People Costs vs. Stuff Costs

The fascination with Jason Calacanis as muse in this part of the tech industry is curious to me. He’s not particularly insightful while being exclusively self-serving and self-absorbed, but give him credit for being able to stoke a small brush fire with some regularity. At any rate, I don’t normally read his blog or feel much desire to comment on him, until now.

His post about how to save money running a startup is largely stating the obvious kind of stuff, such as buy your people lunch so they don’t go out and put a good espresso machine with all the “condiments”, use gmail, and skip phones. While I think one could do a lot better than Aeron chairs (I gave the one in my home office to our house cleaner, it hurt my back), I am with him on the merits of a good espresso machine (I have a Jura-Capresso S9 machine at my house.)

But it was the general sentiment represented in this tip about not hiring people who aren’t workaholics that was disquieting. At what point do you pause your quest for world domination and ask of yourself what you are doing for your employees? It’s all well and good to suggest that equity more than makes up for a thin paycheck and long hours, but what about helping young employees establish some sense of professional self and experienced ones a broader spectrum of opportunities, develop business skills, build their personal brands, and much more?

The single biggest cost in any tech company is people and the most disruptive component in the people equation is replacing good ones who leave your company. The fact is that good people always have jobs so the only way to get them is to poach them from another company. People leave their place of employment for a number of reasons, including a loss in confidence in management, greener pastures at a competitor or in some unrelated company, money (never alone a motivator, but by itself can easily become a demotivator) and working conditions.

How many people would read this post and think that any company Calacanis is involved with is somewhere they want to work? In the final equation who is to say one person’s management philosophy is better than another, but were I voting with my own time and money I would certainly not buy into the idea that only those who can work long hours and sleep under their cheap metal restaurant table/desk are the only people you want to hire (but as an aside, I am running off for a noon meeting in SF today, a Saturday…)

Fire people who are not workaholics. don’t love their work… come on folks, this is startup life, it’s not a game. don’t work at a startup if you’re not into it–go work at the post office or stabucks if you’re not into it you want balance in your life. For realz.

[From How to save money running a startup (17 really good tips)]

(JN NOTE: there were some strikethroughs in the paragraph above, but it’s not clear whether they were added after the dustup that Duncan @ Techcrunch started or were they original.)

33 thoughts on People Costs vs. Stuff Costs

  1. Jeff,

    Couldn’t agree more.

    One of my major complaints with the “corporate” world is their view of employees as nothing more then a cost to me managed/exploited as any other commodity. To see this same view expressed in the start up world is most unfortunate.

    The founding principle of my start-up is to change this view. I guess our market just got even larger.


  2. Well, the line “fire folks who are not workaholics” was intended to be a little cheeky… thus the use of “for realz” and “post office.”

    however, this has struck a chord with folks and I think it comes down to free will and where a person is in life. There are folks who are coming out of school who want to work hard, build something big and important, and have their stock options mean something some day. There are folks who are “over it” and just want to get home and spend time with their kids or go to yoga.

    Some companies are for folks who are on a mission and who have a take no prisoners approach, other places are slow and steady. I don’t disagree with folks taking the slow and steady approach, I do disagree with them taking that approach in a culture or on a team that is looking to move fast.

    Building great companies is about passion, long hours, and non-stop commitment to making the product better…. at least in my warped mind. :-)

    If folks want to go slow and have balance that’s how 90% of companies operate. However, if you want to take five years out of your career path and perhaps hit the jackpot with your stock options I say “rock on!”

    Now back to work you…. no more blog posts until you double your page views! :-)

    best j

  3. His point about email, phones and MS offal (i mean office) is valid. Though he didn’t mention Open Office and the fact that creating and editing copy in a Google doc is a headache. And cell phone coverage inside Class A property is spotty, at least in Reno.

    I think you are a bit hard on him for the workaholic comment. People get into that business because they enjoy it. It’s not MY business, but you can bet I’m thinking content and social media almost every waking moment.

    He is a fool for stocking sodas in the fridge. No good can come of that.


  4. I understand your point and am torn about work/life balance and that our generation should leave the next with more than we got etc.

