10 ms·

The Hacking Business Model

42 points by subsystem 13y ago

czbond 13y ago
This is fantastic.
jzd131 13y ago
Its an interesting concept. However, it may never work for one simple reason "risk". When my partners and I started our company the risk that we took was astronomical, leaving our high-paid jobs, masters, phd's to start a company. This risk needs to be rewarded and it is via equity. Building a company that is there only for its employees does not provide the founders with enough reward to warrant the risk. This does not include the stress it takes to start and run a company, that stress should be equally as rewarded.
- ringdabell 13y ago
  I think you can have both, something that rewards founders for their risk while also providing for your employees. Remember that it's a bit of catch-22 in the sense that you need your employees in order to make your company into a big success. Rewarding your employees and creating a culture that's awesome incentivizes loyalty, hard work, etc. Be careful of this founder-before-all mentality... no one wants to work in a fiefdom...
- marcus_holmes 13y ago
  I've played around with co-operative business structures for this sort of thing, and if the shares are awarded to each employee as a straight split each year (so year 1 creates 100 shares, which are split 50% to the 2 founders, then year 2 creates 100 shares which are split 33% each to 2 founders and 1 employee, and so on) then the founders tend to end up with an outsize lump of shares, and the early employees do well too. It ends up rewarding early employees more than the normal company structure, but I think that's a good thing; they normally have to go through a lot of disruption (and a fair amount of risk; the chances of the startup not being able to make payroll occasionally are high) and are a key element to the success of the organisation anyway.
swombat 13y ago
A lot of this stuff sounds interesting - in the same ballpark as what we're already doing at GrantTree, but some bits are jarringly wrong. For example: > The Company is primarily created to generate bonuses for the employees (not to get sold). Ugh. What an uninspiring company mission statement. Surely the company should exist to do something worthwhile for its customers first. If it does no good to the rest of the world, generating bonuses for its employees is... lame.
- ringdabell 13y ago
  That's a bit too cynical... I read that more as a "company should seek to provide sustainable financial prosperity for the employees". What's wrong with that? It's hard to provide for your customers if you and your employees are struggling. > If it does no good to the rest of the world, generating bonuses for its employees is... lame. I don't know. Not every business produces world-saving value. And that's fine. You shouldn't need kool-aid level propaganda to validate your business and motivate your employees... A primary motivation for me and my business, is creating an institution that enriches the lives of those part of it. I want to create the type of company where everyone has some say, where the mission is bigger than any one individual, and whose employees feel empowered and respected. I've worked too many bigco jobs that wore and ground people down. My first job out of school was at a management consultancy. The pay was excellent, the projects were interesting (and truly made an impact), but the culture of the industry/company was such that people were ground down to the point that they became extremely jaded, materialist, negative, etc. For my older co-workers and bosses that were married and had kids, I always wondered how that impacted their lives at home and how they treated their love ones, and in turn the ripple effect that would have. From reading your blog, I know you have a similar background, so I think you know what I'm talking about. The startupbro culture sneers at these "lifestyle business" sentiments, but there is no shame in a more modest (and I think, balanced) approach.
  - swombat 13y ago
    I certainly do know what you're talking about, and definitely agree that that should be one of the primary objectives of a company... But I think if it's the only one, then something's wrong. The company should have an objective to do something good and worthwhile for people outside of the business. Even "lifestyle businesses", whatever they may be, should. All three are fundamentally necessary, sine-qua-non: making money, doing something worthwhile, and doing it in a way that builds people up rather than grinding them down.
jorde 13y ago
With the background of coming from Finland and now living in San Francisco, I have to say that I'm a supporter of the "Default Employee Rules" section when it comes to working hours and fixed vacation time. While unlimited vacation policy is common among SF/SV startups it drives people to work all the time and not actually take holidays (or you're working on your holiday). No matter how much time you spend at the office people need rest. The second author of the model is Michael Widenius, a Finn and co-founder of MySQL.
marcus_holmes 13y ago
I like it, except for the democracy bit. Voting sucks as a method of making decisions. For quick unimportant decisions, sure, vote. But for important decisions either involve everyone and make it a consensus (i.e. unanimous, everyone has to agree) or give the authority and responsibility to one person. Voting gives every vote the same weight, but some people are more knowledgeable than others and in a better place to know the right course (this is not 'some people are better than others' but 'some people have more information than others'). Voting also disables unpopular-but-necessary decisions, which will kill the company eventually. I would replace it by either: - all decisions are made by one person (not the same person for each decision). The management team select three appropriate employees to make the decision, and an all-company vote selects which one will make the decision. or: - the management team will make all decisions, but must provide post a written explanation of the reasoning behind the decision to the rest of the company, and any decision may be further discussed at a company meeting. But that's just my thoughts after 5 mins thinking about it... someone else probably has better ideas :)
sharemywin 13y ago
Sounds like this would work for a marketplace like ebay.
maerF0x0 13y ago
anyone know a list of companies following such model?
Halfwake 13y ago
This is not good. Almost everything, if not everything, in this document is either specific nitpicking or uselessly vague. > Transparent: We communicate in an honest and genuine way. Any information or process that can be made open, will be made open. That's meaningless if a way of determining what can and can't be made open isn't included. Here's one of the "concrete tools" that's supposed to help the company be transparent. > Corporate transparency - any information or process that can be made open, should be made open. This is not helpful. > The Company should make it as fun as possible to work for the Company. Companies don't strive to make working less fun. This doesn't help. > 2000 Euro hardware allowance at start of position (for laptop, desktop etc). > 1000 Euro/year hardware allowance for everyone that requires new hardware to be be able to do their work. The hardware allowances are just fixed numbers that don't take into account different currencies, job positions, or how the price of parts may change over time and differ by location. This is brittle. > The Company should budget for at least 3 traveling meetings for every employee to ensure that people can work efficiently and get to know each other. One of the meetings should be an all company meeting. It's possible that all employees don't require travel budgets. It's possible that no employees require travel budgets.
viniciusspader 13y ago
The spanish link is broken. Would do you want help to translate it to portuguese?
_lex 13y ago
I might be drinking crazy juice, but I see everything EXCEPT a business model. How does this company make money? How do you attract customers? How do you reach scale? What you've written down is a bunch of ways to spend money - not a business. Most businesses do spend money, and some may even benefit from some of the ideas presented, but please don't call it a business model.

