Startups with Something to Believe In

I went to an informal Seattle startup CEO dinner a while back and it was an awesome opportunity to talk candidly about the problems that early stage products face. Someone remarked to me afterwards that a lot of people in that room had already “made it” (financially speaking). That’s one of the cool things about being a startup founder. There were plenty of folks in the room who put on their pants one leg at a time. There were some other folks who sip Pinot Noir while they have two pant-assistants dress them. But (with a few runaway exceptions) many of them were facing the same challenges.

I had a lot of takeaways from the dinner, but the biggest came from two comments by CEOs in two unrelated conversations (these are paraphrased with a bit of hyperbole tossed in).

Comment #1: “My biggest concern is that we’re on a long road. And it’s going to be a tough slog. We’re going to be dragging our asses uphill for years with a still uncertain future. With that to look forward to, how can I hold on to my best-and-brightest stars when they could take an offer from [insert megacorp] and double their salary overnight? Or they could hop onto another startup that isn’t at the ‘slog’ stage yet?”

Comment #2: “Sure, the downturn has effected our startup. But we’re all working together on stuff that we want to work on and we’re working with people that we really want to work with. If we end up making less money, it really doesn’t matter much.”

The huge challenge is that we are constantly telling ourselves, our teams, and our customers that great stuff is in on the horizon. But the reality is, bad shit is coming. There are going to be huge and gutwrenching bumps in the road and times where the company feels like it’s going to auger in. The thing that can pull a team through these rough spots is belief in SOMETHING.

Something amazing happens, I think, if you can cross the chasm from people getting paid to work for you company and people getting paid SO THEY CAN work at your company (I think that concept came from Tandy way back when– can anyone confirm?). As founders, I think it’s easy to dismiss this possibility. “That might work for people who ooze charisma,” we say, “but it won’t work for me.” Or: “You can only pull off that kind of passion if you have a world-changing product with a runaway growth rate– not for something so mundane as what we’re working on.” Bullshit. Look at companies that actually inspire the founders, employees, and customers– there’s WAY more variety than you might suspect.

So here’s a stab at how startup founders can get creative and (hopefully) inspire.

  • a dragonslaying startup (killing inefficient incumbants, like Redfin is trying to do)
  • “business religion” startup (like Zappos, FogCreek software or 37signals– where the products isn’t something the team gets THAT excited about building, but the “business religion” and/or lifestyle of working there is magical)
  • The “we’re going to change the world” startup. Steve Jobs once said to John Scully (then CEO of PepsiCo), “Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?”
  • “we’re going to get filthy rich” startup (this feels scary to me– seems like people will jump once there’s a bump in the road… and there is almost always a bump in the road).
  • A “family” startup. My first company had this– just about everyone in the company was really close to everyone else. We had regular gaming night, fun social events (that everyone WANTED to come to), etc. Loyalty can definitely help folks through the aforementioned “bad shit”. This is the biggest reason why solo founders quit more often. It’s always easier to quit when the only person you’re letting down is yourself.
  • Succeed, loudly and publicly. Nothing inspires more than setting tangible business goals (that everyone buys into) and actually knocking them out of the park. Want to see a role model here? Check out Balsamiq’s Blog.

The math of working at a startup rarely works out– people get paid less to do more. You have merely adequate benefits and lousy job security. With VERY few exceptions, the journey to liquidity is long and is by no means a sure thing. So you have to offer piles of intangibles that make your best people say, “Yeah, I could get paid another $50k across the street– but it wouldn’t be worth it.”

Did I miss any motivations? Why do you work at a startup when you could be making way more money elsewhere? Or, if you work at BigCo, what would it take for you to take a 30% pay cut?

  • Greg C

    Nice post. I just read Daniel Pink's new book “Drive” which discusses what has been found to motivate people long term and how companies (and parents!) can apply this knowledge. Your post could almost be a summary of it's key points.

  • ethomaz

    Great post. I think there's something to be said for the lifestyle startup here as well. Perhaps it won't make you rich, or let you leave a large footprint in the business world, but it will give you the flexibility to travel, spend time with your family, etc.

  • http://www.rescuetime.com webwright

    That is a great point. I think 37Signals does a good job with that as does
    one of our local favorites, Jackson Fish Market
    <http://www.jacksonfish.com>(they take summers off, I believe). It's
    certainly a way a smaller business
    can compete with the BigCos… And, of course, no one know better than
    RescueTime and Slife users that long work hours does not equal productivity,
    eh?

    Hope 2010 treats you guys well!

  • http://elliotmurphy.com/ Elliot Murphy

    When I left working for a big software company to go to a smaller company I took a huge pay cut for three things: working from home, a team that could teach me a lot, and having all code released under GPL by default.

  • http://www.amirkhella.com Amir

    Very thoughtful post, Tony.

    I believe that the one thing that motivates me the most to work with startups is how productive it becomes when bureaucracy is stripped out of the workplace. While a design took months, if not years, at BigCo to see the light of day, it was a matter of weeks with startups.

    A couple of weeks ago, I summarized my experience going from corporate design to startup design in a presentation on slideshare [pardon the shameless plug]:

    http://www.slideshare.net/akhella/corporate-des

  • http://twitter.com/maxklein maxklein

    In china, there is a particular mode of working:

    - The boss is very big. He is not on the same level as the employees.
    - There are various sub-bosses within the team, for example team leader, etc.

