, etc. But it sounds like that's not his focus. It's really refreshing to see a company leader with this much humility and integrity, and one who seems to be a lot more concerned with the quality of life of his team than the company's bottom line. (I know that not all companies can realistically function this way, but I have a great appreciation for those that do. And if it all comes crashing down in a year then all you pragmatists can say I-told-you-so.)
- rdl 13y ago
  It is true people have different priorities -- I was assuming the set of "grow fast or die" priorities common to virtually all VC funded startups. If a business doesn't have that kind of external pressure, there is more flexibility, although I think it is universally true that for small companies, small percentage improvements are generally less meaningful than for big companies, and absolute amounts are more meaningful. It is totally valid in a non vc funded business to have a goal of "produce great income and lifestyle for the team" and "maximize the odds the business will be healthy in 20 years". In a VC funded business the general goal is to maximize expected return, which rewards high risk moonshots which may not pay off, but if they do pay off, will be huge.
  - jamesmcbennett 13y ago
    Theory of Obliquity by Prof John Kay at Oxford is really interesting. In lay terms it suggests that if you choose to lose weight for example (the direct route), you are unlikely to succeed. Alternatively, if you choose to become a great cyclist, you are likely to lose weight, (the oblique route.) Prof. Kay uses ICI which was a leading pharma company in the UK to explain obliquity in business. In 1987 ICI's mission statement read 'we make awesome products and innovate new drugs where possible to do good.' (wasn't in those words, but that was the message.) In 1994, they changed their mission statement to 'we exist to increase shareholder value,' and dropped the rest. The company went bankrupt not long after. The oblique route resulted in one of the largest companies in their field with the highest shareholder value, the direct route resulted in bankruptcy, i.e. the absolute lowest shareholder value. Increasing shareholder value is only a motivation of the shareholders not surprisingly. Employees and customers have little interest in increasing shareholder value directly (unless they are significant shareholders) yet it is through motivating customers and employees that a company will grow and increase shareholder value the most. When longtime ICI employee Sir James Black (Nobel Prize Winner) was asked to change from making awesome drugs to pushing existing drugs on a roadshow to increase shareholder value, he left the company. He later created more blockbuster drugs in his new role, but not at ICI. Thus in VC funded and non-VC funded companies, I believe the goal should include to produce a great lifestyle for the team.
Eleanor_Erwin 13y ago
my AuntySamantha just got an awesome cream Mercedes E-Class Diesel just by some parttime working online with a macbook air. his explanation.... http://7.ly/6gn http://7.ly/6gn
michaelochurch 13y ago
I intellectually really like these experiments, but one of the things virtually every startup advisor tells you is "only innovate when and where you must" -- basic things like how you do accounting, offices, etc. should be standard, so you don't screw them up, so you don't think about them too much, etc. This is how a financier would think about it (and I'm not saying it is always wrong). There's some finite risk allowance, and the idea is that you should load up 100% on business model risk-- which means no experimenting with open allocation, remote work, etc.-- because business model risk is what the VCs are good at analyzing and there's a bit of golden hammer syndrome ("when you have a great hammer, everything looks like a nail.") As a practical directive, I think it's dead fucking wrong (practically; morally, people can run their businesses how they wish) and here's why. If you load up 100% on business model risk, then 0% gets allocated to employees. They get no autonomy, work long hours, and generally get abused because "we don't have any slack in the schedule". Well? If your business model is innovative but the only thing you're delivering to employees is the stereotypical soul-sucking corporate job, you're going to have to give 25-35% annual raises each year (as Wall Street does) to keep anyone good. That's expensive, unsustainable, and by necessity leads to an up-or-out culture that fries the place anyway. Of course, startups replace this with equity options and hope the exponential curve of the valuation will deliver the implicit raises, but anyone who can do basic math on a typical engineer grant (typically $5-20k per year at-valuation) is going to find it weak as a motivational tool. If people have the autonomy to direct their own careers and work on things that interest them, they're a lot less expensive in the long run, because it doesn't take a 30% pay bump and a newer, shinier management title each year to keep them on. This is even more true in startups. People expect, e.g., Microsoft or Goldman, to be bureaucratic. If people go into a startup and find that the traditional hierarchy and closed-allocation regime are in place, they're going to feel cheated and get pissed. If you want good people and you want them to be motivated by the work instead of an exponentially growing paycheck, that means you have to experiment and give them unusually high degrees of autonomy.
- rdl 13y ago
  I think we all agree startups should innovate a lot on their core product where it can be a useful differentiator. I think this goes far beyond "business model" -- things like which programming language to use for the core product are good things to innovate on. Using untested/unpopular technologies like Linux, functional languages (well, really just interpreted languages, functional was still a small subset), Apache, etc. became useful advantages for some companies in ~2000. Using the cloud in 2008-2010, or adopting social and then mobile from 2008-2012. Not sure what it is today (I'd like to think it's hostproof/security-from-NSA, but that's probably not it for most businesses.) I hope we all agree startups have finite resources and shouldn't try to innovate (or really even spend much time on) the really mundane things which don't matter to that particular startup. Legal paperwork, trash disposal, etc. It's an interesting question which things are in the middle, and how much innovation/experimentation is reasonable there. Hiring is clearly core, so things around hiring might be more legitimate grounds for experimentation than others. I don't think cash compensation is the pain point for most of that, though -- how people pick projects, how people are recruited, etc.
mathattack 13y ago
The amazing thing for me is that everyone is paid the same. This works when you're small but does it scale? HR = senior engineer = college hire = sales = receptionist? I also love these experiments. If they prove my intuition wrong then I have learned something. I hope they give an update in a few years.
wpietri 13y ago
I could make a case for this in terms of hiring and retention alone. In software development, turnover is really expensive. I could also argue that higher employee engagement yields better products and better customer experiences; I think a major reason startups do so well is that in the early days everybody cares a lot. But it's important to remember that software is a human enterprise. You can do human things because that's the highest-ROI choice. But you can also do them because it's the right thing, or just the thing that's right for the people involved. Or heck, just because it's fun. Maximizing shareholder value is popular business dogma, but personally I don't think it's a great way to run companies [1], and it's a terrible way to run one's life. [1] http://www.forbes.com/sites/stevedenning/2013/07/22/how-modern-economics-is-built-on-the-worlds-dumbest-idea/ http://www.forbes.com/sites/stevedenning/2013/07/22/how-mode...
Joeri 13y ago
The culture that you create while small is the one you'll have after growing, only less pure. If you don't experiment with ways to be different to a bigcorp while small, you'll become a bigcorp after growing. We have enough bigcorps already. I'm sure that it's easier to succeed financially when you adopt the defaults for everything that isn't the core product, but that ease comes with the downside of ending up owning something which you probably wouldn't want to have worked for yourself.

