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Category: Articles (page 1 of 6)

Full-length articles written by me.

How to help Deliveroo solve the plastics problem

It should be no secret by now that plastics, in particular single use plastics, are a problem. The EU has even banned them, though only starting in 2021. We don’t have to wait that long. As consumers, we can get ahead of this problem and demand change now. Also, at this point, whether the UK will still be in the EU in 2021 is rather murky…

But we don’t have to wait for the EU to do this for us. Deliveroo is the perfect vehicle to get restaurants to up their game and stop using wasteful plastic packaging (not least because they have already stated their desire to do so – they’re on our side here!). And you can do this yourself, and I am pretty sure that every person who does this will add up to a cumulative impact that will create real change.

How can Deliveroo help?

Deliveroo deals with thousands of restaurants across the UK. They don’t make the food or package it, but they have some influence over how that’s done. For example, they recently added an option (defaulted to “no”) for whether you want cutlery with your order. They already want to do this. But it’s still quite slow, so maybe they could use a bit of help, a bit of extra motivation. As you’ll see in this post, most of the packaging that Deliveroo restaurants use is still full of plastic. And that plastic, used just once, ends up in our landfills1, in our water supply, our food supply – for hundreds of years. The cost of me ordering a takeaway tonight includes a bunch of innocent people and animals being poisoned in 50 years. Do you like that thought? I don’t.

How can they help? Easy. Much like with the cutlery checkbox, they could ask, encourage, cajole and occasionally coerce (for the final laggards) their restaurants to start offering plastic-free deliveries. There are many companies that provide compostable food packaging, that works for hot food, soups, and so on. Here’s one environmentally friendly food packaging company, found through a quick search. Hell, Deliveroo themselves sell suitable packaging (though some of the stuff they sell is plastic, still). Solutions to this have existed for decades. The only reason restaurants continue using plastics is because people don’t seem to care. We can change that perception.

So Deliveroo want to help and definitely can help. What’s stopping them? I don’t know, but I can hazard a guess. Deliveroo is a big company, with investors, employees, many stakeholders, etc. In any such company, things move slowly, and lots of agendas compete for attention. The agenda of “eliminating single use plastics” is there (especially since the law is likely to require it by 2021 anyway), but it’s still quite low on the priority scale.

Let’s help the people at Deliveroo who want to solve this, to show how much of a problem this is. Read on to find out how.

The Scale of the Problem

Here’s a photo of the plastic I’ve received from Deliveroo restaurants over the last month or so. Yes, I do use Deliveroo a fair bit. And that makes me a prime candidate for letting Deliveroo know that I’d like them to do better.Picture of a lot of plastic packaging, plastic bags and bits of shrink wrap

Step 1 is to keep this plastic instead of throwing it away. This is helpful for me, too, to make myself aware of just how much plastic we’re talking about. That’s a lot of fucking plastic. The idea that just to eat, I end up demanding2 this much single-use plastic into existence, is frightening, horrifying. If I can’t solve this, yeah, I should probably stop using Deliveroo. Because this is just not right.3

How much plastic do you have to collect? Up to you. I imagine this will have an effect even if you just send one box at a time, in an envelope (though your postage costs will be fairly substantial then). You certainly don’t need to send as much as I did. We’re trying to fill a cup here, and every drop helps.

Close up of the plastics in a cardboard boxStep 2 is, once you have collected this plastic, put it in a packaging box (cardboard, hopefully), and ship it back to someone at Deliveroo. Who? Anyone who sounds like they might be able to help. Log into LinkedIn and search for people who work at Deliveroo (search for “Deliveroo Product”). Find their name 4. Find the address for Deliveroo HQ (Spoiler: it’s 1 Cannon Bridge House, 1 Cousin Lane, London EC4R 3TE), and address the package containing all this plastic to the person, by name (perhaps including thWider shot of the cardboard box with the plastic insideeir department to make it easier).

Step 3: before you close the box, print (or, as I did, write out by hand) and include a version of the following letter, adjusted however you wish, to make the point. This is the letter I sent. You should probably drop the sentence about my personal blog, or at least tweak it, unless you’re me (if you just want a letter you can print without editing, click here):

Dear <Name>,

I am writing to you as one of your regular customers. I am signed up to Deliveroo Plus, and I make frequent orders from your affiliated restaurants. I love your service – it is reliable, quick, cost-effective – and in all weathers! I don’t have the spare energy many evenings to cook for myself, but I don’t want to eat junk food or packaged food, and Deliveroo helps me eat relatively healthy food more regularly.

The only thing that bothers me about your service is the vast amount of plastic used by your affiliated restaurants. I have enclosed the single-use plastic generated in the last month or so of use.

All this plastic will be in this world for hundreds of years, most likely decomposing into microplShot of a hand-written version of the letterastics that will end up in our water and our food. So effectively, for each order of Deliveroo that I am making, I am creating demand for a piece of plastic that will still be polluting our planet hundreds of years after my death. This makes me sad.

I believe Deliveroo is in an absolutely ideal position to be part of the solution to this problem, which requires coordinated action across many small companies across London (and perhaps the rest of the world). You already offer an option to request that food be delivered without unnecessary cutlery. You could add another one requesting for food to be delivered using only compostable packaging, and enable restaurants to advertise this capability in your listings.

I for one would happily pay £1 extra per order to avoid creating all this plastic demand. And I don’t even think it has to cost extra, once this trend gets going. Compostable packaging is not substantially more expensive than plastic packaging. This company offers compostable packaging amongst its various options, including for soup and hot foods: https://www.biopac.co.uk. Deliveroo itself sells compostable packaging!

I have posted this open letter, along with pictures detailing this story, to my personal blog, http://danieltenner.com. I think this is a great opportunity for Deliveroo to lead the way and associate its brand with something hugely positive and important on a society-wide level

I will publish any answer from you personally or from Deliveroo as updates to the blog post if you agree to it..

Thank youThe hand-written letter, folded neatly, on top of the plastics in the box for your time and your passion,

Step 4: Post it and wait. The package will likely find its way to its intended destination, via the miracle of internal corporate mail. When it does, its recipient will think “Oh wow, a package, for me?” and get excited. They’ll open the package, and find it full of empty plastic packaging, and get annoyed (dear recipient: I’m sorry; it’s for a good cause). They’ll hopefully read the letter, and make a mental note that this is annoying and it would be nice if this problem was solved.

Step 5: Let me know (The top of the box with Nina De Souza's address at Deliverooemail daniel at tenner dot org) that you’ve done this and I’ll add your name here. If you have written up a blog post or Medium post or even just a public facebook post, let me know and I will link to that. Help us build some momentum!

