If you work day and night to get a product out, and then a CFO slides in above everyone on the team, and on top of that they're a cheapskate, that sends a signal.
Much like a single cockroach at the entrance of a fancy hotel isn't by itself a problem if it's limited to exactly that cockroach...
> The engineers focused on building product never noticed when the company had grown into something different than what they first joined.
> The sodas were just the wake-up call.
There is a large sign next to the cage.
There is a stick on the ground.
> read sign
The sign says, DO NOT POKE THE BEAR
> get stick
You pick up the stick.
> poke bear with stick
Despite your better judgement, you poke the bear with the stick. The bear rouses from its sleep.
> poke bear with stick
With a terrible roar, the bear turns on you. Reaching through the bars, it tears your arm off.
There is an arm laying here, holding a stick.
Ontopic: I wouldn't give a shit about soda or free soda, but coffee and tea is always free here for employees in my country (quality may differ!). I simply would not work for a company which wouldn't feat this. So the social norm defines it and keeps its own behavior status quo. That's also a reason why its difficult to get rid of smoking/smokers tobacco in society
Same with “HR types ruining the culture” and “middle managers running amok.” Those people all get hired to transform the company, because leadership has decided some thing very fundamental: What got us here, won’t get us there.
PG once wrote that startups should frame their reason for existence as “trying to answer a question.”
Famous questions of the past: Will microcomputers sell? Will people pay a premium for bit-mapped graphics and a mouse? Can advertising sustain a search engine? Will the world use a social media web site built for college students?
But at some point, you know the answer is “yes,” you know that a sustainable business is possible, and you are no longer a startup. The difference between “answering a question” and “running a sustainable business”is vast.
Maybe killing free soda is not the best way to start the transition, but one way or another, all the people who want to explore the unknown, test their visions, and answer questions are going to leave, to be replaced by people who enjoy playing the world’s most cut-throat, high-stakes engine game, business.
If you truly enjoy what a startup is and how it works, you need to pack your parachute long before the free sodas go away. You need to pack your parachute when everyone realizes that you are no longer wondering if your company can become a real business, the only questions are how, when, and who.
On the other hand, maybe you want to build a real business once you know it can be done. Gates did. Jobs did. Long before them, Ken Olsen did at DEC. If so, accept that the sodas will eventually go and the controls will be imposed.
There is of course the third category like Google whose solution was to stratify into a caste system where your core employees maintain some of that original culture while most of your employees are contractors you treat like shit.
There are companies that make a lot of money and grow both organically and via acquisitions where people have a well-defined culture that attracts top talent... But it's a different kind of talent, it's the talent that enjoys building a lean, mean, money-making machine.
Historically, ITT was one of those companies during the Age of Conglomerates. Later on, IBM and Xerox come to mind. I recall that during the 80s and 90s having worked in management or sales for Xerox was a golden ticket to almost any job you wanted. Same with working in finance for GE.
What about working in management at Disney today? What about working in leadership with Apple or Amazon today? These are very well run companies with a strong management culture, growth, and profits. And investors love them.
That's a distinction without a difference.
it's the talent that enjoys building a lean, mean, money-making machine.
Precisely. You start a company as a problem-solving customer-pleasing machine and it becomes a money-making customer-exploiting machine. The ideal world for the MBA is one in which your customers hate you just not enough to stop paying you.
Curious, are there good examples of companies that were able to delay the "pick 2" problem for a long time?
Im assuming such company would need to be a dividend-paying machine bc otherwise the profits would go into retained earnings (vs staff growth or R&D expense, etc) and that would make investors really unhappy.
My informal model of startups is that they're business that are bad at any one specific thing they do (or at least, not-necessarily-good), but are good at quickly iterating between different business models. Edge cases (all IMHO):
Uber is still a startup because they have huge unresolved inefficiencies in their core ride-service model and are looking for ways to best make use of the network they've established.
Amazon is not a startup because they have a steady business model that enables long-term production at scale. They certainly enter new markets and offer new services all the time, but do it much slower than a startup would (and often do it just by buying a startup). Same logic for Apple (not that anyone was saying otherwise).
Quibi was not a startup because, from the beginning, they locked into a specific model and were slow to iterate.
"A startup is an organization in search of a scaleable business model." When the company moves from exploration to execution, it is no longer a startup.
You can’t even say that it doesn’t work, because it’s how every major company operates. On the flip-side, it’s not like Coca Cola has really invented anything of worth for like a 100 years. So while bean counters are financially good for investors, they are probably pretty terrible at running our society, because it’s the engineers that actually build things and the founders who come up with the saleable ideas.
Anyway, if my career has taught me anything it’s to do your thing. Being part of the transition from startup to enterprise can be a lot of fun as well, so long as you know that you can’t really fight the MBA types and win.
I don't think the soda cost per person would be different for 20 people though, so it seems a weird thing to raise the eyes about.
Basically: who cares, the company will live or die based on products and funding rounds, and you're just trying to make the company not die at this stage.
But to an established company trying to make money, 0.7% of revenue is a huge (seriously, huge) line item in a CFO's accomplishment list. Consistent profitability is built on a long, grueling ladder of tiny incremental bean-countings. And to an established company trying to make money, that's where the focus turns. And those are the employees who get rewarded.
It's not that either side is "right", it's that they have opposing priorities and that growing companies need to manage that tension and not just give in to the temptation to lock the soda machine.
Ok, that seems pretty weird right there, 0.7% overhead of an early stage startup is now 0.7% of revenue even though we agree it is just increasing as the same rate of hires?
In other words while each new programmer hired will drink the same amount of soda as the others it should be evident that the percentage of revenue would be decreasing, otherwise they have some serious problems that getting rid of free soda will not fix.
Think of it from the management perspective. It’s not about the soda, it’s about the “we’re giving this middle manager $1million a year to pay for his/her employees now, and we sort of don’t know what we get in return”. In startups nobody has time to think about that sort of thing, you simply do what’s necessary to get stuff done, and, the amounts are smaller. As size grows, so does the perceived need for bean counters.
I say perceived because I’ve never personally experienced a company who didn’t go that road, so I can’t say what would happen if you continued to trust all your employees and middle managers rather than start monitoring and structuring them, but I do know that a lot of the business intelligence and documentation systems that I have seen showed little actual value once they got disrupted by covid and everyone working from home.
Not a good sign for any company.
Many business decisions are heavily influenced by this dichotomy in accounting.
The no free sods is just a rules for thee but not for me situation. Do you think the exec floor with the said CFO no longer has free soda? Of course not. The execs have free soda, coffee, donuts, meals, open bar, beer, private jet reservations, wine and all kinds of other extravagances.
The company is either broke, and can't afford soda (so it probably won't afford any raises and bonuses), or it's trying to save money on meaningless, cheap stuff (and will try to save money elsewhere... like on staff and wages). To me, this is a signal to slowly leave.