Mike Hostetler - Leading the transition from Gen X to Gen Y

10 Things More Valuable than Money in my Bootstrapped Startup

mikehostetler — Tue, 08 May 2012 18:03:01 +0000

In a startup, resources are required to keep the lights on, pay people, and pursue the vision for why a startup was created in the first place. Recently, I've seen more and more examples of where the pursuit of money becomes the focal point, thus ignoring the reasons why the organization was created in the first place.

When we created appendTo, we started the way many founders do, with just a dream. The path hasn't been easy and along the way we've fought many battles to keep our dream alive, many having to deal with money. As we've grown (we're at 17 full time employees), we've spent long hours discussing the fact that money is important, but it isn't the point.

Figuring out what the "point" actually is can be difficult. It's a process of self-discovery about what matters to the founders and the employees.

The list below is what matters to me, my partner and to appendTo. Your list may be different. The point in sharing our list is simply to encourage you to make a list. You may surprise yourself.

Ability to be Patient - Patience is a vastly underrated commodity. Ignore it at your own peril.
Ability to say No - Saying "No" drives focus. Focus or Die.
Ability to go home at 5 - As a responsible founder, knowing the business operates smoothly without me is invaluable.
Ability to nurture relationships - People are valuable but Relationships are even more valuable. Nurturing them takes time and effort.
Ability to contribute to OSS at my discretion - We stand on the shoulders of OSS giant and consistently giving back is the right thing to do.
Ability to deliver value every day - Knowing I've delivered value every day keeps me going.
Ability to keep learning - The world changes too fast to stop learning.
Ability to work from anywhere - Geographical constraints are artificial limitations in 2012.
Ability to pursue my dream while having a life - I have a family. Startups often require immense cost to family life, which I don't have to pay.
Ability to never stop dreaming - I'm a dreamer. I will never stop dreaming and wouldn't last long where dreams were sacrificed to pursue short term revenue goals.

All of this is possible because of the awesome people here at appendTo. This post is dedicated to them!

Om Malik interviews Steven Blank: Taking Venture Capital is a Pact with the Devil

mikehostetler — Fri, 27 May 2011 14:24:08 +0000

Steve Blank just posted a great interview he did with Om Malik. In the interview, he talks about many different topics but my favorite part starts at 13:00 where he discusses the fact that when you take VC, you're really making a pact with the Devil.

If you've raised money at a high valuation, you've just made a pact with the devil ... your VC is no longer interested in getting 1x return. So, now all of a sudden, you've set the price at where your investors are thinking they are going to make money.

Two is though, if you've raised more money then you can even figure out what to do with, there's a funny heuristic about startups is, ... my heuristic is, if you've raised $10,000,000, you tend to spend $10,000,001. I've yet to see a startup give back money because they couldn't spend it. So, spending kinda matches the amount of money raised.

What Blank identifies is almost exactly the reason why we've chosen the bootstrap route in appendTo. When we sat down and laid plans for what we wanted to create, we realized that we didn't need the money. Furthermore, we also realized that raising money would actually have more of a negative effect then a positive one.

http://steveblank.com/2011/05/27/entrepr...

Hack the Dream: Control, Natural Consequences and Grace

mikehostetler — Thu, 26 May 2011 19:57:17 +0000

As a follow up to my post last week about how appendTo was founded and Hacking the American Dream, I’m going to blog on some of the philosophical pillars we built the organization upon that led us here. If you have a question, please don’t hesitate to leave a comment or contact me.

Control and Management

If you’ve spent any amount of time near children, they exist in a remarkable world. They don’t seek to control anything because they have a firm understanding that there isn’t much that they can control. They don’t control when they eat. They don’t control when they sleep.

If we’re honest with ourselves, the ability to live without the need to control anything, as long as our needs are met, represents a remarkable sense of freedom.

As we grow up, we realize that control can be a good thing. With control comes responsibility, and that’s generally good too. We control a car as it drives down the road. We control what we eat, we control when we wake up, we control when we go to sleep. Self-control is a sign of maturity, a positive step towards adulthood.

Where we get into trouble is when we try to control the actions of others. The fact is, there is very little we can do to control anybody else. This is where the nasty side of control shows up. Manipulation, carrots & sticks, passive aggressive behavior and reverse psychology are all examples of patterns where someone tries to control someone else. Sometimes they work, but they don’t always result in a win-win for both parties involved.

