Shawn Anderson: From Bootstrapped to a Billion – Five BoS Talks That Changed My World

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Shawn, with his twin brother Shane Corellian, founded PDQ in 2001. He shares the 2 decade evolution of PDQ from unfundable startup to small giant. He highlights five BoS talks he heard as they struggled to reach milestone after milestone that led to transformational changes for the company. Today, PDQ has: over 45,000 customers; PE funding; a valuation over $1billion.

From understanding how customers really want to be treated, through rethinking how PDQ builds software, and more.

You’ll learn:

• Interruptions are not collaboration – protect your team’s creative time and focus.
• Be careful of “red flag” words that shut down meaningful discussion.
• Implement a rigorous hiring process that tests candidates’ actual skills and potential.
• Protect your intellectual property meticulously, especially when preparing for a potential sale.
• Build a passionate community around your product – it can be your most valuable asset.

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Transcript

Shawn Anderson 

So I am well aware that the only thing between you and beer is me. And I am so okay with that. We’ll get through this. This is my second time speaking at BoS, but this is my 14th time attending it. I’ve done 12 in the US and 2 in Europe – highly recommend both. They’re just amazing. And so for all the first timers, I hope this is not your first and only time. I hope you keep coming back.

I attribute a lot of the success of PDQ, which was my company, to what we learned in BoS over 14 years of attending. Our first year was in 2008, I have not attended since 2020 because, well, let’s get to that.

Why I Fired Myself and What Happened Next

It’s been a busy three years since I attended. One of the first things that happened is I made good on a threat to my executive team and told them, if things didn’t change and we didn’t improve, there’s only one job on the line, and it was mine. That I would happily fire myself if things did not pick up – and they didn’t pick up. And I was more than happy to replace myself. It was a long process finding a CEO. A CEO is not the easiest thing to do, but I’m an entrepreneurial CEO. I am not a growth CEO. I’m actually pretty good at running a 25 person company, turns out I suck at running a 60 person company, and right now, PDQ is like hovering around 300 people.

So I fired myself, we moved into a new building. That may not seem like a lot to you, but we were in a complete dive. It was so bad. I mean, you were stepping over hypodermic needles to get into our building. I know for a fact we had people show up for like, an interview, and they’re like, there’s no way I’m working here. And they just kept on driving. It was a very embarrassing thing.

Once you got into the building. We had done really cool things. It was actually really nice. Joanna has been there, she can attest to that. It was really cool, but the outside was pretty sketched. So I’m going to show you some pictures here.

We sold PDQ. That, it was kind of funny. We moved into our building, and three months later, we assumed it. So we sold PDQ. My brother and I, who were co-founders. We have board positions. We still own a portion of PDQ. We’re just no longer calling the shots, which is so good with us. And I moved to a Caribbean island, and it’s everything you think it would be. Yeah, so no complaints there, and I’m living happily at wrap with my wife. We’ve got four kids are all grown and out of the house, which means we are great.

Building a Creative Workspace That Employees Love

This is the building that we built, and it is really nice compared to the hovel we were in before. We’ve got, if you see the first floor there is very high, it’s because we designed a building we wanted to have a state of the art studio. We do a lot of training videos and live webcasts for our company.

PDQ is a sys admin software SaaS company. We make software for sys admins. If you don’t know what a sys admin is, congratulations. That means you’re probably not a nerd. Sys admins are people who run computers for their organization, and so we have a very devoted following. We’ve got tens of thousands of sys admins around the world who use our software. This thing was pretty awesome, though.

We’ve got a beautiful this building is just, it’s everything. We’ve got the state of the art. We’ve got podcasting, live webcasts, videos, still photos. It’s just an amazing place. We even built a whiskey lounge. And if you see that little glass structure over there that’s a smoking lounge. You don’t see that very often anymore.

You can see Josh, one of our workers there, taking having a smoke, and Kelly pouring the whiskey. We do have a full bar in our in our building, and we might – I don’t smoke, I don’t vape, I don’t do drugs, but I will fight to the death. You’re right as an adult to do that. I don’t like the way we stigmatize smokers. I think we treat child molesters better than we do smokers, for crying out loud.

And so Salt Lake, where the PDQ is headquartered, it gets very cold in the winter and very hot in the summer. And I just we didn’t like having our employees go out to the curb. And so my brother Shane, who is a smoker, actually named the smoking lounge the curb. So our employees go to the curb to smoke.

And then inside, there’s a reason I’m leading up to this inside. We have a really nice auditorium. We can do our all hands. We have about, about 50% of our company is remote. 50% lives in the Utah area. So we have live ability to do live webcast with multiple cameras. It’s really, really nice setup. And we have all these rooms inside of PDQ building, the conference rooms and the gym and all that stuff they have. They’re named after people who are very important to us, whether usually it’s teachers that we had, anyone who kind of helped us move the needle.

Well, this building, this auditorium right here is someone that you all know. This is the Mark Littlewood auditorium. So I want to thank Mark for real. That’s how important. That’s how important BoS has been to us. People often ask, why did you fire yourself? Why did you stop becoming a CEO? Why explain it when Rick can?

Video 

Later, I’m here to pick up my undead cat and child. Yeah, give me a sec. These are the forms for the employee health plan. All right, yeah, put them on my. I just got bored. Everybody out. All right, just one more round.