If I’m the only one who does this, then it perhaps won’t have much of an effect. If a few people do this, quite regularly, however, it will keep upping the priority of solving the plastic packaging problem, in the corporate prioritisation hierarchy. I imagine even getting as few as 10 such packages a month would become a major talking point inside Deliveroo pretty quickly. It’s a fantastic, relatively effortless, non-violent way to make a point. Eventually, this will be an important enough problem to just get it bloody solved now, if only to stop random people at the office receiving packages full of empty plastics, because Joe in accounting received 3 of them just last week and this is getting ridiculous. Can we please just get this solved?

You can imagine the rest of those conversations. They’re quite entertaining, in my head at least.

Job done! Wasn’t that easy? Well done for changing the world!

What if you can’t do this?

You can still help by sharing this blog post more widely so it reaches someone who has the time and resources and desire to help with this. Thank you.

Why don’t you just stop using Deliveroo and cook for yourself?

Because even if I do this, it will have almost no effect on the problem as hundreds of thousands of other people will continue to order takeaway food in single-use plastic containers. If, on the other hand, I can nudge Deliveroo towards getting their restaurants to adopt compostable packaging as a default, that makes a big change more likely.

Will Deliveroo get back to me about this?

I hope so. If they do, I’ll post an update. My details are easy to find. In the meantime, ladies, gentlemen, and other non-binary humanoids who care about plastics, let’s start working on improving Deliveroo’s prioritisation algorithm.

Honourable mentions

There were some restaurants which I ordered from which were already serving food in biodegradable packaging (at least the food I got from them): Honest Burgers (who make a delicious Beyond Meat burger) and Café Route. Good on them!

Honest Burgers packaging (sans burger, yum): cardboard and grease paper

What are you waiting for? Let’s do this 🙂

  1. Even if it’s “recycled”, that just turns it into more plastic, that is likely not recyclable, and still eventually ends up in nature. And let’s face it, most recyclable plastic isn’t recycled anyway. Remember the 3 Rs: Reduce, Reuse, Recycle, in that order.

  2. By buying something that contains single-use plastic, I create demand for that single-use plastic, which I’m calling “demanding into existence”

  3. By the way, I would advise washing the plastic if you’re going to keep it. Otherwise, it will stink. And it’ll make your point harder to receive. No one wants to be met with the stink of weeks old rotting food when they open their post.

  4. I’m sending mine to Nina de Souza, who appears to be Head of Consumer Product at Deliveroo. Aim high, why not.

The zero-cost entrepreneur

This article was originally posted on swombat.com in December 2011.

If you try to sell things to businesses (as I do in the context of GrantTree), you’ll notice a split in the mindset of people who run companies.

“Can I have it for free?”

Some people are unwilling to pay for anything. No matter how appealing the product might seem, how tangible the benefits it brings, how proven, safe, secure, universally lauded the product is, some people will try to get it for free, and not buy it if they can’t.

Even if you’re providing a service (which, as I’ve argued before, has immediate tangible value in most people’s minds), they will ask if you can do it for free. Or at a 90+% discount. Or maybe you can get paid later.

In the worst incarnation of the zero-cost entrepreneur, you find people who will offer you shares in their business in exchange for your work. I call this one the worst, because I feel very strongly that founders should treasure their shares like the precious life-blood they are. Also, as previously pointed out, experienced entrepreneurs know the value of equity and preserve it. If someone offers you shares in exchange for your work, they obviously don’t understand the value of their own equity – or perhaps they just think their equity is worthless. In either case, their equity is indeed mostly worthless.

This zero-cost entrepreneur mindset is more likely in young businesses by new entrepreneurs, than in later efforts. As a business grows or an entrepreneur acquires experience, a seemingly magical transition occurs. Most businesses come to a point where they decide that spending money for tangible benefits is fine. Before: “no way, we’re not spending anything on recruitment, where can we advertise for free?”; after: “$350 for a Stackoverflow advert is fine if it will give us a selection of good candidates”.

Even more dramatically, the mindset shifts from “we want everything for free” towards “stuff that’s given away for free isn’t really worth anything”. This is somewhat similar to the App Store mindset that free apps are worse than paid apps, so don’t even bother looking at the free apps, because your time is more valuable than the $2 you might save.

GrantTree charges a refundable setup fee to get started (2018 update: we haven’t done so for a long time! The market moved…), and while we’ve had people tell us they didn’t want to pay it (they didn’t become our clients), we’ve also had others telling us that if we hadn’t charged them a setup fee, they wouldn’t have taken seriously (they did become our clients).

So, what’s the deal here? Is one mindset better than the other? Are zero-cost entrepreneurs “bad”? Should they be lumped in with people who offer up equity for bits of work that really don’t deserve it?

Credit cards and paying for things

Here’s an interesting parallel with the domestic world. On a personal level, people often evolve through (at least) three phases of credit-worthiness.

First, people (at least in the UK and US) often get credit cards before they’re ready for them. What happens then is sadly predictable: they overspend and get in debt. A lot of people never seem to get past this stage 0 of financial responsibility by themselves. They stay in debt, let their debt balloon, maybe declare personal bankruptcy, and at that point, they’re forced by the system to go to stage 1: learning to be on top of their expenses (because they can’t do anything else, since they have no credit).

In stage 1, the person learns to be financially responsible, to manage their expenses tightly enough to make sure they can always pay their rent and other essentials. Finally, once a level of confidence about personal cash flow management has been built, they can progress to stage 2: responsibly using advanced financial instruments like credit cards (which is possible!).

The evolution of business owners seems similar, with perhaps fewer people stuck on stage 0, at least in the parts of the world, outside the Valley, where money is scarce (I don’t have enough direct experience of SV startups to comment here, although it does seem that they are quite willing to take on large fixed expenses without any way to sustain them other than raising further investment).

Stage 0 being a willingness to spend without control, stage 1 is the time when control is built, when founders learn how important it is to keep track of cash flow, reduce fixed expenses, etc. Since this new control is a reaction to a fear of stage 0, it is often an overreaction. “Since keeping on top of expenses is difficult, let’s not spend anything”.

Is it unhealthy? No, I don’t think so. If you don’t feel confident managing your cash flow, it’s very reasonable that you should cut down your expenses as much as possible. This is why investment is dangerous to new founders: it enables them to let their expenses grow without learning the hard lessons of keeping on top of cash flow. Perhaps this also explains why so many Silicon Valley VCs feel compelled to bring in a “grown-up” to manage the business more closely, when they invest a large sum into a promising startup.


At the same time, I think it’s important not to think that stage 1 is the best place to be. Overreaction is not a healthy long-term lifestyle choice.

