 I'm going to go ahead and introduce our next speaker. This is Matthew Eppelsheimer, Matthew studied politics at Whitman College before an early management consulting career facilitating strategy for public agencies and private nuclear waste cleanup contractors. He's developed with WordPress for 15 years and Helmed RocketLift, a Portland-based agency that built software for impactful organizations. Matthew joined TenUp as a senior web engineer in July 2018. His passion for applying user experience design plus his mix of technical know-how, entrepreneurial creativity, and experience with channeling conflict into collaboration and high stakes risk management contribute to his ability to work with complex systems. Matthew's recognized for integrity, compassion, openness, rigor, and building others up. All right, here's Matthew. Hello, thank you. This story begins in a bathtub. This is the part where I find out if the technology will work. There we go. It's January 2011. I'm a 28-year-old young man. I spent the last decade since leaving for college out in the world. Now I'm back living with my parents in Westland, Oregon, 10 minutes south of here, trying not to sulk too much in their bathtub. Reflecting on the past 10 years of my life and what happened, I went to college. September 2001, terrorist attacks happened two weeks into my college career. I was sort of woken up to politics, spent most of my college career being an activist and nearly flunked out. I was really excited about anti-war activism. That turned into something instead of reactive pro-active, fair trade activism, working with political structures we have like capitalism to try to make a difference positively within those structures. That sort of developed into a love for local food systems. Food is a wonderful way to make a difference if you focus on increasing access to local sustainable health food because it's good for health nutrition. It's good for the ways in which we stitch community together both at an economic level, local producers and consumers. Having tighter connections is really good for our economies and also sitting down to eat together is one of the ways that we bond as human beings with each other. So I was really excited about local food. The first thing I did out of college was work to start a local food co-op, a health food store, because of those interests. I was sort of a social justice warrior before that. It was a term that was uncool on Twitter. And my education, along with a few other things, Boy Scouts growing up through church youth group instilled in me a drive to try to bring about more compassion between human beings in short, equality, cooperation, those kinds of things. The food co-op project didn't work out. We got a lot of great education. It was ultimately a failure, but we learned. I learned how to work with people, how to raise money, how to think about big project budgets, managing risk. And when that didn't work out, also, I did a side gig to make some money because it wasn't paying the bills for a while, where I hooked up with one of these painting companies that works with college students, and they give managers a really intensive business education, lots and lots of hours of seminars on how to recruit, how to train, hire, fire, how to execute on the operations of business, happen to be painting. But I got this really excellent practical MBA. Never made any money, but my clients were really happy. Along the way, I had fallen in love. I was making a life for myself, and nearly got married. This was all in Walla Walla, Washington, and I went to school. Life was really rich, and I thought I had sort of figured things out on what I was going to do. But when that co-op project failed, and that dream fell apart, and it was really starting from scratch, and it failed, by the way, because we just weren't the right people in the right place at the right time. We didn't have the right resources. But I had learned a ton, and with a fresh start in 2009, I'd always kind of envied my friends in school who had learned PHP and HTML in the early 2000s, and I thought, well, I'm not bad with technology. Let me try this out. Got some books, got really excited about Juma for a little while. It was object-oriented, and that was clearly the future. So I was late coming to WordPress. But I started freelancing, and did that for about a year before a job that I had applied for a year prior called me back, and I started this management consulting gig. And I promise this is all relevant as prologue. So I worked for a year at a high stress, high stakes, very pretentious organization that flew me all over the country, helping facilitate risk management planning conversations between regulators. And so I got a taste for thinking at a systems level, trying to work through complex problems. And the day that I got fired from that job was up to that point the best day of my life, because it was a really toxic workplace, like really horrible for me personally. They didn't like me. It was a bunch of abusive alcoholic managers in their 50s who were sad about life and took it out on their young juniors. So I was really glad when that was done, and I was glad for the perspective that I had. And I was excited to get back to web development and freelancing, because I'd never wanted to be an employee again. And about a month into reconnecting with the web development community, I discovered this great agency, and when they offered me a job, I jumped at the chance, even though I was a little hesitant to be an employee again, because it was a fun group of young peers, slightly older than me maybe. And I began to believe when they hired me into a sales role, because I was rusty and they were doing super advanced work in real time web technologies that were really bleeding edge at the time. They hired me in a sales role to help them develop a product that six weeks in, they cut because they were having a bad couple of months, and so I was laid off. And so my bags were packed, I had given notice in my apartment in Walla Walla, I was gonna move to