A wonderful talk 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.
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Iâm confused already. [Laughter] Iâll try with this one âcause, okay, hi. hello everybody. Wow! I canât see anything itâs really bright up here. [Laughter] So pretend that Iâm looking at you [Laughter] Though I really canât see anything. Anyways, hi, um. Wow, Iâm really excited to be here, and very thankful. Itâs really a privilege, and Iâm really nervous, so here we go.
For those who donât know me, I used to be this little programmer for Adobe. First Macromedia at Adobe, 2007 I decided thatâs it Iâm going to move back to Italy and quit my job and start my own thing. And, back then there was this term called, âMicro ISVâ Patrick knows it, McKenzie because he was in the business of software forums. I donât know if you guys were on there too.
Basically the idea is, was, Iâm just going to create a little software company that does tiny little thing, and itâs going to feed me and my family and weâll 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 itâs 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 thereâs ten of us, and weâre hiring three more people.
So you say, âWow, thatâs incredible! Credibility established.â Actually, not so fast. [Laughter] Take what I say with a giant grain of salt. I took this picture with my sonâs Legos, thatâs salt. [Laughter] [Applause] And because I really donât know what Iâm saying. Iâm just, you know, Iâm 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 donât really learn in a straight curve. Iâll give you what I call Peldiâs laws of learning. Itâs in beta, we can work on it together. [Laughter] But, clearly, learning is a function of time and itâs âtâ divided by 2 plus sin is 4 âtâ minus 0.6. Itâs 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. Itâs more like, âWhoa! I think I know so much!â and then, you realise you know nothing. And then youâre like, âOkay, okay! Iâm learning, Iâm learning! Iâm climbing that curve.â and then youâre like, âOh wow, thereâs so much more to learn!â So itâs really a roller coaster ride. In my case thereâs actually that minus .06, where most of the time you have absolutely no idea of whatâs going on. And then, for brief moments youâre like, âwow, I think I can share this stuff.â because you do accumulate learning over time. Itâs 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 donât 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 weâll do a little therapy session, you guys can help me out. [Laughter]
So why this talk? Mostly because I wanted to go to speakerâs 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 donât care at all about them. We donât have any. and weâre still successful. But, then I saw this, and you know, Jason stole the talk, so I was like, âAlright, I gotta come up with something else.â and so, then I saw this chart that Mark put up on the blog about what people wanted to hear about. And see thereâs growth, and growth again. Little one, and then, scale, and then TBD, which is also a growth. [Laughter] And so, I was like, âYeah, this is great.â And it actually, itâs true that thereâs actually not that much about the growing phase of the company. Mostly because, I think nobody knows what theyâre doing so nobodyâs sharing. But, also because maybe now you have a company, if you wanna bounce ideas off of somebody you donât have to blog about it. I used to blog everything because I was just by myself. And so I was like, âHey, somebody help me out.â But now we got a team, and we talk about it internally, so, itâs less of a public thing.
So, anyways, here we go. I wanna start with a series of epiphanies that Iâve 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, âI have to come up with an idea. Thatâs all I need. I need a great idea, and then Iâll sell it.â Or, then, âI will be rich.â Itâs all about the genius idea, right. And youâre like, âOh, I have this idea, but I canât tell you because youâre going to steal it from me. Itâs so valuable.â Right?! I mean, weâve all been there, come on. But then now itâs more common knowledge that the idea by itself is really not worth very much. Youâre not the smartest person in the world. Thereâs 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 â you need a product.
Um, and then, so, youâre like, âAlright, alright, I need a product. Fine, then Iâll build the product, and the product is all that I need.â Right? Thatâs, that used to be me when I started mockups. I was like, âI have a pretty good idea. I know to build a product, thatâs it. I do these two things, Iâm done.â right?
Third â Sales & Marketing.
And then, you realise that oh crap, now Iâve got to sell it to people. Right? cause if itâs, it could be the greatest product on the world, but if nobody cares about it, nobody wants it. Or, itâs too expensive for you to reach the people that want it. Or, you donât have time, you know, the product is, requires you to, you know, has a sales cycles of six months and itâs just you, you know, itâs 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 thatâs becoming more wide, widespread, thing, because ideally you should do marketing maybe at the same time as you think of the idea. Right? Itâs just as important as the product, as the vision. You gotta figure out that there is a market there, and that itâs big enough, and that youâre going to be able to serve it properly. Alright.