The healthy path is, as always, in the middle. You do need to be on top of your cash flow, but spending when it makes sense does, well, make sense.

If you can spend $100 and save yourself a day of work, you should not hesitate to do so. Even if your company is pre-revenue (perhaps especially so), being able to move quickly, when you know where you’re going and how to get there without falling, is important and worth investing in. Learning to leverage your cash reserves to generate more income faster is as essential as learning to keep cash in the bank.

There are many things that need to happen in a business, and most of them are not critical for you to do personally. For those, you should bring in other people or products, and if you want good work out of them, you’ll have to pay for them.

So, I guess the take-away from this article is:

  • being out of control of your spending is bad;
  • cutting down your spending to the minimum is a natural reaction to the fear of being out of control, and you should keep costs as close to zero as possible until you are in control;
  • the best situation is to be in control and have the willingness and judgement to spend money where it makes sense, rather than try to keep every cost to zero forever.

Thoughts from 2018

This article has aged a little, particularly the reference to setup fees, which we haven’t charged for quite a while now (without losing the clients we wanted to work with!). I also would argue that it’s oversimplifying things a bit in some ways. I chose to repost it anyway because I think the concept of zero-cost entrepreneur is valid and exists in the world and it’s helpful to be able to identify that this is the sort of person you’re speaking to.

A startup escape path

This article was originally published on swombat.com in December 2011.

Today, right now, what is the best path out of the corporate world and into startups? What would I advise myself to do, 5 years ago, if 5 years ago was today?

Let’s start with some assumptions:

  • I am in a corporate job (for example, Accenture);
  • I am nowhere near ready to be an entrepreneur; when it comes to startups, I have absolutely no fucking clue what I’m doing and by default, I will make every mistake in the book;
  • however, I really should be an entrepreneur; given time, I will be successful; I just don’t know the best way to go about it;
  • importantly, I am not based in Silicon Valley, or, for that matter, connected to the startup scene anywhere, since I’m still a lonely corporate drone;
  • maybe I have some technical skills, maybe not; in either case, my technical skills, if any, are geared towards the corporate world (e.g. Java/J2EE, Enterprise .NET, etc.) rather than the startup world (Rails, MySQL, node.js, etc.).

It’s a wild guess, but I imagine it covers 90% of the western world’s potential entrepreneurs. After all, the default for smart people is to do a degree and then end up working in a bank, law firm, consulting company, etc. So most smart people end up working in large corporations. And yet most smart people would be able to run their own business if they knew how.

What’s the default case for a transition from this set of assumptions to “entrepreneur”?

Failure. Dramatic, disastrous failure. The kind that hurts and leaves scars.

Running your own business is an entirely different proposition than working for someone else. There are lots of things you need to learn, hangups you need to get over, habits you need to form, in order to have a chance at being successful. Even then, there’s no guarantee of success, but without those key building blocks, you might as well roll some dice and hope for a 12.

So, with that being said, what would I advise someone fitting those starting conditions, in order to smooth the transition and maximise chances of not breaking one’s teeth on the first attempt?

This is the “startup escape path”.

Where several choices are possible, I’ve chosen what I believe to be the best one. Others will disagree. For example, some might think that working for someone else’s startup is a better learning experience than running your own thing right away. It’s their right to do so. I’ve picked one path that I believe is the best.

The first step into the startup world is to get the hell out of that corporation that’s sucking your soul away and grinding it into shareholder dollars. However, most people aren’t ready for that transition. So step one is to get ready.

The key at this step is to make up for all those great big blind spots that will kill your fledgling company and send you back to the corporate world with your tail between your legs. This is what these tasks are geared towards. All of this stuff can be done on the side, while holding a full time job. The only parts that are time-consuming are the learning parts.

  1. Register a business: it will come in handy later. Figure out what the law requires you to do to be a business owner, and do it. Make the business active, not dormant, even if it doesn’t do much.
  2. Connect to the local startup community: The number of things that can kill your startup is truly astounding. You won’t know about them all, but having a good mentor can save you repeatedly. You won’t be able to get a mentor right away, until you’re someone worth mentoring, but you should at the very least start turning up to local entrepreneurial events so you know what’s out there. Don’t be a blowhard or a showoff, just be your humble self: you may have just spent 5 years at McKinsey and got a top MBA, but there’ll be 19 year olds at those meetups who are a million times better at building cool startups than you’ll ever be. Learn to be honest or you won’t get honest advice.
  3. Read Hacker News regularly: and subscribe to a few great startup blogs. There’s a lot to learn in the startup world, and HN and other key blogs will help you to get up to speed.
  4. Build something someone uses: Learn some basic coding skills in whichever “hot” technology you like (these days: node.js and iOS are the hot shit). Build something, anything, that at least one person other than you finds useful enough to use it at least 5 times. It doesn’t have to look good or change someone’s life. In fact, it shouldn’t. Just find someone with a problem that recurs every once in a while and build something that solves that problem for them. Learn both how easy and how hard that is.
  5. Build something that you will continue to use: Find a problem in your life that recurs regularly, at least once a week (bonus points if it’s every day), and build some kind of solution for it that only you will use. The important thing for this step is that you will continue to use it for a long time, so you learn how important it is not to write shitty code that can’t be maintained. Afteryou’ve run this thing for at least a couple of months (not before), do some serious googling and find the 10 solutions that others have come up with for this problem, and compare yours to theirs.
  6. Start a blog: being able to express yourself in writing is not optional. Your blog might suck, and that’s ok. You’re not trying to become the next John Gruber, you’re trying to become an entrepreneur. Post something to your blog every day, no matter how short. Don’t worry about people thinking you’re stupid: no one will read your blog anyway. At the same time, try to get people (e.g. from the #startups channel on Freenode or from r/startups) to read some of your stuff and give you feedback.
  7. Write something that Hacker News will vote up to the top 5 of the front page: the bar is not as high as you think. Getting over that hurdle will make you more confident about engaging with other entrepreneurs and testing your opinions in public.
  8. Sell something online: create something, or buy something you can resell – whatever. Build a page that sells at least one thing profitably, even at extremely low volumes. You can start unprofitably, but eventually you should make a profit (not counting your time, of course), even if it’s only 1 cent.
  9. Sell something intangible in person: even if it’s not worth your time, sell something to someone who’s not a friend or family member. Being able to convince someone to buy something from you is an essential startup skill. Note: selling a car or other physical item doesn’t count. It has to be something that they can’t touch, or that you made yourself.
  10. Come up with 10 ideas: break them down into at least one full page of hypotheses. Pick the best 3 that don’t require a lot of “blind work” upfront. Blind work is the work that happens before you’ve validated that there is a market.
  11. Invalidate those 3 ideas: go through the hypotheses until you either realise that they will work, or realise that they won’t or aren’t worthwhile (or aren’t exciting enough to you). There are lots of ways to validate ideas listed on swombat.com.
  12. Repeat 10 and 11 until you have something that sticks: eventually, you’ll stumble into something that people actually want, and which is generating recurring revenues, however small. Once you’ve achieved that, celebrate, and then jump off the corporate mothership.

