Peldi Guilizzoni – Coding is the Easy Part

This is a summary of Peldi’s Business of Software 2012 presentation.

Peldi’s Law of Learning

Learning is like a roller coaster ride. Peldi theorizes that we learn in a sort of upward sine wave pattern. We hit peaks and valleys in our quest to educate ourselves. At times we think “Wow, I’m smart and can share my knowledge!”, but other times we don’t feel so smart. Peldi felt knowledgeable and worthy of sharing his experiences in 2010 when he presented at Business of Software. He is feeling the same way again this year.

Peldi’s epiphanies as he grew Balsamiq and moved through the various stages of the company:

• Vision: At first all you have is an idea. You think it’s a great idea, but you don’t want to tell anyone because you think people will steal it. This is despite the fact that no one recommends stealth mode, and that it’s well known that an idea by itself isn’t worth much.
• Product: Then you think all you have to do is build a product, and the masses will somehow manage to find you.
• Marketing: Then you realize “Oh crap, now I have to market this.” Marketing is just as important as the idea and the product. Lean startup helps at this stage.
• Support: If you do the above three right you end up with customers, which leads to doing customer support all the time. You realize customer support is just as important as the previous steps. Then you hire people to do customer support.
• Company: Now you realize you have a company. When you only have 2 – 3 people it’s just a hobby. This company is fragile and it’s going to take a lot of your time. If you hire the wrong person you could ruin the company.
• Ecosystem: Once you have a company you can build an ecosystem of partners around that company. That ecosystem gives you a competitive advantage.

There are many books and blogs that go into great depth about the first four topics, but there isn’t a whole lot of information about the last two. This presentation will focus on the last two – company and ecosystem.

Ecosystem

Your internal company ecosystem starts with the founders and the employees. From there it grows when you need services from professionals like lawyers and accountants. These people are an extension of the team. Then you add vendors, contractors and partners to the mix. Lastly are the competitors. Yes, competitors! Competitors are part of your ecosystem because they have an impact on your business.

There’s an external company ecosystem too. Your sales website, forum and blogs are the same website, but they might all be hosted on different servers. Then there’s your social media presence on Twitter, Facebook, etc. If you’re lucky you’ll also have a cottage industry of people that will extend your tools with plugins.

Embrace your ecosystem. Think about all these things because they are there and will continue to be there. You’re going to have to deal with a lot of people.

Surround yourself with excellence. Make yourself the dumbest person in the room.

Be a good citizen. If you don’t want people to screw with you, don’t screw with them.

Company

Growth requires gardening. Grow organically and grow all at the same time (revenue, employees, PR, etc.). Peldi recommends reading the Inc magazine article by Joel Spolsky – The Four Pillars of Organic Growth.

Company values (Pick your battles and deliver.):

• What kind of person do you want to be when you grow up?
• Reflect the qualities you want to demonstrate as a person in your company’s ethos.

Company policies:

• Use as few as possible. Don’t create a policy just because it’s easy to do. Laws are like features – easy to add, hard to take away.
• Policies are never frozen. They can be changed.
• Explain why the policy exists. How does it relate to the company values?
• Put policies on the blog. Ask the community what they think of the policy, especially if you’re not sure of it. The biggest spike on Peldi’s blog was because of a blog post on Balsamiq’s company policies.

The main goal of the policies is to keep everyone on the same page. It’s also helpful for new employees.

Guidelines used at Balsamiq:

• Pace > deadlines: We are all mature. Let people pick their tasks and go as fast as they can. If you push too hard, people will burn out.
• Vacation policy: Take some!
• Salary: Remove money from the conversation, so employees don’t have to worry about it. Balsamiq pays employees more than the industry average.
• Profit sharing: All Balsamiq employees have profit sharing. It’s not based on salary or skill. The idea is, if the company does well, the employee does well. For some employees it can be as much as their salary. The employees don’t have equity shares or stock, because Peldi says he hadn’t figured that out when he started the company.
• Donations: Employees are given money they can donate to whatever cause they want.

Guidelines posted on Balsamiq’s internal company wiki:

• Sales support bible
• Setting up a new development machine
• How we do development and QA (branding, TDD, etc.)
• Hipchat + Skype + Google hangout
• How we do support
• Website style/HTML
• How we use Twitter
• Sponsorship guidelines
• How we let people go

Things I wish I had known (time saving tips):

• Ignore Asian registrar notices. It’s a scam.
• Ignore award notices. It’s a scam. They usually want you to pay them money.
• PCI compliance is a mafia operation. It’s intentionally complicated. They are time wasters – if something doesn’t apply to you, say yes anyways.
• VCs will eventually start contacting you. Be nice when dealing with them, even if you don’t need them now. You may need them someday.  Keep in mind that for VCs growth is king, not profit.
• Know when to hire. At Business of Software 2010, Peldi recommended that you “wait until you are about to die” before hiring someone. He now takes that back and advises that you don’t wait until it’s so late. If you have good cashflow you should consider hiring someone sooner. But at the same time, be careful not to rush your hiring decisions, because you could make a mistake in hiring the wrong person. Something Peldi recently experienced. Peldi made everyone in the audience take his hiring pledge.

How a typical conversation with a VC goes:

Don’t underestimate the importance and difficulty of growing a company the right way.

Balsamiq’s current challenges:

• Peldi is the bottleneck.
• Managers? Because Peldi is the bottleneck he’s starting to think he needs managers, but he doesn’t want managers.
• Valve envy. Valve is a company that has beautiful employee handbooks that Balsamiq wants to be like.
• Flat organizations. Is this the right choice?
• In over their heads (as usual).
• Is it worth it?

[I’d like to thank Bill Horvath, founder of DoX Systems, for sharing his notes with me.]

Justin Goeres also has a nice summary of Peldi’s talk on his blog.