42 points by subsystem 13y ago

This is fantastic.

Its an interesting concept. However, it may never work for one simple reason "risk". When my partners and I started our company the risk that we took was astronomical, leaving our high-paid jobs, masters, phd's to start a company. This risk needs to be rewarded and it is via equity. Building a company that is there only for its employees does not provide the founders with enough reward to warrant the risk. This does not include the stress it takes to start and run a company, that stress should be equally as rewarded.

ringdabell 13y ago
I think you can have both, something that rewards founders for their risk while also providing for your employees. Remember that it's a bit of catch-22 in the sense that you need your employees in order to make your company into a big success. Rewarding your employees and creating a culture that's awesome incentivizes loyalty, hard work, etc. Be careful of this founder-before-all mentality... no one wants to work in a fiefdom...
marcus_holmes 13y ago
I've played around with co-operative business structures for this sort of thing, and if the shares are awarded to each employee as a straight split each year (so year 1 creates 100 shares, which are split 50% to the 2 founders, then year 2 creates 100 shares which are split 33% each to 2 founders and 1 employee, and so on) then the founders tend to end up with an outsize lump of shares, and the early employees do well too. It ends up rewarding early employees more than the normal company structure, but I think that's a good thing; they normally have to go through a lot of disruption (and a fair amount of risk; the chances of the startup not being able to make payroll occasionally are high) and are a key element to the success of the organisation anyway.

swombat 13y ago

A lot of this stuff sounds interesting - in the same ballpark as what we're already doing at GrantTree, but some bits are jarringly wrong. For example: > The Company is primarily created to generate bonuses for the employees (not to get sold). Ugh. What an uninspiring company mission statement. Surely the company should exist to do something worthwhile for its customers first. If it does no good to the rest of the world, generating bonuses for its employees is... lame.