You may still splat yourself on the ground even after all this. There’ll always be risk. The parachute is by no means guaranteed to open, and despite all these steps you will still probably make some really basic and avoidable mistakes (though if you have built a good and honest relationship with a more experienced startup founder by now, you might avoid most of them).

But you’ll certainly be head and shoulders above the average “I just quit my job, what do I do?” train wreck.

There’s no speed limit on this startup escape path, but I would expect it to take 6-12 months if you’re going about it deliberately and with some energy.

I hope this helps someone.

Thoughts from 2018:

Some of the linked resources are no longer as relevant today as they were 7 years, ago, but on the whole, I think this article still presents a useful path to getting out of the corporate world into startups, and would still recommend it to people who want to follow this path.

Productised Services

This article was originally published in 3 parts on swombat.com in December 2011.

One of the most fundamental decisions when deciding to start a company is whether you will sell a product or a service. Most people will immediately pipe up that products are the best, but that’s not so clear. It’s not even clear that the devision is so binary. There is a third alternative: productised services.

In this series, I’ll explore the difference between products, services, and productised services, and offer some tips for how to productise a service (or service-ize – sorry for the butchery – a product).

Product companies

Classic product startups are things like Basecamp. Sure, it’s sold under the moniker “Software as a Service”, which muddies the discussion a little, but the key product property of a product has is that additional sales require a minimal amount of additional skilled time to deliver. There are support costs, server setup costs, etc, but those are marginal compared to a specific sale. On average, each sale has a fixed delivery cost associated with it and requires no human interaction to deliver the benefit to the customer (though the sales process maybe very time-consuming, but that’s another discussion).

The benefit of selling products is that if you build the right kind of product, and particularly the right kind of technology product, it scales tremendously well. If 37signals gets demand for a million new basecamp accounts at once, they should be able to ramp up the server infrastructure pretty quickly and capture that business, rather than turn them away. Services companies can’t do that. A services company with business than they can handle will either turn away customers, or ask them to wait, or raise their prices (same as turning away customers), or even just take the business on and deliver a poor service.

Another benefit is what I call the “making money while you sleep” paradigm. Since there’s little or no human element in the delivery of the product, you can go to sleep, wake up, and find that you earned money while you were sleeping. That’s a great feeling, not to be underestimated as a feature of products – although in theory, once a services company gets big enough, you will essentially arrive at the same point: others work and earn you money while you sleep.

The big downside of product companies is that it can be very hard to validate demand for your product, and until you’ve done that, you don’t know whether the product is worth building. Many people skip the validation step (because it’s hard) and end up building worthless products that don’t sell. Others take too long to build the product (can especially be the case for web startups), or fail to build it quite right, or are beaten by strong competition. Many of the best product markets are winner(s)-take-all markets, where one or a few large successes will reap most of the business, and the rest will be left with crumbs.

Another big problem with products, particularly intangible products like your typical SaaS app or music track, is that people don’t value those very highly compared to physical products. App developers rightly bemoan the fact that people will spend hours deciding which of three 99 cent apps they will buy, and then walk into a Starbucks and spend $5 without even thinking about it. So another problem with intangible products is that it’s hard to get people to pay a high price for them, so you need to sell to lots of customers to make a profit. These two factors rule out direct sales methods and mean that you need to be able to market your product to large numbers of people cost-effectively to stand a chance. By comparison, a high-price item only needs a few sales a month (or even a year) to be profitable, at least when the business is small.

So, basically, products have a lot of uncertainty in terms of whether anyone will want to buy them, and can have a fair bit of upfront expense before you find out whether your effort so far was a waste of time and money (even with lean methodologies, there will be some waste and dead-ends).

Services companies

Services companies are much better and much worse than product companies, depending on how you look at them.

The classic example of a service company is a consulting, web development or design agency (like, oh, 37signals – but before they built Basecamp). Essentially, a services company trades skilled time for money in a mostly linear way.

There are great benefits to services. First, you can often ask for a significant chunk of the money upfront. That’s great for cash flow, and not to be underestimated. It means that services companies very rarely require investment to take off.

Secondly, you know pretty much right away whether anyone wants to buy your time, so you’re not sitting for years waiting to find out if you have a business. It can take a few months, or even years for sales to ramp up to a level where the business can be called “alive”, but sometime in the first few months you should start to see significant amounts of cash coming in. If you don’t, you’re probably selling the wrong service, or selling it very, very badly.

Another good thing about services is that people instinctively understand that skilled time is worth money, so whereas convincing even a 10-people company to spend $200/m on a web product might be a tough sell, they will not hesitate to spend a few thousand dollars on the right service. And before you say “but the $200/m comes in every month forever”, first of all, that’s ignoring inevitable churn, and secondly, most businesses would (and should) rather have $3000 upfront than $200/m for 18 months, even if the latter is slightly more.

Finally, one last benefit of services is that services markets are often very fragmented, so it’s much easier to build a moderately successful company in that kind of market. There are very few winner-takes-all services markets. Most of them look a lot like accountancy and consulting: a handful of huge mega-firms, a bunch of very large firms, quite a few large firms, and lots and lots of small firms. It’s much easier to get a foot in the door and build a sustainable business in this type of market.

On the downside, services are very hard to scale. Since you’re selling skilled time, and you only have so much of that yourself, you need to hire other skilled people in order to scale. The maths for that just doesn’t work in your favour until you get really big (see this article by Jason Cohen for details), and getting really big is really hard, because you need a lot of smart people, and smart people are rare and expensive and hard to recruit.

Another problem is that services have much lower gross margins, because part of your variable cost (i.e. the cost that is attached to delivering the service) is skilled people’s salaries. As long as you’re the only person working in your company, the margins look great because it’s all profit for you, but as soon as you have to pay someone else, suddenly you find those margins dwindling rapidly. By comparison, with a product, your gross margin can and should be extremely high – 80, 90, or even 95% in some cases.

Finally, services kind of suck because they take constant effort. Most services are not recurring, so you have to keep selling. People leave your company, so you have to keep recruiting. New people don’t know what they’re doing, so you have to keep teaching and training. If you stop doing any of those things, your company can develop deadly problems very quickly, like a diminishing sales pipeline, running out of people at a given skill level, or even running out of cash. Those things are hard to delegate until you get bigger. And getting bigger is really hard.

