Peldi Guilizzoni on Why Coding is the Easy Part!

A wonderful talk from BoS USA 2012 about an entrepreneurial journey over the almost five years of Balsamiq’s birth and growth. Packed with tips and tricks about what to worry about, what to ignore, how Peldi’s views on some things have changed while core values have remained remarkably consistent.

Find Peldi’s talk video, transcript, and more from Peldi below.

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Video

Transcript

I’m confused already. [Laughter] I’ll try with this one ‘cause, okay, hi. hello everybody. Wow! I can’t see anything it’s really bright up here. [Laughter] So pretend that I’m looking at you [Laughter] Though I really can’t see anything. Anyways, hi, um. Wow, I’m really excited to be here, and very thankful. It’s really a privilege, and I’m really nervous, so here we go.

For those who don’t know me, I used to be this little programmer for Adobe. First Macromedia at Adobe, 2007 I decided that’s it I’m going to move back to Italy and quit my job and start my own thing. And, back then there was this term called, “Micro ISV” Patrick knows it, McKenzie because he was in the business of software forums. I don’t know if you guys were on there too.

Basically the idea is, was, I’m just going to create a little software company that does tiny little thing, and it’s going to feed me and my family and we’ll live happily ever after. That was the plan. And, then it sort of blew up in my face. Sort of, it grew, it grew, it grew and I had to hire people, and now it’s been four years, a little over four years and for those of you who are following, this year we should make six million in revenue. About half of which in profits, and there’s ten of us, and we’re hiring three more people.

So you say, “Wow, that’s incredible! Credibility established.” Actually, not so fast. [Laughter] Take what I say with a giant grain of salt. I took this picture with my son’s Legos, that’s salt. [Laughter] [Applause] And because I really don’t know what I’m saying. I’m just, you know, I’m just telling you what I think I know so far, but already in this talk, I I say the opposite of what I said two years ago, so everything might change [Laughter]

But, one insight that I had when I was preparing this talk is that, people don’t really learn in a straight curve. I’ll give you what I call Peldi’s laws of learning. It’s in beta, we can work on it together. [Laughter] But, clearly, learning is a function of time and it’s “t” divided by 2 plus sin is 4 “t” minus 0.6. It’s obvious everybody here, of course, came to the same conclusion.

But you know, you think that you get wiser and wiser over time, and to for me that is not the case at all. It’s more like, “Whoa! I think I know so much!” and then, you realise you know nothing. And then you’re like, “Okay, okay! I’m learning, I’m learning! I’m climbing that curve.” and then you’re like, “Oh wow, there’s so much more to learn!” So it’s really a roller coaster ride. In my case there’s actually that minus .06, where most of the time you have absolutely no idea of what’s going on. And then, for brief moments you’re like, “wow, I think I can share this stuff.” because you do accumulate learning over time. It’s not flat, at least, thankfully.

Uh, so, that was me in 2007. I was this gung-ho programmer, and you know, life was great. Then, I decided to quit my job and become this CEO, which I still don’t know what that means. and then, so, years of learning and two years ago I came and shared what I learned so far. And then another two years, and now at at the brink of the abyss again. And so, I wanna tell you what I learned so far. but also at the end, maybe if we have time we’ll do a little therapy session, you guys can help me out. [Laughter]

So why this talk? Mostly because I wanted to go to speaker’s dinner and meet Kathy Sierra. but, I got, I had to find out something I wanna talk about. And I wanted to do a talk about metrics, and how I don’t care at all about them. We don’t have any. and we’re still successful. But, then I saw this, and you know, Jason stole the talk, so I was like, “Alright, I gotta come up with something else.” and so, then I saw this chart that Mark put up on the blog about what people wanted to hear about. And see there’s growth, and growth again. Little one, and then, scale, and then TBD, which is also a growth. [Laughter] And so, I was like, “Yeah, this is great.” And it actually, it’s true that there’s actually not that much about the growing phase of the company. Mostly because, I think nobody knows what they’re doing so nobody’s sharing. But, also because maybe now you have a company, if you wanna bounce ideas off of somebody you don’t have to blog about it. I used to blog everything because I was just by myself. And so I was like, “Hey, somebody help me out.” But now we got a team, and we talk about it internally, so, it’s less of a public thing.

So, anyways, here we go. I wanna start with a series of epiphanies that I’ve had. And I think that entrepreneurs, first time entrepreneurs, have about, while you grow the company.

The first one is, you have an idea.

Or even before that, it was like, “I have to come up with an idea. That’s all I need. I need a great idea, and then I’ll sell it.” Or, then, “I will be rich.” It’s all about the genius idea, right. And you’re like, “Oh, I have this idea, but I can’t tell you because you’re going to steal it from me. It’s so valuable.” Right?! I mean, we’ve all been there, come on. But then now it’s more common knowledge that the idea by itself is really not worth very much. You’re not the smartest person in the world. There’s probably three or four people around the world who has had the same exact idea, right now. You know, ideas kind of emerge, in general.

Second – you need a product.

Um, and then, so, you’re like, “Alright, alright, I need a product. Fine, then I’ll build the product, and the product is all that I need.” Right? That’s, that used to be me when I started mockups. I was like, “I have a pretty good idea. I know to build a product, that’s it. I do these two things, I’m done.” right?

Third – Sales & Marketing.

And then, you realise that oh crap, now I’ve got to sell it to people. Right? cause if it’s, it could be the greatest product on the world, but if nobody cares about it, nobody wants it. Or, it’s too expensive for you to reach the people that want it. Or, you don’t have time, you know, the product is, requires you to, you know, has a sales cycles of six months and it’s just you, you know, it’s tough. So, this is actually, you know, the lead start up customer development, which we are going to talk about later or tomorrow. I love that that’s becoming more wide, widespread, thing, because ideally you should do marketing maybe at the same time as you think of the idea. Right? It’s just as important as the product, as the vision. You gotta figure out that there is a market there, and that it’s big enough, and that you’re going to be able to serve it properly. Alright.

