So, before we start… I’m so sorry this post took so long. The beginning of 2017 was super hectic for us. It’s February and we already surpassed our revenue for the whole 2016. Writing blog posts had to wait for the first free Sunday.
Quick Announcement First…
We have new offices! Nothing huge and shiny but they are ours. Hooray!
People in 2016
… but back to the subject.
The year 2016 was a disaster for Lime in terms of human capital. Not only we didn’t grow, but we actually shrunk. Lime became a one man show, with couple guys helping after work. While this experience sucked for the most part, I learned a lot.
1. Company Should Have a Single Founder
Despite all the warnings and stories of company failure, I started Lime in 50:50 partnership. No vesting, no description of reverse vesting procedure, equally split decision making rights. This was proven to be really, really stupid decision.
I got caught in the trap of thinking:
Well, all those warning articles apply to the other morons. But we are different.
No, we weren’t. We met the same issues with uneven commitment of founders as others did. Different views on strategy were problem for us, as for many before us. We had uneven risk aversion, which was well described in other case studies. We had different views on work-life balance… It just didn’t work.
Don’t start a company in equal partnership. Instead, learn from companies like Buffer, who are open and fair but still work with equity in much more sane manner.
Note: Just to illustrate equity split in Buffer: Joel (CEO) – 42.7%, Leo (COO) – 23.0%, Sunil (Engineer, the one with highest equity share) – 2.0%.
2. One Man Show is not a Problem
After Aleš left, I was almost on the verge of “closing the shop”. There is this perceived notion in the startup world that unless you have at least one co-founder, ideally a team of 4-5 people, you won’t succeed. My experience from 2016 shows this does not have to be the case – starting a company alone may be a good thing.
A single man with a broad skillset can do a lot of work in a year. To be fair, I understand I have an unfair advantage. I am “pretty good in everything, excellent in nothing” type of person. I can do pretty good coding in multiple languages. My graphic designs aren’t perfect but good enough. I am fairly competent in sales, product management, project management, financial planning, copywriting, etc. In everything I mentioned, there are people who are way better. But when starting a company alone, you need to have multiple skills, not a single superb skill.
Now, after I realized I’m alone, my thinking about building the company and product design changed dramatically. I realized I need to adjust the expectations and “product size” to the fact that only one person works on it. This gave me a great focus. I suddenly saw how much distraction there is. All the startup interviews, conference talks, pointless “let’s find a synergy” discussions, listening to people with ideas on something new, … When you are alone, you realize none of these matter quicker.
The only things that matter are:
- Your customer.
- The problem the customer has.
- The solution you are able to provide.
- The price the customer is willing to pay.
I will talk about these a bit more in the next post on products. 😉
Finally, I realized that it is much easier to attract co-founders and people into your company after you build something that already has traction and generates revenue. This greatly minimizes risk for them (which is reflected in equity, as mentioned above) and gives more accurate vision of the company.
Don’t be afraid to start a company just yourself. It will give you more focus in the first year or two, you will be able to maneuver faster and if you build something meaningful, people will follow…
3. First 10 People At Lime Are From The List
After we started to grow a bit in revenue, I realized that we need to grow in people as well. But I also realized that the first people cannot be just employees…
Many companies keep saying:
The most valuable asset we have are our people
Now, in most cases, this is just wrong. It’s a phrase people repeat because not doing so will start unpleasant questions. So, I will bite in a sour apple here…
People are a valuable asset for a “service oriented” company. In case you are selling man-days or man-hours or human resources, people are indeed your asset. Every man-day you sell puts money in your pocket. Which is basically what being an “asset” means.
In a product oriented company, this works differently. People do not put money in your pocket – your products do. Instead, people take money from your pocket on salaries and other people related costs. By definition, people are liability in this setup. However, people are a liability you need to accept – just as you need to accept many other liabilities. Just as you don’t take a bad bank loan, you mustn’t hire a bad person. In other words, you need to manage the risk associated with your liability.
As a result, I decided to create a list of currently 20 people – specific names – whom I will call to arms in due course. Hopefully, at least 10 of them says “Yes”. 🙂
Create a list of the first 20 people you would like to have in your company. In my opinion, you cannot just look for “someone who can do Ruby”. You should rather pick the people you know are excellent.
These were my top 3 observations about how startups should think about people, based on my experience in 2016. Now, I am really looking forward to 2017. Hopefully, I will be able to grow the company to at least 4-5 highly productive people this year and turn the one-man-show into something more mature.