Tri-Cities for this job, instead I drove to Portland and moved back in with my parents. And was in this bathtub for a month trying to figure out what to do. But I knew that if I couldn't work at that team after a month, a friend of mine actually gave me some great advice which I also recommend if you're ever in a similar situation. If you have the luxury to do so, take a month and don't think about what you wanna do next, just unwind, take a little vacation, that's what I was doing in the bathtub. And after that month, it only took a few days of thinking and I knew what I wanted to do. I couldn't be at that company that I just left, but I could start a company like that. I had the stuff, I knew what to do. At Rockleaf's height we had eight people, we had people in digital marketing, design, development, systems administration. We had over 50 clients in our seven year run. We did projects in the small single digit thousands, up to years long engagements that totaled hundreds of thousands. We designed and created some really great modern web experiences for clients at the forefront of WordPress and web technologies. And then we called it quits after seven years. One of the hardest things I've ever done and also a very good decision. So now you know the prologue and why we started. So this is the story of how I grew Rockalift, some of what I learned along the way, what we did well, what we did badly and ultimately how and why we decided to end it. And let me tell you, putting together this talk has been a weird exercise. First of all, you can imagine this is me having to really wrestle with my ego, keep it in a corner, stay in the cage, shame, stay over there. And we're talking about seven years of blood, sweat and tears here that ultimately didn't work out. So I'm grateful to you for being willing participants in my catharsis, processing and sharing the hard one lessons learned here. So much of Rockalift's experience is really about me and it's highly personal. So the lessons I learned are about compensating for my weaknesses, utilizing my strengths better. So highly personal that it's been, I hope that you find this useful directly in some way, shape or form. But all of what I have to say is really just my soapbox, I decided to just go ahead and tell you my story. Some of the opinions I have may be wrong. I may have over-learned some lessons, over-corrected, that's possible. Some things I'm gonna tell you, certainly some of you already know and you're gonna be thinking at times, yeah, duh, I think you in advance for keeping that to yourself. And unfortunately I don't have time to dig deep into any of this, so this is gonna be a bit of a crash course. But you can trust that I have put it, nothing in this talk that I'm not confident is true, even if I may be wrong about some things. I'm not gonna have time for questions, this is gonna be a bit of a whirlwind. So I'd love your questions, please talk to me at the after party, let's be friends. And also you'll be able to email me or tweet at me if that's more your style. So in the beginning, RocketLift was just me. This was our logo, I made it myself, I'm not a designer. To drum up business, I went to local business networking events here in Portland and I tried to sell advanced white glove services, that's what I felt like I could do. If I only got the sales, I would be able to put together a team that could deliver, it's what I wanted to do. But my perspective customers were mostly small, they were all small family-owned local businesses who didn't need any of that. They all provided non-digital services to their markets, they really just needed websites that didn't make them look bad and told you how to contact them. I didn't have a network to draw on, no connections really. So it was a real struggle to find the right customers. But I impressed enough people into giving us a shot and gradually got better at directing energy into where it was actually useful going where the customers seemed to be coming from. And even those early small projects were enough to slowly grow our client base. So started hiring that team, supplementing my skills and it was all about supplementing my skills. I didn't wanna do everything, I wanted to just focus on leading for the most part. Which, so first takeaway, I actually strongly believe that that's a mistake if you're doing technical services, you should have your leadership of the company be highly proficient as much as possible, especially in early days if you're starting something small. If you're thinking of freelancing, be great at WordPress before you decide to make the jump to start hiring because you're gonna have to do a lot of that work yourself for a very long time before it's gonna be economical for you to get completely out of that. Didn't know that, wish I had, you know, somebody had told me that at the time. Our first hire was Matt Pearson, good friend of mine from college. As I described these early hires, pay attention and see if you can pick up on any patterns. There will be a quiz in a few minutes. Matt was our systems admin, I could write code, deploying it and managing it was not something I wanted to do, so he did that, he was great at it, and he also served as a kind of internal support for IT, so I became a lot more productive, goal achieved, and Matt is also a walking encyclopedia of technology, his breadth of understanding of the technologies that we work with far outpaces his familiarity with actually implementing them, but that gave us a skill early on that we could really talk big, and we knew what it was gonna take to us, like we knew the people that we could plug in to deliver on projects, so we started to sell more high-end things. Our next hire was a web developer designer, friend of mine, she had some formal design training, awesome, I didn't have that, more fun encoding experience than I had, awesome, gold star for me, like the putting your ego aside and working with people that are better than you is absolutely essential in business. Did some pretty great things on behalf of our clients from a design