Wednesday, February 15, 2017
Guest Blogger: Founder/ CEO Jan Schulz-Hofen
Chris Rice Cooper
Guest Blogger: Jan Schulz-Hofen,
Founder & CEO of Planio
Bootstrapped: Building A Remote Company
If you ask me, working remotely rocks. I’m currently writing from a small beach bar located on a remote island in southern Thailand. Looking up from my laptop, I see nothing but the endless ocean and its crystal clear blue waters. I’ll be enjoying this morning undisturbed and focused on my work because the rest of the team hasn’t even gotten up yet. Time zones work out really well for distributed teams.
My colleague Thomas recently talked to eleven thought leaders in project management about the impact of remote work on a company; some scrum experts argued that distributed teams could work together effectively while others came out strongly against it.
I understand the concerns; you can’t just open up the office doors and release everyone into the wild. It’s not guaranteed that you’ll end up with a thriving business. Marissa Mayer at Yahoo famously axed remote work in 2013 after feeling that some employees abused it.
So how does a tech company get this working remote thing right? Read on. The following is based on our story at Planio and how we made it work.
Enter Planio, my remote company
There are a number of things which motivated me to start my current company. Breaking away from client work while retaining all the benefits of being a location independent freelancer was one of them.
In 2009, I was sitting in the shadow of a cypress grove situated in a beautiful Mediterranean-style garden overlooking the rolling hills of Tuscany, working hard on a new side project of mine: Planio.
It’s a project management tool for people like me: developers. Planio helps make client projects more organized and transparent all while reducing the number of tools and platforms needed to do the job. Planio is based on open-source Redmine (an open source Ruby on Rails-based software project), which I’ve used remotely with my own clients since its very beginnings. So, in a way, remote work is already in Planio’s DNA.
Fast forward to today, and my small side project has grown into a real company. We’re a team of 10 now, serving more than 1,500 businesses worldwide. We have an office in Berlin, but many of us work remotely.
In this article, I’ll dig into the principles, tools and lessons that have helped us along the way. After reading it, I hope you’ll be able to architect your software company so it’s remote-friendly right from the start.
Every Thursday we have an all-hands conference call where we discuss what we did the previous week and what’s coming up next.
At the beginning, we spent a lot of time discussing ideas before deciding on what to do, but we found that it’s a lot harder when some team members are on a poor quality telephone line and you can’t see them.
Now, we often just “build the thing” and then discuss it – we create a working prototype with a few core ideas and then discuss that. For instance, we recently hit some performance issues with our hosted Git repositories. Instead of discussing and analyzing all the possible ways in which we could potentially save a few milliseconds here and there with every request, my colleague, Holger, just built out his suggested improvements in a proof-of-concept on a staging server to which we directed some of our traffic. It turned out well and these ideas are going into production.
This method focuses everyone’s minds on action rather than talk. The time invested in writing code is paid back by less time spent talking in circles.
Use Text Communication
Real-time communication punishes clarity. Instinctively calling a colleague when you need something is very easy, but it’s not always your best course of action. I can’t remember the number of times I’ve started writing an email or a Planio ticket for a problem only to solve it myself just while writing it down.
Zach Holman, one of the first engineering hires at GitHub, agrees: “Text is explicit. By forcing communication through a textual medium, you’re forcing people to better formulate their ideas.”
Text communication also makes you more respectful of each other’s time, especially when you’re living multiple time zones away. Immediate communication can be disruptive; the person might be in the middle of figuring out why the last deployment went wrong. With an email, s/he should be able to consider your write-up at a more convenient time.
Be as Transparent as Possible
Time spent worrying about office politics isn’t conducive to shipping working software, and transparency promotes trust. It’s no coincidence that many remote-by-design companies, such as Buffer, have radical transparency. In the case of Buffer, it shares revenue information and the salaries of all its employees.