ringdabell 13y ago
That's a bit too cynical... I read that more as a "company should seek to provide sustainable financial prosperity for the employees". What's wrong with that? It's hard to provide for your customers if you and your employees are struggling. > If it does no good to the rest of the world, generating bonuses for its employees is... lame. I don't know. Not every business produces world-saving value. And that's fine. You shouldn't need kool-aid level propaganda to validate your business and motivate your employees... A primary motivation for me and my business, is creating an institution that enriches the lives of those part of it. I want to create the type of company where everyone has some say, where the mission is bigger than any one individual, and whose employees feel empowered and respected. I've worked too many bigco jobs that wore and ground people down. My first job out of school was at a management consultancy. The pay was excellent, the projects were interesting (and truly made an impact), but the culture of the industry/company was such that people were ground down to the point that they became extremely jaded, materialist, negative, etc. For my older co-workers and bosses that were married and had kids, I always wondered how that impacted their lives at home and how they treated their love ones, and in turn the ripple effect that would have. From reading your blog, I know you have a similar background, so I think you know what I'm talking about. The startupbro culture sneers at these "lifestyle business" sentiments, but there is no shame in a more modest (and I think, balanced) approach.
- swombat 13y ago
  I certainly do know what you're talking about, and definitely agree that that should be one of the primary objectives of a company... But I think if it's the only one, then something's wrong. The company should have an objective to do something good and worthwhile for people outside of the business. Even "lifestyle businesses", whatever they may be, should. All three are fundamentally necessary, sine-qua-non: making money, doing something worthwhile, and doing it in a way that builds people up rather than grinding them down.

jorde 13y ago

With the background of coming from Finland and now living in San Francisco, I have to say that I'm a supporter of the "Default Employee Rules" section when it comes to working hours and fixed vacation time. While unlimited vacation policy is common among SF/SV startups it drives people to work all the time and not actually take holidays (or you're working on your holiday). No matter how much time you spend at the office people need rest. The second author of the model is Michael Widenius, a Finn and co-founder of MySQL.

marcus_holmes 13y ago

I like it, except for the democracy bit. Voting sucks as a method of making decisions. For quick unimportant decisions, sure, vote. But for important decisions either involve everyone and make it a consensus (i.e. unanimous, everyone has to agree) or give the authority and responsibility to one person. Voting gives every vote the same weight, but some people are more knowledgeable than others and in a better place to know the right course (this is not 'some people are better than others' but 'some people have more information than others'). Voting also disables unpopular-but-necessary decisions, which will kill the company eventually. I would replace it by either: - all decisions are made by one person (not the same person for each decision). The management team select three appropriate employees to make the decision, and an all-company vote selects which one will make the decision. or: - the management team will make all decisions, but must provide post a written explanation of the reasoning behind the decision to the rest of the company, and any decision may be further discussed at a company meeting. But that's just my thoughts after 5 mins thinking about it... someone else probably has better ideas :)

sharemywin 13y ago

Sounds like this would work for a marketplace like ebay.

maerF0x0 13y ago

anyone know a list of companies following such model?

Halfwake 13y ago

This is not good. Almost everything, if not everything, in this document is either specific nitpicking or uselessly vague. > Transparent: We communicate in an honest and genuine way. Any information or process that can be made open, will be made open. That's meaningless if a way of determining what can and can't be made open isn't included. Here's one of the "concrete tools" that's supposed to help the company be transparent. > Corporate transparency - any information or process that can be made open, should be made open. This is not helpful. > The Company should make it as fun as possible to work for the Company. Companies don't strive to make working less fun. This doesn't help. > 2000 Euro hardware allowance at start of position (for laptop, desktop etc). > 1000 Euro/year hardware allowance for everyone that requires new hardware to be be able to do their work. The hardware allowances are just fixed numbers that don't take into account different currencies, job positions, or how the price of parts may change over time and differ by location. This is brittle. > The Company should budget for at least 3 traveling meetings for every employee to ensure that people can work efficiently and get to know each other. One of the meetings should be an all company meeting. It's possible that all employees don't require travel budgets. It's possible that no employees require travel budgets.

viniciusspader 13y ago

The spanish link is broken. Would do you want help to translate it to portuguese?

_lex 13y ago

I might be drinking crazy juice, but I see everything EXCEPT a business model. How does this company make money? How do you attract customers? How do you reach scale? What you've written down is a bunch of ways to spend money - not a business. Most businesses do spend money, and some may even benefit from some of the ideas presented, but please don't call it a business model.