perspective, but you know how some people burn brightly and they're kind of unstable, and she went through sort of a personal breakdown, a bit of a hot mess for a little while there, and we had to fire her because she just wasn't showing up to do the work. Freelancers, if you make the transition to building a team around you, you're rolling the dice, because when you're tiny like that, this is one of the ways the odds are against you. Sometimes it's sunny weather, sometimes there's a perfect windstorm, and the smaller you are, the harder it is to weather a storm, so losing somebody, losing your third hire abruptly really kind of set us back in a way that if we were a larger organization, we would have been able to weather. We found another designer, we found time to redesign our own brand and relaunch our website, and with a more professional logo, we started to get the attention of businesses that we were much more in our league of what we were looking for. Companies that actually had a marketing budget and were prepared to pay us on an ongoing basis to help them out. Appearances absolutely matter, you got to be ready to show a positive professional face to the world if you expect callbacks and people to find you through just organically. Our next hire, and remember you're looking for a theme here, you're looking for a pattern, was my brother. He and I are super close, I was looking for operations help and he had just graduated from a business school, he had a BA and this like super weirdly advanced program that was supposed to be all the rage, particular theory of how to manage businesses and he quit a couple months in because he discovered, he didn't know, that he really just didn't enjoy being behind a computer all the time. It wasn't for him. He's currently in medical school, he's found his path and it's much different. What's the theme? Nobody's figured it out, shout it out. Friends and family, yeah, that's right. Recommend not hiring friends and family as a general rule, let alone don't make all of your hires friends and family. A few years later, this is a picture of most of our team out to dinner after a quarterly. All lovely people, all talented people, like qualified I would highly recommend, I have and I would continue to highly recommend them to others for the jobs they did for us, but all of them are my friends and right to left that Shenoa, we were friends from a previous job, not so bad, we had worked together, we wouldn't have wanted to work together if we didn't know that we could already, but because I was not writing your paycheck, so that introduced a new dynamic which was different and so being friends was different than it had been before. Doug, a best friend from high school, Matt, a best friend from college, Catherine, my girlfriend, could have ended badly, but didn't. We just got married about three months ago. Most of you, I hope, don't need to spell it out for you, but someone probably does, so it's worth saying that romance in the workplace, especially when there's a boss employee power dynamic, is extremely problematic due to potential conflicts of interest, issues of fairness between romantically favored employee and everybody else, whether that's perceived or actual, potential for abuse of power, potential for nepotism, I mean, you have to take my word for it, believe me or don't, but we avoided those problems, but everybody at this table was aware of that dynamic and it complicated things in a way that, that was just one more thing we had to deal with, kind of some cognitive emotional overhead that in an ideal circumstance, that wouldn't have been the case. Because of course, if you know that your coworkers sleeping with the boss, they're gonna have more influence, and so I'm not saying this to tell you how to make it work because I'm saying, definitely don't put yourself in this position if you can at all avoid it, but we made it work by having a highly structured process with open discussions, like there were clear channels of communication that didn't involve me to make sure that if anybody had any concerns that they knew how these could be dealt with. So I think we did it right, but again, I'm not trying to defend that it's a good idea. And here's really the problem with employing friends or family that's separate from how talented people are, is you can't have the most talented friends even and employ them and not screw up accountability in your company. Firing people was so far from a possibility in both my mind and in the employee's minds, and I hate that there's this fear sort of basis to what makes hierarchical relationships work in capitalism, I hate it, but I also recognize that hierarchy at least can be healthy if you get it right and you approach difficult conversations with decency and compassion. A lack of accountability in the workplace is never healthy. Our fondness for each other, all of these people kept us from pushing each other at times when perhaps that's what we really needed, and that went both ways. I didn't get critical feedback that I probably could have used at a really hard time giving critical feedback to my team when they definitely needed it. Things that are as simple as, hey you, when you do this, when you do blank, then blank bad thing happens, I needed to blank so that blank instead, those are simple conversations with people that you don't have a lot of emotional history with, and I couldn't, maybe it was partly me, I just couldn't be direct like that with my friends, I was too concerned about roughing up feelings even a little bit. So the quality of our work suffered because we had some just endemic issues that went on for years, nothing crazy, but just bad enough that our work quality wasn't as good as it should have been. At one point, things had broken down a bit between me and one of my team, and I took them out for drinks and had this really awkward conversation where I said, I need you to give me permission to be your boss, because I've never been your boss, not really, and that conversation was difficult, it was critical, took a few months before I got a, yes, okay, you can be my boss, I understand what that means and how things need to change, so it's not ideal. And I could go on for a long time about this topic, but I'm gonna stop here, but we're hiring friends, it's easy to do, we compartmentalize, we have our social life with people we love spending time with and we have our work lives, and sometimes that can be difficult, and I mean, who here hasn't had a conversation with a friend, a good old friend, and say, man, it'd be so great to work together. But, so it's easy to fall into this, but, and this slide doesn't say never do it, it just says, that would be going too far. What's important, if you're gonna hire your friends, you have to maintain the potential for you to fire them, sucks, but there it is. There's no one right way to run a business, there's lots of trade-offs and competing philosophies can both work, but a few things I can say for certain, hire friends if you can help it, here's number two, you need to be good at marketing, and we never were, and we, eventually we're selling ourselves as a marketing service agency and we always struggle to market ourselves. I started going to local business networking groups, I mentioned, and I was talking to the wrong people, way over-selling things they didn't need. What works, I think, if you're gonna do this is you have to have a book of relationships already or hire somebody in a sales marketing role who does and who can provide that for you. If you're starting from scratch, you have a really tough road to have to find your clients. Another thing that's really hard is differentiating yourself. I knew this, but we never quite, we tried to not just be a WordPress company, but we never really quite got there, I talked about it a lot. Here at these kinds of WordPress-oriented events, we're all excited about WordPress, but your clients probably don't care. So don't let your takeaway from events like this be I need to talk more about WordPress because WordPress is great. I've never been shy about saying that, from the very beginning, RocketLift was trying to compete with my now current employer, TenUp, who has enterprise clients, and that kind of client definitely does need to hear about WordPress because that's what they need, they know it, they're seeking that for their publishing platforms. They look for companies talking about that, but just talking about how good you are at WordPress alone doesn't mean that those clients magically appear because they're not where you're saying that, if you're not where they are, does that make sense? You also need to be in those conversations with those people in the first place. I figured out way too late how to do that. What to talk about instead of WordPress? I mean, that's a whole other presentation, but just quickly, whoever your client is, they probably don't care about open source, even though it's good for them. They don't care about how actively developed the software is, that's annoying. We all hate how many software updates we have to deal with. They don't care about how secure it is. You and me both wish they did, but honestly folks, small business owners have a million things that are bigger risks that they rationally should be worrying about instead, so that just doesn't sell. They just want people to find their business, to not look stupid, to be able to find their address or their phone number, be found where people are searching for them, et cetera, so those are the things you need to sell. Again, I'm bad at this, but I think talking about it in terms of, hey, we fix broken publishing experiences, that's a good lead, or we help you tell your story, that's a good lead. We provide complete digital marketing, that's a great, very highly valued service in our economy, those are things to say instead. And by the way, we did make that transition from a WordPress agency to a digital marketing solutions company, and that was one of the best things we did. Some of you must have noticed this, your friends that run SEO companies give away WordPress services, it's like a loss leader for them, they hire developers to crank sites out, and then they get people on programs where they're subscribing to digital marketing services, pay-per-click ads, Facebook management, content management, stuff like that. We realized we just were not competing, we were selling like website builds for what it costs us to produce them, and then that was the end, so we were showing up and saying, four, 45 hundred bucks or so, up to a lot more than that, depending on their needs, and then you're done, and then you can pay us to do other things if you want instead, and they were also getting presentations from competitors who were saying, you're gonna get a free website, it's gonna do all these things, it's gonna be WordPress, and I just sold them on WordPress foolishly, and also you're gonna pay us like a hundred bucks a month, and we're gonna forever, and we're gonna sell you crappy marketing, they bought that. You can do that more ethically, you need to charge them a lot more for that service to be actually truly valuable for them, but that's what we started to do, worked really well, and we should have made that transition earlier. This is a much better business to be in than just being a WordPress agency. So favorite worst ever client story, I was all excited to show off my chops with responsive design when nobody had really heard of it yet, outside of developer circles, and a client needed the website to look good on a phone, and so I was like, I know how to do that, and I spent a lot of time getting this responsive layout for the site that looked very different as it was supposed to from the desktop. I freaked out because what Jerry wanted was, his value was looking professional, looking like his cohort of businesses he was competing with, and to him that meant what he had seen them all do before. None of them had done responsive design. He was expecting to load the website on his phone and it to look exactly like it does on desktop, which is, forget that it's unusable, that wasn't what he was valuing, that's what I was valuing, it was horrible, but he freaked out when he saw it was broken, it doesn't work, and I'm like talking him through, no, it's doing exactly what you asked for, and he's like, no, I missed what the client actually valued, and I was so angry about it that I had worked really hard on this. Reversing it had to undo some stuff, when it wasn't as good with Git then, so that was expensive, so I sent him the bill for all of this work, and I'll never forget the brutal language he used on that second phone call, which was that I was treating him like a stuck pig that I was bleeding for all he was worth. So I think that the big takeaway here is understand the perceived value of your customers and deliver that, that's critical, it's part of service that I missed, client services, emphasis on the word service, you really gotta do what your clients want if you're gonna succeed in this business. Variations on that story continue to happen in less dramatic and less problematic ways over time, but I did make this mistake repeatedly. And actually, maybe this sounds obvious, but I do think a lot of people make this mistake, I made it over and over again. I think the reason that it was such a hard lesson for us to learn is that ironically, we were trying to hold ourselves to a higher standard than our clients wanted, it wasn't what they wanted, and so we were over delivering to try to be impressive. That does it to service to your clients. I'm a recovering perfectionist. I'll do respect to people in recovery for more serious addictions, but it's a disease, it really is. Brene Brown says that it's rooted in a sense of shame from feeling like you're not good enough, like you have to make it perfect. That sounds familiar to me. If you're a perfectionist and you wanna do well in client services, you've got to see your way to knocking that off. I never did through a rock of this history, I think I've started to get a lot better in the last couple of years, but certainly not soon enough. Again, this is another point I wish I could talk a lot more about, but I gotta move on for time. So one thing that's helped me is to realize that good enough for today's needs is good enough. You have to confront the reality, perfectionists, that no one reasonable thinks that done means perfect. Nobody thinks that. That's what has helped me. If it can be made better, that's what the future is for. Our clients weren't recommending us. Ask anyone at a successful web consultancy. Ask any freelancer who's successful. Where do your clients come from? Hey, where's your new business come from? I don't know, man, referrals. That's the strategy that works. Advertisements don't do it. Go into conferences, I mean, once in a while, but that's not a way to build a sustainable pipeline of new clients. It's all about relationships. Building trust over time through consistent delivery. You have to meet or ideally exceed people's expectations and think and act from their perspective. I think about what you would appreciate if you were them. If you don't do that, what's happening all the time is, hey, friend, I need a great web developer. You got anybody? No, sorry, I mean, I've got these people that I wouldn't really recommend it. They're called RockLift. Do you want their contact information? No, I'm good, I'll keep asking around. That's happening to you if you're not getting referrals, just like it was happening to us, I'm sure of it. And I knew I didn't wanna ask because it was an awkward, like, why aren't you recommending us? Like, we knew. This wasn't all of our clients, but it was enough of them that it was a major problem. We did have really positive client experiences, but they were in the minority. So why did it take us so long to sort of figure this out and turn the ship? We tried, we honestly, we were getting better the whole time incrementally and that was a point of pride for me, but it just wasn't good enough. You've gotta learn fast. And another issue specifically holding me back was impatience. Remember this goal that started the company? I was doing all the client service work, not as the end in itself, but a means to an end. And our minds and my entire team's mind because I had sold everybody that and recruiting that our whole value was to get to where we were doing more exciting, fun stuff. I'm not saying don't do this because it's possible to do this, but just be cautious. Don't assume you can skate by on substandard delivery to pay the bills until you build up enough. You can only do that for so long before everybody giving you a shot isn't recommending you. You gotta put first things first. If step one is supposed to lead to step two, make sure step one is solid, let alone steps three, four and five. That's the foundation for all of it. So don't take it for granted. Again, I do know that it's possible to do this well. Amazon is a perfect example. They were really, really good at selling books and nothing else before they branched out into selling everything and then taking over the world of managed IT services that we now call the cloud. They had a vision, they executed it well before they moved on. So focus. In moving past the foundation, we got into this dynamic where we were like clients made us really anxious. I was afraid of stuck pig Jerry conversations happening over and over again. I became afraid or at least offensive with just about all of my conversations. Meanwhile, we had this sort of syndrome of we were really excited to get to that dream of working on our own products when we are only gonna have to be answerable to ourselves. Any upset customer that can just unsubscribe, there's gonna be thousands more, we'll be fine. We imagine that every problem we would have would be solved and I think this is a really common dream amongst small client consultancies because it's really hard to do consulting and you wanna get to this dream. So that was a sort of self reinforcing sort of tailspin. By the way, if you are a consultancy trying to transition to being an in-house product company