Automattic, the company behind Wordpress.com, also emphasizes transparency. In his book, The Year Without Pants, Scott Berkun shares his experience working remotely for Automattic, and that all decisions and discussions are internally available to employees in its P2 discussion platform as part of its emphasis on transparency.
The chat feature in Planio works in a similar way. Discussions are open for everyone to see and chat logs are linked automatically from the issues discussed so nobody is left out; even new hires can read up on what previous decisions were made and why. When I started building the chat feature, I considered adding a feature for chatting privately with others, but when we discussed it as a team, we ended up leaving it out because we wanted to keep team communication as transparent as possible.
I think transparency is critical for remote teams. For example, imagine you’ve just joined a team of remote developers. Perhaps you’ve never met your new colleagues. You don’t know the unspoken rules of behavior. You might be worried about whether you’re doing a good job. Are your teammates actually being sarcastic or do they really mean their compliments? Is everyone privately discussing how good of an engineer you are?
Digitalize Your Systems
We choose our services based on what they offer by way of online platforms, from telephone providers to banks (many of them will even offer a small financial incentive for going paperless, plus it’s great for the environment, too). I’m lucky to have a lawyer and an accountant for Planio who are comfortable sending emails or messages with Google Hangouts instead of summoning me to their offices. (I strongly recommend you ask about this at the first meeting.) Bonus points for getting them to sign up with your project management tool and become a part of your team!
We’ve even digitized our postal mail; at Planio, we use a service called Dropscan that receives our letters, scans them and forwards the important ones to the appropriate person. You don’t want to your friend to pick up and read them out over Skype. If you cannot find a mail-scanning provider for your city or country, some coworking spaces offer virtual memberships to maintain a physical mailing address while you’re away.
For those companies sending out mail, there are services available so that you never have to visit a post office again. We use a German printing company with an API that automatically sends a letter along with stickers to each new paying Planio customer. It’s something people love, and we don’t have to print and mail a thing. International alternatives include Lob and Try Paper.
Should You Have a Digital Presence Mandated?
In a co-working space on the tropical island of Koh Lanta, Thailand, I noticed that someone in a support role for a major e-commerce platform was constantly on a live video feed with the rest of the team. Sqwiggle offers a similar “presence” functionality for remote teams.
I suppose mandating that all employees are on video while working might be based out of a fear that employees abuse remote work arrangements. In my experience, that’s not the case. At the tropical co-working space, there’s a certain urgency in the air, despite the laid-back clothes and coconut drinks. People are quietly focused on their laptops; it’s as if they want to make sure remote work delivers results, so they can stay out of a fixed office for good.
We found that we don’t need a digital presence because we have a great level of trust among everyone on the team. I also think that it’s paramount to respect everyone’s privacy. If your company is moving from an all-on-site setting to remote work, a digital presence might help the more anxious managers to overcome any trust issues.
Choose Bootstrapping over Venture Capital
Most venture capitalists are looking for outsized returns, so they’ll prefer an intense short burst of 12-months’ work from a team over a more sustainable pace. Front App, a startup funded by the Silicon Valley accelerator Y Combinator, rented a house in the Bay area for their three-month stint in the Y Combinator accelerator program. The goal is to optimize for evaluating a business idea quickly.
Given the outsized return mindset, you may have a hard time convincing a venture capitalist to fund you when you’re working from a beach in Cambodia. This is why many venture-backed startups (such as Buffer or Treehouse) that use remote work built leverage first. Buffer was profitable before taking on investment while Ryan Carson, the founder of Treehouse, had already proven himself with a previous startup.
Here’s a better way than venture capitalism: bootstrapping. It means financing your company with revenue from initial customers. In my opinion, it’s by far the superior approach because it enables you to build your company on your own terms and remain in control. However, it often requires working two jobs or freelancing on the side while you get your company started. It took me about two years working on both Planio and client projects (via my software development agency LAUNCH/CO) to get going, but it was well worth it.
