There’s been a blip in the blogosphere (and the Seattle Tech Startup mailing list) lately about corporate culture and how hard people should work at startups. Posts of note include:
- 37 Signals announcing they are moving to 4 day workweeks (among other things).
- Jason Calacanis saying you should fire people who aren’t workaholics (among other things).
- 37 Signals responds to Calacanis.
- Calacanis tones down his earlier statement to: you should fire people who don’t love their work.
We’ve taken our own approach here… (not super noteworthy yet as there are only 3 of us relative to the “mega-corporations” of 37 Signals and Mahalo 
) but we have done it twice already successfully — we take two “breaks” a year for roughly 4 weeks at a time (last year summer and winter). During those periods we shut the company down and respond only to emergencies and customer issues. For the most part though people travel out of the country, do big projects at home, etc. We considered the 4 day workweeks but decided that to get some really good non-work stuff done you need more than a week or two at a time. Also, not having everyone else working while you’re on your trip around the world makes it easier to relax we’ve found.
But… that’s not the main point of this post.
Across the net people have come in one side or another of this debate. Clearly being flexible with your employees and making sure they have time to have a life makes sense. Clearly not hiring slackers or people who don’t love their job makes sense as well (though I would ask Calacanis, why does he write it as “fire” as opposed to “not hire in the first place” — but that’s another post). But I have noticed (in an ad-hoc fashion) that the companies that talk about scaling back from “seven days a week to six” are often funded by angel and VC money. And the companies that have a more liberal attitude about time spent at work are not part of that funding model.
My take is this: VC money comes with a countdown. At a certain point the fund ends. At a certain point the investors need to see return. At a certain point there’s a deadline for progress past which it’s no longer worth it to spend any more time or money on a particular startup. When you start a company with an hourglass, it’s no wonder startup CEOs feel the need to work six and seven days a week. The’re battling the clock. “It’s in the DNA” as Umair Haque would say.
I know the knee-jerk response to the above paragraph from a few folks (my responses in-line):
- “So you don’t care about making money?” — Of course we do.
- “So VCs shouldn’t expect a return on their money in a reasonable timeframe?” — Of course they should.
- “So you want to spend your entire career taking time off instead of making a successful business?” — Can’t I do both?
I don’t know about other folks trying to create businesses, but I am under no illusion that I have any predictive power in terms of when we’ll reach certain revenue milestones. I can guess. I can make educated guesses. I can even make spreadsheets and presentations that look like I really know what the fuck I’m talking about. But I don’t. And I believe nobody else does either. When you’re starting a new business, there’s simply no way to know. You can guess, but I’m not sure what that gets you other than a false sense of comfort. (For more on this check out my favorite post from Marc Andreesen from a while ago… basically, you can’t raise your batting average so increase your number of at bats.)
So, for me at least, this means that we would be insane to start a business with a built-in self-destruct timer given that we have no idea how long it will take to make the business a success. I’m a relatively risk-averse person and this seems to me the equivalent of startup suicide. And, yes, I know many businesses have successfully beaten the clock, but many more businesses (some started by the very same people) have not.
And in fact, when you take that investment, not only is your VC and your business on the clock, but you end up putting yourself and your employees on the clock. Regardless of what the founders say, I think it’s hard as the leader of a VC funded startup to not start thinking about an exit. (The VCs are thinking about it.) When you’re running a business the values of the leadership have to align. When you take investment there is some aligning of the values of the leadership of the company and the new owners of the company. I believe that invariably, on the issue of timing, the leadership of the company ends up aligning their values with the investors. Cause… who could argue with wanting to be successful in a reasonable time frame? So let’s act like we have a better than average ability to effect that outcome! (Oh wait, we don’t… shhhhhhhhhhhhhhh.)
And once the leadership is on the clock, it’s a short hop, skip, and a jump to put the rest of the employees on the clock. (Never mind that the upside for most of the employees is very very different from the leadership and investors — more on this in a later post.) Of course this is simply not a recipe for the long term. Ask any runner (and I’ve had to since I’m allergic to most exercise) and they’ll talk to you about pacing yourself for a long distance run. Most VC-backed startups I learn about are sprinting.
This is not to say that taking venture is necessarily bad, or that VCs don’t understand that businesses take time, or that every venture-backed startup necessarily behaves this way. But, I do believe the DNA in the VC backed startup is conducive to this type of short term thinking. And of course, when you’re facing a deadly snake (hmm… who has the new Indy movie on the brain?) or some other life-threatening situation, short-term thinking can come in quite handy. But running your business this way wears on the employees. To borrow a term from the environmental sphere, what we’re looking for is sustainability. You can’t overfish the seas (the fish need time to replenish their population), you can’t overplant a certain crop (farmers do crop rotation), you can’t use up all the natural resources of the planet, and you can’t look at your employees as having a short shelf-life. It’s not like there’s tons more just waiting to replace the ones you’re burning through.
Finding fantastic people is very very hard. In general when you find someone who is just perfect (smart, talented, energetic, fun to hang out with, etc.) wouldn’t you want to stay working with that person for as long as possible? The cost of replacing them is huge. Of course 37 Signals and Mahalo both get this fact and are taking the approach they think best to retaining their best folks. I just think, making the right decision comes more naturally when the pressure to succeed comes primarily from a group of talented folks who want to create value and prove themselves, and not from people who’s top priority is a return on their investment.
And finally, the pressure relief works in both directions. When a company is filled with people working hard to get their exit so they can retire and do the things they really love, everyone is feeling the pressure. When you give people the time to do the things they love in addition to work (let’s not be so cynical as to assume people have a limited capacity for being passionate about things in their lives) then when they are working, they can work even harder. Not because they feel time ticking away, but because time has slowed down. They no longer have to wait until they “hit the lottery” to do the things they love in addition to their work — they can do them on Friday (at 37 signals) or in their next month break (here at JFM). Having the time “now” to fit a broad range of things into your life does wonders for the degree with which you apply yourself to work you love. Truly passionate people don’t confine their excitement to great work, they need time to follow their passions year round.
Update: More thoughts from Alex at Launch 21.