Fourth – now I need to support those customers.

Uh, then say you do the all these three things right, and they come, they buy your product. Yay, it’s amazing! And then, you end up doing sales report and customer support all the time. Right? And, I did this for a while when it was just, still just me, and it got to three thousands in customers, and I got like, “Wait, I thought vision and product and my marketing was all that I needed?! Actually, these people have questions, and I need to answer them.” So, support, just as important as vision, product, and marketing. Alright, and so you start hiring people. And all of a sudden, you know, a little while later, while, if it’s a couple of you, that’s still kind of like a hobby, helping me out.

Fifth – now we become a company and you need to think about people and growth

But, then as it goes to three, four, you realise that it’s a company. All of a sudden you have this new thing that you gotta deal with, that requires your attention, that you have to sort of have to grow by itself. And, it is just as important as all the other pieces. Because if you hire the wrong person, it could sour the whole thing. Especially at the beginning because there’s only three or four of you. Right?

Sixth –build an ecosystem

Alright. Then you do that, and then, this is the last one that I realised is, even if you do all of those things right, it probably not enough. It’s really not a defensible competitive advantage, just to do that. You want to have an ecosystem of partners, vendors, your customer’s community, people who root for you to be successful. Right? Cause, when all things are equal, a company that has a strong ecosystem is harder to beat than one that doesn’t.

And so, this is already, are you frightened? Cause, you know, if you are just starting out this is a lot. And, they are all equally important. And this, for me, was the biggest epiphany of all. Right. And so, there’s a lot of thought, there’s a lot of, literature and blogs and books and stuff about the grey part, the vision, the product, the market, and support, how to do that all very well. But there’s not a lot about their sort of growth, focused wedges about company and ecosystems. So this talk, I wanna give a little overview about these two, to focus on these two.

Building an Ecosystem

Let’s start with the ecosystem because it’s a little simpler. And, I split it into internal, external, but it’s not really, a great, categorization. But I, let’s start with the internal one. When you first start out, it’s just you and maybe you have a co founder or two. And, you have your dynamics you, you, you know, you split the work between you guys. Or, you’re the sole founder, you do it all. You have everything in your head. Then, you start having employees, and so then you have to have a contract with the employee. You have to sort of have, start thinking about, uh treating your employees well, and you know, it’s another sort of layer.

The Internal ecosystem

But then there’s lawyers, accountants, payroll people. Right? Especially where we have, people in Italy, Germany, France, and the U.S. And, for each of these countries, we have a set of lawyers, accountants, and payroll people. Right, you can’t escape this. And they’re really important. Their job is to protect you from yourself. Right? From making bad mistakes. And so, you have to trust these people because they know about stuff that is ugly most of the time. At least for me, but anyways, and so you, you have to uh think of these people as extensions of the team. You gotta really interview them as if you were going to hire them. we’re on our third set of accountants, for instance. We’re happy now, but it took a while, it took a lot of effort.

Uh, then there’s contractors when you want to speed up a little bit, everybody’s busy. Get a contractor in for a bit, or if you want to do something that you don’t have the, the, the DNA to do internally. Get a contractor. Alright, that means another kind of contract, intellectual property, blah, blah, blah. Right?

Uh, then there’s the vendors. People who host your website, people um who you, you know, the back tracking tool that you use, the wiki tool that you use. You want, you wanna have some sort of good relationship with them as well, because if they go down, all of a sudden you don’t have a wiki you can’t work, you know, very easily anymore.

And then there’s partners, which is kind of like vendors, but you have a closer relationship with, maybe, you have a resale agreement, and so these are all contracts that need to be in place. All relationships that have to be in place that you have to think about.

The channels, so you have, like, the resalers or, you know, different ways that you sell.

And then in this slide, I also put competitors because even though it’s not really an internal thing, but they do influence a little bit of how you, how you behave. Right? and so, the idea is to just think about all of these things. They’re there, and not matter what you are doing they are going to be there. So, think that you are going to have to deal with all these things. And, I wish somebody had told me when I started. So, that’s why I’m giving this talk right now.

The external ecosystem

Um, externally, so, there is your website www your company. For instance, our’s is hosted on S3.

And then there’s your, uh customer and management system, the database of customers, the key generation, the billing stuff. You know, we use different, systems.

And then there’s the blogs. And those are hosted on WP Engine. And so, it’s all the same website, but really it’s on seven different servers.

Uh, the forums we use Get Satisfaction, and then user generated content, we have, we have a collection, of wire frames that people share with everybody else so that they can be reused.

Uh, we have a website where we teach people. Well, we’re working on it. Teach people how to be bad ass at UX.

Um, and then we have fun things, like, we have a list of dinner recipes that one of our employees uh makes for her customers to do for dinner, just to help them out. And so together this is your website. Right. You got all these kind of things and together it’s perceived as one big website.

And then, you have to have a Twitter presence because it’s for support, you have to have it. Facebook page, right. LinkedIn group. Depending on what you do, some of these might be more important than others. Google +, I’m generous. [Laughter] and then, other blogs. Right? So, there’s, sometimes you do a guest post somewhere, or you sponsor a blog that is related to your topic.

Uh, or, we sponsor a lot of events because we want to see them successful, because they also help people build better software which is what we’re all about.

Then you have the Evangelist people who sell you inside their big company. Right, they are working for you because they love you.

Uh, then if you are lucky you have a cottage industry of people who extend your tools, with, you know, try to make money on top of your tool or together with your tool. And that’s a great, uh defensible compatibility advantage.

And then you make new friends! This is great, I’m so happy here. This is where all my new entrepreneur friends are. It’s like I’m at camp. so thank you.