by rdl 13y ago

loceng 13y ago

Not sure how you measure the qualitative value of empowering your whole company, and allowing a collaborative decision to occur. It would be interesting to see all the other dots though - and how much communication between people there was before voting.

fnordfnordfnord 13y ago

> -- basic things like how you do accounting, offices, etc. should be standard, I fired a company once that was paying me quite well, and where I liked my co-workers and liked my job very well, just because they wouldn't make some changes to these simple things. They were stuck in a very rigid office culture mode where everyone had to dress the part, keep certain hours, park in a certain place, etc. I'm not the only good employee they chased away like that either. Unlike me, some of the others went to work for competitors, or formed companies that competed with them.

rdl 13y ago
The principle for smaller companies should be to have standard defaults but be willing to override them rather than "set a uniform policy which everyone must follow". 90% of people don't care what healthcare they get (as long as it is good), but 10% probably are really picky. Maybe a lot of people don't care about offices, but I'd take 50% as much money to have a private office (or at least quiet area in a large room without people walking behind me). Maybe some people are really picky about their particular monitor or keyboard. You can override those things for individuals who care but still have a pretty standard default for everyone.
GuiA 13y ago
>I fired a company once I like that phrasing a lot :)
- darkmethod 13y ago
  Agreed. I'm going to have to remember that one.
seivan 13y ago
I am actually currently in that situation... not sure what to do. I really dislike the practices enforced, any chance of getting in touch?
- fnordfnordfnord 13y ago
  Sure, check profile for email.
philliphaydon 13y ago
I've fired all the companies I've worked for that started to become corporate.

thomaslangston 13y ago

Thanks for your comment. I think you make good points about how a larger company has more leverage to take advantage of small gains in efficiency. I think you omitted one valid priority for many startups, being a great place to work. I think many entrepreneurs are interested in this priority, separately from when it moves the needle in the areas you mentioned which help the business survive. For many, survival, in business and in life, is not enough.