Control in the Workforce

Part of the reason central offices exist is because forced physical presence is a way to maintain control. There are positive benefits for face-to-face collaboration, but they don’t require full-time face-to-face presence. The internet is teeming with examples of distributed teams creating something just as compelling as face-to-face teams.

The realization that a typical company or workforce is built upon a leader or owner’s ability to control the output of a worker stood in stark contrast to my experiences in Open Source. Open Source is a place where the foundation of control doesn’t exist and all forward progress is built upon the willingness and intrinsic motivation of the people doing the work.

The major difference between Open Source and a business is that people get paid. Because money changes hands, explicit control is used as a technique to ensure output. That makes sense, unless you have another paradigm to work under.

Expectations and Natural Consequences

When we founded appendTo, we were more familiar with the management structure of expectations and natural consequences. Prior to appendTo, I spent some time freelancing. Freelancing is a great way to really learn how the world works. If you don’t sell, or don’t follow through, you don’t eat. It doesn’t get much simpler than that. Thus, we made the decision to implement a system of expectations and natural consequences within appendTo rather than utilizing control as a management style.

The system of expectations and natural consequences is black and white, which creates a really sharp edge. You are either delivering or you aren’t, you are eating or you aren’t. Most employees typically don’t like that, because part of their employment is the security that comes with knowing that they will eat tomorrow. In a small startup, where your performance today affects the health of the company tomorrow, this sharp edge can be a positive thing.

Another significant reason we chose to go with a system of expectations and natural consequences is because it can be a win-win system for both parties involved, and had the built-in feature of not requiring any manipulation or nasty control techniques. As long as the expectations were defined properly and both parties understood where the lines existed, everyone could operate with a certain amount of autonomy. Once again, it kept things simple.

The only downside that we could think of was that such a system could be too harsh at times. While you can allow for mistakes, or simple “life happens” moments, what happens when expectations simply aren’t met? What do you do as a leader when the natural consequence for missing an expectation is firing someone?

The Missing Piece with Natural Consequences

For the last piece of the puzzle, the only answer was to explicitly add an element of grace into the equation. Grace is an often overlooked, yet powerful tool. Humans typically understand when they have screwed up. If consequences for screwing up aren’t enforced, that sense of screwing up tends to fade and things go downhill in a hurry. This is where strong expectations are important.

The truth is, if we required everyone to constantly live up to a set of expectations the company created, nobody would want to work at the company, including me! That’s where grace comes in.

When someone realizes they screwed up and they honestly want to be at the company, a natural human reaction is to feel bad and apologize, especially when the natural consequences of their mistake are already understood. It is at this moment that you have the tremendous opportunity as a leader to build up that individual.

This is where the relationship between the human beings involved is key. If you have laid a solid relational foundation with the other person, extending grace can have tremendous positive effects. If that relationship is just beginning, extending grace is great way to begin building that relationship.

That Magic Moment

Something magic happens when a leader extends grace to someone who clearly deserves the natural consequences of their actions. The impact on the person receiving the grace will often motivate correction of the behavior in addition to building organizational loyalty and emphasizing the value placed on the relationship.

As a leader in your organization, implementing a policy of extending grace should not be underestimated.

Too Far?

What happens when someone keeps failing? If you extend grace multiple times in a row for the same offense, and there is no attempt at improvement, my advice would be to put that person on a documented improvement plan with concrete milestones. The details of this process are beyond what I intend to write here, but the point I want to make is that it is advisable to implement limits to the extent of the grace you are willing and able to give in order to properly manage people who may wish to take advantage of the process.

Blog Topics:

Hacking the American Dream

mikehostetler — Thu, 19 May 2011 16:12:44 +0000

Last week I had the privilege of attending the 2011 BigOmaha conference. BigOmaha was by far the best event I have ever attended. The Silicon Prarie News team did an amazing job organizing and executing this conference.

Filled to the brim with inspiring content and amazing introductions, Jonathan Sharp, Andrew Wirick and I sat down to just hang out and decompress on the event. The short discussion that followed crystalized a perspective I've held for a while, but am only beginning to understand and communicate.

A bit of history

When I founded appendTo in October 2009, I was working full time in another company I'd founded, a Drupal consultancy called A Mountain Top, LLC. Jonathan Sharp and I were working together, but hadn't made the full jump into a partnership yet. We landed our first training gig with AOL and earned enough money to get the company off the ground. The initial plan was to merge A Mountain Top with appendTo, leveraging the success of A Mountain Top to propel the new venture.