Shawn Anderson 

I’m bored everybody out. So there you have it. This is your fair warning. AI images are coming. When I was at PDQ on a daily basis, I didn’t have any problem tasking some of our creative people to make slides for me. I’m not going to do that now, simply because most of them don’t even know who I am. So I just thought, well, I’m going to become very intimate with Dolly and chatGPT, and so that’s what we have. Again. I’ve been to a boatload of BoS’es, and so without further ado, let’s dive in.

Talks That Shaped My Thinking

I’m going to be talking about a bunch of things that I’ve learned during the different BoS’es. I’ll do my best to keep to give attribution where I can, but I don’t want to slow the flow.

The Cost of Interruption

This first one is on interruption. And this came from 2008 BoS talk from Jason Fried from Basecamp. And one of the nice things about attending BoS is you have access to the videos from past BoSes. Just see Mark. I highly recommend all these BoS talks. They’ve been so good.

So let’s talk about interruption, and specifically, the interruption is not collaboration. And basically, we want to collaborate. That’s very important. In fact, we had four core values at PDQ. One of those was collaboration. We want to make sure we’re not building silos. We want to work with each other. But some people confuse interruption with collaboration. In fact, there’s a talk tomorrow from Jeff, I believe, who’s going to be talking about, why aren’t productivity apps making us more productive? And I think I don’t know what his talk is going to say. I wouldn’t be surprised if it kind of hints on this. I think it’s just because we allow these productivity apps to interrupt us during the day, whether it’s email or chat or Slack, or you name it.

And so I think that where we had the most success is allowing our employees to choose when they were interrupted. They could. In fact, our most productive developers were ones that just had their one window open at a time. They didn’t have email, they didn’t have Slack. And every hour they would close their development window, they’d open up email, they’d go through email, be done. And they go to Slack, answer slack, be done.

When you’re a CEO or a founder, it’s a little bit more difficult, because when you send a slack out, people think, oh no. Shawn just asked me something. I better do it like right now. And that’s not what we were expecting. But you would like stop meetings. I’ll send a Slack and I’ll send someone run out of a meeting to answer it. And it’s like, no, no, this is the wrong thing. I mean, I’m a dick, but I’m not that big of a dick. Come on. Let’s keep it creative here. And so just my advice that I’ve learned is just be super careful on what these apps can do. But there’s even one thing that’s more pernicious than apps, and it really affects you if you have open space, which many companies, if not most tech companies, are open space. With our office before and even now, if you wanted an office, you probably had it. I was surprised a lot of the millennial employees wanted to be open space and out in the world. But the thing that’s more pernicious is what I call the shoulder tap. And even go pass through here one second. This is death to anyone who is creative, whether it’s your developers or your marketing, or anyone in their creative bugging them.

And we had an employee, oh, he just drove me nuts. We asked him over and over again. And this is back when we had like seven employees, so it wasn’t really difficult to get the message out. Stop interrupting. Please, stop interrupting. He would go, he would go to. We had one developer who was the third co founder, and this guy would go and just interrupt him all the time.

Well, one time, I just read him the riot act, or at least I thought I did, because five minutes later, he went and literally tapped Adam on the shoulder to ask him a question. And oh my gosh, it was. And it was so tough, because when you pull these developers out, they it can take them a half hour, an hour, to try and get back five levels deep wherever they were. And that goes true with any with any creative person. So just get creative and work with your employees and find out what they want.

For instance, we only did four day work weeks at PDQ, and so we tried to make the most of the four days that we were working. And I don’t know how it is now, because I’ve been out for three years. So what I’m saying now may not be the case, but we tried to avoid Monday meetings because that was our first day back after a three day weekend, and we wanted people to be productive. Tuesdays were great for all hands meetings. I did not like meetings that were just standing meetings, because if you didn’t have something to go over, people were still showing up to a meeting. I also don’t like meetings where you are discussing things. I think the discussion should take place beforehand, and the meetings should be there to discuss what you’re going to do about certain problems and disseminating information and things of that nature.

The Cost of Interruption

So the next thing I learned, which evidently, which I mean incidentally, also came from the 2008 talk from Jason Fried was red flag words. And I decided to do a little bit more of a deep dive than what Jason had done on these red flag words. Because when you hear these words. When I would hear them, I would perk up and think, Okay, now wait a minute, is there a reason why they’re using these words? And you’ll you’re going to recognize these words here because they happen all the time.

Easy, I think, is one of the funniest things, because it’s so easy to use this word, and there’s times where these words are appropriate, and there’s times where they are absolutely not. And I actually have a trick that will that help me know is this the incorrect use of the word, and I’m going to hit that trick in a minute, but right now, let’s just deep dive into some of these words and what what I think they mean.

And so when you start hearing someone say easy, especially if they’re talking about features, future features, oh, yeah, yeah, it’s basically anything that’s easy that is someone else’s job. That’s kind of how I view that.

Can’t. Now, or I’m sorry, need. Need is there are some things that are very needful. For instance, if you’re an American company and you host a retirement plan for your employees, what we call a 401K, you need to file an IRS Form 5500 every single year. If you don’t file an IRS Form 5500 every single year, men with guns will show up to your office, take your property and may even put you in jail. That’s a classic example of need.

We’re going to hit, begin my test here in just a second. Let’s talk about can’t. It’s interesting, too. When people use this, they use this the same way they use easy. Easy was when I went when they want something, can’t it when they don’t want to do something. Then we also have nobody, and everybody and nobody. We have everybody and we have nobody.

