GrubHubMike

Blog Series: From 1 to 50 employees

Bootstrapping my business from 1 to 50 employees has been a wild ride.  The nature of the business has changed a lot.  As it has, I've had to stay on my toes to adapt to the new realities.  There have been shifts in the nature of my work as I've needed to raise my own game and continue to be the right person to move the business forward. 

I think the next time I do this it might be easier.  I've got a toolbox now.  A set of principles and techniques to apply as the business expands.  They will need to be adapted, for sure. But it will be easier than starting from scratch.

Overall there have been 2 trends: The changing nature of my own work, and the changing nature of leading.  When it was just me, I did 100% of all work. Now we've got 50 people. I'm not going to move the needle more than 2% by burning the midnight oil to get that last sale, or piece of software written.

I'll chat a little bit about each of the following milestones:

• Its Just Me (1 employee)
• 2 is company (2 employees)
• The Other Founder (4 employees)
• The First Office (7 employees)
• The Second Office (15 employees)
• The Far Flung Sales Team (25 employees)
• Promoting People (35 employees)
• The Third Office (50 employees)

Bonus Post:

    9 tools for growing your business from 1 to 50 employees

Creativity and Focus in the Planning Process

So, we just finished our 2010 budget. As an organization, it was an incredibly productive experience.  One of the really great things was the process we used: A period of creativity and possibilities followed by a period of focus and tough choices

Start with divergence.  What should we do next year?  Increase our breadth? Increase or depth? Launch a new product line? Improve the current product line? Focus on customer loyalty? Focus on new customers?  Fund some R&D cases?  Engage with some expert consultants on new ideas?  Expand our development group? Expand our customer service?  Move towards inside sales? Move towards outside sales?

End with convergence. After about a month of brainstorming and fleshing out ideas, we ended up with maybe 8 or 9 really great ways to grow the business.  Now the hard part began.  Discussing and refining and collecting data and sifting options and arguing and the entire team coming to agreement on the plans. Then putting funding numbers behind things and further discussing and refining and sifting options. 

In the end, we have 2 or 3 really well thought out initiatives and enough resources to capitalize on.  I'm stoked about 2010. We're gonna crush it.

Budgeting... a novel experience... again

I'm amazed at how much budgeting changes from year to year in a growth company.  On the surface, everything looks the same: Financial models, margins, estimates, etc.  But in reality, it really is an organic process from year to year.  There are a couple reasons:

The business changes a lot over a year.  A year ago, we had a part time finance controller. This year we have an HR and finance departments.  A year ago, we *hoped* to be in 7 markets.  This year, we are in 7 markets and hope to be in .... an undisclosed amount more.  At the same time macroeconomic conditions and HR laws have been in flux.  

Effeciveness of capital changes.  Sure, we have some more cash to spend. We are a growth business after all.  But, $1 doesn't go as far as it did when we were a little leaner.  It takes a little more overhead to employ 2x as many people, it isn't a straight graph.  Ironically, while some things get less efficient other areas experience economies of scale.  We don't need 2 cleaning services.  A 2x increase in the size of the marketing team can handle a budget 10x as big. 

Red Line Blues

If you've ridden the Chicago El before regularly... or probably even once... you've had the experience of seeing or hearing a special kind of crazy.  You know, some person acting so outside the acceptable range of behavior for 100 people packed inside a small place that its the first thing you tell your friends or family about when you get to your destination.

So I was on the El last week, and this guy was just screaming into his phone.  So loud that I made eye contact with the person across from me and we both just started laughing.  I've been taking harmonica lessons, so I promise to record an arrangement. and as I listened to him rant on the phone, I realized he was giving me some perfect blues lyrics.  I took out my phone and started typing them out:

Everything has done gone bad!
Can ya hear me?
Everything has done gone bad!
Huh!
Huh!
Everything.
Everything!
I'm on the train!
Huh! can ya hear me?
Everything has done gone bad!
You said to mind my business.
Listen! I don't think she has no money.
Huh!
Hay!
Hey man how you been doin!
Huh!

The Entrepreneur's Boss: Being The Internal Referee

In addition to being responsible to shareholders,employees,customers and the brand, the entrepreneur must be the internal referee to each of these groups.   While I have a legal/fiduciary responsibility to the shareholders, that doesn't exist in a vacuum.  In fact, a lot of effort must be applied to aligning those interests.  But every once in a while a conflict exists that must be arbitrated.

Short Term vs Long Term.  The easiest way to arbitrate conflicts is short term vs long term. Most conflicts are resolved by this simple rule:  Always act to the benefit of customers and employees in the short term and long term;  Always act to the benefit of shareholders in the long term.  In practice this means: don't sacrifice your employees and customers for short term shareholder value.  Of course, short vs long term is somewhat subjective.  In VC backed companies, it is usually defined to some degree by deal terms as well as investor portfolio timelines.  

When in doubt serve the customer.  Good employees and good shareholders see the wisdom of this.  In a global environment where the customer is treated so poorly by so many customers it makes sense they'll be on board with small sacrifices for the benefit of customers.  Simply because in the end, happy plentiful customers cover over a lot of problems, thereby obviating the need for further sacrifices!

When still in doubt serve the employee.  If the conflict is between the employee and the shareholder, it pays to benefit the employee if possible. Sure, sometimes its not possible. Sometimes budget constraints really suck.  But... in general, shareholders will agree that the best way to increase enterprise value is to get and retain great people

The Entrepreneur's Boss: The Brand

Entrepreneurs have responsibilities to a lot of groups of people.  There are also some more abstract, but still critically important areas to be cultivated in a startup organization.  Even while aligning and representing the interests of customers, employees and shareholders, an entrepreneur must maintain the quality and consistency of the brand.  Not just the consumer facing brand, but the tone for communication throughout the entire organization. 

Intentional Communication.  Read: "Shut the hell up, Mike"   At some point it became unacceptable for me to think out loud.  "Holy crap, we spent $100 on coffee this month!"  was a totally reasonable exclamation when I wasn't anybody's boss.  Now, that comment might be the only feedback our office manager gets in a week.  How demotivating!  Even in brainstorming sessions, which have been specifically designed for this kind of exercise,  I need to be careful not to make statements that curtail creativity.  My statements have the weight of organizational authority.  So I must be careful.

Consistency.  It constantly amazes me how I can make a statement 1, 10, or 100 times, and still find out that someone in the organization is relating the exact opposite concept.  Crazy!  The problem gets exponentially worse as an organization gets larger.  Ideas must be well thought out in advance, and then communicated concisely. Again. And Again. And yet again.

Responsible Transparency.  There are a sickening number of blog posts and conversations around the idea of personal vs professional transparency.  Basically, it comes down to a key principle: Be as transparent as possible without causing harm.  I think of this in terms of concentric circles.  In the most secure inner circle might be personal information and specific business strategy.  In the most open outer circle might be company culture anecdotes and business principles.