Paradox is the spice of life. Maybe. Because life is full of contradictions and other hands. Take this very interesting juxtaposition. Kevin Systrom, founder and CEO of Instagram, just sold it for $! billion to Facebook. And he built the Instagram prototype himself, in his spare time, after teaching himself to code, also in his spare time. Here’s more detail, from Instagram’s product genius is a self-taught programmer on The Next Web:
Systrom, an active user on Quora, is a largely self-taught programmer. While working in the marketing department at Nextstop, which Facebook acquired in 2010, he would spend his evenings learning to program. According to Systrom, small projects included combining elements of Foursquare with Mafia Wars.
The “new breed” of Valley people are dubbed “user experience designers” and can fetch as much as $80,000 for an entry level position. In some situations, designers are becoming embedded in the conceptIon of new features — Facebook, for example, has begun assigning a designer to consult with a team of engineers led by a project manager.
True, designers aren’t engineers. But they aren’t do-it-yourself programming-at-night entrepreneurs either.
Go figure. The pots of gold aren’t always where they are supposed to be.
(I posted this about two years ago on Small Business Trends. I’m reposting it here today because this is a good time of year for this kind of reflection. And maybe also for not writing a new post. Tim )
Last week a group of students interviewed me, as part of a class project, looking for secrets and keys to success. They were asking me because after 22 years of bootstrapping, my wife Vange and I own a business that has 45 employees now, multimillion dollar sales, market leadership in its segment, no outside investors, and no debt. And a second generation is running it now.
Frankly, during that interview I felt bad for not having better answers. Like the classic cobbler’s children example, I analyze lots of other businesses, but not so much my own. As I stumbled through my answers, most of what I was saying sounded trite and self serving, like “giving value to customers” and “treating employees fairly,” things that everybody always says.
I wasn’t happy with platitudes and generalizations, so I went home that day and talked to Vange about it. Together, we came up with these 10 lessons.
And it’s important to us that we’re not saying our way is the right way to do anything in business; all businesses are unique, and what we did might not apply to anybody else. But it worked for us.
1. We made lots of mistakes.
Not that we liked it. At one point, about midway through this journey, Vange looked at me and said: “I’m sick of learning by experience. Let’s just do things right.” And we tried, but we still made lots of mistakes. We’d fuss about them, analyze them, label them and categorize them and save them somewhere to be referred to as necessary. You put them away where you can find them in your mind when you need them again.
2. We built it around ourselves.
Our business was and is a reflection of us, what we like to do, what we do well. It didn’t come off of a list of hot businesses.
3. We offered something other people wanted …
… and in many cases needed, even more than wanted. You don’t just follow your passion unless your passion produces something other people will pay for. In our case it was business planning software.
4. We planned.
We kept a business plan alive and at our fingertips, never finishing it, often changing it, never forgetting it.
5. We spent our own money. We never spent money we didn’t have.
We hate debt. We never got into debt on purpose, and we didn’t go looking for other people’s money until we didn’t need it (in 2000 we took in a minority investment from Silicon Valley venture capitalists; we bought them out again in 2002). We never purposely spent money we didn’t have to make money. (And in this one I have to admit: that was the theory, at least, but not always the practice. We did have three mortgages at one point, and $65,000 in credit card debt at another. Do as we say, not as we did.)
6. We used service revenues to invest in products.
In the formative years, we lived on about half of what I collected as fees for business plan consulting, and invested the other half on the product business.
7. We minded cash flow first, before growth.
This was critical, and we always understood it, and we were always on the same page. See lesson number 5, above. We rejected ways we might have spurred growth by spending first to generate sales later.
8. We put growth ahead of profits.
Profitability wasn’t really the goal. We traded profits for growth, investing in product quality and branding and marketing, when possible, although always as long as the cash flow came first.
9. We hired people slowly and carefully.
We did everything ourselves in the beginning, then hired people to take tasks off of our plate. We hired a bookkeeper who gave us back the time we spent bookkeeping. A technical support person gave us back the time we spent on the phone explaining software products to customers. And so on.
10. We did for employees’ families as we did for ourselves.
Family members — not just our own family, but employee family members too — have always been welcome as long as they’re qualified and they do the work. At different times, aside from our own family members, we’ve had two brother-sister combinations, an aunt and her niece, father and daughter, and husband and wife.
And in conclusion…
Bootstrapping is underrated. It took us longer than it might have, but after having reached critical mass, it’s really good to own our own business outright. It might have taken longer, and maybe it was harder — although who knows if we could have done it with investors as partners — but it seems like a good ending.
Family business is underrated. There are some special problems, but there are also special advantages too.
You’ve got your startup brewing, you love the idea, you’re gathering a team, and you want everything to be perfect. So do you move to Silicon Valley? Silicon Alley? Austin TX?
I know of people who’ve moved from where they were to where they thought they should be, before starting the company. Their assumption, when they do, is that the new place is better. It has better access to investment, management team, mentors, and sometimes even channels and such.
Does that make sense? Do you move first, then start? Here’s what I think:
Business is to enhance life, not life to enhance business.
One of the great advantages of building your own business is that potentially you can decide where you want to live.
And of course there are trade-offs. If I were independently wealthy I might live in Yosemite Valley, but I don’t think that would generally be a good place to start a business.
We can deny that some locations have advantages. Having a startup community, investors, history, and potential team members can make a huge difference.
But there are lots of ideal places to start businesses. Your preference really matters. For example, I’m biased towards the Silicon Valley because I grew up there and did business planning and consulting and startups there during the 1980s and early 1990s. But as I write this today I’m in New York looking at Silicon Alley, the New York startup world, and that has its advantages too. A lot of people in New York want to stay in New York, and here too they have community, investors, history, and potential team members.
Let’s not forget that costs are different in different places. Office space, living space, housing costs, salaries … and of course these costs are higher in the more well-known locations.
On the other hand, you know the ins and outs where you are. You have connections. You know the territory. That reduces costs.
Moving before you start a business, just for the sake of a business, and not because you want to live there, is a bad idea. That increases your uncertainty and your degree of difficulty tremendously.
On the other hand, moving to somewhere you’ve always wanted to live, just before you start a business, that’s not such a bad idea. You take advantage of the flexibility, you make the jump, and add it to the positives of doing your own thing. Yes it adds uncertainty and probably degree of difficulty, but it’s about living well, and choosing where you want to live can be part of that.
I like it that my wife once said that since we were putting up with the downside of owning our own business, then we should get the upside and move to where we wanted to live. I think that you should live where you want, but, if you’re building a business, within some reasonable framework of practicality. What do you think?