And why are these so tough? And this is the test that I would use to see is this truly a need, and that is, is this being used to shut down discussion? You’re having a discussion about feat, about future features. If you’re saying it’s easy, or we can’t in a way, you’re saying, shut the hell up. We don’t want to talk about this anymore. It’s a done deal. When these words are being used to shut down discussion, I would propose that that is probably the incorrect use of the word, and you need to deep dive a little bit more. Just because someone wants it their way and they don’t want any more discussion, doesn’t mean that that’s really going to going to happen. So that was from Jason Fried’s talk.

Reinventing the Hiring Process

Now let’s jump into Mikey Trafton’s. I’m not sure what year Mikey did his first gauntlet interview stuff. It was probably 2014 or 15 or something like that. They all kind of blend together. Was it 12? It completely changed the way we did interviewing.

And not only, now Mikey specifically spoke about interviewing for developers, and of course, we used it for that, but we also incorporated this for every position. It doesn’t matter what you were applying for. And so maybe you’ve seen this when you post a job and you get a gazillion resumes. Oh, I hated that when you have so many resumes and I am horrible when it comes to hiring. I actually get in a really bad mood, and people just kind of stay away from me.

And you’ve got a stack of resumes, and I would almost have a conversation with this stack, and I’m basically looking at each resume saying, I freaking dare You to have me put you in the keep file versus the not keep file, and I might give them 10 seconds, and that’s being generous, as I’m just scanning it. And it was just a really inefficient way of going through some of these resumes.

So we would not accept resumes until a homework assignment that we gave them was done. So if you wanted a job, especially as a developer, you would fill out a web form, and we would mail you an assignment. You actually had to do some code, and when that code was done, you would have to, we’d have to review it and approve it, and then, then, and only then, could you send a resume. What would happen is we take 50 resumes that we’d get for position down to three or four, and I was suddenly in such a nice mood. And I was happy to go through and deep dive on these resumes and really try and figure out is this person qualified because we they had to self select out. And what was interesting about the homework review, it might take anywhere from one to three hours. If they did it faster than one hour, they were probably cutting corners. If it took them longer than three hours, they probably weren’t at the level that we needed them to be.

But basically, for developers, it was a module that we that we gave them specs for, and it was a module that is not something that we’re going to use. We’re not going to sell this thing. What we were doing is seeing how well they followed specs. And in fact, let me think, I think I have, yeah, they’d have specs, and then they’d submit their code. And here’s what we were looking for. Did they follow the specs and did the code work?

Now we specifically wrote the specs, so there’s some really popular public modules out where. I think we the when I was there, the thing we had them write was a counter, a specific type of counter, but we didn’t want them to use a generally available counter, and so we had them do it in such an increment that you couldn’t do that with this generally available count. You actually had to go and code it yourself. And we got some very interesting replies. Anyone who was worth their salt knew that they could get this free to go counter. And so we’d get people submitting this module that was publicly available, but it didn’t meet the specs. And sometimes they’d say, Hey, I sell that your specs for this, but this module does that, so I’m going to submit this. Because why in the world would you want it to do this weird calculation that doesn’t make any sense? Well, it makes sense to us, because now we realize that you don’t give three shits about specs, and you’ve just selected yourself out.

We also had people get really upset about, we saw it all. The two bottom bullet points were the things that we didn’t ask them for, but they made it or they would make or break a submission. When you have a really good developer, they should be really good at putting comments in there. Now, some of the developers that you hire have been coding since they were 13. The challenge with coding since you’re 13 is you’re usually doing it by yourself, and there’s no one doing a quality control or a check. And so you get really sloppy habits, and one of those is not doing comments. If you see somebody who doesn’t do comments, that’s a person, that’s a sign that they’re probably not going to be working super duper well with other developers. Because if you’re if, you mean, it’s the golden rule. How many times would you jump into someone’s code and you don’t know what they’re doing? And you what you would give for just a line of comments saying, Hey, by the way, this is what I was trying to do.

Probably fewer than 10% of the submissions would put in error handling. But I think 100% of those who did error handling when their module worked were hired. That is, we never asked for it in the specs, but that is a sign of a really mature developer. And incidentally, those who put in error handling, we could almost never break their code. Those who didn’t, it was sometimes it worked, but you couldn’t really put it under through the paces. And yet, when they did error handling, it made them think, okay, I need to anticipate this. Is this going to work? Is that going to work? And you got some, in fact, we got one piece, one code. And it was a bummer, because it was from a person from Mexico, and we did not have the whole the ability to hire internationally. Which really suck, because we could not break his code. We were just blown away at how good it was. But we weren’t there, and we don’t subcontract for a reason that we that I’ll discuss later on, which was also a BoS talk. So anyway, then they would submit resumes after all those steps were done.

The Gauntlet: Our Interviewing Framework

Now, after that, they would have to run the gauntlet. And we actually just named this the same thing that Mikey Trafton did from his BoS talk. It was a gauntlet, and it is up to a half a day of an interview. And it goes through multiple teams and where they had a homework assignment to write code on their own at home. Now they got to write it in front of us, in front of peers. And they also got to work, not just with developers, but they’d have meetings with with the testers. They’d have meetings with other people, kind of around the meeting. And it was a long interview, and everyone had to do it. It would go several hours, and this is super important. It included lunch.

Now we cater lunch every day for our employees, but this is really important because, as I mentioned before, PDQ is a sys admin tool. Now, developers and sys admins, they’re like inbred cousins, okay. They sometimes don’t have the best social skills, and so I want you to picture like we were talking about this yesterday at our little round table. I’m going to give you a picture of the average sysadmin – 28, probably doesn’t live with mom anymore, but what if she would let him, lives in an apartment is single and would have the same shirt on for three weeks, and you’ll be staring at staring at the same gravy stain for two of those weeks. And they are gamers, and they love Comic Con and they’re really good at their jobs, and they have very poor social skills. What happens when you cater lunch is you need to have someone who has some ability to read social cues, and having lunch would let you see if someone is what I call a snotter. I don’t know what you guys call them, but people who will blow their nose right when you’re eating next to them, which is just turns my stomach, or people who chew with their mouth open.

We had one guy who got a nosebleed during the interview. Hey, that happens. Things happen, right? But then he got the bloody rag, and when it was done, he just put it right there. Just put it right there on the table where everyone’s eating lunch, and then continued talking as though nothing happened. He wasn’t hired.

We had a guy who showed up with he chewed tobacco and he had his little spit thing. But for some reason, he thought it was a good idea to use a clear bottle on that one, because they go through the rounds of every. I had every single female that we employed come up to me and say, Oh, please, no, please, please no. And my brother, Shane who choose, was really offended because he’s like, Oh, come on, if you can’t gut it, you’re not really a man. Sohe also was not employed, we would also did not give him an offer.

Hiring Beyond Developers

So now when it comes to non developers, Mikey did not talk about this, but this, we had so much success with hiring badasses with this gauntlet that we thought we were going to do this for every position. And we had to get really creative. Basically have them solve a problem.

We had one guy. We found out what his hobbies were. He loved soccer. So I’m like, Okay, explain off sites to me, because I’ve never really understood that he explained it and I was able to understand it. Can they teach? Another thing that we wanted to know is because when you’re a really good developer or a really good sys admin, you’re very smart. And sometimes you’re the smartest person in whatever room you’ve been in or whatever company you were previously employed at, and that’s a very dangerous combination, if you know it. It’s kind of like being good looking and knowing it, you just kind of become a dick. And so when these people, we want to find out, are they teachable? That’s really, really, really important. And if you’re not teachable, it’s really hard to continue learning. And in the tech space, things change so much. And so we would try and see, are they teachable? We would look for for signs that they were not. They interrupt a lot. Are they always trying to one up you? Can they admit their mistakes, and do they welcome or shut down discussion?

The Power of Admitting Mistakes

Now I want to talk about mistakes for a second. Many of the people that we hired when we hired you, yes, we had marketing and we had support stuff, but you were probably falling under one of two things. You were either a developer or a sys admin, and if you were a sys admin, then you were providing support for our customers and things of that nature. I love asking sys admins tell me your biggest mistake. If they cannot tell you a biggest mistake, then one of two things is true. One, they’re lying, or two, they don’t have enough experience to be helpful to your company.

Let me give you my biggest mistake. I was a consultant. I was working on an Air Force base. This is during a time of war, and I was in charge of getting software installed onto 16,000 computers, and doing it remotely, where I wouldn’t interrupt the users that could be using the computer at the same time, they wouldn’t even know anything was happening unless you made one mistake, which I did. I pushed out an application that which would force a reboot in the middle of the day, during a time of war to 16,000 computers. Now, when I hit the command, it was a mistake of hitting the wrong key at the wrong time. The Unix command, OD admin, shut down, all has never been typed faster than I did that day. Od admin shut down, all was probably typed and entered in less than two seconds, and I was able to avoid rebooting 16,000 computers during a time of war.

Shawn Anderson 

I always thought that was a pretty good story, until we asked one candidate. I asked her, Hey, you’re sys admin, what’s your horror story? What’s your resume generating event or your career limiting move that you made? And she said, Oh yeah, I brought down 911 in my town. Yes. I’m like, Well, you just made my story sound lame, and that’s the problem. But see, we also called these sphincter moments, because they would just tighten everything up. You know how good of a developer or sys admin is when they are under the gun. When you’ve just brought down 911, you also become extremely efficient, and you learn more in those few seconds. I mean, just talking about this now, I’m getting sweaty palms, and it’s not because I’m speaking. It’s because I’m starting to relive the whole moment where I almost rebooted a whole Air Force base. Anyway, you become you become better. Can they talk about their mistakes? They can’t. That is a huge red flag.

All right, let’s move on here. Can they teach? I love this quote, this was a contemporary in the 50s. In the 40s and 50s, this as a contemporary of Albert Einstein. He worked at Princeton. He was in the chemistry lab and the physics lab, where Einstein was in physics. And so they would actually like carpool together and taught together. And this was Henry Eyring, professor of chemistry. And he would, in summers when Princeton was on break, he would teach chemistry to elementary school kids. And someone would ask him, you’ve earned every award except the Nobel. What are you doing wasting your time teaching kids? And I love this quote, If you can’t explain something to an eight year old, you really don’t understand it yourself. So we want people who are teachable, but we also want people who can teach. That’s just important, and now we’ve moved off of Mikey trafton.