So, anyways, a lot of bubbles right? There’s one more way to split the, this ecosystem, think about this ecosystem thing is that we, you know I started this company because I cannot, you know they say life is too short for bad software. I cannot stand software that is not well made. It’s just, it makes such, it puts me in such a bad mood, right. and so, I deeply, deeply care about usability. But there’s a lot of other people that care about the same thing. There’s a whole industry of user experience professionals, alright. There’s and they, and they work at big companies, they’re consultants, they have..they write their books, they have blogs. Then, there’s our customers. They buy our product because they also care and they wanna make better software. Right? There’s you know, our staff and our product. It’s all part, and even our competitors. Right? Or regular folks compassionate about UX. It’s all, we’re all pushing in the same direction. We’re all trying to do the same thing, which is get rid of bad software.

Um, and so in summary of this ecosystem stuff, is that, embrace the ecosystem. Those bubbles are not going to go away. You can’t just say, “Oh, it’s just going to be me in my room doing this software.” If it works, that’s not the way it’s going to be. You’re going to have to deal with a lot of people, establish a lot of relationships, and it’s just as important as the product, the vision, the marketing, the support. Right? It’s one wedge that is so important so, if you know that this is coming from the start, it should help. Hopefully, it will help.

And then, this is one of my favorite quotes, I don’t know where it’s from, “surround yourself with excellence.” Right, I always say I want to be the dumbest person in the room. It’s such a great place to be, right? Because you are learning from everybody around you. You know, it happens more often than not. You know, you could do a lot worse than trying to do that. and so, when you think about your ecosystem, you know, try to get the best lawyer you can, the best accountant you can, the best vendors you can. People that inspire you, you can learn from.

And then, be a good citizen. Play nice, you know, if you want them to play nice with you, play nice with them as well. Don’t screw them over.

How to grow a company

Alright, let’s get to the meatier part. The company, how to grow a company, right. the first thing that I always think about is this sort of fast growth needs gardening. You can’t just let it happen by itself, especially organic growth. Well, I guess I don’t know anything about VC growth, but I think that’s managed as well, but I always go back to this slide. I showed it two years ago. Every talk I give has to have this slide because it is so important to me. This is an article that, I don’t know if Joel is still here, Joel wrote, a couple years ago, three, four years ago about organic growth. And you see the four charts, it says if you want to grow your company organically revenue, PR, employees, quality are all have to, more or less, grow on the same curve. And that makes so much sense to me because if you get written up in the New York Times, and the product is bad, then that’s not good. The quality has to be together with the PR. If you have a ton of customers but can’t support them, they’ll go away.

Right, so, for me, a lot, it’s a gut feeling. Like all it’s not released that feature yet because we don’t have people to support it. Right. But this is so useful for me, and while I was preparing this talk I was like, “Hey, I wonder how I’m doing on this, now it’s been four years I have some data.” And I used this tool called digmydata.com where you can track all sorts of things. And this is our data. I was like, “Wow, this is a nice surprise!” You know, the blue is visitors to the website, the red is the employees, and the grey is the revenue. And I guess, you know, we are growing organically. It’s it’s pretty fun, so Joel was right.

Company Values

Um, so, let’s start with something simple that you can do even if you are just starting up. It’s the company values. Right, so we have, an about page, a company page that I started, that I wrote when I did the website. And it changed a bunch of times since, you know, as we added employees, as we grew the company. But, there are a couple parts, sentences that didn’t really change very much at all. this is one,

“Basalmiq is a fast-growing, but still very personable software company. We like to compete on usability and customer service.”

So, I spoke about this two years ago, pick your battles and deliver. Right? These are the two battles that I decided were going to be what we were going to compete on, forever. And they are not related to features, they’re not going to change ten years from now. People are not going to want worse customer service or worse usability, right?

Uh, and another one is this sentence.

“We are trying to build a company we would like to do business with ourselves. We aim to wow you through our support and outstanding user experiences, and be a company that’s human, respectful, transparent, inclusive, socially and environmentally conscious.”

So, the way I came up with those is, it was just me and I was thirty-something, thirty three maybe. And I was like what kind of person do I want to be when I grow up? Right. What are, what, so I put some qualities that I wanted to be as a person and that I wanted my company to have those same qualities because that is a lot easier, otherwise, maybe if you have split personalities you can do another one. But, so that was real easy it was like I want, I wanted to be all of these things. I think I can be those, it will take a little effort, but I think I can deliver on these. And, if I write them down, I have to do it. Right? I’m telling everybody my company is going to be like this, then I have to do it. So, I it was a great soul-searching moment, and you know, it took twenty minutes. Right. It’s not, and that has been one of the few things that hasn’t changed on our website. And that is what perspective employees read as soon as they come to your website. Right. That is the company culture that Mike is going to talk about, later. So, I highly recommend sitting down five minutes. I know it’s kind of squishy feeling things, but, you know, for programmers like us, it’s kind of tough. But, it’s important, I think. It’s very important.

Company Policies

Alright then, moving on to company policies, sometimes we call them bibles, mostly they are guidelines. It’s documents on the wiki that describe to ourselves how we do the work. Right. There’s a few key characteristics of these.

For instance, we try to have as few as humanly possible.

I come from Italy, long history, lots of laws added on top of laws. It’s kind of like features, easy to add, really hard to take away. Right. [Laughter] And every time you add a little law it feels like, “oh, oh” you’re, like, becoming a mummy. Right. And then you can’t do anything because you’re tied into this path that it’s the only canyon you can walk. Right. So, we say as few as possible. There’s this great chapter about this long in rework, the 37 Signals book called “do not scar on the first cut”

Right. Basically if somebody messes up, does something bad, the tendency is always, “Ah let’s write a policy saying that was bad. Nobody should ever do that.” Don’t do that. Resist that temptation. Talk to that person say, “Hey, that was not cool. Don’t do it again.” and it might never happen again anyways. Right?

