Optimizing your startup for growth, profits and happiness

Tom Preston-Werner (CEO - GitHub) wrote a great blog post a few years ago entitled ‘Optimize for Happiness’, in which he describes the difference between optimizing for happiness and optimizing for profits. He went on to talk about the GitHub journey and how bootstrapping the company helped him to always “optimize for happiness”.

One of my favorite quotes from the piece is:

“VCs want to see quick success or quick failure. They are optimizing for money. There's nothing wrong with that as long as you want the same things they do. But if you're like me, then you care more about building a kickass product than you do about having a ten figure exit. If that's true, then maybe you should be optimizing for happiness. One way to do this is by bootstrapping a sustainable business with infinite runway. When there are fewer potentially catastrophic events on the horizon, you'll find yourself smiling a lot more often.”

Without comparing ourselves to GitHub (we will get there one day!), we try to have the same philosophy here at PagePicnic. We’ve spent 5 years building a solid product, a solid customer base and a solid revenue stream, and because we’ve been profitable almost from day one - we’ve never had to “optimize for money”, for fear of the runway.

Of course - VC is an obvious path for many startups, but for us - bootstrapping has given us a great freedom, one that we probably wouldn’t have had otherwise. We don't have strict working hours or big-company-bureaucracy. We couldn’t afford that flexibility if we had investors breathing down our necks every month.

It’s important to note - this post isn’t an attack at VC, it’s just important to think about how you want to build your company.

Can you optimize for both happiness and money?

Eventually, GitHub did take in venture funding - $100m from Andreesen Horowitz. Does this mean GitHub is no longer optimizing for happiness? Does it mean they now optimize for for money and profits? According to the company, they've managed to maintain their famous company culture, even after bringing in a massive pile of cash, and all the bureaucracy that comes with that.

Here at PagePicnic, we have no plans to take in venture funding and we really want to build this company for a long time. In a time where so much of the tech world is obsessed with big exists and the "billion dollar unicorns", it's becoming increasingly rare for people that want to build sustainable businesses for people to thrive in. Again, it's not for everyone, it's just our take on company-building. 37Signals partner David H. Hansson sums it up perfectly when he said he wants "maximum happiness for the maximum amount of time". Very Scandinavian if you ask me!

Without going too much into our business - we've been helping small businesses create beautiful websites for nearly 5 years. We've built our loyal customer base of paying customers to 10,000 and we've built annual revenue to $2.5 M USD with a 40% profit margin. Whilst many of our competitors have scaled up more quickly - we're here for the long run and believe that the "optimize for happiness" approach is the right one - for our customers and our company.

How have we optimized for happiness? And how have we also managed to build a sustainable and growing business at the same time?

As CEO, I've always tried to keep the following things in mind - as we grow our team, our company, our customer base and our revenues.

Make decisions based on the long-term vision, not short term wins

• Don't focus too much on hiring "rockstars", find talented, energetic and eager-to-learn people. Sometimes the smartest guys, are not the right fit for your culture. Sometimes they are, sometimes they're not. You need to figure out "who" fits your team, and chase them.

Hire different types of people, some that can grow into bigger roles and some that can just be great at their starting role

• Some people are natural leaders. Some are great programmers. Some excel at helping customers out. Let everyone do what they do best and value them for it. Some will have amibitions to work themselves up the "company ladder", some don't. Respect that. Remember, you'll need both types.

Be as transparent as possible towards employees and keep them in the loop on how the company is doing

• We hold Monday meetings where everyone can raise their concerns and where we update everyone of the company's progress, new features, potential partnerships etc.
• Trust that your employees can handle the truth. Always be transparent about the company direction.
• We have a big screen in our company living room where data on new customers, orders processed through our customers shops, net sum of new customers this month and more is clearly stated. This helps keep everyone in the loop.

Never lose focus on the product. Always be iterating. Always compare to the best of the best and be better

• If you're bootstrapped, your customers happiness with what you offer is the only thing that will keep your business alive.
• This does not mean they always know what they want, but the company shouldn't prioritize business relationships in front of customer needs (cough, daily deal sites?).
• Making your customers happy also makes for a happy support team that don't have to handle too many angry tickets!

The best perk you can have as an employee is to feel safe. Safe to be who you are and safe to speak your mind

• Have regular one-on-ones with the CEO as long as possible. Of course, this might be hard to maintain as the company grows, but this really helps your team feel appreciated and a part of the company vision.
• Listen and try to get everyone onboard when it comes to big decisions. Even if everyone doesn't agree, they should understand the reasons behind the decision and respect it.
• Don’t abuse titles - but also don’t be afraid of using them. Remember that titles are mainly for responsibility, not authority.
• Lead by example. People will follow you if you do great work and work hard.
• Put up high expectations and challenge employees, then clearly show your appreciation when they come through.

Summary

There are MANY different ways to build your company and develop your company culture. There is also no "right way" or best practices. Each company is different - but most companies will benefit from a culture which genuinely appreciates and respects it's customers and team members.

Got feedback? We'd love to hear it! Tweet to us or get in touch on Facebook!

Ludvig Granberg, CEO PagePicnic