Intellectual Property: What I Learned from Eric Sink

Let’s talk about intellectual property. This came from Eric Sinks’ talk. I think it was 2010, Eric wrote a book called Business of Software. I highly recommend it. Even though he wrote it back in like 2006 or something or 2004 it’s still applicable, even in the SaaS world. It’s really good book. And he spoke about his experience selling a product, not a company, just one of his products to Microsoft. And this was game changing to me, as we sold our company just three years ago, because I put into practice immediately when I heard this talk. Things that really bit him in the butt. And one of those is, I’ve met a lot of people who own companies, software companies like me, who they didn’t have patents. We didn’t worry about patents. We didn’t think we really had anything patentable. I think patent loss kind of broken in anyway. But sometimes developers or CEOs or founders will think, oh, I don’t have patents, so I don’t have intellectual property that I need to worry about. And that could not be further from the truth.

When you sell your company, you care more about the money, go figure, but the buyer cares more about the IP. They don’t want to spend money on something that someone then claims that they own instead of the person who just bought the company. And so they put a lot of tests to go through here. It’s not just patents. It includes copyright. Is your code copyrighted? if you have a major release, now you’re gonna have to talk to a tech lawyer, because I might be smoking crack. It might be up in the night, but if I remember correctly, there’s a five year limit to copyright major releases and a three year limit to copyright minor releases. Do you copyright your code? I think copyrighted code has more protection than a patent does. It’s got some teeth with it, and it’s a lot easier to prove. Just ask a patent troll, because they’re always going after it. But copyright in your code.

Are you taking care of your trademarks or your service marks? Are you taking care of documenting, very specifically, any open source foundation software, creative commons software that you’re using. It’s okay to use, but you’ve got to follow within those parameters. You don’t want to take any risk that your code is going to fall under a GNU that would that could make it more difficult for a person, for a potential buyer.

Here’s a story from Eric Sink. He was going through this process of selling this product to Microsoft, and they discovered that one module was written by one developer on a university computer, and Microsoft shut down the entire process of this purchase until they went to the university president, explained the situation and said, we cannot move forward with this sale until you sign a waiver saying that the university is not claiming ownership of this. Because of that, we instituted a no subcontractor rule for developers. And if you do subcontractors, great, I just hope that you have really good documentation that says we own the code. I strongly recommend that if you do subs that you require that they use your computers. Our employees were not allowed to write code on computers that we did not own. We had to own it. They had to be employees, and we wanted to make sure that we own that code, because until that was resolved, Eric Sink’s sell of his product was completely stopped. That’s how much they care about IP.

And let’s talk about getting the right IP lawyer for a second. If your business is selling meth, go ahead and go to a strip mall and get Saul Goodman. He’d probably be really good if Breaking Bad and better call Saul or any indication he was really funny, as long as he was not representing you. But strip malls are not for tech law. If you see a guy’s like, Yeah, I do divorces and I do personal injury and I do family law, bankruptcy and, yeah, I’m also a patent lawyer. Be really careful. My guess is he’s full of shit. I strongly recommend that you go to a tech law firm. And in that tech law firm, find someone who really just does copyright and patent law or something like that, when that’s their specialty. This is not the time for a jack of all trades, you’ve got to make sure that it’s done rightly. If you haven’t heard the story you’re about to. You know the little smiley face emoji, the yellow smiley face. The reason why that’s so easy to go out there is the trademark lawyer screwed up the application, and so anyone can use that little smiley face. And the person who created it doesn’t get any royalties from it. It was just a clerical error from probably a better call Saul strip mall lawyer who was doing divorces on the side or something like that. So just be super careful and really get good lawyers.

Avoiding Pay Discrepancies

Now we had someone discuss, I think it was Eric yesterday, the first talk they mentioned pay discrepancy. Now this is not part of my discussion, but I want to hit this because it goes to this point of getting the right lawyers. We put in charge of our HR an extremely progressive person. Her name was Gwen. Her wife was also an HR manager for a huge US corporation that has tens of thousands of employees. We thought, we are in such good hands. And so she was in charge of HR. And then we heard about Google’s pay discrepancy, and we thought, you know, we’re going to pass with flying colors. Let’s just take a look at our company. At that time, we probably had 30 or 40 employees, and we did not like what we saw. We actually saw pay discrepancy.

And I was like, How in the world is this happening? And Gwen was floored. She’s like, I how, if there’s anyone who would be long knives coming out over pay discrepancy, it would be Gwen. And she’s like, how did this get by me? And we called up our employment labor attorney, again, we use only specialists for every field that we needed. And I said, Christina, we just failed an internal audit on pay discrepancy. We have no idea how. And she said, I can tell you exactly how. You’re asking for pay history and you’re asking what they want to make. She said pay history, women are generally paid less, so their history is going to reflect that. And she said, and for some unknown reason, guys high ball it when you ask them how much they want to make, ladies will low ball it. Guys will apply for a position when they hit, when they meet 80% of the qualifications. Women won’t apply if they don’t hit all of the qualifications. And so we thought, okay, well, what do we do Christina to our awesome lawyer? and she said, stop asking pay history, and stop asking how much they’ll make.

