Will Critchlow: Founder of Distilled, fan of whisky, basketball and food (in almost any order), husband, father. These are my personal thoughts and not necessarily the views of Distilled (or anyone else).
You can find me on Twitter @willcritchlow or my company blog.
If you’ve followed the stuff I’ve written here and elsewhere, you’ll know I’m a sucker for academic exercises, game theory and business strategy. Combine the three and you know I’ll be hooked.
It’ll come then as no surprise that I’ve been fascinated recently to read about Valve’s amazing corporate structure (TL;DR no management at all and an incredibly empowered workforce). If you haven’t been following along:
I desperately want to learn from their experiment, but there are some things I’m really struggling to get my head around. I hope someone from Valve can stop by and help out. I’ll start with just three questions. I think all of these three actually relate to the same underlying confusion of mine - of what fills some of the vacuum that must be left without any management at all:
I understand how you mainly avoid people slacking off (explained in the economics post). I don’t quite understand how individuals balance personal desires against company performance. It feels like it could easily descend into a tragedy of the commons where everyone was working (very hard) on long-term fun long shots and no-one was maintaining the cash cows.
Do some people suck this up and take one for the team to work on less fun but highly important projects out of a sense of duty? Do they resent others swanning around having fun on crazy projects?
First the when - in most companies this would be a core function of management - estimating capacity and demand and choosing what roles needed filling.
I can just about imagine this self-organising with individual teams hiring people when they need them - but given that they can just wheel their desks off somewhere else and join another team, it’s not clear that they would actually be making a good decision for the company (indeed, if you can’t recruit internally, it should indicate that you have an unpopular project, no?).
Whom - as you’ve said, the whole thing relies on having only very self-motivated and disciplined people working for you. With (presumably) no company-wide hiring process and no way of enforcing specific gatekeepers on hiring, how are you better than your average company at what is one of the key determinants of your success?
Related to the hiring question - it’s not clear to me what it means to (for example) hire a bookkeeper. You can hire a person and start them off doing bookkeeping - but from their first day, they can wheel off their desk and start “adding more value” somewhere else. How do you hire for unglamorous roles (and retain people in those roles)?
Some questions that are probably more sensitive but that I also don’t understand:
Wow. That’s a boring title. Could I have come up with a worse title?
You already know I’m a geek. Well, when I read Wil Reynolds’ recent post on issues with various bonus structures he’s tried, this was the first thing I thought about. You’ll want to read Wil’s post before continuing here in order for anything to make sense.
At university, I studied game theory (my thesis was on combinatorial auction theory - a brilliant, often NP-complete branch of auction theory). I try really hard not to apply it to everyone I meet all the time.
Having said that, I’ve had to learn how to act in social situations, and game theory is actually pretty great for this (see a beautiful mind).
In many situations, the key is to view life as a series of events taking place over time rather than one-off experiments (it is this that “fixes” the prisoners’ dilemma). And it was to this that I turned when reading Wil’s post.
(Before I get into the meat of my thoughts, note that I don’t believe we have compensation completely right at Distilled - but that’s a post for another day). Here are the game theory issues that sprang to mind for me when I read Wil’s post:
(*) ignoring all the 1% debate for now - that’s another post
It seems like some of this can be fixed by tying bonuses to individual performance, but there are issues here too:
Ignoring the theory, the practicalities of determining appropriate reward systems are also complicated by the fact that the people in charge of small businesses skew towards higher risk / faster change / less certainty than average. I find it can be an area where it’s hard to put yourself in others’ shoes.
I’m going to be doing loads more thinking about this. Thank you Wil for being so amazingly open in your post and I hope to have more fruitful discussions about this stuff.
[Sidenote - I wrote this post today on the Distilled blog and the kind of reasoning I refer to above is the stuff I was talking about in the “heads-up” part of the leadership section.]
I have a very different viewpoint.
After my undergraduate degree (pure and applied mathematics at the University of Cambridge) I stuck around in Cambridge for a one-year course entitled “part III” - effectively a one year masters in mathematics.
Part III is described on the website in typical Cambridge style as “not an easy course”. This is a bit like maths professors using the word “trivial” when they mean “very hard, but previously solved”. I found part III hard.
One of the courses I took was financial modelling at the Judge Institute (the business school in Cambridge). This course is part of the MBA syllabus and we sat alongside MBA students. It was not easy for those of us doing it as part of an immersive mathematics course. The MBA guys were doing this across a whole range of disciplines and it’s probably this that is the source of my respect for the institution as a whole.
Although I don’t have the patience to go back into academia now and I love building a business in the real world I am always watching out for ways I can learn more about the theory of business.
I think the biggest three distinct benefits of an MBA are:
I’m not realistically about to embark on an MBA and I think I have the rigour from my degree and just have to push my own flywheel on the network side of things. Which is why I’m focussing heavily on case studies.
The online world is dominated by young companies and young business people. Many of Distilled’s competitors are run by people no older than Duncan and I. We need to learn from history both to grow our own business and to help our clients truly effectively.
Watch this space.
I have recently been reminded of how hard it is when you’re starting out at something. When we started Distilled, it took us a long time to get any kind of momentum going (see the presentation I gave at my old high school over the summer). Recently, we have been the lucky benefactors of the flywheel effect - that once you have been pushing hard in a consistent direction for a length of time, it seems to get easier and easier to build momentum.
