It is difficult to call Jason Fried, CEO of Basecamp, a workaholic. He works no more than 40 hours a week, and the same requires from the members of his team. Less is better, but with more quality. And he is not the most ambitious person in the world. He does not want to build a «new Google» or make Basecamp a unicorn. He does not need unnecessary problems, which are often associated with global goals. Jason avoids the problems and prevents them from arising.
Many business problems arise from themselves. Many wounds we inflict ourselves. You can win in the competition, but even more often the competitors lose to themselves.
Entrepreneurs are good at making things difficult. I communicate with many people and constantly come across this. If they were to devote more time to avoid future problems than to solving real ones that they had previously created themselves, they would have done better in less time.
We built our business to avoid problems. This is the main reason why we were able to do what we are doing and continue to do it profitably for 18 years. Whatever decisions we take, we proceed from their future value. In simple words, how messy it will be tomorrow, if we do something today.
We see no reason for pride in meeting big problems. We prefer to avoid problems that can be foreseen. Below are a few things that help us in this.
Avoid company growth
We specifically restrain Basecamp in growth. We serve more than 100,000 paying customers and several million individual users with a team of 50 people. Small companies avoid the problems of large ones. Less management, fewer lawyers, fewer difficulties in translation, much less bureaucracy and formalities, because of which people are forced to wait for permission before moving forward in some business.
In small companies, everyone is closer to customers. Of course, there are some things that small companies can not do, while large ones can, but it seems to be very good.
Avoid staff growth
We intend to keep our company from growing, and our team as well. Almost every project in Basecamp is performed by no more than three people — two programmers, one designer. Many projects involve only two people — one programmer, one designer. And some involve only one person — either a programmer or a designer.
Perhaps, if we had a bigger team, we could solve the problems more seriously. But with a large team, we would have created more serious problems. It’s not worth it. We are happy with small projects and small teams. We can still do everything we want — just in pieces. This makes it much easier for us to stick to the right direction in our path. And, frankly, it is in all cases the best version of the approach to solving problems.
Avoid large horizons
There are some very demoralizing things in business, and one of them is a long-term project when you do not see the light at the end of the tunnel. Irregular infrastructural projects, as a rule, have no end. For us, all fits in cycles for six weeks. Many projects are small enough to manage to close them in a couple of weeks or even days.
But even if we do a project for which we allocate six weeks, we are not afraid that something will go wrong, because the worst that can happen is that we will lose six weeks. We avoid any difficulties associated with the desire to continue what we see is not worth continuing. Compare this with the projects «too big to fail» or «will be ready when finished», which takes 6, 8, 12 or more months. Hardly you will give up such a project after all the work done.
Long projects are a very demoralizing.
Avoid plans and promises
We rarely look forward further than six weeks. We have a common big picture of where we are going, but we keep it in mind, not on paper. This is an unofficial rule.
And we rarely make plans for the future. Promises are an inexhaustible source of headaches and conflicts. It’s easy to say «yes» to something that will happen later because now you can not do it. But when the time comes, you probably will not want to do what you promised long ago.
Past promises are a generator of business problems. We avoid such promises like the plague.
Scale up! Scale up! Everyone wants to scale! But we are not. We try to avoid everything, in which the key to success is scaling. We are interested in things that work without scaling — large or small.
For most companies, scaling is synonymous with «now we are unprofitable, but one day we will start earning money.» Do not run ahead of the locomotive — grow within your capabilities. Become profitable as soon as possible with as few users as possible, and not with an unimaginable multitude.
We have deadlines. And we avoid dreadlines. Dreadlines are deadlines that nobody cares about. They force you to run and rush, teasing the ephemeral finish line. This is not what you want. It’s bad not to see the end, but it’s even worse to see it and do not believe in it. «Something will go wrong again», «Impossible to do it on time». Thinking process becomes negative. The quality is sacrificed. All the fun is lost when you are regularly behind schedule.
Companies do not have problems with communication, but there are problems with mutual understanding. And every additional person, who participates in the dialogue, increases the risk of misunderstanding at times. Communications, as a rule, result in failures with rare exceptions.
Small companies and small teams essentially have the advantage over large ones. Of course, two people can also misunderstand each other, but small teams, groups, and companies have more chances that the information will be correctly interpreted by all parties involved.
We are constantly called by large companies. They want to become our partners. We used to do this before, and everything always ended in a dead end. Just wasted time. Especially often this happens in unbalanced situations when a large company wants to work with a small one. Usually, this means a lot of work for a small company and very little for one of the many business developer employees who does not even need to do something on their own. Avoid!