And so we subscribed to this service that told us what geographic boundary, and what things were paid. And we set up pay scales, and it was based on how you ranked, kind of on the step. If you were 22 years old and you made and you were at this level, you got paid this much, even if you were a 52 year old at the same level, it was what you could do. And everything was done at the pay scale based on what their how good they were. And so your interviews had to be really good. You had to find out. Once in a while we’d hire someone, they would come back, like two weeks later and say they’re actually better than we than with the scale that we put them on. And so we’re going to bump them up three levels or whatever and give them some back pay. We never filled another audit because we stopped asking history, and we stopped asking, How much do you want to make? We would just say, this is what this makes based on what you can do. And they could say, take it or leave it, whatever. So that’s just a little snippet that I thought of when Eric mentioned that yesterday.

Everything Changes at Employee 25

Then we hit Peldi’s talk. Oh, I miss Peldi, Mark. Oh, my gosh, I missed Peldi. If you guys haven’t met Peldi, then your life is not complete. Peldi was a mainstay at Business of Software. He started a company called Balsamiq. And he’s from Italy, and he said he always wanted to start a company that had the name of a condiment. So he thought Balsamiq. And so and Balsamiq was a wire framing, maybe you’ve used this, it’s a wire framing solution, SaaS solution. It’s just really cool. But Peldi was so integral. He’s now, is he doing like he doing, like he went to university or something like that, and doing interior design. He’s basically made it. Hopefully he comes back. But he made a lot of money doing what he was doing, and had an existential moment, I guess, anyway.

He gave a talk that was called Everything Changes at Employee 25, and I almost started to cry. Because I’m like, did he just like, read my diary? And we’re not going to go too much of a deep on this one. Again, because I’m standing between you and beer. But basically your CEO responsibilities will change. And boy, did I see this. You saw Rick dumping gas all over his company and lighting it saying, I’m bored. I’m out of here. That’s how I felt. I was a sys admin in my career, and once you get over 25 employees, you’re no longer doing whatever it is that you were doing before. You’re now basically a benefits administrator or a complaint administrator.

I love this story. In the 70s, a man was hired to be an engineer for General Motors. He was so excited, he’s going to develop, he’s going to design cars. It was his childhood dream. He went to school dreaming, I’m going to be a car designer. And then he when he got the job, he told his wife, one of these days, I am going to be the CEO of GM. And like, 30 years later, he made it. He was CEO. And he said in an interview, I thought I was becoming a CEO of a car company, and I’m not. My job is not designing cars. My job is a Benefits Administrator for retirees. That’s what all of his time was spent doing, and that’s just that takes all the romance out of it, takes the fun out of it.

And so everything changes when you hit employee 25. Alex, keep it really low. Keep those employee levels down low, so you will never have to hit this because if you want to find out what becoming a two fisted alcoholic is like, hit employee 25. It’s really tough to get up to maintain a flat organization. You have to use the M word, or you don’t have to. But if you don’t, you’re going to probably see what we saw, where you couldn’t get a release out for a couple of years. You probably need to get managers, because when you have 25 people, there’s no one person in the company who knows everything that’s going on.

What Exit Interviews Revealed

And one of the things we do exit interviews. By the way, when someone leaves your organization, if you’re not doing exit interviews, you are leaving behind a gold mine, because they will often be honest with you for the first time. Where they hold back, because they think if they complain about their manager or whatever, people who are chewing with their mouth open or spinning into a bottle, they’re just more open when they’re leaving. And you get a lot of good information.

And one of the things that I’ve learned when someone was leaving is, number one, they were quitting their manager. You’ve heard the whole thing, you don’t quit your job, you quit your manager. And number two, they thought I knew their frustration. I had no clue. I remember one time we got like three complaints on an exit from people who were leaving from the same team, and they all came complained about the manager. And I finally thought, Okay, we have got a Charlie Fox drop this person out. And so we fired him. And here’s how bad it was. I actually had saw people on that team break down in tears and cry after we fired this manager. I had no idea that things were going bad. And so the CEO is sometimes the last to know, and I’m just sitting up there all fat, dumb and happy, and I had no clue that something was going wrong.

You’re going to see some employees when you grow, who cannot scale. They might be the best employee when you’re at 15, and they might be the worst employee when you’re at 50. Do yourself and do them a favor and get them out. It’s just not going to help. It’s not, you’re not doing anyone favors. And bad employees, in fact, the Atlassian far core, wow. What’s his Scott, he gave us. He gave a talk. I think it was in 2008 as well. Maybe it was 2010 where he said, from Atlassian. I’m not sure if you guys know that company, but Scott said, I guarantee right now that every one of you have an employee back home who you should have fired but you haven’t done it yet for whatever reason. They’re friends. You just can’t do it. You know, they’ve got a kid who’s in soccer, or their spouse has cancer, or whatever you need to fire them, and you’re not. And so it’s just, I can’t. It can be really bad.

So there’s my presentation. And here we come down to the point where, having been to 14 BoSes, I know what it’s like to just be dead with notes. You’ve got so many notes, and you go back and you try and implement them, and it makes me think about How To Train Your Dragon when Hiccup is trying to learn how to fly Toothless. And so he takes his own notes, and they look something like this, and he’s trying to learn, he’s trying to reference these notes as he is flying. And this is exactly how I felt when I’d get home after a BoS and I’d have my stack of notes, and all of a sudden I would try and ride the dragon. And it went something like this.

Hopefully you saw him just ditch the paper. He’s like, I can’t read this and fly at the same time, and he just chucked it over his head. And that’s how I felt. Sometimes you’re like, I’m just going to have to try and remember the best I can. When I went through preparing for this talk, and went through and looked at a lot of the BoS stuff, and watched those videos, a lot of it came back, and I thought, Oh, I wish I would have done that, or I wish I would have done this, or I remember that, that was so important. So moving that we did that. So what I’ve learned after 14 BoSes is you don’t need to become a billion dollar company to achieve success. If you have a half a million dollars or a million dollars that you’ve made, congratulations. You’ve done better than most people, and you’ve made a ton of money. We always hear about these $9 billion and $12 billion exits, and you’re like, oh jeez, am I ever going to get there? If you don’t, don’t worry about it, you’re making a lot of money. You’re doing great. But the other thing I’ve learned is it doesn’t suck when you do hit that mark. I am happy to answer any questions.

And if we don’t want to do questions, if we just want to go get a beer, I’m happy with that too, because you guys can pull me off to the side whatever this guy wants.

Q&A

Mark Littlewood 

I’m going to take some questions. I’m oddly emotional, not oddly, quite understandably. Well, that’s really. Who’s got questions? Wayne?

Audience Member 

Serious one this time. Are there warnings? So you were talking about bad managers and you didn’t know, and you got rid of them, and the team’s crying and everything. Are there any warning signs that you’ve learned over time of a bad manager to look out for in that scenario or?

Shawn Anderson

Yes, have a really good HR manager and make sure that manager is fostering communication. If you only find out about it during an exit interview, then you don’t have the best manager. The manager that PDQ has right now has put so many people at ease. That people are more comfortable speaking up. Because, remember, they’re afraid of retaliation and speaking ill of your manager, or speaking ill especially, oh, heaven forbid, it’s like a social harassment. If they’re feeling there’s nowhere to go, then you’ve done a bad job. And so as long as they know where to go and they trust that person, they also have to know what if the HR manager is the one that’s doing us? So we always train them. There’s someone that you can talk to, if it’s not the HR manager, it’s someone that you can talk to, whether it’s someone in the C suite or someone else. But please don’t keep it because we would tell them we cannot act on information that we don’t have and we probably don’t know what’s going on. So a good HR manager is worth whatever you’re paying him or her. It’s worth it.

Audience Member 

So first of all, I guess this is a request to mark you. There really are five videos. Are there? I’m sorry, there’s what there were the five talks that affected you the most. Are there? Yeah, yeah. We had five talks that we had. I can I can set off. Offline, I can send you what they were, if you’d like, yeah, we’re posted someplace I’m happy.

Mark Littlewood 

So a couple of things. We will make a little Shawn and Shane playlist.

Audience Member 

It’s about the going to 25, at what point did you hire? I don’t know if you want. I call them an administrator, a personal executive assistant, but somebody to take some of the day to day stuff off your plate. When did you do that? When did you do that and in retrospect, when would you have done that?

Shawn Anderson

Well, when it comes to HR, we hired it around employee 22 or so, because at 25 in the United States, you have certain requirements that kick in, like FMLA and other things like that. We wanted to be ready to go. And so we hired that around 22/23 or something like that. And as far as a personal assistant, I think I hired one around employee 15, or something like that. And yes, I still have a personal assistant, even though I no longer work for the company, I just pay her out of my own pocket. She, my brother Shane and I, have one that we that we kind of split the costs on. And she’s worth every penny that we pay. But, yeah, they definitely keep you sane.

No, I don’t think so, because around 15, things were okay. I felt like I had a good handle on what was going on in the company. I might be delusional. Maybe I’m tapping a vein, or something like that, and I just don’t know what’s going on. But it was around 2025, that things really started to suck.

Mark Littlewood 

Well, there other points as the business grew that were those existential moments, those inflection points?

Shawn Anderson

What were some of those you mean? yeah, When we had to start hiring more developers. And one of the challenges was getting those developers to play well together, especially when you’re coming from a single developer. CEO, not CEO, single developer who’s a founder, and then getting other people in who are good and who can kind of play in the sandbox. Well, that was always a challenge. That challenge went away when the co founder retired, retired several years before we sold the company, and that seemed to fix a lot of the issues.

Mark Littlewood 

So big company must have been quite easy to raise funding for that. Your big company must have been quite easy to raise funding?

Shawn Anderson 

Oh yeah, raise funding. Yeah, no. It turns out I really suck at raising money. I tried. In fact, I’ve telling people yesterday I would have signed the contract in blood in 2009 or 10. If we could have gotten some funding. I think we could have done what took, what we did in 10 years. We could have done in three. I think we would have had the same pivots just sooner. Now I might be up in the night, and it may have been a horrible nightmare, but I tried to raise money. I’m not good at it. At the time I was trying to raise it, we were on prem software. We were not cloud. And if you had cloud in your name, back in 2009 or 10, people were giving you blank checks. Sys admin software that was on prem was just not sexy, and I couldn’t sex it up. I couldn’t make it look interesting. So that’s on me. I wish I could have done it sooner, but I gotta tell you, by the time we hammered that check. It was sure nice not to have to share it so.

Audience Member 

How do you fix compensation going forward, but how did you handle it for existing issues?