When you don’t yet have that flywheel, it is hard to sell, hard to convince and hard to reach people.
You may know that we are building out conferences in the US. You may not know that we are not going to sell out our upcoming conference in NYC. There. I said it. We have poured blood, sweat and tears into the content and the promotion, but we are simply not yet as well known on the east coast as we are in London or Seattle. The conference will still be amazing, but it’s painful to feel that we could have done more to reach more people, to pack out the room.
And it’s a big but.
Some of us have been here before. It’s only 4 or 5 years ago that Duncan and I were excited to be “selling out” our little shared office hallway to give presentations to 20 or 30 people at £20 / head. We have come a long way. And we’ve done it by turning that damn flywheel. Every damn day.
I’m writing this publicly, even though it should probably be an internal email. I’m doing that because I want our whole team to see that I mean it. Many of our team joined recently. Very few of them (2?) ever worked in our tiny underground office. To you guys: this is real. This is what it’s like. And this is winning. It just doesn’t always feel like it.
There is no shame here. We will continue to work to get the best speakers, to push them to deliver their best content, and to give our delegates the best conference experience we possibly can. We will carry on:
And it will pay off. Maybe not this year. Maybe not even next year. But if I’ve learnt one thing, it’s that pushing the flywheel is something close to magical, and by the time it’s going so fast that you couldn’t stop it if you tried, you will feel like the king of the world and we will sell out events that will make this one look puny.
Finally, I want you all to remember the bigger picture. To put things in perspective, up to 2008, maybe 100 people total had attended a Distilled event. In 2009 I think it was about 200. In 2010, 320. In 2011, by my count, we’ll sell about 950 tickets across all events (and that’s not counting the hundreds of people who have bought videos).
The flywheel is spinning, we just need to keep pushing. Welcome aboard. It’s going to be a helluva ride.
Oh, and I should mention, you can still buy tickets, and don’t worry - we have enough people coming that it’s going to rock, we’re just kinda ambitious around here…
I recently got a new favourite coffee shop in Balham. It’s a little surprising, as I don’t think I’m really in the target market. It’s a boutiquey shop selling cute little trinkets. Not really my style.
So why the love?
They sell Monmouth coffee. Terrifyingly expensive, but totally worth it. The best coffee I’ve ever tasted.
I say terrifyingly expensive. It retails for about £6 / 250g in roasted beans.
That’s a lot compared to ordinary supermarket coffee, but when coffee is the thing you do? I’d argue it’s hella expensive not to buy coffee this good.
Let’s do the math. 40 cups / pound, let’s guess at £3 / pound wholesale for Monmouth coffee, or £1.50 / pound for “nearly good enough” beans. That means you save about 4p / cup if you choose not to buy great beans.
I understand margins are tight, but surely price elasticity isn’t so great that you can’t go from £1.85 / cup to £1.90 / cup?
Please, small businesses, don’t skimp on the main thing you do. I don’t care if you buy cheap computers for the back office, I don’t care if you hand-write your menus to save money. But please, please don’t skimp on the main thing you do. If you run a restaurant, buy great meat. If you run a coffee shop, buy great coffee. It’s not rocket surgery, folks.
Some background: I have recently begun writing down longer-term goals (partly shamed by Danny Dover’s amazing list, I have to admit).
I have had some success in my personal “getting things done” system from separating out today’s tasks from “current” tasks from “someday” tasks and I thought this was a natural extension. Previously I had thought of these more as goals than tasks - things to aspire to rather than things to do.
It turns out that there is a level between non-actionable ideals and today’s todo list - I think it may be the level that David Allen (of Getting Things Done fame) calls the 30,000 feet view. There are higher views which are things like “be a great father” - but these tend not to be particularly actionable - they should just shape the levels beneath them. I’m talking here about the top level of tasks or todo items
One of the tasks on this long term (5-10 year) list (when I made it at the end of last year) was become an investor.
The problem with making these kinds of lists is that I am also trying to train myself to Get Shit Done(TM). This sometimes results in extreme failure to procrastinate.
So it turns out that the opportunity to become an investor came around sooner than I expected.
But that’s the point of 10 year plans right? To do them this year?
Anyway, here are some lessons I’ve learnt through the process of making a small (£5-figure) investment in an early stage (but profitable) startup:
I’m going to write more about what this means for Distilled - it changes nothing dramatically, but it’s exciting and I hope it’s the beginning of a lot more excitement…
(Note that technically, it’s Distilled making the investment - I’ll write more about that later too).
“For every person who comes in here talking about the team they’re going to hire, there are 3 others out there that DID hire people”
~ This post (via randfish - the “best post this year on entrepreneurship”) contains loads of the kind of advice I need to include in my talk.
It looks as though I’m going to be giving a talk to the ~500 or so students leaving my old high school this summer. I’m going to be talking about business lessons I wish I’d known when I left school. I’d love to hear others’ ideas for inspiration (one of the lessons is that using other people’s ideas for “inspiration” is fine after you leave college!).
I’ll probably post some here as I go along. The first few I’ve come up with are: