Rework (2 page)

CHAPTER
INTRODUCTION

We have something new to say about building, running, and growing (or not growing) a business.

This book isn’t based on academic theories. It’s based on our experience. We’ve been in business for more than ten years. Along the way, we’ve seen two recessions, one burst bubble, business-model shifts, and doom-and-gloom predictions come and go—and we’ve remained profitable through it all.

We’re an intentionally small company that makes software to help small companies and groups get things done the easy way. More than 3 million people around the world use our products.

We started out in 1999 as a three-person Web-design consulting firm. In 2004, we weren’t happy with the project-management software used by the rest of the industry, so we created our own: Basecamp. When we showed the online tool to clients and colleagues, they all said the same thing: “We need this for our business too.” Five years later, Basecamp generates millions of dollars a year in profits.

We now sell other online tools too. Highrise, our contact manager and simple CRM (customer relationship management) tool, is used by tens of thousands of small businesses to keep track of leads, deals, and more than 10 million contacts. More than 500,000 people have signed up for Backpack, our intranet and knowledge-sharing tool. And people have sent more than 100 million messages using Campfire, our real-time business chat tool. We also invented and open-sourced a computer-programming framework called Ruby on Rails that powers much of the Web 2.0 world.

Some people consider us an Internet company, but that makes us cringe. Internet companies are known for hiring compulsively, spending wildly, and failing spectacularly. That’s not us. We’re small (sixteen people as this book goes to press), frugal, and profitable.

A lot of people say we can’t do what we do. They call us a fluke. They advise others to ignore our advice. Some have even called us irresponsible, reckless, and—gasp!—unprofessional.

These critics don’t understand how a company can reject growth, meetings, budgets, boards of directors, advertising, salespeople, and “the real world,” yet thrive. That’s their problem, not ours. They say you need to sell to the Fortune 500. Screw that. We sell to the Fortune 5,000,000.

They don’t think you can have employees who almost never see each other spread out across eight cities on two continents. They say you can’t succeed without making financial projections and five-year plans. They’re wrong.

They say you need a PR firm to make it into the pages of
Time, Business Week, Inc., Fast Company
, the
New York Times
, the
Financial Times
, the
Chicago Tribune
, the
Atlantic, Entrepreneur
, and
Wired
. They’re wrong. They say you can’t share your recipes and bare your secrets and still withstand the competition. Wrong again.

They say you can’t possibly compete with the big boys without a hefty marketing and advertising budget. They say you can’t succeed by building products that do less than your competition’s. They say you can’t make it all up as you go. But that’s exactly what we’ve done.

They say a lot of things. We say they’re wrong. We’ve
proved
it. And we wrote this book to show you how to prove them wrong too.

First, we’ll start out by gutting business. We’ll take it down to the studs and explain why it’s time to throw out the traditional notions of what it takes to run a business. Then we’ll rebuild it. You’ll learn how to begin, why you need less than you think, when to launch, how to get the word out, whom (and when) to hire, and how to keep it all under control.

Now, let’s get on with it.

CHAPTER
FIRST

The new reality

This is a different kind of business book for different kinds of people—from those who have never dreamed of starting a business to those who already have a successful company up and running.

It’s for hard-core entrepreneurs, the Type A go-getters of the business world. People who feel like they were born to start, lead, and conquer.

It’s also for less intense small-business owners. People who may not be Type A but still have their business at the center of their lives. People who are looking for an edge that’ll help them do more, work smarter, and kick ass.

It’s even for people stuck in day jobs who have always dreamed about doing their own thing. Maybe they like what they do, but they don’t like their boss. Or maybe they’re just bored. They want to do something they love and get paid for it.

Finally, it’s for all those people who’ve never considered going out on their own and starting a business. Maybe they don’t think they’re cut out for it. Maybe they don’t think they have the time, money, or conviction to see it through. Maybe they’re just afraid of putting themselves on the line. Or maybe they just think
business
is a dirty word. Whatever the reason, this book is for them, too.

There’s a new reality. Today anyone can be in business. Tools that used to be out of reach are now easily accessible. Technology that cost thousands is now just a few bucks or even free. One person can do the job of two or three or, in some cases, an entire department. Stuff that was impossible just a few years ago is simple today.

You don’t have to work miserable 60/80/100-hour weeks to make it work. 10–40 hours a week is plenty. You don’t have to deplete your life savings or take on a boatload of risk. Starting a business on the side while keeping your day job can provide all the cash flow you need. You don’t even need an office. Today you can work from home or collaborate with people you’ve never met who live thousands of miles away.

It’s time to rework work. Let’s get started.

CHAPTER
TAKEDOWNS

Ignore the real world

“That would never work in the real world.” You hear it all the time when you tell people about a fresh idea.

This real world sounds like an awfully depressing place to live. It’s a place where new ideas, unfamiliar approaches, and foreign concepts
always
lose. The only things that win are what people already know and do, even if those things are flawed and inefficient.

Scratch the surface and you’ll find these “real world” inhabitants are filled with pessimism and despair. They expect fresh concepts to fail. They assume society isn’t ready for or capable of change.

Even worse, they want to drag others down into their tomb. If you’re hopeful and ambitious, they’ll try to convince you your ideas are impossible. They’ll say you’re wasting your time.

Don’t believe them. That world may be real for them, but it doesn’t mean you have to live in it.

We know because our company fails the real-world test in all kinds of ways. In the real world, you can’t have more than a dozen employees spread out in eight different cities on two continents. In the real world, you can’t attract millions of customers without any salespeople or advertising. In the real world, you can’t reveal your formula for success to the rest of the world. But we’ve done all those things and prospered.

The real world isn’t a place, it’s an excuse. It’s a justification for not trying. It has nothing to do with you.

Learning from mistakes is overrated

In the business world, failure has become an expected rite of passage. You hear all the time how nine out of ten new businesses fail. You hear that your business’s chances are slim to none. You hear that failure builds character. People advise, “Fail early and fail often.”

With so much failure in the air, you can’t help but breathe it in. Don’t inhale. Don’t get fooled by the stats. Other people’s failures are just that:
other
people’s failures.

If other people can’t market their product, it has nothing to do with you. If other people can’t build a team, it has nothing to do with you. If other people can’t price their services properly, it has nothing to do with you. If other people can’t earn more than they spend … well, you get it.

Another common misconception: You need to learn from your mistakes. What do you really learn from mistakes? You might learn what
not
to do again, but how valuable is that? You still don’t know what you
should
do next.

Contrast that with learning from your successes. Success gives you real ammunition. When something succeeds, you know what worked—and you can do it again. And the next time, you’ll probably do it even better.

Failure is not a prerequisite for success. A Harvard Business School study found already-successful entrepreneurs are far more likely to succeed again (the success rate for their future companies is 34 percent). But entrepreneurs whose companies failed the first time had almost the same follow-on success rate as people starting a company for the first time: just 23 percent. People who failed before have the same amount of success as people who have never tried at all.
^*
Success is the experience that actually counts.

That shouldn’t be a surprise: It’s exactly how nature works. Evolution doesn’t linger on past failures, it’s always building upon what worked. So should you.

Planning is guessing

Unless you’re a fortune-teller, long-term business planning is a fantasy. There are just too many factors that are out of your hands: market conditions, competitors, customers, the economy, etc. Writing a plan makes you feel in control of things you can’t actually control.

Why don’t we just call plans what they really are: guesses. Start referring to your business plans as business guesses, your financial plans as financial guesses, and your strategic plans as strategic guesses. Now you can stop worrying about them as much. They just aren’t worth the stress.

When you turn guesses into plans, you enter a danger zone. Plans let the past drive the future. They put blinders on you. “This is where we’re going because, well, that’s where we said we were going.” And that’s the problem: Plans are inconsistent with improvisation.

And you have to be able to improvise. You have to be able to pick up opportunities that come along. Sometimes you need to say, “We’re going in a new direction because that’s what makes sense
today
.”

The timing of long-range plans is screwed up too. You have the most information when you’re doing something, not
before
you’ve done it. Yet when do you write a plan? Usually it’s before you’ve even begun. That’s the worst time to make a big decision.

Now this isn’t to say you shouldn’t think about the future or contemplate how you might attack upcoming obstacles. That’s a worthwhile exercise. Just don’t feel you need to write it down or obsess about it. If you write a big plan, you’ll most likely never look at it anyway. Plans more than a few pages long just wind up as fossils in your file cabinet.

Give up on the guesswork. Decide what you’re going to do this week, not this year. Figure out the next most important thing and do that. Make decisions right before you do something, not far in advance.

It’s OK to wing it. Just get on the plane and go. You can pick up a nicer shirt, shaving cream, and a toothbrush once you get there.

Working without a plan may seem scary. But blindly following a plan that has no relationship with reality is even scarier.

Why grow?

People ask, “How big is your company?” It’s small talk, but they’re not looking for a small answer. The bigger the number, the more impressive, professional, and powerful you sound. “Wow, nice!” they’ll say if you have a hundred-plus employees. If you’re small, you’ll get an
“Oh …
that’s nice.” The former is meant as a compliment; the latter is said just to be polite.

Why is that? What is it about growth and business? Why is expansion always the goal? What’s the attraction of big besides ego? (You’ll need a better answer than “economies of scale.”) What’s wrong with finding the right size and staying there?

Do we look at Harvard or Oxford and say, “If they’d only expand and branch out and hire thousands more professors and go global and open other campuses all over the world
… then
they’d be great schools.” Of course not. That’s not how we measure the value of these institutions. So why is it the way we measure businesses?

Maybe the right size for your company is five people. Maybe it’s forty. Maybe it’s two hundred. Or maybe it’s just you and a laptop. Don’t make assumptions about how big you should be ahead of time. Grow slow and see what feels right—premature hiring is the death of many companies. And avoid huge growth spurts too—they can cause you to skip right over your appropriate size.

Small is not just a stepping-stone. Small is a great destination in itself.

Have you ever noticed that while small businesses wish they were bigger, big businesses dream about being more agile and flexible? And remember, once you get big, it’s really hard to shrink without firing people, damaging morale, and changing the entire way you do business.

Ramping up doesn’t have to be your goal. And we’re not talking just about the number of employees you have either. It’s also true for expenses, rent, IT infrastructure, furniture, etc. These things don’t just happen to you. You decide whether or not to take them on. And if you do take them on, you’ll be taking on new headaches, too. Lock in lots of expenses and you force yourself into building a complex businesss—one that’s a lot more difficult and stressful to run.

Don’t be insecure about aiming to be a small business. Anyone who runs a business that’s sustainable and profitable, whether it’s big or small, should be proud.