Do not create a policy just because it’s so easy to do, okay. Because it will constrain you in the future.

The other thing that we have on our policies up at the top it says, “This is not final. It will never be final. Please edit this, improve this. If this doesn’t change, we’re screwed.” Right. We have to continue to learn about every single thing, and continue to improve it because, if it’s frozen, then we’re frozen, then we’re dead.

The other interesting hack is to at the top of the policy, always say, explain the why. Why we’re doing this way and not doing it the other way. How does it fit with our values? Right. Just a little explain the reasoning behind the thing. Don’t, don’t just say, “Here’s the bullets top down this is what we’re doing.” Right. Explain the why and that, gets everybody on the same page.

And then, maybe don’t put them on the wiki, but put them on your blog. We did that with some of our company policies, just because we weren’t so sure, you know, we talked about it internally, but I said, “Hey, why don’t we just ask the community what they think about it.” And, I recommend this. Excuse me. I never, ever, ever look at analytics. But, that, the other day somebody wanted to see something, so I was showing them and I saw this historical data on the website, and the biggest spike was a blog post about our salary. Whatever.

Anyways, the goal is, to keep everybody on the same page. Right. It’s not the law, it’s a communication tool so that, hey I know something because I’ve been in charge of it until now let me just write down how I do it, and why I do it this way so that I can take a vacation and somebody else can do it. Right. It’s a communication tool. It’s also very, very useful for new employees. Here, read the wiki, tomorrow you start. Right? Reuben, for instance, does this with video tutorials. And I’m going to start trying to do that because it’s higher bandwidth than just a wiki page. Right. Put the video on the wiki page.

Pace of work

Alright, so, let me, let me share with you a few of these, some of these are on the blog, so, I, you know, go read the details if you want. Each of these could be a whole talk by itself, if you’re interested in any of these come, come over, we’ll talk. The first one is sort of pace over deadlines. I just don’t like dangling carrots, you know, I just, come on, we’re all mature, you know. How about you give each person their dream job that they want to do all the time, and say, “Okay, here is the job that needs to be done.” and they just pick what, the task that they want to do and they go as fast as they can, on their own speed. This is what I care about, I care about everybody going at a good pace. Like a car in third, fourth gear. Not fifth because you’re going to burn out. And that, and then you go to zero, right. And everybody has ups and downs. You have a child, you go in second gear for a while, you know. It’s fine as long as you go, you know, at a pace that we’re all happy with. so that’s one thing that we do. I don’t care where you work, or what time it is because I’m probably sleeping while you’re working. and just that the work gets done.

Vacation policy

Uh, another one is the vacation policy which is, take some. That’s it. [Laughter] hey it works! But I think we all take three or four weeks. I don’t know because we don’t track it. But, you know, take some because again, I don’t, we can’t afford to have you burn out. Alright, it’s that important.

Salary policy

Um, salary policy, this is heavily inspired by Dan Pink who’s here tomorrow, I think. I can’t believe it. [Laughter] and basically the idea is, remove the salary, the money from the conversation. We pay our employees better than the same job in the same geographical location so that they’re not going to worry about it, that they are not going to worry oh look if I interview there, I’m going to make more money. No. We pay better, not going to have to worry about money, it’s good, worry about the work.

Uh, on top of that we have a profit sharing program. Like, this is kind of fun because the formula, it’s pretty, it’s interesting. So, we take ten percent of our profits from the previous quarter and split it, with all the employees. twenty five percent of that is equally divided. Which is, just, here, this is what you get because you’re an employee, and uh we value you, even if you just started. And the other seventy five percent is based on, seniority. So that the new employees grow a little bit, and the older employees, it, it levels out at the end. You know, after five years, it’s not going to matter so much if you’re started a few months earlier than somebody else. Notice that it is not based on salary, it’s not based on skill, we don’t have job titles because we think that everybody contributes equally to the success of the company. We do not have an, a revenue, I mean an equity share or stocks in the company because I still haven’t figured out any of that. I don’t know any, what any of that means. So right now we are doing the profit sharing instead. I’m like Dharmesh was many years ago, then, then he figured it out. I’m going to go ask him tonight. [Laughter] But, for now, you know, the idea is if the company does well, the employees do well. Makes sense. And for some employees this profit, uh this bonuses of the profit sharing program is substantial, is be as much as their salary.

Donations policy

Uh, we have a donations policy. Two percent of the previous year’s, profits go to are split equally between employees, and each of them can give this, one, once a year. Some to whatever they want.

And, so that’s just a few, a few of our policies. And, you know, those sort of came out organically and slowly, as slowly as possible because we don’t want to have too many policies. But, when it was useful for the company to communicate with each other we put those down.

Sales support bible

Uh, a few more, I’ll go through these fast. The sales support bible. Does somebody have one of these in their wiki? Basically this is the sister document to the purchasing FAQ on the website. The FAQ on the website says, “Can I get a refund?” Yes. The wiki page says, “Here is how you give a refund. Go to Paypal, click here, click there, blah blah blah.” So, we try to put as much as possible on the website because that way they find it themselves. They don’t even email us. But there’s some things, the mechanics that we keep internally. So that for the policies I always try to have this sort of paired up documents. One public with as much stuff as possible, and one internal.

Technical  documentation

Uh, setting up a new dev machine. Please, please tell me you have this wiki page. Of course you have it, right? Of course you have it. I went to visit at this company, and was like, ”You don’t have a wiki? Like you don’t have a page like us? How does it work when you need a new machine set up for development?” Oh one guy, he knows that stuff and he’s not telling anybody else. Right, yeah right. Fire that guy. [Laughter] That’s, that’s so stupid! You don’t, shouldn’t, you shouldn’t, that is not a job. Right? Come on. [Laughter] Everybody should be able to do that. Script this.