That plan ended abruptly in mid-December. Due to a series of unforseen events, A Mountain Top came unraveled in the span of a few days. Everything I had worked to build for the prior three years evaporated in a span of a few days. Going into the holidays, I chose to take some time off, something I hadn't truly done since I began working in my own business.

It was during that time that I realized I had to change my approach. I'd learned many valuable skills in my previous venture, but had also introduced many fatal flaws into A Mountain Top. The chief flaw being I was always working for tomorrow, always searching for that big payoff.

I realized that while the damage to A Mountain Top could be repaired, I had been given a tremendous opportunity with appendTo, an opportunity to do something different.

Trying to do it "My Way"

Little did I know the impact of that choice. The first practical outcome was to choose to partner with Jonathan Sharp. We solidified that partnership in January 2010. The second was the decision to close down A Mountain Top and start fresh.

Over the next few months, the new start began to get off the ground. We landed a few more sales, participated in the jQuery 14 event, and began getting some traction. However, Jonathan and I didn't completely follow our gut. We followed well-intentioned advice that caused a few missteps, and we found ourselves out of money and out of time early in the year.

The weeks that followed, mid-April through early May, defined the future of appendTo. We threw out all the rules and decided to do three things: work hard, follow our instincts and do the right thing even when it is hard.

Initial results

What followed was an explosion of growth. We hired 6 people within the span of 2.5 months. As a bootstrapped company, we were selling new projects as fast as we hired employees, a juggling act that would be difficult to replicate even if we tried.

Along the way, we made several important decisions. We decided to build a company that would be 100% virtual. We committed to run our company infrastructure in the "cloud". We decided to pay for health insurance for everyone, covering 100% of the premium cost for all full time employees and their families.

As more and more people joined appendTo, relationships began to form. Our team grew and our capabilities grew. We committed to a transparent style of leadership, agreeing to make the hard decisions as leaders, but honestly sharing our thought process and doing our best to put the health of the company and the employees first.

We operated with the key philosophy that we were running a marathon, not a sprint. This drove our policy of maintaining realistic work hours within the company. As such we work 40-45 hours a week. Client's didn't always like or respect this policy, but we knew from experience that mandated rest promotes productivity for knowledge workers. We'd all worked at jobs where the value delivered went down as the hours we logged went up.

Emerging culture

As our culture began to form, we started to realize there was something special about appendTo. While we couldn't quite put our finger on it, or easily describe it, everyone in the company started to feel it.

We began holding focus groups to discuss the concepts that we felt made appendTo different. We would ask questions, write answers, create lists and write down definitions in an attempt to describe what we all intuitively knew had drawn us to the organization.

Our attempts to define and document our culture were important and produced a lot of great information. Yet, the simple definition of what made appendTo different kept eluding us.

Closing party at BigOmaha 2011

Fast forward to the conversation at Big Omaha last week. As we discussed common threads from the speakers and valuable advice that we could take away, the conversation drifted to the topic of appendTo's product.

We have an amazing team of people. Not only do we have a team that could build an awesome product, but they each possess amazing character and an amount of internal motivation that makes me honored to work with each one of them. The consensus is that we can build anything we put our mind to.

The trick is to find something we are all passionate about. It's not easy getting two people to be passionate about any specific thing, let alone eleven. This is why the conversation drifted to the similarities everyone at appendTo shares and the factors that draw us to work there. Our shared passions boil down to two things:

We are passionate about Front-End Web Development and JavaScript
We are passionate about working to live, not living to work

The lightbulb went on when we realized that appendTo was an organization that not only believed this, but was actually a place that followed through with making these passions a reality for each employee.

The juxtoposition of this realization against the story of other exciting startups floored me. General wisdom states that most startups are built for one of two end points, a grand exit of some sort or die trying. In appendTo, we'd built an organization geared to serve the employees while maintaining stability, and we'd succeeded.

Deep inside, we probably share the same goals as the founders of other startups. We just found a way to get there faster and with less compromise.

Freedom defined

In appendTo ...

I have the freedom to work anywhere in the world, as opposed to going to a specific location every day.
I don't have a million dollars in the bank, but I have a job that pays the bills and puts food on the table.
I have the freedom to work on projects that I find interesting.
I work with talented and passionate people that motivate me.
I can turn off connectivity and actually relax because I know that the team has my back.
My work encourages healthy relationships, with friends and family.
I don't have to choose between providing for my family and spending time with them, I get both.