Fourth â 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, itâs 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, âWait, I thought vision and product and my marketing was all that I needed?! Actually, these people have questions, and I need to answer them.â 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 itâs a couple of you, thatâs still kind of like a hobby, helping me out.
Fifth â 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 itâs 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 thereâs only three or four of you. Right?
Sixth âbuild 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. Itâs really not a defensible competitive advantage, just to do that. You want to have an ecosystem of partners, vendors, your customerâs 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 doesnât.
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, thereâs a lot of thought, thereâs 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 thereâs 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
Letâs start with the ecosystem because itâs a little simpler. And, I split it into internal, external, but itâs not really, a great, categorization. But I, letâs start with the internal one. When you first start out, itâs 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, youâre 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, itâs another sort of layer.
The Internal ecosystem
But then thereâs 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 canât escape this. And theyâre 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. weâre on our third set of accountants, for instance. Weâre happy now, but it took a while, it took a lot of effort.
Uh, then thereâs contractors when you want to speed up a little bit, everybodyâs busy. Get a contractor in for a bit, or if you want to do something that you donât 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 thereâs 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 donât have a wiki you canât work, you know, very easily anymore.
And then thereâs 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 itâs 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. Theyâre 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, thatâs why Iâm giving this talk right now.
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The external ecosystem
Um, externally, so, there is your website www your company. For instance, ourâs is hosted on S3.
And then thereâs your, uh customer and management system, the database of customers, the key generation, the billing stuff. You know, we use different, systems.
And then thereâs the blogs. And those are hosted on WP Engine. And so, itâs all the same website, but really itâs 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, weâre 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 itâs perceived as one big website.
And then, you have to have a Twitter presence because itâs 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 +, Iâm generous. [Laughter] and then, other blogs. Right? So, thereâs, 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 weâre 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 thatâs a great, uh defensible compatibility advantage.
And then you make new friends! This is great, Iâm so happy here. This is where all my new entrepreneur friends are. Itâs like Iâm at camp. so thank you.
So, anyways, a lot of bubbles right? Thereâs 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. Itâs just, it makes such, it puts me in such a bad mood, right. and so, I deeply, deeply care about usability. But thereâs a lot of other people that care about the same thing. Thereâs a whole industry of user experience professionals, alright. Thereâs and they, and they work at big companies, theyâre consultants, they have..they write their books, they have blogs. Then, thereâs our customers. They buy our product because they also care and they wanna make better software. Right? Thereâs you know, our staff and our product. Itâs all part, and even our competitors. Right? Or regular folks compassionate about UX. Itâs all, weâre all pushing in the same direction. Weâre 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 canât just say, âOh, itâs just going to be me in my room doing this software.â If it works, thatâs not the way itâs going to be. Youâre going to have to deal with a lot of people, establish a lot of relationships, and itâs just as important as the product, the vision, the marketing, the support. Right? Itâs 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 donât know where itâs from, âsurround yourself with excellence.â Right, I always say I want to be the dumbest person in the room. Itâs 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. Donât screw them over.
How to grow a company
Alright, letâs 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 canât just let it happen by itself, especially organic growth. Well, I guess I donât know anything about VC growth, but I think thatâs 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 donât 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 thatâs not good. The quality has to be together with the PR. If you have a ton of customers but canât support them, theyâll go away.
Right, so, for me, a lot, itâs a gut feeling. Like all itâs not released that feature yet because we donât have people to support it. Right. But this is so useful for me, and while I was preparing this talk I was like, âHey, I wonder how Iâm doing on this, now itâs been four years I have some data.â And I used this tool called digmydata.com where you can track all sorts of things. And this is our data. I was like, âWow, this is a nice surprise!â 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. Itâs itâs pretty fun, so Joel was right.
Company Values
Um, so, letâs start with something simple that you can do even if you are just starting up. Itâs 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 didnât really change very much at all. this is one,
âBasalmiq is a fast-growing, but still very personable software company. We like to compete on usability and customer service.â
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, theyâre 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.