QA

Um, anyways, I have one about how we do QA, so should I check in our branching strategies? You know, pretty simple stuff where the little TDD that we do basically how the lifetime of a bug. You know, simple things.

Internal Communication

Um, we have one about how we communicate with each other. We use Hipchat now instead of Yammer, sorry, but Hipchat has all these rooms one is the announcements room where it’s stuff that’s important. Then we have, like, a water cooler room where it’s stuff that is not important, but more fun. Then we have like each product has it’s own room, blah blah blah. And so, for somebody that is just starting out, there’s like fifty rooms now with pen and please, and it’s kind of ridiculous. [Laughter] But where should I post my daily or weekly agenda? And then we have Skype for video talks and Google Hangout is a new thing that we are using for all hands meetings which we have started doing once a month. It’s kind of cool.

Support

Uh, there’s this one about how we do support. Every support interaction is a three part thing. First, I have this problem. Second, perfect answer. Third, thank you so much, you guys are great. That’s it. I don’t want us to say “Oh, hold on. I’m going to go find the answer and get back to you.” That wastes everybody’s time. Okay? Just let it sit for a little until you find the answer, give the perfect answer so that they just come back and say that you guys are the best. And the perfect answer is, ideally is here is this page on the website that has your answer on it already. Right. Cause there should, if it’s on the website, that means that you’re probably not going to get that question again – or not as often.

Website and social media style guide

Um, then we have a website style guide with a little html for, you know, so that people can post articles themselves.

We have one about how we use Twitter, which is mostly for support right now.

How we decide what to sponsor, and what level of sponsorship to give them.

Firing

And we even have one on how we let people go. We had to do that last year, with one person and out of that came, a nice document that took a lot of soul searching as well. But now everybody is on the same page about they know what to expect, what the process is going to be like.

Time saving tips

I could go on, and on, and on. But since you are falling asleep [Laughter] I’ll give you a few time saving tips.

Things that I wish somebody told me, cause I wouldn’t have worried so much about them.

Avoiding scams

And so first one is this one. I know some of you already recognise this. [Laughter] We have the department of vision, process, registration services trainer. Somebody came to us with you, wanted to register your domain. We are so nice. We are asking you to register instead first. If you don’t do it in seven days, we will be forced to allow them to steal the domain from you. Trash. Track trash. Scam, don’t worry about it. You get these every week. It’s not, it’s a scam. The first time I was like, “Oh my gosh, it’s true!” [Laughter] But then I started Googling for it and I got three more. Just put it in the trash. If you want to minimize this, go right now and buy your Chinese, Taiwanese, Hong Kong domain. One hundred bucks, you’re done. You know, you’re saving yourself a bunch of garbage like that. Don’t worry about it, you know.

Award

You know about this? I hope there’s nobody that does awards yet. [Laughter] But one day you wake up. Oh my gosh I won an award, yay! We can put it on the website. You know those awesome awards. And then we get this email, “Hi Peldi, [Clears throat] has featured Basalmiq markups as one of their product excellence awards. Here’s the article. Let me know what your plans are for leveraging on this prestigious honor. There are great opportunities this great press and special awards logo with pull quotes on the website, in catalogs. Catalogs? [Laughter] Dealer materials, product packaging, and more. The huh huh huh brand is copywrited and requires a license on file prior to any usage.” Go away. [Laughter] I’m like, “Is it all like that?” And then I found this other award. [Laughter] And you have to apply, and it’s $10,000! [Laughter] And they will make a niche category so small [Laughter] that you’re the only product in it, and [Laughter] you’ll win the award. It’s such a scam! Alright, forget it, forget it. These people must disappear. [Laughter]

PCI Compliance

Um, PCI compliance. Dun dun dun dun, it gets cold in the room [Laughter] Right? This is the credit card you have to have the security procedures and all you hear about is, “Oh, it’s such a nightmare! Oh my gosh, I hope you never have to do that.” It’s such a nightmare, right? It is a nightmare I looked into it, but don’t worry, it’s not so bad. So you go to the official website, and they have documents and documents. Who here has been on it? Oh my gosh! Oh my gosh. It is intended to terrify you. [Laughter]

This little chart is, is part of the document that helps you navigate the other documents. [Laughter]

Right, this is which document, which set of documents you need to look at depending on your thing. And it’s either SAQ, A, B, C-VT, and then they all end up in the same, it’s terrible, it’s terrifying right? And so, but then they say, “Look, you’re never going to be able to figure out all this out by yourself. We have this set of professional PCI consultants that we work with. You should go and pay them.” It’s like a total mafia [Laughter] You know, you pay them and it’s going to be okay. I was like, “Ah, great.” And so, we call this one guy, well, actually, not bad. I think maybe you guys told me about it. So, you go there, you pay the two hundred bucks a year. And there’s this survey, six questions, eight questions. And it’s all about, “Do you take credit cards directly?” No, I well, you know, we take, we have we go through another company to do that. “Do you have a locker in your office, so where you, you with a lock so that you can store the sensitive files in it?” I don’t even have an office! [Laughter] so like, no. So then, that stuff that doesn’t apply to us at all, right. I’m like, “Alright, this is my best guess.” Submit. Denied! [Laughter] Denied, it’s like, you know, aw great call this number. Alright, call the number. Like, oh no, no don’t worry about it.

They explained to me, they said, “If something doesn’t apply to you, say yes anyways.” [Laughter] It means that if in the future that should apply to you, then you know what you’re supposed to be doing. [Laughter] So I’m like, “So I should just say yes to everything?” “Yes, just say yes to everything.” [Laughter] Give the two hundred seventy five dollars. Okay, great. [Laughter] Alright, we’re compliant! [Laughter] Oh my gosh, it was so ridiculous, so ridiculous. They give you, there was one useful thing. They give you this, word document template where it says, “insert your company name here, of our official security policy.” Okay, so alright, so then we say if we ever got an office with lockers, you know, [Laugher] and we all signed it and we’re good. So lame.