We avoid everything that hinders the free flow of information and the flow of processes. We do not establish a hierarchy in which someone needs someone’s permission for something. If what you are about to do will not destroy the company, just take it and do it. There is no need to bureaucratize processes and people. Let everything go smoothly, do not stop and confirm each step. Of course, sometimes mistakes happen, but only sometimes. After all, much more often everything goes right and without irritation.
The metaphor may seem strange, but I still say: it’s like washing dishes after you eat. If you do this, you will never have to wash the dishes afterward. You have avoided the hassle and unnecessary work in the future. If you ate and left dirty dishes in the sink to wash it later, you created yourself or others much more work. It will be harder to wash over time. You have increased the complexity of the work, which sooner or later you still have to do. Over time, a bunch of dirty dishes grows, and you less and less want to communicate with it. Oh, one more dirty plate — just leave it here.
If you wash dishes at once, as part of dinner, you will never have to return to this later – everything is already done. The future is free and clear.
After the appearance of Facebook, which took its place among the technological giants of the world, no Internet company has been able to achieve comparable success.
Silicon Valley is used to perceive as a place where a couple of guys in a garage or dorm room start companies that are changing the world. This happened with Apple and Microsoft in the 1970s, with AOL in the 1980s, with Amazon, Yahoo, Google in the 1990s and with Facebook in the 2000s.
But from 2010, there was a start-ups drought. People, of course, continue to launch startups. But the last really big startup success, Facebook, is 13 years old.
Until the last year it seemed that Uber was waiting for the fate of the new technological giant of Silicon Valley. But now the CEO left the company and its future is in doubt. Other start-ups launched over the past 10 years play in a slightly different league. Airbnb – the American startups with the highest rating after Uber – costs $ 31 billion – about 7% of Facebook’s capitalization. Other projects like Snap, Square and Slack are much less expensive.
So what happens?
Internet pioneers tore down the “fruit hanging from the ground”, taking advantage of profitable niches, including search, social networks and e-commerce. By the time other companies such as Pinterest and Blue Apron began to pick up, the fruit was crushed.
Today’s technological giants have become much more savvy in assessing and preventing threats to their dominance. They did it aggressively, expanding into new markets and buying potential competitors, when they were still relatively small. Some critics argue that corporations have become better at controlling and securing key parts of the Internet infrastructure, closing the way that start-ups used to enter the mass market.
As a result, the industry, famous for the constant change of players, began to resemble the usual oligopoly, where several large companies dominate, whose place on the top seems more and more protected.
Technological giants buy startups early and often
Everyone in the Silicon Valley is once familiar with the great companies like Digital Equipment Corporation, Sun Microsystems, AOL and Yahoo, who lost their positions due to technological shifts. The current technology giants have learned their mistakes well and are not aiming to repeat them.
The management of today’s corporations – Facebook, Amazon, Google and Microsoft – understands risks much better.
For Facebook, the first major test came with the advent of a smartphone. Social network began as a desktop website and the company could easily be caught off guard by a shift towards mobile devices, as it happened with Yahoo. But Zuckerberg saw the importance of mobile devices with a touch screen and directed the efforts of engineers to make the mobile application the company’s top priority.
Zuckerberg also went to buy up companies that seemed to be gaining a large audience on mobile devices. In 2012, he bought Instagram, where there were only a few employees. Two years later, he bought WhatsApp messenger for $ 19 billion.
Facebook founder followed the model that Google used for the first time. In 2006, Google paid $ 1.65 billion for YouTube, a site that grew into one of the most popular Internet destinations. Most importantly, Google bought a small little-known software company called Android in 2005, laying the foundation for the corporation’s dominance in the mobile operating system market.
These purchases proved to be extremely important. One ranking shows WhatsApp and YouTube as the main social network of the Internet after Facebook. Instagram – next in the list, if you ignore the Chinese platform. If these companies remained independent, they could easily develop into the main competitors of Google and Facebook. Instead, they became another brick in their empires.
Amazon followed a similar strategy. They bought the Zappos online shoe store in 2009, and the following year bought Quidsi, the company behind the popular Diapers.com.
Technological companies that preserve independence face tough competition
Not all technological startups accept the proposals of the giants. CEO Snapchat Evan Spiegel declined the $ 3 billion deal proposed by Zuckerberg in 2013. Four years later he brought the company, already called Snap, to the stock exchange.
Facebook responded by creating its own versions of many features of Snapchat. Facebook-owned Instagram presented its version of the popular in Snapchat format Stories last year. Six months later, Instagram’s stories gained more daily users than Snapchat itself.