    But here is the stark macro fact – India’s median age is 25, ours is 36, Germany’s 43. And young Indians and Chinese are workaholics…

    So I am ok with a 3,5,7 year start of career assignment that is workaholic… Just like the military hires a certain profile – young, brave, I think startups, investment banks, audit firms will always need young and workaholic

    It’s ok to say work smart …but with global realities I am not sure our young can have early expectations of leisure…

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  7. As long as you want to operate your startup in California (or most of the US), you’d better be careful about statements that indicate you don’t want to hire people who want to “spend time with their kids.” Turns out the cost of employment discrimination lawsuits tends to negate the savings on in-house espresso machines and cheap tables (and then some).

    Also, if I’m forced to use my cell phone for business, you’re damn well going to pay for it.

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  9. Jeff,

    Here’s my own contribution to the debate; I seconded your comments on TC:

    The ideal is to create a great place to work. That’s how you’ll make sure your people aren’t concerned with figuring out the exact number of hours that they’ve worked and shutting it down after they hit their number.

    And I agree with Jeff Nolan–you can’t just hire a bunch of warriors and expect being a great place to work to happen naturally (unless those warriors have worked with each other in the past, and loved the experience).

    Work ethic is necessary but not sufficient; grim and joyless will rarely produce a breakthrough business.

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  13. Jeff, right on! I agree with Vinnie’s comments regarding the economic realities of a global market but… nothing and I mean nothing replaces, passion coupled with creativity and a decent amount of intellectual horsepower. I’d stack that combo up against any 18 hour a day worker any time.

  14. This debate disappears if the people who run companies do the sensible thing: measure output, not input. It’s one thing the pharma industry has right. If you’re a scientist working for them, they don’t care if you come into the lab at 9AM or 3PM if you can produce a Lipitor or a Viagra. Bosses who are so paternalistic and command-and-control have issues I can’t help them address as a colleague, which is one reason I went freelance two years ago. Now the only psychological flaws I have to deal with at the office are my own. :)

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  16. I’ve never worked a startup but I’ve had my share of 18 hour days, and still do and the one thing I’ve learned more than anything else “most workaholics” burn our or move on quite quickly, encouraging that sort of an environment does not lead to long term loyalty. Passion is a must for any project but you also have to remember not everyone is going to fit that mold the same way – you have to bring your team together using their strengths and not forcing the status quo.

  17. I agree with Jason. He cares about his employees ability to be exceptionally productive at work- even to the point of buying expensive chairs and a very expensive espresso machine. Anything that doesn’t fit the aim of exceptional production gets cut or marginalized.

    This doesn’t mean that there can’t be work/life balance. It just means that if you want the type of emotional and financial satisfaction that can only come from building something from the ground up and succeeding, you have to be the person who is exceptionally committed to that success. If you are that person, the work/life equation gets blurred anyways because, as someone building something exceptional, you’re finding exceptional meaning in your work.

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  26. The challenge of trying to convert a concept into an actual fully functioning software program or new site is hard for the best of us to comprehend.

    The IT R&D world truly defines the phrase ‘a work in progress’. It takes a rather unique type of personality that can immerse themselves into a project that can seem to never end.

    Its not always the genius that performs best…its the its the creative facilitator type who finds the way to get it done on time, on budget without going ‘Postal’ …. If your lucky enough to find that one do everything you can to hang on to them.

  27. One of the many reasons that I love the world of business is that its NOT a static space. Every aspect of a business, market, technology, or relationship is in a constant state of change. If its not … its dead in the water and soon to fail.

    The learning curve required to effectively manage a n ever changing & growing venture is demanding and in itself a moving target. Good owners / managers must be constantly learning in order to stay ahead of the challenge.

    Smart owner / managers use a variety of information sources to gather the concepts, trends and methodologies that they will then use to provide vision and direction to their associates.

    There is no one author out there in BolgWorld that is the be all & end all expert on how to do things right…. if there was we all would have read his Bible and all our business would be run the same & life would be boring. All any of us can do is find that blend of ideas that works for our own situation.

    Jason is an excellent source of inspiration and speaks from a recognized point of view & experience. But he’s not the only one out there….

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