The key point is that I wouldn't trade any of these benefits for all the money in the world. Taken together, these benefits allow us to enjoy the present rather then betting on the future.

Conclusion

As entrepreneurs, we've been taught that working hard to achieve the American Dream is all about hustling, growing big and then gunning for the big payoff. That's no longer true. Eighteen months ago, we set out to build something different. Along the way, we chose to ignore the rules and build something that made sense. What I realized this week was that we've essentially hacked the American Dream. I think that's pretty awesome.

I'd like to add a few more key points:

While this story is about me and I am a founder and leader of appendTo, I am only a participant. The manifestation of this hack would not have been possible without everyone's participation in the company.
Have you hacked the American Dream? Please share your story in the comments.

Blog Topics:

American Dream

Freedom

Speaking at jQuery Boston 2010

mikehostetler — Thu, 09 Sep 2010 20:07:03 +0000

I'll be giving my "Introduction to jQuery" talk again at the jQuery Conference in Boston. Tickets are still available at http://events.jquery.org/2010/boston/

http://blog.jquery.com/2010/09/09/jquery...

Fishing with Strawberries

mikehostetler — Wed, 05 May 2010 04:26:57 +0000

Great article about the history of O'Reilly Media and its founder Tim O'Reilly. As the CEO of a startup, I'm constantly on the lookout for examples to follow and Tim O'Reilly is quickly becoming one of my favorites. Hope I can meet him face to face someday.

http://www.inc.com/magazine/20100501/the...

The coming melt-down in higher education

mikehostetler — Thu, 29 Apr 2010 18:45:18 +0000

Seth Godin lays out the inconsistencies in the Higher Education market. I've maintained for a while now that my daughters won't attend College in the same way my wife and I did. This article backs up my claim.

http://sethgodin.typepad.com/seths_blog/...

jQuery San Francisco Bay Area 2010 Conference Slides

mikehostetler — Wed, 28 Apr 2010 17:45:07 +0000

I was privileged to give a introductory talk at the jQuery Conference last weekend on April 24th. Below are my slides from the talk.

I really enjoyed giving this talk, and received great speaker feedback up on Speaker Rate. If you attended the talk, please head over and provide feedback, I really appreciate it.

Speaker Rate Entry

jQuery('#knowledge').appendTo('#you');

View more presentations from mikehostetler.

Blog Topics:

Tim O'Reilly - The state of the Internet Operating System

mikehostetler — Tue, 30 Mar 2010 15:08:20 +0000

Must-read article by Tim O'Reilly about where he sees computing going. He's got a unique perspective, one worth listening to.

http://radar.oreilly.com/2010/03/state-o...

Thanks to Lakewood, Colorado HVAC company, Paradise Heating & Cooling

mikehostetler — Wed, 10 Dec 2008 16:31:32 +0000

The topic of this blog post is not the typical sort of content that I post on, but I felt compelled. Feel free to tune out if you're not interested in anything non-technical. The purpose of this post is to express appreciation to Paradise Heating and Cooling and is the least thing I could do to express that appreciation and send a little SEO love their way.

Sometime during the night last night, the gas furnace at our house went out. I woke up to find our house 10 degrees cooler then normal. With just two adults, this wouldn't have been such a critical issue. With a 1 year old, it becomes very important.

I googled for "Lakewood, CO HVAC" and visited the sites of several local companies. I called John at Paradise Heating and Cooling and left a message about our lack of heat. John called me back within less than an hour and informed me his technician would arrive within 10 minutes. All other companies I spoke with were unable to send a technician for several hours.

Upon arrival, the technician quickly diagnosed the problem. Missing a part, the owner John personally delivered the part to our house. After replacing the part, the core problem appeared, a faulty circuit board. The replacement circuitry required a part from a supplier in another part of the city.

Returning with the part, John discovered during installation that the last technician who serviced our furnace completely screwed up the wiring. Explaining this to me afterwards, John completely re-wired our furnace, taking the time to do the job right.

After finishing the job, I found John's pricing to be very reasonable. The entire experience was wonderful.

I want to express my deep appreciation to Paradise Heating and Cooling in Lakewood, Colorado. John really went the extra mile when we were in a tough situation.

I would HIGHLY recommend Paradise Heating and Cooling for any Furnace, Air Conditioner or Plumbing needs you may have in the Denver Metro area. I will definitely be using John's services again.

Blog Topics:

Misc