    Workers are given targets that they have to achieve every month. When they achieve them, they make more money than other workers. After spending an amount of time in the company, they become team leaders, or their title increases.

    This method gives employees a concrete monthly goal to work towards where they can see what their part of the company was. It also gives them clear hope of when they will rise in the company. The path upwards is clear.

    I'm not saying it's a good method for everyone (we had a lot of churn in our china company), but for the company it leads to great productivity, and keeps your best people well compensated while putting pressure on the poor performers to leave.

    This is obviously not a method that fits well in the western context, but it's interesting to study other modes to know how best to optimize yours.

  • http://www.olivernassar.com/ Oliver Nassar

    “what would it take for you to take a 30% pay cut?”
    a product/service that is important.

  • kareem

    Learning. I left FIM to start eduFire and happily took a 55% paycut because I knew that, even if eduFire tanked, I'd have learned a ton more after running my own thing than working at a BigCo.

    Also – sell the meaning of working at your company. BigCos are so often focused on quarterly profits that all that really matters is juicing the bottom line. At your company, revenue is important (I hope :), but you're also trying to change the world by doing “x”. “x” is the reason people work for your startup and not somewhere where they could be making more money.

  • dshen

    As you say, I also believe non-monetary motivators are necessary in early stage startups. Monetary motivators are almost always present (as in, the big windfall to gain a huge pile of FU money) with few exceptions like a non-profit or gain donations type of startup. But something else really needs to be there to hold onto people as they go back to living like poor college students for years.

    In the early Yahoo days, we had passion and culture in addition to the monetary motivation. Our dream was that we were helping millions of people find their way around the internet and its a powerful motivator to feel like you are pioneering something new while helping users. Our culture made it all more palatable as we hired people who loved hanging around with; we better like hanging around with them because we worked around the clock with the same people for years!

    These helped us get through the first few years of growth, and yeah it was nice to see the IPO in the second year, but remember that the stock had a bump but then settled back for a long time before the dizzying 100s of dollar stock values came around.

  • deezzer

    I think it's nothing too special that our consciousness understands we must bring something of value to our society, or die. This should be enough motivation to make wonders. Don't forget to announce the startup on fireroll

  • http://www.rescuetime.com webwright

    That's a great point about Yahoo, and it brings to mind one of the early
    motivations we had at RescueTime that I've probably grown too complacent
    about.

    Most people develop software that sucks (because most organizations suck).
    When you actually have an active hand in a business that causes people to
    say things like “RescueTime the greatest invention since sliced bread!”
    (which someone said the other
    day<http://twitter.com/ealeyner/statuses/7472213665&gt;!),
    it's pretty moving. That's nothing compared to Yahoo, where you were
    literally changing the lives of millions of people (and they were probably
    shouting “hallelujah” pretty often).

    To leave something like that and go to BigCo, where you'll work on a tiny
    slice of a HUGE piece of software that most of its users hate is a pretty
    painful shift.

  • dshen

    YES – time to develop your own reason for passion at rescuetime, or bring it back!

    re: shouting “hallelujah” – i believe that they were shouting “yahoo” LOL. too bad they don't shout that anymore.

    re: leaving passion, going to bigCo.

    i think maybe the only company that is not like that is Apple or maybe google. huge success, working on cool stuff, changing the world, people's eyes light up when you tell them you work there – where else do you get a chance to be part of that? it's really awesome…

  • http://one-shore.com/aaron fijiaaron

    That IS the western method of working. It's how western Europe and the USA succeeded, and it's a conscious effort within China to model it.

    The one thing failing is that in China, the entry level employee can never become the big boss. While that's true to a degree in the USA as well (now more than ever), the escape valve is you can always quit and start your own company here.

  • http://one-shore.com/aaron fijiaaron

    “what would it take for you to take a 30% pay cut?”

    40% more pay.

  • GeekMBA360

    Great post. I found your post on nPost. I would like to add one more motivation to start a company: to live an authentic life in one's own term. I know this sounds ideal, but Great Harvest Bread is a great example of starting a business in an “anti dot com” way. (I wrote about it here: http://www.geekmba360.com/?p=885).

    By the way, I didn't Rescue Time is based in Seattle — it's a great product. I use it daily and love it!

  • http://one-shore.com/aaron fijiaaron

    That IS the western method of working. It's how western Europe and the USA succeeded, and it's a conscious effort within China to model it.

    The one thing failing is that in China, the entry level employee can never become the big boss. While that's true to a degree in the USA as well (now more than ever), the escape valve is you can always quit and start your own company here.

  • http://one-shore.com/aaron fijiaaron

    “what would it take for you to take a 30% pay cut?”

    40% more pay.

  • GeekMBA360

    Great post. I found your post on nPost. I would like to add one more motivation to start a company: to live an authentic life in one's own term. I know this sounds ideal, but Great Harvest Bread is a great example of starting a business in an “anti dot com” way. (I wrote about it here: http://www.geekmba360.com/?p=885).

    By the way, I didn't know Rescue Time is based in Seattle — it's a great product. I use it daily and love it!

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