The third alternative: productised services

First of all, what is a productised service? It’s a service which you’ve systematised and supported by tools, automation, processes, etc, so that you’ve decoupled the benefit given to the client from the amount of time spent on your side. In other words, whereas in a services company the ratio of X units of time for Y units of income is relatively fixed, in a productised service, X/Y can be all over the place. Some clients will be extremely profitable, and others less so (but still worth serving – otherwise, turn them away, of course).

Accounting services are a great example of productised services. Though many accountants will charge for time above and beyond their “standard service”, most of them have packaged things like “yearly accounts” or “VAT returns” into a fixed price deal. This leaves them free to optimise the delivery of those services so that they take a minimum amount of time, while still charging the client the same amount.

Even large consulting companies, like Accenture, try to productise their services. Back when I was there, Accenture was very keen to sell what they called “Managed services”, where they would take over an entire function of the business and deliver it for a fixed price, enabling them to manage the costs internally and deliver the service in an efficient way without undercutting their own revenues.

Productised services don’t have to, and in many cases, shouldn’t, be marketed as such, or else clients may try and push down your prices if they think it doesn’t take you that long to deliver (conveniently forgetting the time it’s taken you to systematise the service so it can be delivered more efficiently). “But you’re getting a lot of value out of our service” doesn’t always work, especially not with smaller companies, so think carefully before marketing your productised service as such.

Productised services have a number of advantages. Similarly to products, they can scale much more easily than services. Once a service is properly systematised, it is easier to actually carry out, which makes recruitment much easier, since you don’t need your people to be as highly skilled. You won’t be able to deal with a sudden million orders, but you can ramp up capacity pretty damn quickly if you need to.

Like products, the margins can also be quite high, because most of the time-consuming parts of the service have been automated or simplified so that the human time spent is small compared to the return. Unlike products, however, the process doesn’t move along without human involvement, which means you have to keep working on it – but you can structure productised services so that there is a recurring component, which provides similar benefits.

Since this is a service (and perceived as such), people naturally understand the value of it and are willing to pay real amounts of money (in the thousands or tens of thousands) which they would not be likely to throw into a product by a small company.

Because it is a service, unfortunately, you must do the sales directly – it is difficult to sell services without any salespeople. However, the advantage is that you can tailor your pricing to the type of client, and how much value your productised service brings them. If your service will provide £100k of value to one client and £1m of value to another, it stands to reason that your proposal for the second client will have a markedly higher price tag than the first (which might be based on a percentage, or some other calculation method). This is difficult to achieve with most typical startup products, since you often don’t know who you’re selling to until too late.

Finally, another advantage of productised services over both products and services is that they can be taken in either direction if needed. If customers start to require a lot of bespoke work, you can evolve towards a normal service model. If, on the contrary, the customer base just keeps growing, you can automate more and more of the service until it becomes self-service. This makes productised services a great way to kick off a product business, by generating these product-related revenues early on and using them to continue building out the self-service aspects of the product (in effect cannibalising your own service with your product).

Productised services are not good at all stages of a company. Google could not and should not run AdWords as a productised service, for example. At that scale, you need maximum automation. But they could have done so in the early days of AdWords. Nor are they always possible in the very early stages, before you have any idea what your market wants (but then, why are you starting a business in that industry?).

I’ll address the paths to a productised service, from either a product or a service, in later articles, but hopefully in this article I’ve made the case for why there is a third model, which sits in between products and services, and which should be worthy of your consideration when trying to figure out how the hell you’ll get your company off the ground, particularly if you’re a new entrepreneur and are taking my advice to stay away from investment until you have your basic business skills figured out.

Thoughts from 2018:

This article still makes a lot of sense today. The fundamental business forces have not changed. The benefits of each kind of business are still the same.

Investment as a cushion or a springboard

This article was originally published on swombat.com in December 2011.

I believe new entrepreneurs should not take investment. Here’s why.

There are two primary types of investment that I’ve observed being taken: investment as a cushion, to protect the company from having to focus on short-term revenue generation right away, and investment as a springboard, to help the company grow faster or enable a cash-intensive business model. These can be loosely matched with the Seed and Series A stages of funding, though some Series A are cushion funding, and some Seed funding is used as a springboard.

One might expect me to launch into a tirade about how one is better than the other, but that’s not really the case. Both uses are valid. However, cushion funding is dangerous for inexperienced founders.

A cushion from reality

Starting a business with zero revenues and zero funds, you have to do what’s called “bootstrapping”. As UK entrepreneur Iqbal Gandham (who contributed this swombat.com article) argued on TechCrunch, bootstrapping from zero funds is impossible:

The harsh reality for startups is that you need someone somewhere to pick up a tab for around £50k, which of course could be split over two people, i.e £25k a piece, but still that is just £300 or so pounds less than the average salary in the UK.

However, many people commonly raise this initial £50k (though it’s often much less) from their own savings (saving £50k is hard, but hardly impossible, when you’re an IT contractor earning £50-100k/year). Bootstrapping, then, is creating a business without taking external investment. When it’s your own savings dripping through the hourglass, when every expense matters, you end up, hopefully, being very focused on reaching revenues as soon as possible. Lack of funds creates an extreme awareness of the need for more funds.

However, if you have a nice £100-200k cushion provided by someone else, you don’t feel the bite quite so much. Sure, you still have a runway, and it is diminishing, and it is something you need to “think about”, but it is far more theoretical than seeing the biggest number in your bank account steadily approaching zero.

One of the biggest things that new entrepreneurs (at least in most of the world outside of Silicon Valley) need to learn is not how to build a product or deliver technical work, but how to run a business profitably. It’s all these ancillary tasks, from sales to accounting, finance, legal, marketing, and general business management, that take three years to learn (give or take). That learning is one of the most important forms of progress for the new entrepreneur.

In that context, any cushion which slows down the learning, which delays it, makes it more distant and theoretical, is potentially harmful. Most successful entrepreneurs are the kind of people who thrive in sink-or-swim situations, and investment-as-a-cushion can turn this into a delayed sink-or-swim, and even set things up for a sink: having funds makes you more likely to take on fixed expenses start relying on your ability to spend, which you shouldn’t – not until you have a functioning business and/or know what you’re doing.

So, my advice to new entrepreneurs is: don’t take funding, and if you do, take a minimal amount and spend as little of it as humanly possible.

A cushion from short-term focus

The proposition is considerably different for experienced entrepreneurs. Managing your cash flow, your runway, your fixed expenses, etc, is a very hard lesson to forget. Once you learn how to sell a product that doesn’t exist based on a reputation that’s only in your head, that’s a skill acquired for life.