Shawn Anderson 

Question is, how do we handle this pay discrepancy? Back pay. Without apology, back pay. Well, no, with apologies and back pay. And you know what? People were so cool. They understood, especially when we explained to them, especially when they found out that we were no longer asking pay history and no longer asking what they wanted to make going forward. They thought, hey, this was an honest mistake, and it was an honest mistake. And so but it’s a mistake that we will never make again.

Audience Member 

And at some point you made a shift from like a services consulting model to a product model. At what point was that, and how did that compare to some of the other inflection points you had?

Shawn Anderson 

When we were consulting, it was just me and my brother, and we were our only employees, and we did that for years. When we decided, I was 50% travel, and when you’re raising little kids, that’s tough. Just ask my wife. We also relocated to two different states, two different times. And when that’s super easy, when your kids are four, little difficult, when they’re 14. And my wife and I could see if we’re going to stay in the consulting realm, we are going to have to continue traveling and continue moving, because that’s you just that’s what consultants do. They’re gypsies, or highly paid gypsies. And so we thought it’s we would rather, rather than selling hours, which is what you’re doing when you’re consultant. We decided to sell software, there’s an infinite number of software, and unless you’re a lawyer, you can’t bill more than 24 hours in a day. And so that’s why we thought there’s a finite limit that you can bill. And so that’s what we did.

Audience Member 

And that’s employees came with that like?

Shawn Anderson 

Yeah. So when we started, we thought, let’s make some software. And that’s when we started pulling on employees. And because we were bootstrapped, we waited until we had the money. So we grew very slowly. We never went into debt. Made my wife a promise, we’d go into never go into debt, and we’d always pay the mortgage. And she was cool. She’s basically and we basically are consulting money. I would we would just use bare minimum that I was making, and when we put the rest into the company. Over six years, my wife and I put in $880,000 and my wife’s only caveat was, don’t tell me how much we’re putting in the company, which I never did. And I’m glad because that she might have been nervous at that point, but it turned out to be a pretty good investment. We have a question over here, Marvin. I think I’m not sure. These lights are bright.

Audience Member 

Hey. Thanks so much for sharing your top takeaways from the previous conferences. Yesterday, you talked a lot about the community led growth. Aspect of the business growth, the community led growth. And you talked, you were talking about the building and basically the studios that you guys have in there show them in the pictures. Can you tell us a little bit more about tell us a little bit more about that, right? How does that being used today?

Shawn Anderson 

one of our biggest assets was our community. We had 30,000 sys admins around the world who were using our software. And computer sys admin work is kind of like the airline work. The International Language is recognized as English, so we totally lucked out on that. And so we had all over the globe. We had administrators using our software, and they were very, very die hard. They really liked us, and we would really cater them with our live webcast. They could join in the webcast and actually ask questions, so they were driving the content, rather than leaving some mindless comment on a video that was pre made.

And so when we sold the company, we, I asked the equity fund, what, why were you interested in? What made this company seem appealing to you? And they said, Well, number one, was your executive team. So we hired really well on our CEO, and then he surrounded himself with really good people. They said number two, is your community. We’ve never seen anyone who has a community like this. And number three, yeah, your product’s okay. And it was, they’ve completely replaced the product now. It’s, we have a fully cloud. We’re still selling the on prem stuff, but everything is going into the cloud portion, and they just get it. They killed it. And I’m so happy for them.

So community is, I mean, everything it made, it made a huge difference, getting people to use your software, love your software, talk about you. Our NPS scores were so high, people thought we were faking them. I mean, seriously, they were like, we’re like 80s and 90s. And it’s just it was amazing.

Audience Member 

Awesome. Congrats on the exit. Thank you. If you could maybe go back in time and give yourself some advice. Kind of top takeaway on the sales side and maybe top takeaway on the product side, although you just said maybe the product wasn’t as much of what you’re focused on, but the community aspect in the NPS seems amazing. Like, what are some of those takeaways?

Shawn Anderson 

The biggest takeaway is the community made it. I mean, we always tell people at the breakout yesterday, if someone went on the our sys admin subreddit and complained about PDQ, the long nights came out, and it wasn’t from us. Our Redditors were really, I mean, our customers were rabid, and they would come out after you. And it was, I always kind of felt bad when someone would criticize us because I’m like, oh, man, I’d rather have a botched circumcision than what they’re about to get. Yeah, so.

Mark Littlewood 

Dave, I think one final.

Audience Member 

All right. So you touched on this a little bit about, you know, bootstrap versus funding, and over this amount of time, we’ve seen the acceleration and the pace of the industry change. Do you think that bootstrapping in today’s environment is a good idea?

Shawn Anderson 

Bootstrapping, I think, will always work is just going to be slower. Slower may not maybe what’s needed. Because when you bring in funding, if they want to pivot you, they will pivot you. But sometimes a pivot is not bad. We did two pivots on our own with PDQ. It just took us a lot longer to recognize them.

Another thing I learned from Dharmesh Shah and actually, this is Brian Halligan over at HubSpot. Is very few mistakes are fatal to your business, provided you identify them soon enough to discuss in the oh and the your toes sticking out. You know what I’m going to talk about right now. A small problem was what killed Bob Marley. He had an ingrown toenail that he did not address, and it got infected and you end up dying from it.

Most errors are not fatal, as long as you recognize them as errors and fix them. Fail quickly, fix it. Otherwise, it can be really bad. The smallest little cut can become infected if you don’t take care of it. So there you have it. Thank you guys very much. Let’s go eat.

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