Venture Capital and Investment

Um, this one I don’t know, I don’t know but this is. Are there any VC’s in the room? I don’t want to offend anybody. [Laughter] so, there’s this, there’s this problem in our industry that, just because we do stuff on the internet, and we are programmers, we’re supposed to be in the same industry as Facebook. Right? Or, Y-Combinator. You guys are here, it’s a different industry. It’s, we have very little in common, okay? Our goal is not to grow. You know, Paul Graham is now saying that we are not startups, they’re startups. He’s claiming the word, so, I don’t know. Whatever. [Laughter]

But VC’s are also confused, the press is confused cause they put us together, and the VC’s are also confused. And so they say, “Oh wow, okay.” So, they call you, and the first time I call, I got a call, I tell you, my knees shaking, I was like, “Oh my gosh, this person has billions of dollars.” you know, must be important, it must be right.

And now, excuse me! Now I get about two calls a week, and they’re all exactly the same. So I want to share with you the formula so that if it happens to you, you know what they are expecting. [laughter] Exactly the same. They send an email, “We continue to hear great things about your company. Let’s have a phone call this week.” I think they do like, they AB tested this, cause they add some urgent [Laughter] urgency, right. It’s this week or we might buy, we might invest in someone else! Right? And so we’re like, “Thanks, but we’re good.” [Laughter] And I have a templated email. I’ll show you, I’ll put it up later so you can take a picture if you want. [Laughter] Um basically, you know, thanks, but we’re good. [Laughter]

And that’s when they start drooling.

Oh my gosh, we’re not used to this. [Laughter] Uh so, can we really talk so we can start establishing a relationship? It’s you, it takes two years between when we meet a founder to when we finally invest usually. So, let’s just start talking to each other. I’m like, “whatever, call me.” [Laughter] And so then they call, cause you can’t just be totally rude to these people. You might need their millions one day, you know. [Laughter] And they’re all the same. They’re like, “Well, let me give a little intro. We are the best. We are the specialist. We’ve been in this. We have billions to give away.” and “We are so special.” They are so special, I don’t remember a single name of a company I spoke with. They are all exactly the same. [Laughter]

And then they’re like, “Alright, now tell me about your company.” What they want to know is growth, cause for them growth is king. Much more than, they, they are surprised when we say, when we say we’re profitable. You know, they’re used to people, that other industry and so here’s our number. Here’s our revenue profitable. Blah, blah, blah. And here’s why we don’t think we are VC material. We’re a different industry. If I grow ten times in five years, that is a failure for me. [Laughter] You know, that’s not what I want. And, I’m a super niche business that doesn’t have room for anybody to grow ten times. You know, we’re already kind of already dominating our little niche, and we’re happy there. And so they say, “Crap, you’re right. But, I’ll call back in six months! [Laughter] Just in case you’re.” And, honest to God, a couple of people asked me if I was hiring. [Laughter] So when you talk to VC’s, be nice to them. They are really in a tough problem. They’re, they have people who gave them a lot of money to invest. Right? So they’re terrified of their people. And they have to invest, and call people like us who say, “Thanks, but we’re good.” So, you know, be nice to your friendly VC’s.

This is the thing. If you want to take a picture. I’m flattered by your offer, you know, here’s the manifest. I don’t know. It’ll be online later. it doesn’t really work. They still call. I’m working on a better one that is a little rude, but it doesn’t work.

When to hire

Uh, alright, next hack is when to hire. When I came two years ago, I said, “Wait until you think you’re going to die.” Right? And I did with the first hire. I thought I was going to die cause I had been doing six weeks of support during the week, and coding during the weekend. Nonstop. And I woke up one morning, and I was like, “I gotta hire someone. Now” [Laughter]

This is bad. And so, at the time I had a, a year of salary for this employee in the bank. And so I said, “Listen, I can pay you for a year, and then we will see what happens.” And so, that was okay back then because they fluctuations in the revenue were pretty high. Now, it’s been four years, the revenue is predicable.

And so, I’d say, “Don’t wait until it’s so late. Give yourself a little time so you can see more candidates.” Right, so that give yourself a chance to get the real best person. So if you have a good cash flow, you know, start looking a little ahead. Like, hey three months I think we’re really going to need a full, we aren’t going to have enough, this is growing so much it’s going to need a full time person doing that in three months. Start looking now. So, we have three open positions on our website right now. Check it out.

Rushing hiring decisions

Um, but actually, this brings me to a good thing. If you could all stand up, please. This is an important, important thing. Alright, hand on your heart. [Laughter] Repeat after me. I Peldi Guilizzoni, well, say your name, of course [Laughter] hereby solemnly swear that I will never, ever, ever rush a hiring decision. Alright, you may sit down now. [Applause]

Now remember, you swore that. Okay? We’re all witnesses. Okay? It could mess everything that you have worked so hard for up. Right? It could cause so much headache. And it’s so easy, so tempting. Hey, this person loves us! They want to work for us so bad. I have to hire them. They love us so much. They’re nice people. Well, that’s not enough. Okay? Not enough, give them a chance. Give them a couple of tough projects as a contractor. You know, do some peer programmer with them, if they’re programmers. Do not resist the infatuation just because they really want us. And they are big talkers, cause they want the job. Right? And some, sometimes it’s really hard to say no cause some candidates are pretty good. But, there’s something that doesn’t feel right, listen to that. Alright, I could go on, and on, and on.

In summary about this company part.

Do not underestimate the importance and difficulty of growing a company the right way.