Many experienced entrepreneurs who could fund themselves take seed funding anyway. However, they don’t take it “because they couldn’t afford to do a startup otherwise”, they take the seed funding because it enables them to put aside the short-term revenue focus for a little while and aim for something bigger and riskier. Once you’ve learned how much the short-term focus matters to your survival, it’s very hard to ignore it. The cushion of external investment enables an experienced entrepreneur to temporarily ignore that pressure.

In this situation, I think it makes a lot of sense to take external investment as a cushion.

A springboard to greatness

Finally, the third case almost exclusively applies to experienced entrepreneurs, since, at least in the sane world outside of the Valley, VCs will pretty much never invest in a business that doesn’t have either a proven founder or proven revenues (both of which add up to an experienced entrepreneur).

In this case, funding is required to enable the business to grow much faster than by organic growth alone. This is particularly important in winner-takes-all and first-mover-advantage types of markets. Paypal and eBay are great examples of the first: most people will have only one online payment account, and they’ll pick whoever has the most popular platform. This winner-takes-all advantage paradigm is so strong that even with all their misbehaviours, both of those players are still firmly lodged at the top of their respective markets. Worth taking investment to get there first? You bet.

For the second case, looking in the enterprise market, many pieces of software like SAP have huge installation costs. A large SAP installation might cost $200m: $20m in software licences, and $180m in consulting fees to set it up. In a market like this, being the first to make the sale is pretty important, because customers are very rarely going to change platform if it costs that much.

In these contexts, taking growth investment makes sense, because otherwise a competitor who does take that investment will beat you to the post. This type of investment is not at all a cushion – in fact, it makes the fall much harder if you miss, turning a moderate success into a complete failure – it is a springboard, an amplifier of your efforts.

If you know what you’re doing and are willing to take the risk, springboard investment does of course make sense.


So, in summary, taking investment can be seen as either a cushion from reality (often the case with new entrepreneurs), a cushion from short-term focus, or a springboard to greatness.

Only the latter two are good uses for investment. If you don’t yet know what you’re doing, if you feel you need the cushion just to survive, then you probably should not take it.

To conclude, it’s worth noting that these arguments apply mostly to the 99% of the world outside of Silicon Valley, where spending tens of millions to build a company with zero revenues for years is not an option.

Thoughts from 2018

Even as the amount of money available to entrepreneurs has moved up and down with the times, I don’t think the core point of this article has changed at all. If anything, I’d expand it to larger, more mature companies, where my observation is that money without a clear sense of purpose to direct it is itself toxic, as it tends to lead to investing that money in distracting side-ventures that eventually impact the success of the core business.

Taking Responsibility

This article was originally published on swombat.com in December 2011.

Some time ago, I read an excellent historical novel about a character called Sinuhe. Set in ancient Egypt, it charted the life story of a talented doctor who travelled through Syria, Minoan Crete, the Hittite Empire, and other similarly exotic locations. Sinuhe got involved in intrigues, wars, mysteries, and all kinds of fascinating adventures, masterfully narrated in an autobiographical style.

It was an incredibly infuriating book, probably one of the most frustrating that I’ve ever read.

Sinuhe takes the concept of the doctor’s oath of non-intervention to the extreme. Through this monumental example, Mika Waltari shows how remaining passive and uninvolved can lead to great evils. Time and time again in the book, Sinuhe finds himself in exactly the right time and the right place to take actions that will change the course of events, of history, even. And yet he consistently fails to act until it is too late. Through this passivity, he loses both of the great loves of his life, as well as his only child, to stupid and avoidable deaths. Throughout the book, Sinuhe only ever acts when the evil has become manifest, obvious, immediate and urgently needs a cure – which, in most cases, is too late. And then he proceeds to rant about the evils of men, gods, delusions, and other forces of the universe, forever failing to see that every mysery that befell him was a direct result of his own actions, or lack thereof.

There’s a point in there about both startups and life in general.

Taking responsibility

I’ve argued before that the ability to take responsibility is an essential trait of the successful entrepreneur. Sinuhe is the quintessential example of someone who would consistently fail at business (much as he fails at life), because of his inability to accept that he is responsible for what happens to him, and that he can make a difference to those events.

To paraphrase Stephen Covey, until I accept that who and where I am is a product of the choices I’ve made (conscious or not), I cannot take the next step, which is to say: “Today, I choose otherwise.”

It’s easy to blame external factors for playing a part in your startup’s failures. “It was too hard to raise funding”, “the industry was in recession”, “people just weren’t ready for our product” – I’ve used those excuses myself. But that’s what they are, they’re excuses. Ultimately, successful entrepreneurs make things work despite the barriers standing in their way, by focusing on what they can do, and then doing it.

Accepting the results

Which brings me to the final point of this article, one which most of the self-help books out there fail to cover: taking responsibility, getting involved, throwing yourself into the thick of things and making decisions, all that is really, really hard (for most people). Sinuhe, in fact, deserves our pity more than our anger.

Psychologically, it can be very daunting to realise that taking action makes us responsible for the outcomes of those actions. If we get involved in making something complicated better, and we fail, we have no escape from the reality that we personally brought about a result that we did not want. We can’t blame it on circumstances, on external factors, competition, general human stupidity, and so on. It’s our own lack of competence that brought about our failure. If I take responsibility for things that affect others (like running a business or helping someone who needs emotional help), and I fail, I also accept responsibility for hurting others, maybe directly. Some people are so afraid of accepting this possible consequence that they shy away from making any decisions that impact other people.

Unfortunately, such decisions get made with or without our input. When we refuse to take responsibility, we let others take those decisions for us, or, even worse, we let the decisions be taken by the faceless system of default behaviours that composes the world. This is disastrous both in business and personal life. The default outcome for any startup is death. The default outcome for life in the western world is being normal, unremarkable, unnoticeable. If you are unhappy with either of those results, you need to take responsibility and take action.

Had Sinuhe acted, perhaps he would have brought about his and his friends’ downfall. But perhaps not. By his inaction in times when he had the opportunity to do something, he achieved failure anyway.

Thoughts from 2018

This article is an evergreen. As illustrated by the central example (set in ancient Egypt), the points being made here have applied throughout human history – and will probably continue to apply as long as there are humans about.

An injured man on a bike

First, I felt some shame that I’d been fooled so easily.

The man on a bike had approached me from the street while I was on the pavement. He was on a bike. He pointed to his arm. There was what looked like a fairly sizeable gash, and blood coming out.

“I had a bike accident, I need to go to the hospital, I want to take a black cab, do you have £5?”

I’m not sure exactly what happened next, but it resulted in me deciding to hand him the £10 that happened to be in my pocket, with a wish that he get help.