Instagram also introduced a version of the Snapchat lens. It allows you to place cartoon hare or dog ears on the selfie. Concerns about the competition from Instagram had a negative impact on Snap shares.
The threat of tough competition can be a powerful incentive for independent start-ups to sell to established players. Quidsi, the company that ran Diapers.com, initially refused Amazon’s takeover. Amazon responded with a sharp drop in prices for diapers. Quidsi could not afford price war, so in the end the company sold Amazon in 2010.
The nature of innovation is changing
Take, for example, Tesla. In some ways, it’s a classic Silicon Valley company. They are based in Palo Alto, and the army of programmers is developing everything – from touch screen interface to unmanned system.
But in some ways Tesla departs from the norms of the Valley. While Apple produces the iPhone in China, Tesla operates a factory in Fremont, California. While Uber and Airbnb avoided ownership of cars and homes, Tesla spent billions on the battery factory.
Therefore, although established players like Google, Facebook and Amazon continue to dominate the online services market, this does not mean that they will continue to lead the broader scale of technological innovation. Rather, innovation can move to very different directions. For example, towards electric vehicles and drones for delivery instead of applications for smartphones. We are used to thinking about the Silicon Valley, the Internet and innovations, as synonyms. But the next wave of innovation may not look the same as we used to.
There’s been a lot of talk about ICO (initial coin offerings) business fundraising events. All due to the sale of cryptocurrencies, but not a lot in the way of action until recently. That’s when former Mozilla CEO Brendan Eich, creator of web browser Brave, raised $35 million from its ICO in less than 30 seconds.
The thing is, that ICOs run by selling investors crypto currency. You can use it to stock up value in many ways, not only as traditional share. Brave produced its coin for its sale – The Basic Attention Token (BAT), also known as BAT. She sold one billion of them that brought her over $35 million. An additional there is 500 million BAT for user development and growth. She isn’t planning to sell another token in the future.
The ICO is the highest grossing to date in IT sphere
Another company followed Brave’s steps and took the same approach. That is a popular messaging service – Kik. They just announced plans for its own coin -‘Kin’ – which is a virtual currency for paying for related services and goods. It plans to use BAT – special currency for its marketing system. Also, it claims that it can decrease the level of ad fraud and boost efficiencies for advertisers and publishers. As well it is assessing the probable micro payments for buying digital goods with BAT in the prospect.
Brave’s pitch was great and well-planned because it gave something new. It provides consumers with tighter privacy controls, quicker loading times and even the perspective to make money simply by reading content.
There is a great anecdote situation of the Brave ICO. It is about how a handful of individuals were dominating in the process of its creation. Only roughly 140 people bought BAT because there was one buyer who scooped up $4.6 million of them (worth of 20,000 ETH). In general, only five buyers owned half of the entire haul, as the 20 main spenders bought two-thirds of the offered coins.
A vital component
That situation runs counter that token sales are permitting anyone to take rights to own parts of the companies they use or follow. For sure, larger, more organized investors — including early moving VC firms or brave corporations — are a vital component. Especially, when a company is selling millions of dollars in coins. But ensuring that there is space for smaller parties as well, is going to be an ever significant challenge. As nowadays ICOs become more ordinary in the market.
Aside from Kik that didn’t give any a specific date, payment firm based in Asia -Omise is planning to raise just under $20 million from a token sale. Such companies are leading in the business as the phenomenon begins to find interest among a venture-backed and more established tech companies.
Sometimes you just need to take a risk, think creatively and believe in yourself. With hard work and patience, your new start-up will achieve success and bring great revenue.
Everybody knows an example of Toyota factory that you can find in the classic management textbooks, where each employee had the right to stop the conveyor belt to eliminate the defect or to make any proposal. This approach is the basis of Agile philosophy.
Agile, which emerged as a software development method in small teams 10-15 years ago. Today it becomes a new management trend and buzzword for companies of any sizes.
Is Agile the only right method nowadays?
There is a classical approach to the creation of products and services, characteristic primarily for the IT industry. This method is called cascading, or waterfall development. Why is it called a waterfall? Because with such a development scheme, once you have approved a software product plan, you can not stop or change this plan before it’s full creation.
Agile – the approach of innovative rethinking of the creation of a new product or service. The base of it is a very simple idea: every participant work in the process. Every employee of this “assembly line” should be involved in the process of rethinking their tasks and the common objective. Everyone can stop the conveyor and make their reasonable proposals.
In most organizations, when creating software products, people who are responsible for particular stages of the project are in very different, often conflicting, divisions. It’s no secret that the employees of the maintenance department, testers and developers are usually in conflict with each other. And if the product does not work and does not bring business profits, then everyone strives to blame the other.