and honestly who isn't everybody I know has that dream or has had that dream at some level, at some point. Definitely I have a lot of opinions about that that I can't get into but I'm confident that WordPress services are not the way to do that. I don't believe it's feasible period because of the margins in our industry. Ask me about that later if you're curious, very important. Probably most people don't need this but I think I'm in the 99th percentile for like focused challenged people. If you're an entrepreneurial type, if you're excited about the idea of the week, then you're something like me and probably struggling to become very good at anything. This is my own personal most important takeaway from Rocket Lift is if you don't focus, you're spreading yourself thin. Think about every discipline in this room represented in how many skills you have to have, how much knowledge you have to have in order to be truly good at your craft and if you do try to do all of it, you're just gonna suffer through mediography and not get anything done. If you focus and apply yourself on doing one thing well, you can actually proceed. So there's a kind of a discipline that I lacked as a younger person. Focus sucks, it's hard, you gotta do it. There's this great Vanity Fair interview that they did with Johnny Ive, the lead designer at Apple. They asked him what he learned from Steve Jobs. It's a really great segment on YouTube, look it up. But he said what focus means, this is coming from what he learned from Steve Jobs, is saying no to something that with every bone in your body you think is a phenomenal idea and you wake up thinking about it, but you say no to it because you're focusing on something else. This is one of like one or two things that separated Rocket Lift and Apple. Consulting is a pretty tough business. If you're freelancing, I generally recommend against starting one at all, honestly. The odds are against you. It's not a good bet. It's probably not gonna work out for you financially. And here's why, freelancing, if you have a string of bad months in a row, because you balance these variables of your salary, billable hours, and your charge rate, if your charge rate suffers, you just make less money. But you can not necessarily go out of business if you're only supporting yourself. Your overhead is relatively fixed, not too bad. You can afford to do this for a while if you have to. This is a developer's market. If you're qualified, you can be well-paid. And by that, I mean, from the perspective of somebody managing a company's pay, it means very expensive. Being fast and loose here with these statistics, a lot depends on geography, years of experience, specific programming skills you have, and soft skills, collaboration, self-direction, skill acquisition, meta skills, things like that. But let's just say you probably need to offer a well-qualified person at least 60K to attract them to just be a competent developer who can do your WordPress work without a lot of supervision. There's a few ways to do this. One is to go with somebody less experienced if you can't afford those $60,000 developers, because you can more easily afford their salary, but expect that if you do that, your billable hours are gonna plummet because you aren't hiring somebody competent. You now have to spend a lot of time not only training them, but overseeing their work and redoing it and correcting it and going through multiple iterations to get it right. I figure there's a one-to-one ratio at best of senior developer time to junior developer time. If you're trying to train somebody in your company's processes, if you're tiny, and if you hire somebody to do 20 hours of work a week on a part-time basis, now you've got a 20-hour-a-week job that you didn't have to get it right at least, and that's optimistic, honestly. We didn't, we did this both ways. We hired people that were cheap and needed a lot of attention. We hired people that were expensive when we could, but this means working 70-hour weeks to do that supervision work, and it takes months to get to a point where people brought on are actually lowering your billable or improving your billable efficiency. Really want to emphasize, profitably support $75,000 in new fixed costs. That means bringing in like $100,000 worth of work to have some profit left over after all of these costs. So you can contract, you can go with employees, that's a whole other thing, not gonna get into it really. The downside of contracting is you're not actually building a team in the long run, unless that's explicitly part of the conversation. You hire contractors because they're excited to eventually join your team. What's different about the economics of a one employee consultancy? What we've added is the employee's salary, which is a new fixed cost, plus investment for growth, because now you're having to think about adding equipment, your computer, you're gonna be spending probably another $300, $400 a month on SaaS services if you're like most companies that I've talked to per employee, and fully loaded amortized costs if you're planning ahead. The problem here is that you can no longer afford $0 in income, you can drop your salary down to zero if you have to, and if you can afford to do that for a while, but if it goes any lower than that, you're sunk, you're out of money now and you have payroll you have to make. I need to like write a book to get all of the words that I wrote for this presentation out into the world, so I'm gonna skip over most of this because of time, but let's see what jumps out of my notes that's worth mentioning. Something about the first few bullets, especially how your efficiency calculus changes, more people means more communication in every sort of sense of the term. The healthcare.gov fiasco from several years ago is a really illustrative point where you had very expensive, highly utilized teams for the back end and the front end of that application that were not communicating about how they were gonna interface, how their codes can interface, so you had them both delivering