Almost as soon as he rode off on his bike, my rational mind kicked in again.

“So,” it said, “he’s riding off on the bike, huh?”


“Seems quite comfortable too as he smoothly makes his way down the street. Surely he could ride to a nearby hospital on that? Oh, look, he just went past the ambulance station there on your right.”


“And he’s now stopped by these two other people… look at that, they’re now going to the cashpoint nearby to get him more cash.”

There was a bit of anger, directed at myself first, for falling for it so easily. And then I tried to see what the anger was protecting. It really felt like I was not entirely conscious while the brief conversation had happened. I’d reacted without really allowing my analytical mind to do what it’s good at: analyse things, with skepticism if called for, and come to a decision that I can justify. And within seconds after the man had ridden off, it had flicked back on and I could immediately see that I’d been taken advantage of.

I wasn’t so much angry at being taken advantage of, as at the effortless ease with which it had happened. As I considered the scenario, I saw that probably, what had happened was something along the lines of the sight of another injured human overriding any sense of suspicion, the desire to help a fellow human being who’s been physically hurt being more immediately important than considerations of being conned.

It had worked marvellously well. The guy on the bike looked homeless, but this was a masterful interpersonal hack, a devilish use of a fundamentally good impulse in all (or most) of us: the impulse to help someone who’s obviously injured. Perhaps he had been a psychologist in a past life.

The true but boring thing to discuss here would be how this ultimately harms all of us. I’ll take it as granted that if you’re still reading, you’re the kind of person who sees that making this fundamental impulse untrustworthy helps no one, least of all a homeless person. It’s a variant of the “crying wolf” story. Some day he (or someone else) might be genuinely injured and dying on the street and not get help because people think it’s a con. I think we all get that. We also all get the stupidity of a society that arrives at this: a homeless person probably deliberately hurting themselves in order to make cash by taking advantage of good human impulses, because that still works and begging doesn’t. It’s tragic, and fairly obvious.

I’m more interested in the feelings it left me with. I felt shame, which was self-directed anger, because of this, and when I stayed with the anger instead of shaming it in turn (“Shame is bad anger! Go away shame!”), I saw that what the anger was protecting was the innocence of being able to just trust that someone who’s injured needs help. That innocence is beautiful, and I want to preserve it and protect it. I want to be able to help an obviously injured person without thinking about it, without considering whether I’m being conned.

And the reality of the world, that the fellow on the bike proved in a few moments, is that I cannot. I guess he gave me a useful lesson for my £10.

Or rather, I can preserve this innocence in some way, but, if I want to be sensible, it needs to be in a bubble that also contains some self-awareness and skepticism. No, you can’t trust a random guy on a bike with a wound on his arm to not be trying to fool you.

Will that result in me being less helpful when someone genuinely needs help? I hope not. My analytical mind is flawed, like anyone’s, but it’s probably going to be fairly good at deciding whether the situation I’m faced with is genuinely an emergency, whether I have time to ascertain some facts, etc. I think reasonably quickly, so I don’t think anyone will suffer greatly from me not disabling my analytical thinking when I meet an injured person. If anything, it might even save me or others. After all, the advice I was taught in First Aid training back many years ago was that the first thing you should do when you enter a space where there is someone injured or unconscious is stop, then think of whether there are any remaining sources of danger (e.g. an electrified floor, or a person who’s still in process of being electrocuted), before you rush to their aid.

So what am I trying to say here?

I guess I want to show compassion to myself for being conned in this simple way. It was the innocent young boy inside of me that got fooled there. That’s ok. I want to show compassion to the part of me that wants to protect that innocence. I also want to show compassion to the part of me that wishes I could retain that innocence. I also want to show compassion to the part of me that knows that the world is more complicated than that and that it is important to build boundaries where they make sense, and this is one of these places.

I share this in the hope that you can also feel compassion for yourself, and your various levels of reactions, the next time you, inevitably, get taken advantage of.

Startup gung-ho

This article was original published on swombat.com in November 2011.

Businesses, investors and consumers alike are gregarious. They want to go where everyone else is going. They want to buy success, from successful companies.

This leads to a perversion that affects the startup world as well as the rest of the business world: the need to appear more successful than you are, in order to get business, investment, customers.

This is not entirely artificial. Building a successful business is also about being able to project the right image to appeal to customer, and an appearance of success is part of that. Fake it till you make it, as they say. People don’t want to buy from or invest in a dying company, so you’ve got to look like you’re doing great, even if you’re an invoice away from technical bankruptcy.

But there’s a reverse side to that, which I believe is harmful to some startups: this projection of fake success extends to meetings with other startups and potential mentors at networking events, and because of that, founders who could really use a good dose of advice from a more experienced entrepreneur end up flying blind and making all the same mistakes again.

Startup networking events

When I turned up to my first startup networking event, I didn’t know what to expect, so naturally, I turned on the “we’re doing great” façade (which, I quickly observed, everyone else did too). Isn’t it amazing how, in a high-risk industry where most companies are expected to fizzle out in the next few months or years, everyone is doing great, growing fast, acquiring more users, etc? How often do you meet a new founder and hear “Yeah, well, I’ve been at this for 9 months and our revenues are still way too small, so I think I’ll be throwing in the towel and trying something else soon, because this isn’t working.”

Another aspect of this problem is that once you start putting up the appearance of success, it becomes very tempting to do so consistently, with everyone. Anyone could refer you to some business, after all, so you have to be on your toes all the time. Otherwise, you might miss out on some great opportunity that would have come your way if only people thought you were doing well. At least, that’s how it often feels.

To make matters worse, if you introduce yourself by presenting what’s wrong with your business, people will peg you as a negative type, and that’s not the kind of founder people think of as being headed for success. No, you have to be an outgoing, friendly, open extrovert with a strong dose of self-confidence and a very slight touch of arrogance.

I’m very lucky that I can genuinely say that at this point, the two businesses that I am involved in are doing very well. But this wasn’t always the case.

Missed opportunities

In the times when my companies were not successful, did I get any amazing opportunities by claiming to be successful to my startup peers? I don’t think so. Founders have a pretty finely tuned bullshit detector. I doubt anyone was all that fooled. What about investors? With them, faking success is even less useful. VCs will not invest without doing a fair amount of due diligence. Claims that you’re doing great when you’re going bust will never lead to investment, unless you’re a consummate con man.

What opportunities did I really miss, then?