âWe 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 thatâs human, respectful, transparent, inclusive, socially and environmentally conscious.â
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? Iâm 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. Itâs not, and that has been one of the few things that hasnât 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 itâs kind of squishy feeling things, but, you know, for programmers like us, itâs kind of tough. But, itâs important, I think. Itâs very important.
Company Policies
Alright then, moving on to company policies, sometimes we call them bibles, mostly they are guidelines. Itâs documents on the wiki that describe to ourselves how we do the work. Right. Thereâs 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. Itâs 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, âoh, ohâ youâre, like, becoming a mummy. Right. And then you canât do anything because youâre tied into this path that itâs the only canyon you can walk. Right. So, we say as few as possible. Thereâs this great chapter about this long in rework, the 37 Signals book called âdo not scar on the first cutâ
Right. Basically if somebody messes up, does something bad, the tendency is always, âAh letâs write a policy saying that was bad. Nobody should ever do that.â Donât do that. Resist that temptation. Talk to that person say, âHey, that was not cool. Donât do it again.â and it might never happen again anyways. Right?
Do not create a policy just because itâs 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, âThis is not final. It will never be final. Please edit this, improve this. If this doesnât change, weâre screwed.â Right. We have to continue to learn about every single thing, and continue to improve it because, if itâs frozen, then weâre frozen, then weâre dead.
The other interesting hack is to at the top of the policy, always say, explain the why. Why weâre 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. Donât, donât just say, âHereâs the bullets top down this is what weâre doing.â Right. Explain the why and that, gets everybody on the same page.
And then, maybe donât put them on the wiki, but put them on your blog. We did that with some of our company policies, just because we werenât so sure, you know, we talked about it internally, but I said, âHey, why donât we just ask the community what they think about it.â 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. Itâs not the law, itâs a communication tool so that, hey I know something because Iâve 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. Itâs a communication tool. Itâs also very, very useful for new employees. Here, read the wiki, tomorrow you start. Right? Reuben, for instance, does this with video tutorials. And Iâm going to start trying to do that because itâs 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 youâre interested in any of these come, come over, weâll talk. The first one is sort of pace over deadlines. I just donât like dangling carrots, you know, I just, come on, weâre all mature, you know. How about you give each person their dream job that they want to do all the time, and say, âOkay, here is the job that needs to be done.â 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 youâre 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. Itâs fine as long as you go, you know, at a pace that weâre all happy with. so thatâs one thing that we do. I donât care where you work, or what time it is because Iâm probably sleeping while youâre working. and just that the work gets done.
Vacation policy
Uh, another one is the vacation policy which is, take some. Thatâs it. [Laughter] hey it works! But I think we all take three or four weeks. I donât know because we donât track it. But, you know, take some because again, I donât, we canât afford to have you burn out. Alright, itâs that important.
Salary policy
Um, salary policy, this is heavily inspired by Dan Pink whoâs here tomorrow, I think. I canât 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 theyâre not going to worry about it, that they are not going to worry oh look if I interview there, Iâm going to make more money. No. We pay better, not going to have to worry about money, itâs 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, itâs pretty, itâs 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 youâre 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, itâs not going to matter so much if youâre started a few months earlier than somebody else. Notice that it is not based on salary, itâs not based on skill, we donât 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 havenât figured out any of that. I donât know any, what any of that means. So right now we are doing the profit sharing instead. Iâm like Dharmesh was many years ago, then, then he figured it out. Iâm 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 yearâs, 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 thatâs 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 donât 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, Iâll 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, âCan I get a refund?â Yes. The wiki page says, âHere is how you give a refund. Go to Paypal, click here, click there, blah blah blah.â So, we try to put as much as possible on the website because that way they find it themselves. They donât even email us. But thereâs 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, âYou donât have a wiki? Like you donât have a page like us? How does it work when you need a new machine set up for development?â Oh one guy, he knows that stuff and heâs not telling anybody else. Right, yeah right. Fire that guy. [Laughter] Thatâs, thatâs so stupid! You donât, shouldnât, you shouldnât, 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 itâs stuff thatâs important. Then we have, like, a water cooler room where itâs stuff that is not important, but more fun. Then we have like each product has itâs own room, blah blah blah. And so, for somebody that is just starting out, thereâs like fifty rooms now with pen and please, and itâs 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. Itâs kind of cool.
Support
Uh, thereâs 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. Thatâs it. I donât want us to say âOh, hold on. Iâm going to go find the answer and get back to you.â That wastes everybodyâs 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 itâs on the website, that means that youâre 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.
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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] Iâll give you a few time saving tips.
Things that I wish somebody told me, cause I wouldnât 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 donât do it in seven days, we will be forced to allow them to steal the domain from you. Trash. Track trash. Scam, donât worry about it. You get these every week. Itâs not, itâs a scam. The first time I was like, âOh my gosh, itâs true!â [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, youâre done. You know, youâre saving yourself a bunch of garbage like that. Donât worry about it, you know.
Award
You know about this? I hope thereâs 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, âHi Peldi, [Clears throat] has featured Basalmiq markups as one of their product excellence awards. Hereâs 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.â Go away. [Laughter] Iâm like, âIs it all like that?â And then I found this other award. [Laughter] And you have to apply, and itâs $10,000! [Laughter] And they will make a niche category so small [Laughter] that youâre the only product in it, and [Laughter] youâll win the award. Itâs 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, âOh, itâs such a nightmare! Oh my gosh, I hope you never have to do that.â Itâs such a nightmare, right? It is a nightmare I looked into it, but donât worry, itâs 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 itâs either SAQ, A, B, C-VT, and then they all end up in the same, itâs terrible, itâs terrifying right? And so, but then they say, âLook, youâre 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.â Itâs like a total mafia [Laughter] You know, you pay them and itâs going to be okay. I was like, âAh, great.â 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 thereâs this survey, six questions, eight questions. And itâs all about, âDo you take credit cards directly?â No, I well, you know, we take, we have we go through another company to do that. âDo you have a locker in your office, so where you, you with a lock so that you can store the sensitive files in it?â I donât even have an office! [Laughter] so like, no. So then, that stuff that doesnât apply to us at all, right. Iâm like, âAlright, this is my best guess.â Submit. Denied! [Laughter] Denied, itâs like, you know, aw great call this number. Alright, call the number. Like, oh no, no donât worry about it.
They explained to me, they said, âIf something doesnât apply to you, say yes anyways.â [Laughter] It means that if in the future that should apply to you, then you know what youâre supposed to be doing. [Laughter] So Iâm like, âSo I should just say yes to everything?â âYes, just say yes to everything.â [Laughter] Give the two hundred seventy five dollars. Okay, great. [Laughter] Alright, weâre 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, âinsert your company name here, of our official security policy.â Okay, so alright, so then we say if we ever got an office with lockers, you know, [Laugher] and we all signed it and weâre good. So lame.
Venture Capital and Investment
Um, this one I donât know, I donât know but this is. Are there any VCâs in the room? I donât want to offend anybody. [Laughter] so, thereâs this, thereâs this problem in our industry that, just because we do stuff on the internet, and we are programmers, weâre supposed to be in the same industry as Facebook. Right? Or, Y-Combinator. You guys are here, itâs a different industry. Itâs, 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, theyâre startups. Heâs claiming the word, so, I donât know. Whatever. [Laughter]
But VCâs are also confused, the press is confused cause they put us together, and the VCâs are also confused. And so they say, âOh wow, okay.â So, they call you, and the first time I call, I got a call, I tell you, my knees shaking, I was like, âOh my gosh, this person has billions of dollars.â you know, must be important, it must be right.
And now, excuse me! Now I get about two calls a week, and theyâre 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, âWe continue to hear great things about your company. Letâs have a phone call this week.â I think they do like, they AB tested this, cause they add some urgent [Laughter] urgency, right. Itâs this week or we might buy, we might invest in someone else! Right? And so weâre like, âThanks, but weâre good.â [Laughter] And I have a templated email. Iâll show you, Iâll put it up later so you can take a picture if you want. [Laughter] Um basically, you know, thanks, but weâre good. [Laughter]
And thatâs when they start drooling.
