[This is part 1 of an 8 part series on business philosophy.]
Twice in the past few weeks, someone has sent me the manifesto of a company, explaining why they do the things they do, which things are radically different from the way other companies do them. The first was a culture statement from Netflix. And the second was the employee handbook of Valve. I’ve read both of these, and you know what I kept thinking the whole time I was reading them?
This sounds familiar ...
You see, I founded my own business—Barefoot Software—in 1992, four years before Valve, and five years before Netflix. I ran my business in ways that were considered radical at the time: in fact, one of the reasons I worked so hard at it was undoubtedly just the satisfaction of proving a bunch of people wrong. At Barefoot, we referred to our way of doing business as “the Grand Experiment” exactly because it was so different from how anyone else had done things. Now it seems like everyone is jumping on that bandwagon.
Now, don’t get me wrong; I’m not saying that either of those companies (or any other company) stole my ideas. You see, those companies have one major advantage over mine: they succeeded. My company was mildly successful for a while, but in the end it didn’t last. Thus you’ve never heard of it, and thus the people who founded Netflix and Valve have never heard of it, and thus it isn’t sensible to imagine that anyone stole my ideas. On the other hand, those companies (and others who have championed radical business approaches, such as Google, Zappos, or GitHub) not only lasted, but managed to make shit-tons of money. So in one sense, you should listen to those guys and not to me.
Still, I wonder if my experiences have some merit. Many of the things I did are similar to the policies of those companies that followed me (yes, I preceded all those other guys too). But I also did a few things differently, and I think that, supposing you were someone who was interested in creating your own personal business philosophy for whatever reason, you would want to study as many different examples as possible and look to combine all the best points. So perhaps my offering will be useful.
Of course, it may occur to you to wonder why you should listen to me if I freely admit that my business failed. There are two reasons that I think you should. First, failure is how we learn. In my experience, and in my research, I find that the best and most successful business owners have a failed company or two in their past. But, more importantly, it’s crucial to note why my business failed. I was good at a lot of things, but not everything. In particular, I was pretty awful at the sales and marketing side, and that’s one of those things that you can’t neglect. If the way you get all your new cusomters is mostly by luck, eventually your luck runs out. The fact that I made it for 12 years is actually pretty impressive, if you look at it that way. But the main point is, I’m not going to offer you any advice on how to attract new customers, since that’s obviously an area I’m not particularly qualified to comment on. You’ll have to handle that side of it yourself. What I want to talk about is how to run the company on a day-to-day basis.
In researching this article, I looked around to see if I could find any of the original stuff we wrote about the “Barefoot Philosophy.” I remember doing a sort of “mission statement” ... such things were just getting popular back in those days, and, even though on the one hand it seemed a bit silly and unnecessary, on the other hand I was an English major, with an inherent understanding of the power of words, and I thought maybe there might be something to it after all. So we came up with something. I don’t seem to be able to locate it in my files (no doubt it’s on one or more of the hard drives I have sitting around in boxes somewhere, which are all that remains of the many Barefoot servers), but you know what they say: the Internet is forever. Yay, Wayback Machine!
So, looking at the most recent version of the Barefoot Philosophy I could find, I notice several things. First of all, it’s crap. That is, it’s sincere enough, but it’s all fluff. There’s very little substance there. There are a few important concepts, and I encourage you to read through it, but I think you’ll come away with the same assessment as I did: it’s almost entirely content-free. All talk and no action. Now, in my defense, most company mission statements are, in my experience. Also, at least back then, most entire web sites were. Having your web site actually do stuff came later. At that time it was all about looking pretty and soundy lofty. Which that page achieves about half of.
The other thing I notice is that, back then, pretty much anything you wrote to describe your company’s way of doing business could be called a “mission statement.” Nowadays, there are mission statements, vision statements, value statements, culture statements, and all sorts of other statements. What we called our “mission statement” is actually closer to a values statement in today’s terminology. Which is nice and all, but values statements are pretty abstract. I already mentioned that I think mission statements are almost always content-free, and I think vision statements are even more so, almost by definition. But culture statements, on the other hand, can be useful.