How about opportunities for advice? Entrepreneurs are a helpful lot, but if you don’t present your problems clearly, your peers won’t be able to help you. Even non-entrepreneurs seem more likely to offer advice and connections if they think you’re struggling and they could make a difference. Perhaps the only set of people to whom you might want to project the “appearance of success” are clients, during a pitch. Even that is unclear, though. It really depends on your industry. In some industries, a fledgling startup is more likely to get a foot in the door than a mature, successful company, and expectations will be lower, and therefore easier to beat.

In summary

  1. Appearing more successful than you really are will destroy more opportunities than it will create.
  2. Instead, be honest with fellow entrepreneurs. Don’t be negative about it, but don’t claim to be doing great when you’re not.
  3. VCs will not invest based on an appearance of success, so bullshitting them won’t work either.
  4. Appearances of success may work with some types of customers in some industries, but think about it for a few minutes instead of simply defaulting to the startup gung-ho attitude.

Thoughts from 2018

This article was and still is bang on the money. And it has thankfully become less of an original thought due to a lot of focus, in the startup scene and elsewhere, on depression and how it impacts people in jobs with a high pressure to appear successful, like startup entrepreneurs. Tragically, that focus has generally come about due to people committing suicide.

In a more prosaic sense, the same is still true. People at startup events rarely talk about their problems, opting instead to project an image of success. And yet, there are all sorts of “fail-con” types of events that also try to portray the reality that many startups don’t succeed. It feels like we still have a fair bit of work to do as an industry to bring these two poles together.

Driving, and the art of running a business

Learning to drive and learning to run a business are surprisingly similar endeavours.

When you learn to drive, you don’t know what you need to pay attention to. There are, seemingly, a million things going on, and some of them might kill you if you fail to heed them. This can cause a sense of panic in the beginner. When you know how to drive, you rely your experience to know what to pay attention to and what you can simply ignore or deal with without thinking about it.

Learning to run a business is similar. There are a million things that you could do, and some of them will kill your business if you fail to heed them. This can cause a sense of panic in the beginner. When you know how to run a business, you rely on your experience to tell you what you need to pay attention to and what you can simply ignore, delegate or outsource.

When you learn to drive, there are a lot of new habits that you need to build into automatisms. Learning to use the clutch to change gears rapidly while accelerating onto the motorway, surrounded by speeding cars, seems very difficult at first. But the more you do those things, the more they become automatic and unconscious. When you know how to drive, you don’t even really think about changing gears, you just do it.

Learning to run a business is similar. There are a lot of new habits that you need to build into automatisms. Learning to detect that the person in front of you is a lead, pitch them in the correct way, follow up, and close the sale, seems very difficult at first. But the more you do it, the more it becomes automatic and unconscious. When you know how to run a business, you don’t really think about pitching and closing sales, you just do it.

To learn to drive, you have to actually sit in a car and drive yourself. No amount of reading or talking about it will enable you to drive. You could study driving for years, and even watch someone else driving for years (most of us watch our parents driving for our entire childhood), and still it won’t replace the actual experience of driving. While it is possible to build car simulator, even that is a poor substitute for actual driving.

Learning to run a business is similar. You have to actually run a real business yourself. No amount of reading or talking about it will enable you to run a business. You can do all the MBAs you want, and study entrepreneurs and entrepreneurship for years, and still it won’t replace the actual experience of running a business. While it is theoretically possible to build a simulation of a business, it’s a poor substitute for actually running a business.

The best approach for learning to drive is to get an experienced driving instructor who will sit in the car with you and figure out what you know and what you need to learn, construct a teaching plan personalised to you, teach you those things, demonstrate them when it helps, and help you practice them over and over again in a safe environment, watching out for things that might kill you. Because this approach works, it is used throughout the world.

The best approach for learning to run a business is similar. You get an experienced mentor or coach or close advisor who will be lightly involved in the business, who will figure out what you really need to know next and point you in that direction, who helps you work through tricky business issues, and who watches out for things that might kill your business and that you haven’t spotted. This is much less widely used in business than indriving, perhaps because good business coaches are much more rare than good driving instructors. But driving schools for business are getting more common every day.

There is a difference between learning to drive and learning to run a business. In business, there is no such thing as a safe environment. You’re on the motorway from day one. And most people drive their first business without an instructor by their side.

Thoughts from 2018:

Not much to add to this article! I still think this is a good and useful analogy for learning to run businesses, and the best ways I have observed to train entrepreneurs are indeed experiential and based on working on a real business.

People, Processes and Tools

This article was originally posted on swombat.com on October 24th, 2011.

Some years ago, one of my managers used to repeat this “Accenture truism” (or so he designated it): to fix or improve something, first you need the right people, then you need the right processes to help those people work together, then finally you need the right tools to support those processes. People, processes, and tools – in that order.

This is even more true for tech startups than for corporations. As geeks, whenever we face a problem, we often start by looking for a tool to fix it. “Our team isn’t communicating properly – let’s set up Campfire.” “But I don’t like Campfire, why don’t we use Yammer?” “Yammer and Campfire are so lame, let’s just use good old IRC.”

This is the wrong approach. Tools by themselves rarely resolve problems in your business. If your team isn’t communicating, you need to solve that problem step by step.

First you need to figure out if that’s because of a “people” problem. Maybe one member of your team just doesn’t want to talk to the others. If that’s the case, no tools or processes are going to fix that. For example, many sales organisations try to get their salespeople to communicate everything they know about every client – but salespeople don’t want to do that, because it makes them more easily replaceable. Setting up a CRM tool doesn’t solve that problem, until you fix the people, by giving them the right incentives to do what you want (or, if that’s impossible, either changing what you want or changing the people).

Then, you need to look at the “processes” part of the problem. For example, assuming your team wants to communicate with each other, maybe they can’t because they tend to sleep at random schedules in different parts of the world. That’s a process problem that can be fixed by, for example, declaring a certain time each day “team time”. For example, you can anoint the period between 2pm and 4pm in some timezone as “team time”, and require everyone to be available to chat at that time every weekday.

Finally, once you’ve got the right people and they have the right processes in place to support them, then you can start looking for tools to support those processes. Depending on what you actually want “team time” to look like, you might choose campfire, GTalk, IRC, or any number of other tools. But by now, you can select the tool based on whether or not it supports your processes, rather than whether or not it’s the sexy SaaS app of the month.

Thoughts from 2017

The principle still feels true to me. If anything, it feels even more true. The biggest addition would be a much deeper and nuanced understanding of what working on the “people” and “process” problems can mean, and how they feed into each other. At GrantTree we’ve even adopted and developed a whole interview aimed towards figuring out how well people will be able to adapt to our complex processes (open culture makes significant demands on people’s abilities), so we try not to find ourselves hiring people who are perfectly fine individuals but not well suited to our environment.

As the years have passed, tools, however, have become less and less interesting in and of themselves.

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