Bootstrapping also forces you to build a business that generates revenue from the very beginning, which I find much healthier. Hint: Building a B2B SaaS makes this much easier than creating a consumer app because businesses are far more willing to pay monthly subscriptions if it adds value. You have to sell a lot of consumer iPhone apps at $0.99 to cover monthly payroll for even the smallest of teams.
Price your Products Strategically
One of our first clients was a massive technology company with billions in annual revenue. Obviously, I was delighted that they’d choose us over much bigger, more established competitors. They’re still a happy customer, but we have moved away from very large enterprise accounts; I’ve found that they require a lot of hand-holding and in-person meetings before they’ll become a customer.
As Jason Lemkin points out in his article on scaling customer success for SaaS, when you have big enterprise accounts, someone will have to get on a jet to visit them twice a year. If you’re a small company of two or three people, that person is going to be you, the CEO, the CMO and the CSO all rolled into one overworked hamster.
Keeping your pricing model within the rough bounds of a $49/$99/$249 model as suggested by developer-turned-entrepreneur Patrick McKenzie means avoiding having to hire an enterprise sales team, and having to earn the massive amount of capital required for it. You, the customer, don’t expect the CEO to pop in at Christmas with a box of chocolates when you’re paying $249 a month.
Build on Open Source
A venture-backed business based on proprietary software is great when your play is a “Winner Takes All” game and own the market. When you’re a bootstrapped company, open source software can give you reach and leverage you could never have achieved, otherwise.
There’s precedence of profitable tech companies building a business around open source software; Basecamp famously open-sourced Rails, guaranteeing themselves a supply of highly qualified engineers for the rest of eternity. GitHub has become a unicorn, leveraging the open source project Git that Linus Torvalds started to manage the Linux kernel sources. Our friends at Travis-CI started as an open source project, ran a crowdfunding campaign and then turned it into a remote-focused bootstrapped business (which also campaigns for diversity in tech through its foundation).
Planio is based on Redmine and we contribute many of our features and improvements back to the community. This works great in multiple ways; our contributions and engagement in the community help advance the open source project and Planio gets exposure to potential new customers. For us, it’s the most authentic way to build a brand; by showing our code and taking part in open technical discussions, we can demonstrate that we know our stuff!
Hire Proven Professionals
Hiring a fleet of interns every year makes sense only if you’re intent on scaling up your employee count as soon as you hit the next round of funding.
Outsourcing tasks is easy if it’s copy-and-paste, but you don’t want to outsource your DevOps to someone with the lowest hourly rate when you have thousands of customers relying on your servers. You’ll want proven professionals, such as those as Toptal.
Matt Mullenweg, the founder of the popular open-source blogging platform WordPress, stated that by focusing on quality means that his company, Automattic, predominantly hires experienced candidates who can handle the unstructured working environment of a remote company.
That means it “auditions” candidates by paying them to work on a project for several weeks, then hire them based on performance. Automattic has found this method is far more effective in finding the right candidates than traditional CVs and cover letters.
Emphasize Quality of Life
Work takes up a massive amount of our time, year in and year out. It should not be something that you just do to be done with; you’d probably end up wasting a huge chunk of your life. The best source of motivation and the main ingredient for great results is a work environment that’s inspiring, enjoyable and fun. Travelling, learning and engaging with people from different cultures makes work feel less of a sacrifice or necessary evil (at least in my life) than when working a nine-to-five office job.
It’s not just about travelling the world, though, there’s the personal freedom aspect. Parents get to spend more time with their kids, thanks to avoiding a two-hour commute. You don’t have to live in Silicon Valley to earn San Francisco wages. Maybe, your significant other gets a great job opportunity abroad, too. You’re not faced with the painful choice between staying at your job and continuing your career or becoming a “trailing spouse” with limited career options.
At Planio, even though many of us work remotely, we all try to meet up at least once a year in a fun location. Last year, we spent a few weeks of summer in Barcelona, and several of us met here in Koh Lanta, this year.