Both of the documents I referenced at the beginning are culture statements: one explicitly so, and one disguised as an employee handbook. The values statement of Barefoot’s that I found on the Wayback Machine can give you some vague insight into what sort of lofty goals we aspired to. But a culture statement is more useful: it tells you how you’re going to get there. What specific policies are you going to enact (and enforce) in order to achieve those lofty-sounding goals? What are you going to do when a problem crops up? or when something threatens your business philosphy? How will you ensure that the policies are embedded into the organization and will outlive you, whether by death, disenfranchisement, or just plain disinterest? Those are the things which interest me in the two documents I read, and Barefoot never had those things written down for it.
So I’m going to write them down now. And share them with you.
Now, I’ve written about my business experience before, so I’ll take advantage of that and refer back to a few things I’ve written previously, just to save time and not have to repeat myself. The primary culture of Barefoot can be summed up in two words: Employees First. As I said more recently when I was talking about managing programmers:
I ran my own software development business for 12 years, and I followed one simple philosophy: keep your employees happy. I never worried about keeping my customers happy, because I found that, if you keep your employees happy—and not just content, but deliriously, ecstatically happy; happy to the point where, at the end of the day, they’d rather stay at work because it’s more fun than going home—they’ll produce such amazing software that the customer satisfaction thing just takes care of itself. I had more than one employee tell me that it was the best job they’d ever had. Very few of my employees ever left for any other reason than I’d run out of work for them, and nearly all the ones that left because of that ended up coming back later. I had an employee once sit at home jobless for a year and a half because he was just waiting for me to call with more work (and also because I’d paid him well enough that he could afford to do that).
Most business advice you’re going to see out there tells you to listen to your customers, to worry about keeping your customers happy. Which you should. But I’m going to advance a pretty radical departure: that shouldn’t be your first priority. Why not?
When I started my own business, it wasn’t to get rich (and good thing too, since I didn’t). It wasn’t so that I could be in charge and tell everyone what to do: in fact, I spent a good deal of time trying to hire someone to be my boss. It was mainly because I felt that most of the companies I’d worked for treated their employees like shit. And I thought that was a terrible thing to do. Even though I never actually wanted to run my own company—never wanted to be in charge of anyone—I did so because I felt it was the only way to create a workplace where the employees would be valued, treated with respect and dignity. I never tried to get rich. I only wanted to make enough money for me and a bunch of my friends to have a cool place to come to work every day.
But despite the fact that I started out with very anti-business motivations, I soon discovered that this was an excellent way to run a business even if you’re very profit-centered. I explained the financial aspects of this a bit more clearly in my Employees First manifesto:
Your customers want excellent work done for reasonable rates. And here’s what I discovered when I ran my own company: if you make your employees happy—not just a little happy, but deliriously, ecstatically happy, or as close as you can damn well come—they will do excellent work, and they will do it for reasonable pay. If they get reasonable pay, I can charge reasonable rates. Now I have excellent work for reasonable rates, and that’s called outstanding value. If I put my employees first, I can make my customers happy without even trying. If I put my customers first, my employees are not as happy, and they won’t do their best work for reasonable pay, and I can’t make my customers happy.
Note the repitition of the phrase “deliriously, ecstatically happy.” I use that phrase nearly every time I broach this topic, and for good reason. This is what you want to achieve if you want to have an awesome company. Now, I was working with creative people (primarily programmers), but I tend to think this applies to all employees (although admittedly I lack the experience to back that up). When your employees are deliriously, ecstatically happy, you will produce value that is so outstanding that your competition will cringe. Your customers’ loyalty will be unbounded. Of course, as I mentioned above, this is not sufficient to creating a very successful business. You’ve still got to think about marketing, and how you attract interest, and how you create buzz, and all that other stuff that nowadays is generally lumped under “branding.” I don’t mean to downplay that stuff at all. But while keeping your employees deliriously, ecstaticaly happy is not sufficient, I believe it damn well is necessary.
In the next 5 parts of this series, I’m going to tell you exactly how to do it.