This stuff is important, and really hard. It’s harder than coding because it has to do with people. Okay? [Laughter] It’s not, right, and nobody prepared you for this. Right? At all. But think about this. Everybody has to go through this at the same time. I mean, if they are doing well.

So we have competitors that come up once in awhile, and they have a good product. And we are like, “Okay, great. Let’s see if you can build a company around that.” Right? They are going to have the same roadblocks that you’ve had before. They, you know, it’s hard for them to catch up. Even if the product is not all there is. Don’t worry about it too much. They also have to build a product, a company around it. We have, we’ve had a couple of competitors that have had good products. But after two years, gave up cause they weren’t able to scale it, grow it.

And so even when you slow down, you feel like, “Oh, the company is growing. I’m slowing down. I’m doing all this stuff that’s not, that’s not about the product.” You’re not slowing down. You know you’re working really hard. You’re just working on other wedges of the pie. And if you know, you are convinced that they are just as important as everything else. I know it’s less flashy. The customers say, “Hey, what happened? You used to release every week.” And I’m like, “Yeah, I released a new wiki page. Company policy was really hard. You don’t know about it, but [Laughter] now we’re in a better position, you know.”

So looking back at this chart I, I realise that it’s actually not very good. I think that this is a better chart. Where, sure, you have to have an idea for a product and something of vision for where you want it to go. Right? But, you also have to have a vision about all the other wedges. How, what kind of company do you want? What kind of support do you want to give in the future? How are you doing to grow that? How are you going to grow your ecosystem? Right? and every single thing needs, needs to be managed. And you have to have a vision that is sure flexible, and nimble. But also some, cohesive. Right? It’s, it’s hard stuff, but. I printed this out, put it on my wall. I might do like, a laptop sticker, cause I like the colors.

Um, anyways, so, this could be the end of the talk. If that, but yeah, we have time. What do you think? Should we do a little more of the? Alright, one sip of water. Whew, you too, if you want.

Please help me with my founder challenges…

So, I hope, I hope it was useful so far. So, not it’s where you help me. I told you that I felt like I was at the edge of the cliff, and that I, I’m realising how much I don’t know and how much I have to learn.

And, the main challenge of right now is that I am the bottleneck.

There’s ten employees. So, I was set up like Joel says you see, you’re at the bottom of the pyramid. we have one pyramid, one line at the bottom. And my job is to come in and say what do you need, and I do that. And I love doing that. But, if I, if I have an hour meeting with each employee every day, that’s nine hours. And then, you know, that’s it. And, then we’re hiring three more. Right? That’s not, it doesn’t scale. And I don’t want it to be that way. And so, when everybody says “Oh, this is your reaching death threshold.” And that’s where you start putting managers in. I’m like, “Really? Managers? Aw man.” I mean, nothing wrong with managers. But we’re remote, how, how you going to put in with somebody who is asleep the whole time while you’re awake? You know. That’s not going to be a fun job. [Laughter] and it kind of feels like a little bit of a failure. Like come on we gotta be friends and everybody kind of just picks up the work. Can’t we just continue that.

And so, then as I was debating what to do. Have you seen this Valve handbook? Oh my gosh, Valve is a video game company in Seattle. They do Steam, which is like a video game web store, and do a bunch of big video games. I, I am not much of a gamer so I don’t know much. But, they came out with this beautiful, beautiful PDF cause they were trying to recruit a bunch of Linux people to port their stuff to Linux. And so this was their way of recruiting. It’s so gorgeous. It’s got images. It’s got like the t-shaped employee. That’s really, aw man I wanna be just like them. [Laughter]

So great! Basically, they say we have no managers.[Laughter] We have groups, your desks have wheels so that you can go and work with whatever you want, with uh whoever you want, whatever project you want. Ah, it’s so beautiful! And we were like, “Ah come on!” So, there’s that.

And so I started researching, “What does it take to do a flat organization, and who does it?” And so I started this wiki page, I call it Balsamiq 3.0.

But anyways, there’s WL Gore, the Goretex people. Two thousand employees, no managers. They’ve been doing it forever. It’s super secret. They don’t tell you why, how though.

Github, apparently a flat org. as well.

Talk about Morning Start. They are a tomato processing company in California, also no managers. And it’s not like, sort of elite, I mean there’s people who have to do the job of picking tomatoes. And still they do it without being told to do so. So this sort of magical world of flat organizations. And some recurring themes about like self organizing teams, you have like, an idea.

Darmesh was talking about it a yesterday a little bit. If you have an idea, you pitch it internally. If people follow you, you become the leader of that project. It’s all about project based. Anyways, this was super fascinating stuff. But, there’s a lot of, sort of, talk about it, you know. There’s some documents about why we’re doing it, but not much of the substance. Right? We’re trying, like, I went all hours saying, “Okay, we’re flat now!” not that we were before, but let’s stay flat and I make no more decisions. I tried, I tried. And then, immediately we hit a roadblock about, “Wait. How do we decide how to spend our money?” Right? I was like, “Oh, I don’t know.” right? Oh maybe we should have a policy. Oh but I don’t want polices. Oh, it’s um it’s such, I’m such a mess right now. [Laughter]

So help me out. Later, if you are interested in this kind of stuff, please come and talk to me, please. I’m serious. but maybe in a couple of years I can tell you all about it. Because it’s going to be, hopefully, it won’t be down there.

You know, clearly we are in over our heads. As usual. [Laughter] We’re used to it. And sometimes I think, “Is it worth it?” Oh, I have such envy for the Freshbooks, the Shopify, Red Gates, they buy a beautiful office. They’re all in, have lunch together. Okay, wouldn’t it just be easier to say, “Everybody move to Italy now. From now on we’re this traditional company, we have our beautiful desks.” You know, we all work from home. It’s very different, right. And so it’s like, “Eh, it would be so much easier to just put some managers in here.” Right?