products that were expecting the other half of it to work completely differently. The more people working on a thing, the more time you have to spend and your billable rate goes down because of that communication time and you're probably not ready at that point if your billable rate has to go up to make up for the more time you're gonna be spending, you still have to charge enough to pay for these people's time, you're less efficient, your clients aren't ready for that increased cost and if you're lucky you've planned ahead and your pipeline has been targeting higher clients that are expecting that, but you probably haven't gotten around to being able to successfully do that, this is an incredibly difficult transition to get to stick. There's just no economies to scale here for growth from one person to two to three people, there is economy of scale there, that's good, but somewhere between three to five people, you hit this point that doesn't end until somewhere between 15 to 20 people based on a lot of time I've spent with spreadsheets where there's just no profit, you're in this dead zone, dread zone of more risk, more stress and no profit. Here Catherine and I are on a beach in Zihuataneo, Mexico doing the remote life thing, we were travel blogging, I think what was going through my head at this moment on the beach was how many things were falling apart, I had a developer quit on me, we were in a town where the entire town's internet was out for a day, the Pino Colada didn't taste so good when I was only drinking it because it was the only thing I could do because I didn't have internet and I had clients freaking out on me. It's really, really hard to do this and that's what ultimately really killed RocketLift was the finances, this is what makes me envy the luck of every competitor that we have had. Goodness knows we could have put ourselves in a better position to weather the dread zone but I also know that for our competitors even the best of them, the most professionally positioned and the most capable, they also might have fallen victim to this dynamic if they had had worse luck in their early days. It's just a reality, you're rolling the dice and this is why I'm saying freelancers, it's a bad bet, I would say don't do it. Everybody I know who has done this is either they haven't grown beyond six to eight people, maybe they did and they've contracted back to where it was working or they have gotten acquired, yay, or they're currently trying to grow and struggling like we did for seven years or there are a few winners who've made it over 20 people and they now command our market and all of those companies by the way, I'd love to know some exceptions, I could be wrong about this but everyone I'm aware of started before RocketLift did. I think the ship has sailed, I think that we were too late to this market to succeed in it and it's certainly not gotten better for somebody trying to start today. So starting a business with this model is a gamble. What did we do right? Fundamentally we did really good work. We tried to structure this like a big company for growth. I got a lot of positive feedback from a lot of business mentors and coaches and trainings about how I was doing everything right, structuring our company for success over the long term. Clients really appreciated our systems thinking approach, our holistic view of things, our creativity. We rarely got to apply some of those creative strategies because of marketing, but we were a good team coming up with a really creative strategy for folks. We had a really strong executive process. Everybody who wants to run a business should read Entrepreneurs Operating System by Gina Wickman and this is, yeah, by Gina Wickman. Did I get that right on the slide? Traction, get a group on your business by Gina Wickman. It's called the Entrepreneurs Operating System. It's what we used, it's fantastic. It really allowed us to systematize our leadership in a way that was sustainable and made things better. Our vision and our values were real. We were a great place to work. These are the values. More companies should do this, not necessarily these values. I'm not gonna read all of them, but the first one just to give you a sense. We build just communities and nurture individual freedom to promote a better or more vibrant world. Be brave with your values expression, take your time to identify what they truly are for you. Craft and re-craft the wording until it's clear and it feels real and is inspiring to other people. If you don't get people wanting to work for you because they read your value statement, then you're not done yet and it's like really getting it right and being a place that attracts people because you're doing exciting work and then preach those values and definitely live them, most importantly with your actions or they're worthless. What do you actually care about? What do you actually want your time here to bring about in the world? Figure that out. Last couple of bullets here, great place to work. We took great pride in being on the cutting edge, great group of friendly, hardworking people because of those values and we cared a lot. Why does that matter? Because it's fulfilling. People care about fairness a little bit more than equality in the workplace. They feel like they care about feeling safe at work. We were a fair place and a safe place to work and there's a silly acronym somebody came up with impeach reasons talented employees stay. We were never paid well because of the reasons we've talked about and people knew why and we were transparent and our strategic direction was angled to get people paid well and we didn't always have fun because there were so many stresses with not being a successful company but people were mentored, empowered, inspired all of these other things and these are things that made work great and our turnover was ridiculously low. Like we did not have the problem of hiring developers as expensive and then they leave, we just people stayed because we did these things. You can do them too. We're really all just trying