On the contrary, the Agile method involves all participants work in the software development process. This approach allows us to understand that they all work for the same ultimate goal – a quality product for their customers.
Organizations that don’t need Agile
Of course, some organizations do not need Agile. For example, government agencies, because most of their activities are legislation. We will not be able to interact with the state if the rules of the game change every day.
Thus, we have two radical opposites of the organizational infrastructure. On the one hand – the strictest bureaucratic formalized organization. They use it certain cases, and it works well in certain situations. And the full diametrical opposition to it is young startups, teams of like-minded people who create something new. Agile is much closer to the state of the emotional collective that works for the ultimate goal, quality (software) product. That’s why the problems that arise at any stage are the problems of all people. Besides, all those who can solve them are involved in this process.
The transition of a large classical business (Enterprise) to Agile
Advanced business has three pillars: experience and knowledge in the industry (in which company operates); the development of products and services using Agile methodology; innovative culture.
Leading IT companies, easily copying banking products and services, begin to complete them to a level that the bank can not withdraw. Because the traditional financial institution does not have a sufficiently developed innovative culture.
Another very simple example is microfinance organizations. This is a company creating a service with a flick of the fingers. Today the company has appeared, has given out the credit under high percent – tomorrow at it profitableness in times is more, than at a bank. Also, such organizations can instantly rebuild their services and products, quickly enter new markets and pushing out traditional banks.
Similar things happen not only in the banking industry. It happens in all industries and spheres of business. Mobile operators are beginning to deal with payment systems. Uber changed the approach to passenger transportation around the world in a few years. Airbnb did the same with the hospitality segment of the tourist business.
With cascading development, you must plan for a year ahead. But if something changes – for example, it will take more servers or other components, then a scenario is possible when you stop the project – it will be necessary to conduct a new tender, buy a new infrastructure, etc.
So, Agile becomes not just a methodology for creating new software, but a system for flexible development planning for the entire company. Such an infrastructure should also react flexibly to requests from customers and requirements. That changes during the development of the software product and its operation. As a result, it implies a complete transition to cloud technologies.
For flexible planning, you need to understand and analyze each business process. And this is the next stage of the company’s development – its digitalization.
How can classical enterprises introduce the philosophy of Agile? What should you do to turn the different departments of a large company into a team of like-minded people, as in startups?
Leadership and responsibility are the only answer. The leader should, first of all, bring something new to the company every day. And this desire for innovation will become the basis of the corporate culture of the organization. Innovative culture is on the principles of forming a team of managers. Finally, the topics of discussions that occur at all meetings, setting strategic objectives, mission, and vision of the company are also very important.
If you have startups, then you need a cloud. It is an inexpensive and flexible system. Almost the whole market thinks that way. Is it true? Are the cloud services suitable for startups?
The clouds changed the market. Any startup can now use resources, which were previously only available to large enterprises.
Main cloud options
SaaS(software as a service) is a cloud application program, used for specific tasks of the customer. The client uses the program, but the provider fully maintains it.
PaaS(platform as a service) – when the client uses parts of the cloud provider’s power for its IT tasks.
IaaS(infrastructure as a service) – when a customer has a cloud platform, as the total processing power, on which he/she independently chooses, how and in what form they will use this infrastructure to solve problems.
A client pays only for resources when using any of these cloud models. He/she chooses from the package of services only what they specifically need. Such point-wise use of IT services became possible thanks to cloud technologies.
Cloud technologies will not disappear from the market in the coming years. It’s not even a fashion or trend, just mutual profit for all parties involved.
Clouds and startups
Clouds are the best solution for startups. Often, IT project owners do not have substantial resources in the beginning, but any startup requires thousands of dollars to pay for systems, licenses, etc. You pay only for the IT service used while using cloud technologies.
There are no special clouds for startups. Some clouds are suitable for a particular project or task. Therefore, nowadays there are very popular those services and programs that work in the cloud and optimize, including financially, work on a project. Yes, these cloud solutions will be limited in functionality. But the client will have only what he/she needs.
The average age of startups is from 10 to 20 years, all are young, and all want to start their projects. Often such “beginners” do not have enough experience in the physical world because they do not look outside their offices.
To start your project, you need to collect a team of various specialists, and you can already fail at this stage, managing not those and not with that experience, but the same dreamers with “genius” ideas. An experienced team is much better for the project. If you look at the world practice, people after 35, or even 40 years organize startups.
Why? Because the winners are those, who have a lot of offline experience. It is clear that there are also many ambitious young people, but they have in the first place – experience, and not starting something of their own at any cost.