Um, and then you think, I think back about this. Right? So if every wedge is just as important. Why not innovate? Why not give it all you’ve got on every single wedge, right? Sure, I, I love thinking about new features for the product. But now, I also love thinking about new features for the company, or the ecosystem, or the the support, or the marketing. Right? It’s, it is worth it to me to innovate because this is my life. Right? I’m trying to make it a nice place for us, for me, my family, and our employees and our employee’s families, and our customers, and our ecosystem. Right? If it’s just as important, and we agreed earlier that it was. Why not do it? I think it is worth it. And, that’s it. [Applause]

Five, I have five minutes for questions. Please be nice. And I have stickers, no marshmallows. Anyone? Oh, there’s one there, thank you.

Audience: So, I’m interested in seeing the picture because you were saying that everybody works in their own, uh space most of the time. How do you decide, when do you decide, how often do you decide to get everybody together?

Peldi: We’ve been doing a yearly retreat. Where we do a week somewhere nice together. This picture is from our one, one we did in June. We rented a big villa in the Hamptons in New York and we spent the week there mostly just eating, talking together, having a great time. Uh we, we barely did any work. Which was a problem. Next time we’ll try to do a little more work. [Laughter] But but but yeah so once a year right now. But, that was one of the topics at the retreat where we said, “Should we do it once a year? Should we do it twice a year? With families or without families?” And so, for now, we’re going to try to continue to do once a year thing that is mostly around fun.

And then, to encourage everybody to fly, to meet other employees for little projects. or ever to do just some training like, quick training course. And so that’s what we decided right now. We’ll see, it’s, as usual it’s in flux.

Anybody else? Two down there. Hold on, wait for the mic. Ooh, sorry. [Laughter] This light. [Laughter] Thank you.

Audience: Just a quick, dumb question. Where are you guys incorporated?

Peldi: We have two companies. We have one in California because I used to live there when I when I started. And, incorporating in that little city was like a one form super easy thing. Then I moved back to Italy. And then, you have to, I believe you have to pay taxes in the country where you live. Otherwise, you know, it’s [Laughter] you, you’re taking advantage of hospitals and roads. So, we incorporated, I incorporated there. And the Italian company owns the American company now. So, we have one in Italy and one in California.

Audience: I wonder if you had a new hire that didn’t work out, and what did you do about it?

Peldi: Oh, [Laughter] Yes, we did. We had one, and I, I tried to talk about it in private cause it is sensitive. I don’t wanna hurt anybody’s feelings. But it was hard, but now there was, there’s closure and everybody’s in a better place, and it took us a year and a half to figure that out. Which is too long. But so, well, I can tell you more about it, but. I hope that’s okay. One, two or one and two, I don’t know.

Audience: You’ve, hi!, you’ve build a business organically over a reasonable amount of time, and it’s hugely impressive what you’ve done. But, do you think there’s room for accelerating that rate of growth by using external capital?

Peldi: Wait, say that again.

Audience: Do you think that if by using an external capital in, then would you have done things differently? You would’ve done things faster? Would you ask more questions rather than try to invent it yourself?

Peldi: Yeah, I’m sure it would have been very different cause the minute you get capital, you get a boss, you get like a kitchen timer. Right? [Laughter] And they decide they call the shots after a while. Right? So very, it would have been very different. I don’t know if, if it would’ve been better. Maybe. Yeah, I don’t know. One of the competitors that gave up was venture funded. So, I don’t know if it would have been better. So, my main goal starting Basalmiq, and it’s still my main goal in life, is to learn as much as I can. Always put myself in a position where I do look at the abyss. So, I wanted to learn everything, how to do it, all on my own, all of the steps where. So I didn’t want anybody, anybody’s help. I was kind of, maybe I had to prove something to myself. I don’t know. But so, that’s also partly why I haven’t taken in VC. There was one there.

Audience: how do you go about hiring new employees, and finding new employees? Do you say, “I need a marketing person or new engineer, and I can find them.” and what the process.

Peldi: Okay, thank you for asking. let me see. Does it work? Oh, oops. Oh, I messed it up. They’re not happy with me. Company, can you, can I show this yes or no? Oh, it doesn’t even have internet, sorry. So last week my project was to make a jobs page on the website. That was a big milestone. Basically it says why you should not work here. [Laughter]

Big. And then, if you read past that, why it’s awesome to work here. And then it, you click through to the job positions that are open. And then, you click through that to the form. The form takes like over an hour to complete. It’s like the phone, it’s designed to replace the phone call. With all the softball questions. Where do you see yourself for five years? Right? But, at least, we get sort of a sense and so, check it out Balsamiq.com/company/jobs. so that’s our attempt to have people find us. So far we’ve had five applications in the last week. So, I, I’m pretty happy. Three were garbage, but it’s ok. So we’re still tweaking. But I guess who was it that said a couple of years ago always be hiring? Right? Everything you do, try to attract people to you in about marketing. But then sometimes you ask your friends. I accept anybody LinkedIn. Anybody, I don’t know anybody on my LinkedIn. I have five thousands of people. I just accept cause you never know, sometime you’re going to need somebody. Right? That’s one way. [Laughter] or I was this close to paying five hundred dollars to do a search on Stack Exchange.

[Applause]

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Peldi Guilizzoni

Giacomo ‘Peldi’ Guilizzoni is the Founder & CEO of Balsamiq, makers of rapid, effective, and fun wireframing software. If you’ve been to Business of Software Conference before, you’ll know Peldi – he’s the friendly one handing out stickers!

Peldi’s been attending since 2010, and has spoken 7 times – giving us a unique behind-the-scenes look at the growth of Balsamiq from a one-man project to a scaling software company of 25. Balsamiq is now 10 years old, with over 30 remote employees.

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