Company of One Page 8

  Alexandra Franzen is the author of several books and has written for such publications as Time, Forbes, and Newsweek for the last ten years. Previously, she had a full-time job in radio broadcasting. A few days after quitting, she didn’t start renting office space or buying business cards; rather, she just began emailing every single person she knew. Her parents, friends, college professors, former coworkers, internet friends … everyone she could think of. She wrote each one a personal email stating she had left her radio job, she was now working as a freelance writer, and she was ready for new projects.

  Alex also mentioned the type of work she was looking for. By the end of the week, she had emailed sixty people, and almost everyone had written back — either giving her ideas about others to contact or asking to hire her. She began with three small projects, and those led to three more as her first clients hired her a second time for a new project or referred her to someone else who needed writing work done. It all snowballed from there, and now she’s booked almost a year in advance. She didn’t start with a vision for growth and profit or a vision of what the next several steps would be — she began with what could immediately result in paying customers. Then and only then, based on profit, did she increase her expenses (but only a little) and make some business purchases.

  People often feel like they have to move away from obscurity in their new business as quickly as possible. While obscurity can equal less exposure to potential customers at the outset, starting out small and without a massive audience is perfect because it enables you to gain experience and play with your business ideas. Not to mention that there aren’t many people watching if you fall flat on your face. Starting out small is the best time to learn what your business truly is and why it serves who it serves. There’s no need to rush to be noticed faster than you can handle.

  Starting a company of one requires that you embrace working on what’s achievable now, which usually means embracing less than your vision for your ideal future. Remember, at the start you’re the smallest and most agile you’ll ever be. You have fewer (or no) customers, less established processes, and less name recognition. Being small and measuring meaningful growth based on profits instead of projections ensure much more stability.

  We often think that we need to have everything in place — all the systems, all the automations, all the processes — to be ready to launch a digital product. We want everything all polished and perfect before we hit “publish.” But most of the time this doesn’t happen. Most of the time, in fact, waiting until everything is totally perfect can only hurt or delay your launch.

  You can’t start a business with every idea you’ve got for it listed in the “need to have” column. You’ll never get anywhere. Plus, a lot of your assumptions about what you need might change once people start buying and using what you’ve made. A true “need to have” is whatever will make your idea fall apart if you don’t have it. For example, if your idea is a health care SEO consultancy, your business first needs to thoroughly understand SEO and its implications for hospital websites; otherwise, your idea is of no use to hospitals. But does your consultancy need an office when working from home or in a cheaper coworking space would suffice? Does your company need glossy business cards if most of your connections are made online? Does it even need a printer if contracts and documents are all sent digitally? These are all examples of “nice to haves” that can come later, after your business is up and running.

  Crew, a company we discussed in Chapter 3, started out with a single form, on a one-page website, that manually matched businesses with designers and programmers. Over time, as revenue grew, the company was able to create software and automations that helped scale the volume of matches. But at first, Crew was able to launch and test the idea of a matching service almost instantly by helping a single company get matched to the right freelancer. Scaling down an idea that you can start right now puts the focus on helping people immediately with what you have available right now and are resourceful enough to provide, like a sort of business MacGyver. If your business only has an expertise plus a figurative stick of gum, a paper clip, and a ball of twine, think: Whom can I help with these things?

  In short, start small. Start with just the smallest version of your idea and a way to make it happen. Instead of waiting (sometimes for years) for bigger wins to happen, you can use small wins to propel you. That’s actually a much smarter way to launch. Easing up on the “growth equals success” mentality opens you up to starting and becoming more profitable much sooner.

  IF SCALE ISN’T THE GOAL, WHAT IS?

  We need to reexamine our relationship with thinking big and success. Questioning growth — or at least, not scaling — isn’t the same as staying static and unchanging. Even a business that doesn’t want to grow much needs to constantly learn, adapt, and refine. The cost of living, labor, equipment, materials, travel — all increase year over year. Companies of one aren’t anti-scale; rather, they’re aware that they need to determine which areas of their business need to scale and when it makes the most sense to do so. Scale can sometimes create efficiency, and volume can increase profit margins. But without business introspection, scale and volume could be chased as vanity metrics rather than as accurate measures that determine profit.

  There’s a real difference between growth as a goal and growth as a direct result of profit from sales of a valuable product. Letting growth as a goal guide your company’s decisions can be shortsighted or result in high churn. Whereas if your decisions are guided by growth resulting from profit, you stay focused on how you can continue to make things better for your customers — with better products, better experiences, better support, and increased success for them. This is growth that stems from doing things correctly, not from making growth your top priority and just hoping you do everything right.

  In public companies on stock exchanges, there’s pressure from stockholders to see stock prices increase constantly so that there’s positive return on investment. The same is true for private companies with investors — they want to make a return to show those investors that investing in the company was a smart idea. The majority of companies, however, don’t need to chase growth to appease outside investors. Companies of one can get by paying only an income to their owners.

  Peldi Guilizzoni founded a wire-framing company called Balsamiq in 2008. Before that, he was a senior software engineer at Adobe. Balsamiq has always been privately owned, profitable, small, and focused on being better instead of bigger. Its goal — providing great software that’s valuable and easy to use — leads to more customers and more profit. This approach varies from that of other software companies, which is to acquire more customers and earn greater profits that can happen only at scale and sometimes at the expense of customer satisfaction. Each year Peldi takes out $1 million personally, keeps an eighteen-month runway in the company (in case anything bad happens), and pays out the remainder to his twenty-five-employee team (which grows by only two to three people per year). He’s faced pressure to grow much faster and has even been offered VC investment, but he continues to turn it down. To him, such investments, far from helping to improve his software, would just make him beholden to growing for the sake of investor ROI. He likes to make sure he has no business debts, and the only deadlines are ones that Balsamiq self-imposes. Peldi’s company grows because he focuses on simply making great software.

  By focusing on customer success and happiness, Peldi avoids the dangers of “thinking big” or pushing aside profit in the hope that one day margins will be huge. Even business moguls like Richard Branson started small: the entire Virgin brand began with a single magazine called Student. Google began as a research project at Stanford. Facebook was targeted only at Harvard undergraduates when Mark Zuckerberg started it.

  For Peldi and his team at Balsamiq, focusing on better, not bigger, removes any pressure to take shortcuts in software development. He gets to spend his time talking to customers instead of in board meetings or at investor
pitches. Moreover, Peldi says, “I’m Italian. Italians measure things in generations, not quarters.”

  If scale isn’t the goal, we can strip our business and business ideas to their essence to discover their greatest strength. This is the view held by Yvon Chouinard, founder of Patagonia, the clothing and outdoor gear company. Having business minimalism as its functional ideal has led Patagonia to create an ironclad guarantee for its products, which is in essence a lifetime refund/replacement policy. This ideal also led Chouinard to start the charity 1% for the Planet, instead of attempting to maximize and grow sales at all costs. Patagonia even has ad campaigns telling people, “Don’t buy this jacket,” and encouraging them to repair or recycle the clothes they already have.

  GROWING WITHIN AN EXISTING ORGANIZATION

  In many large companies, as your career grows, you’re promoted out of doing work with your core skill set and into managing other people with that same skill set. Since these companies operate as pyramidal hierarchies, advancement brings increasing influence over more and more people. This can only happen if a company continually hires more staff, since there need to be people to manage as others get promoted.

  This doesn’t have to be the case for organizations that operate under a company-of-one mind-set. But then how do you advance in your career within a company that doesn’t grow, or that grows extremely slowly? Career growth in this case happens by increasing your scope of influence and the level of your ownership; success in these two areas allows you to stay focused on your skill set. This is how our friends at Buffer (introduced in Chapter 2) approach career advancement — with an interesting hybrid of a pyramidal bureaucratic hierarchy and a holocracy (a completely flat organization where no one manages anyone else).

  It takes even less to start a company of one within an existing organization, like a team at a corporation. Although it’s not been my own path, working at a larger company does have its benefits — for instance, not having to worry, for the most part, about insurance, administrative work, or covering your expenses. And although you can sometimes gross more as a freelancer or entrepreneur, you have to take into account many expenses you wouldn’t have working for a larger company, from office rent to equipment to insurance to long sales cycles (which you can’t typically charge for). This is why many people opt to work as a company of one within an existing business, if it’s set up to foster this approach or if they can get buy-in. As we’ll see, there are several benefits to doing this.

  Buffer has seventy-two employees, is happy at that size, and has no short-term plans to excessively grow this team. They saw that defining their scope of influence meant determining the amount of technical prowess they needed in a subject area. For example, with the goal of being able to program for Android devices, your scope of influence can start small — say, with being able to program in Java (the primary language for Android). It then grows by how much impact you can make, like a ripple. Being able to program to accomplish your tasks creates a relatively tiny ripple (you wouldn’t be hired as an Android developer if you couldn’t code) and grows only as you’re able to influence more, for instance, by having the expertise to make sound decisions around Android for your whole team. Your scope of influence can potentially increase to become industry-wide (such as being asked to speak at Android events), your tiny ripple having turned into a massive wave.

  The second factor in career growth is ownership. Ownership is related to how Buffer assigns responsibility to each employee. Junior programmers just starting at the company are given only tasks to do, not any ownership on a project, along with responsibility for doing the work, learning, and being mentored by others. As their careers continue, they’ll be able to own specific projects within their team — and be accountable for the deliverables associated with those projects. Finally, as their career advances even further, they’ll be given ownership over entire disciplines within the company and all the deliverables that come from that discipline. For instance, a CTO is in charge of everything, company-wide, that relates to technology and programming.

  Katie Womersley manages engineers at Buffer and helped come up with this “scope of influence” and “ownership career” framework. She’s what Buffer calls a “people manager” — she’s in charge of people decisions in engineering. In this model, Katie makes decisions in engineering as they relate to people, as she has a scope of influence and ownership over that entire team. But in this style of organization, an engineering team member can make specific decisions as they relate to their own scope of influence and control — for example, the team member who knows the most about Android. In this way of doing things, different people are in charge of different areas. So it’s possible to have a scenario where two employees are working together and one is in charge of one type of programming and the other is subordinate, but in an HR scenario their roles are reversed. Basically, the most qualified and best-suited person makes the decisions for each specific project.

  Buffer’s goal in organizing the company this way is to illustrate that there’s no ceiling for rising: employees who don’t want to outgrow their jobs don’t have to. An employee who loves programming for Android can simply acquire more and more Android-related ownership and decision-making abilities. Other employees may choose to grow to manage Android projects, or to become people managers. Buffer employees never have to choose between stagnation and leading people — they can choose to go deeper into their area of expertise or go wider by building a name for themselves outside the company in their area of expertise (which is then rewarded).

  This is exactly how you grow within a large company of one or how a large organization can operate more like a company of one.

  BEGIN TO THINK ABOUT:

  ■ How you could prioritize your existing customers or transform them into repeat customers

  ■ The smallest version of your business idea that you could start with now, with little to no investment

  ■ How you want to grow as a business, or as an employee who doesn’t require transitioning into work you don’t actually want to do

  Part II

  * * *

  DEFINE

  5

  Determining the Right Mind-Set

  Regardless of whether or not your company of one is just you or is part of a larger organization, with greater autonomy comes greater responsibility to do the work expected of you. How you think about work is important to how work gets done.

  To succeed as a company of one, you have to have a real underlying purpose. Your why matters as an unseen but ever-present element that drives your business. Your purpose is more than just a pretty-sounding mission statement on your website; it’s how your business acts and represents itself. And it’s what your business sometimes places above even profit.

  As more and more consumers are making purchases related to shared value (even over price), companies are responding by aligning their true purpose with how they act at every step along the supply chain, how they market to and pitch potential customers, and even how they support their products and services. Companies of one recognize that economic value and shared purposes don’t have to be mutually exclusive — they can drive sales and also ensure sustainability.

  Yvon Chouinard, the founder of Patagonia, believes that much of his company’s success is due to being a “responsible” company. A shared set of values around environmental stewardship and sustainability guides how they do business, from how they hire and train employees to why they’ve had on-site day care since they started, to why they cofounded the charity 1% for the Planet. This approach may run counter to how a lot of clothing companies operate, but Patagonia’s purpose is to produce less clothing, to make it last longer, and to offset its price socially and environmentally. Because this purpose resonates with Patagonia’s audience, they’re able to charge a higher price for their responsible clothing. Furthermore, the top five companies in 1% for the Planet saw record sales years during the 2008–2009 recession, when most other companies wer
e losing money. In a thriving economy people gladly buy products that align with their values, and in a downturn they spend less and do business with companies they respect and trust. So either way, having a purpose is a win.

  Seventh Generation is another business that’s built around purpose — so much so that the purpose is part of their name: they consider the impact every product they create will have on the next seven generations. This purpose has guided them to create plant-based, nontoxic cleaning supplies and to become a B-corporation (B-corps are certified through rigorous standards of social and environmental performance, accountability, and transparency). This purpose is beneficial in several ways for Seventh Generation: They attract a younger workforce, none of whom probably thought, Hey, I’d like to work for a household goods company when I graduate! They also build traction through word of mouth for a market that most people wouldn’t otherwise talk about. Their purpose is seen through their actions, not just their marketing efforts — they encourage both employees and customers to line-dry clothes, even at the risk of slowing sales of their dryer sheet product. Seventh Generation’s purpose doesn’t just result in customers feeling good about their products — it also generates approximately $250 million in revenue. In 2016, Unilever purchased Seventh Generation, which hopefully will stay true to its purpose.

  Your purpose is the lens through which you filter all your business decisions, from the tiny to the monumental. We’re talking about who you work with, what you offer, where you focus your time and energy, and even how you define your audience. Determining the unique purpose that underpins your company of one isn’t always a quick or easy process, and there’s no spreadsheet that can crunch some numbers and spit out the answer. Figuring out your purpose requires actual reflection on both your own desires and the audience you want to serve. After all, doing business boils down to serving others in a mutually beneficial way. Customers give you money, gratitude, and a shared passion, and you address their problems by applying your unique skills and knowledge to what you sell them.