Oh my gosh, weâre not used to this. [Laughter] Uh so, can we really talk so we can start establishing a relationship? Itâs you, it takes two years between when we meet a founder to when we finally invest usually. So, letâs just start talking to each other. Iâm like, âwhatever, call me.â [Laughter] And so then they call, cause you canât just be totally rude to these people. You might need their millions one day, you know. [Laughter] And theyâre all the same. Theyâre like, âWell, let me give a little intro. We are the best. We are the specialist. Weâve been in this. We have billions to give away.â and âWe are so special.â They are so special, I donât remember a single name of a company I spoke with. They are all exactly the same. [Laughter]
And then theyâre like, âAlright, now tell me about your company.â 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 weâre profitable. You know, theyâre used to people, that other industry and so hereâs our number. Hereâs our revenue profitable. Blah, blah, blah. And hereâs why we donât think we are VC material. Weâre a different industry. If I grow ten times in five years, that is a failure for me. [Laughter] You know, thatâs not what I want. And, Iâm a super niche business that doesnât have room for anybody to grow ten times. You know, weâre already kind of already dominating our little niche, and weâre happy there. And so they say, âCrap, youâre right. But, Iâll call back in six months! [Laughter] Just in case youâre.â And, honest to God, a couple of people asked me if I was hiring. [Laughter] So when you talk to VCâs, be nice to them. They are really in a tough problem. Theyâre, they have people who gave them a lot of money to invest. Right? So theyâre terrified of their people. And they have to invest, and call people like us who say, âThanks, but weâre good.â So, you know, be nice to your friendly VCâs.
This is the thing. If you want to take a picture. Iâm flattered by your offer, you know, hereâs the manifest. I donât know. Itâll be online later. it doesnât really work. They still call. Iâm working on a better one that is a little rude, but it doesnât work.
When to hire
Uh, alright, next hack is when to hire. When I came two years ago, I said, âWait until you think youâre going to die.â 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, âI gotta hire someone. Nowâ [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, âListen, I can pay you for a year, and then we will see what happens.â And so, that was okay back then because they fluctuations in the revenue were pretty high. Now, itâs been four years, the revenue is predicable.
And so, Iâd say, âDonât wait until itâs so late. Give yourself a little time so you can see more candidates.â 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 weâre really going to need a full, we arenât going to have enough, this is growing so much itâs 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? Weâre all witnesses. Okay? It could mess everything that you have worked so hard for up. Right? It could cause so much headache. And itâs 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. Theyâre nice people. Well, thatâs 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 theyâre 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 itâs really hard to say no cause some candidates are pretty good. But, thereâs something that doesnât 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. Itâs harder than coding because it has to do with people. Okay? [Laughter] Itâs 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, âOkay, great. Letâs see if you can build a company around that.â Right? They are going to have the same roadblocks that youâve had before. They, you know, itâs hard for them to catch up. Even if the product is not all there is. Donât worry about it too much. They also have to build a product, a company around it. We have, weâve had a couple of competitors that have had good products. But after two years, gave up cause they werenât able to scale it, grow it.
And so even when you slow down, you feel like, âOh, the company is growing. Iâm slowing down. Iâm doing all this stuff thatâs not, thatâs not about the product.â Youâre not slowing down. You know youâre working really hard. Youâre 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 itâs less flashy. The customers say, âHey, what happened? You used to release every week.â And Iâm like, âYeah, I released a new wiki page. Company policy was really hard. You donât know about it, but [Laughter] now weâre in a better position, you know.â
So looking back at this chart I, I realise that itâs 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? Itâs, itâs 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 itâs where you help me. I told you that I felt like I was at the edge of the cliff, and that I, Iâm realising how much I donât know and how much I have to learn.
And, the main challenge of right now is that I am the bottleneck.
Thereâs ten employees. So, I was set up like Joel says you see, youâre 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, thatâs nine hours. And then, you know, thatâs it. And, then weâre hiring three more. Right? Thatâs not, it doesnât scale. And I donât want it to be that way. And so, when everybody says âOh, this is your reaching death threshold.â And thatâs where you start putting managers in. Iâm like, âReally? Managers? Aw man.â I mean, nothing wrong with managers. But weâre remote, how, how you going to put in with somebody who is asleep the whole time while youâre awake? You know. Thatâs 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. Canât 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 donât 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. Itâs so gorgeous. Itâs got images. Itâs got like the t-shaped employee. Thatâs 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, itâs so beautiful! And we were like, âAh come on!â So, thereâs that.