to carve out some comfort here, like dusts, specks of dust we were gonna be on in a few short years. The news is full of hate and trauma and our would be leaders are tearing each other to pieces with millions of dollars on public airwaves. Raising a family, making a living is exhausting and it's easy to fill a loan and I just wanna get along and cooperate with people but I have to devote the best hours of my days and perhaps the best years of my life to selling more advertisements because that's what we're doing and I'm one of the insanely lucky ones. I have privilege for days. Nobody's trying to kill me or kick me out of the country. Life is hard. So I think the thing we did best was to care about people and when you're in a position to do that to make people's lives a little easier, you should. Great power, great responsibility. If you're thinking, okay, that's fluffy. That's not concrete. Let me make it concrete for you. This is, for lack of a, this is a working title, a philosophy. This is what we did and I really believe it works. First of all, get rid of bad actors. They're poison. Then be daring with your values. I already talked about that. Then be an excellent manager and hire only excellent managers. This is the hardest part. What that means is that the manager's role is to build up and support other people. Accountability's in there, but accountability is a part of supporting and building up people, so place it in that context. Practice and coach, honest, direct communication and kind communication. There are management adages that help you assuage your guilt over firing people. Be suspicious of those. They didn't work out. They're not a good fit. This is really in their best interest because they're gonna be a better fit somewhere else. I'm doing them a favor by firing them. Maybe, but your hiring and recruiting process shouldn't put people in your company that are going to fail and your management shouldn't let people fail. So really think about where the responsibility lies. Really interrogate that. If you're just letting people go because they're not working out, then you're gonna continue to repeat that story and you're the bad guy in that story and the people whose lives you've just disrupted by firing them. I don't think we say this enough in management circles, but it's, this was my approach. And empowering your managers to take every opportunity they can to do good and then by centering the team, not the individual, what I mean is make the team the engine of everything. Ask the team what do you think is possible and then hold them to that. What's a team inspired to do? Make that the goal. Don't tell them what to accomplish and then hold them accountable as a group for execution. When focusing on an individual's performance always relate it back to the team. Everyone supporting everyone is what happens when you do that, when you have this ethic. It ain't hard to do really, like this is just do this. It worked, it was pretty easy, I found. Better workplace. So everything I just said, maybe you could write it off because we didn't succeed. Everything I just said, maybe you want to write it off because here I am, a failed business owner. And I have friends in business mentor groups, I used to be a part of who really think that I was too esoteric and I was focusing on the wrong things. We have friendly disagreements about that. I'm so glad and overjoyed to know several companies that do operate this way and are much more successful so our success shouldn't discount and our lack of success should not discount any of what I just said. Really quick. We focused a lot on process and we were in the zone of too much process, which is, the problems when you're there is uncompetitive pricing, stifling people's creativity, driving talent away because people don't like to go through process especially if it feels like it's stifling their creativity and preventing them from doing what they already know how to do. When you're on the other side of this line, the zone of too little process, you have different problems, they're real, they also suck, but they won't kill you as fast. So my advice is to actually leg that line of the theoretical happy line of optimal process or at least mind it because you definitely want to be adding process to automate things that do suck, but if you're too far ahead, that's a danger zone to be mindful of. More seriously, just it's about balance. And there's an art to finding that right balance. I'm already over time and I apologize, but I want to just really quickly tell in one minute the story of how we shut down. We got to everybody together at our quarterly executive meeting in January 2016 and said, what would make this worth continuing to do a year from now? We're all underpaid. Everybody needed to get better income. We all were wanting to start families, et cetera. We set those goals, we held ourselves to them and we didn't meet those goals, so we closed down. That's the 32nd version of this slide that could have been a 10 minute talk. Sorry, so much I wanted to say. Something terrible happened to us in that year, four anchor clients, any one of them that could have kept us in operation. All kept us on the hook for like nine months, earnestly like promising work next month and all four of them for nine months, it just wasn't quite the right timing. We had to furlough people in September. That was the beginning of the end. People started to leave and we tried a bunch of things. We got a lot better having that ultimatum as a fire under our butts made us a lot better. I wish we'd done it earlier, but ultimately closing down was the right good thing to do. Here was the team sort of celebrating that we made a good decision. We're all looking, it was sad, but we did the right thing and good news. At the end of that experience, I didn't sulk in a bathtub because I had already processed it. I knew what I wanted to do next and that is a different story. Thank you so much for your attention. Again, please, at me, at me with questions. Email me, talk to me at the after party. Thanks.