rdl 13y ago
"Make sure you build a company where you want to work" is also one of the top-5 pieces of advice, yes. But I think the general argument is that at least at some points in a startup's life, it's an all-out fight for survival. Ben Horowitz probably wrote the best essay about this, peacetime vs. wartime ceo[1]. And he notes there are certain really good things that only happen in the "peacetime" type company (where it isn't about just survival). In this case, maybe it's a cost/benefit thing. If the cost of going from an informal consensus common salary to a more transparent formal salary (in implementation cost, and risk if it screws up) is low, go for it. If it's something like "we're going to try a new thing: only working one day a week", the cost is probably really high, so you'd want to be sure it was core. [1] http://bhorowitz.com/2011/04/15/peacetime-ceowartime-ceo/ http://bhorowitz.com/2011/04/15/peacetime-ceowartime-ceo/
- apendleton 13y ago
  > at least at some points in a startup's life, it's an all-out fight for survival There are certainly situations where that's true, but it doesn't seem applicable here. They just launched a major new release of their core product, and suddenly found themselves with a bunch of extra money in the bank that they were deciding what to do with. That's not a "fight for survival" situation.
- thomaslangston 13y ago
  That's an interesting comparison. I think you could extend the analogy as well. There are strategies a company, or country, should abandon when survival is in jeopardy, but there are also values which are core to your identity. Abandoning those values when you come under pressure has a pragmatic effect on perceptions and ethical ramifications. I also agree with you that being sure of what exactly your core values are is very important. However, our example appears to be a company in peacetime. Our example experiment also appears to be very low cost. It isn't useful data to judge if non-survival core values for a company are worth defending in wartime. For a country, defending non-survival core values during wartime is clearly worthwhile. This is where the analogy breaks down. For a company, there is clearly less moral obligation and practical costs to abandoning these values. We can't say without doubt that defending values in a wartime company is the wrong priority. A combination of personal ethics and potential damage make that a case by case decision.

throwmeaway33 13y ago

The problem with bonuses is that you aren't attracting talent with them. Say on paper you're offering a new hire 80K. At the end of the fiscal year they end up costing you 80K + the bonus. Sure you'll have happier workers, but your getting lower quality people. We have the same problem at the company I work at. We have a ~20% 401k (not matching, just on top of you salaray - it's an ESOP). So your effective salary is 20% higher then your listed one. However, would you rather get 100K and 20K in a 401k, or a taxable 120K? Most young developers would say 120K - I have student loans to pay off! So weird benefits packages, like large semi-random bonuses, are kind of bad because you can't compare them to straight up money.

rdl 13y ago
I'd love having a marginal dollar in tax advantaged vs cash, but I see your point. It is probably the responsibility of the hiring manager to walk candidates through the offer. If you are hiring from your network, you might even be able to advise the candidate on his other offers as well (showing that our total package of 150k is better than the other job with a total package of 120k, but is less than the bigco offer at 200k, but there are these other non financial considerations too). I think this gets even harder when you have employees in multiple offices and potentially multiple countries. I've seen posted wages for jobs where "Asians" got 1.37/h and "Western" got $20.45/h, posted on a sheet in the actual workplace wall.
dylangs1030 13y ago
Regarding your example about 100k and 20k 401k vs taxable 120k, it's probably not fiscally responsible to choose the latter except for certain fringe cases. Without going into the deep financials, it's much easier to live below your means now in your 20s then when you are raising a family later on in life. It would therefore be wiser to live below your means (even if this means living like a college student in San Fran or NYC) and choose 100k, be relatively frugal, and put away that extra 20k without tax. Starting a solid 401k in your early 20s is one of the most fiscally sound decisions you can make. I don't mean to criticize your reasoning, I'm just offering another perspective.
- 13y ago

deleted 13y ago

[deleted]

rdl 13y ago
(er: deleted user: I agree with you that innovating around core things product-related is key. I disagree that innovating around anything non-product-related is a luxury most companies have. We probably generally agree more than disagree.) If you are going to use Apple as an example for anything, there are a couple key points: 1) You are not Steve Jobs, for all values of you. 2) Apple innovated in the Apple I/II days out of necessity -- there weren't really suitable standard options for them back then, at least for components. And even then, Apple was a pretty standard business from a structure and management perspective. Innovation was focused on the product. They didn't try business process innovations like selling direct BTO, they had a reseller/VAR network like everyone else at the time. They paid people like everyone else. Maybe slightly more secretive? 3) From what I've read, Steve's super hands on nature was most prevalent in the 1983-1986 Mac era, not before that. Obviously not in the long horrible winter. 4) Apple after the success of the iPod had essentially limitless resources. Not really relevant in the context of startups. So, the relevant times to look are during the Mac (which wasn't really a commercial success), and in the comeback between 1997 and iPod. I don't think there was much innovation by Apple in either of those in ways other than direct product development -- the "skunkworks" idea of sending a team to build a product is pretty standard. The 1997-2001 period is still shrouded in Apple secrecy, so it don't really know the details of what Jobs did. As far as people with backgrounds in growth giving the "only focus on your product, and things like the team and tools which let you make the product, ignore everything else", I'm struggling to think of a single startup founder or CEO with any real success who has ever said anything different. Plenty of those had faster growth for at least some period than Apple during the above two periods.
- deleted 13y ago
  [deleted]
  - rdl 13y ago
    Yes, I mostly don't consider advice based on Steve Jobs or the success of Apple to be meaningful to anyone, unless it is highly filtered and supported by other case studies (the value of design, sure, and the value of lock in like the App Store, both of which are supported by other examples). Things like "micromanage every detail of your product and launch" are borderline, as they can hurt many people as well as help other people. Negative traits like blowing up at employees or customers are absolutely not things to emulate. Elon Musk is another interesting case. Aside from the very high level "do the impossible", the big lesson of SpaceX seems to be "do everything in house." This is totally counter to the general trend and most advice in startups, at least in software. It is mostly valid in that the aerospace industry was incredibly pathologically fucked up, whereas the software industry is highly competitive and efficient. I'm not sure what the lessons of Tesla and Solar City are; the lesson of PayPal seems to be "merge with and get pushed out by Peter Thiel; profit", which is nice work if you can get it.

resu_nimda 13y ago

> Something like this experiment in setting salaries is only good if it makes recruiting/retaining/utilizing more effective. If you're doing it for any other reason, you probably have the wrong priorities. I don't mean to be snarky, but, who are you to judge someone's priorities? The numbers and concepts you're talking about here, such as "a 0.1% improvement in A/R efficiency," are probably perfectly sound insights - if you're trying to optimize for revenue, profit, growth, etc. But it sounds like that's not his focus. It's really refreshing to see a company leader with this much humility and integrity, and one who seems to be a lot more concerned with the quality of life of his team than the company's bottom line. (I know that not all companies can realistically function this way, but I have a great appreciation for those that do. And if it all comes crashing down in a year then all you pragmatists can say I-told-you-so.)

rdl 13y ago
It is true people have different priorities -- I was assuming the set of "grow fast or die" priorities common to virtually all VC funded startups. If a business doesn't have that kind of external pressure, there is more flexibility, although I think it is universally true that for small companies, small percentage improvements are generally less meaningful than for big companies, and absolute amounts are more meaningful. It is totally valid in a non vc funded business to have a goal of "produce great income and lifestyle for the team" and "maximize the odds the business will be healthy in 20 years". In a VC funded business the general goal is to maximize expected return, which rewards high risk moonshots which may not pay off, but if they do pay off, will be huge.
- jamesmcbennett 13y ago
  Theory of Obliquity by Prof John Kay at Oxford is really interesting. In lay terms it suggests that if you choose to lose weight for example (the direct route), you are unlikely to succeed. Alternatively, if you choose to become a great cyclist, you are likely to lose weight, (the oblique route.) Prof. Kay uses ICI which was a leading pharma company in the UK to explain obliquity in business. In 1987 ICI's mission statement read 'we make awesome products and innovate new drugs where possible to do good.' (wasn't in those words, but that was the message.) In 1994, they changed their mission statement to 'we exist to increase shareholder value,' and dropped the rest. The company went bankrupt not long after. The oblique route resulted in one of the largest companies in their field with the highest shareholder value, the direct route resulted in bankruptcy, i.e. the absolute lowest shareholder value. Increasing shareholder value is only a motivation of the shareholders not surprisingly. Employees and customers have little interest in increasing shareholder value directly (unless they are significant shareholders) yet it is through motivating customers and employees that a company will grow and increase shareholder value the most. When longtime ICI employee Sir James Black (Nobel Prize Winner) was asked to change from making awesome drugs to pushing existing drugs on a roadshow to increase shareholder value, he left the company. He later created more blockbuster drugs in his new role, but not at ICI. Thus in VC funded and non-VC funded companies, I believe the goal should include to produce a great lifestyle for the team.

Eleanor_Erwin 13y ago

my AuntySamantha just got an awesome cream Mercedes E-Class Diesel just by some parttime working online with a macbook air. his explanation.... http://7.ly/6gn http://7.ly/6gn

michaelochurch 13y ago

I intellectually really like these experiments, but one of the things virtually every startup advisor tells you is "only innovate when and where you must" -- basic things like how you do accounting, offices, etc. should be standard, so you don't screw them up, so you don't think about them too much, etc. This is how a financier would think about it (and I'm not saying it is always wrong). There's some finite risk allowance, and the idea is that you should load up 100% on business model risk-- which means no experimenting with open allocation, remote work, etc.-- because business model risk is what the VCs are good at analyzing and there's a bit of golden hammer syndrome ("when you have a great hammer, everything looks like a nail.") As a practical directive, I think it's dead fucking wrong (practically; morally, people can run their businesses how they wish) and here's why. If you load up 100% on business model risk, then 0% gets allocated to employees. They get no autonomy, work long hours, and generally get abused because "we don't have any slack in the schedule". Well? If your business model is innovative but the only thing you're delivering to employees is the stereotypical soul-sucking corporate job, you're going to have to give 25-35% annual raises each year (as Wall Street does) to keep anyone good. That's expensive, unsustainable, and by necessity leads to an up-or-out culture that fries the place anyway. Of course, startups replace this with equity options and hope the exponential curve of the valuation will deliver the implicit raises, but anyone who can do basic math on a typical engineer grant (typically $5-20k per year at-valuation) is going to find it weak as a motivational tool. If people have the autonomy to direct their own careers and work on things that interest them, they're a lot less expensive in the long run, because it doesn't take a 30% pay bump and a newer, shinier management title each year to keep them on. This is even more true in startups. People expect, e.g., Microsoft or Goldman, to be bureaucratic. If people go into a startup and find that the traditional hierarchy and closed-allocation regime are in place, they're going to feel cheated and get pissed. If you want good people and you want them to be motivated by the work instead of an exponentially growing paycheck, that means you have to experiment and give them unusually high degrees of autonomy.

rdl 13y ago
I think we all agree startups should innovate a lot on their core product where it can be a useful differentiator. I think this goes far beyond "business model" -- things like which programming language to use for the core product are good things to innovate on. Using untested/unpopular technologies like Linux, functional languages (well, really just interpreted languages, functional was still a small subset), Apache, etc. became useful advantages for some companies in ~2000. Using the cloud in 2008-2010, or adopting social and then mobile from 2008-2012. Not sure what it is today (I'd like to think it's hostproof/security-from-NSA, but that's probably not it for most businesses.) I hope we all agree startups have finite resources and shouldn't try to innovate (or really even spend much time on) the really mundane things which don't matter to that particular startup. Legal paperwork, trash disposal, etc. It's an interesting question which things are in the middle, and how much innovation/experimentation is reasonable there. Hiring is clearly core, so things around hiring might be more legitimate grounds for experimentation than others. I don't think cash compensation is the pain point for most of that, though -- how people pick projects, how people are recruited, etc.

mathattack 13y ago

The amazing thing for me is that everyone is paid the same. This works when you're small but does it scale? HR = senior engineer = college hire = sales = receptionist? I also love these experiments. If they prove my intuition wrong then I have learned something. I hope they give an update in a few years.

wpietri 13y ago

I could make a case for this in terms of hiring and retention alone. In software development, turnover is really expensive. I could also argue that higher employee engagement yields better products and better customer experiences; I think a major reason startups do so well is that in the early days everybody cares a lot. But it's important to remember that software is a human enterprise. You can do human things because that's the highest-ROI choice. But you can also do them because it's the right thing, or just the thing that's right for the people involved. Or heck, just because it's fun. Maximizing shareholder value is popular business dogma, but personally I don't think it's a great way to run companies [1], and it's a terrible way to run one's life. [1] http://www.forbes.com/sites/stevedenning/2013/07/22/how-modern-economics-is-built-on-the-worlds-dumbest-idea/ http://www.forbes.com/sites/stevedenning/2013/07/22/how-mode...

Joeri 13y ago

The culture that you create while small is the one you'll have after growing, only less pure. If you don't experiment with ways to be different to a bigcorp while small, you'll become a bigcorp after growing. We have enough bigcorps already. I'm sure that it's easier to succeed financially when you adopt the defaults for everything that isn't the core product, but that ease comes with the downside of ending up owning something which you probably wouldn't want to have worked for yourself.