And so I started researching, âWhat does it take to do a flat organization, and who does it?â And so I started this wiki page, I call it Balsamiq 3.0.
But anyways, thereâs WL Gore, the Goretex people. Two thousand employees, no managers. Theyâve been doing it forever. Itâs super secret. They donât 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 itâs not like, sort of elite, I mean thereâs 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. Itâs all about project based. Anyways, this was super fascinating stuff. But, thereâs a lot of, sort of, talk about it, you know. Thereâs some documents about why weâre doing it, but not much of the substance. Right? Weâre trying, like, I went all hours saying, âOkay, weâre flat now!â not that we were before, but letâs stay flat and I make no more decisions. I tried, I tried. And then, immediately we hit a roadblock about, âWait. How do we decide how to spend our money?â Right? I was like, âOh, I donât know.â right? Oh maybe we should have a policy. Oh but I donât want polices. Oh, itâs um itâs such, Iâm 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. Iâm serious. but maybe in a couple of years I can tell you all about it. Because itâs going to be, hopefully, it wonât be down there.
You know, clearly we are in over our heads. As usual. [Laughter] Weâre used to it. And sometimes I think, âIs it worth it?â Oh, I have such envy for the Freshbooks, the Shopify, Red Gates, they buy a beautiful office. Theyâre all in, have lunch together. Okay, wouldnât it just be easier to say, âEverybody move to Italy now. From now on weâre this traditional company, we have our beautiful desks.â You know, we all work from home. Itâs very different, right. And so itâs like, âEh, it would be so much easier to just put some managers in here.â 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 youâve 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? Itâs, it is worth it to me to innovate because this is my life. Right? Iâm trying to make it a nice place for us, for me, my family, and our employees and our employeeâs families, and our customers, and our ecosystem. Right? If itâs just as important, and we agreed earlier that it was. Why not do it? I think it is worth it. And, thatâs it. [Applause]
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Five, I have five minutes for questions. Please be nice. And I have stickers, no marshmallows. Anyone? Oh, thereâs one there, thank you.
Audience: So, Iâm 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: Weâve 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 weâll 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, âShould we do it once a year? Should we do it twice a year? With families or without families?â And so, for now, weâre 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 thatâs what we decided right now. Weâll see, itâs, as usual itâs 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:Â 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, itâs [Laughter] you, youâre 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 didnât work out, and what did you do about it?
Peldi:Â Oh, [Laughter] Yes, we did. We had one, and I, I tried to talk about it in private cause it is sensitive. I donât wanna hurt anybodyâs feelings. But it was hard, but now there was, thereâs closure and everybodyâs 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 thatâs okay. One, two or one and two, I donât know.
Audience: Youâve, hi!, youâve build a business organically over a reasonable amount of time, and itâs hugely impressive what youâve done. But, do you think thereâs room for accelerating that rate of growth by using external capital?
Peldi:Â Wait, say that again.
Audience: Do you think that if by using an external capital in, then would you have done things differently? You wouldâve done things faster? Would you ask more questions rather than try to invent it yourself?
Peldi:Â Yeah, Iâm 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 donât know if, if it wouldâve been better. Maybe. Yeah, I donât know. One of the competitors that gave up was venture funded. So, I donât know if it would have been better. So, my main goal starting Basalmiq, and itâs 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 didnât want anybody, anybodyâs help. I was kind of, maybe I had to prove something to myself. I donât know. But so, thatâs also partly why I havenât taken in VC. There was one there.
Audience: how do you go about hiring new employees, and finding new employees? Do you say, âI need a marketing person or new engineer, and I can find them.â and what the process.
Peldi:Â Okay, thank you for asking. let me see. Does it work? Oh, oops. Oh, I messed it up. Theyâre not happy with me. Company, can you, can I show this yes or no? Oh, it doesnât 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 itâs 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. Itâs like the phone, itâs 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 thatâs our attempt to have people find us. So far weâve had five applications in the last week. So, I, Iâm pretty happy. Three were garbage, but itâs ok. So weâre 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 donât know anybody on my LinkedIn. I have five thousands of people. I just accept cause you never know, sometime youâre going to need somebody. Right? Thatâs 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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