The Perfect Startup

People in startups often talk about how much fun it was during the early days, when everyone was on the same page and things moved quickly. Speed, transparency, and simplicity can be found in larger organizations, but while they happen almost automatically in a startup, they are harder to achieve at larger scales.

Early days at Automattic

During those fun early days of the “perfect startup”, the team is usually around a dozen people in size: The majority working on the first product (engineers and designers) plus a few generalists to take care of early needs around business ops, systems, and customers.

When startups get bigger, they often hit one or more of these growing pains:
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When a company grows, but the office shrinks

Automattic, a distributed company with over 500 people, is moving out of our San Francisco offices. Why?

The story begins in late 2011. Automattic had about 100 employees with 15 of us in the San Francisco Bay Area and the rest spread around the world. We had a small office in San Francisco’s Pier 38 that we used for Bay Area employees, various visitors, and WordPress events. Then we, along with dozens of other startups, got evicted by the San Francisco Port Authority and started looking for a new space. Since 15% of our company was Bay Area based and we were planning to grow to 500+ people over the next 5 years, we decided we needed space for about 75-100 people. We ended up leasing a 14k square foot warehouse in the SOMA area of San Francisco and renovated it into a fantastic space for both co-working and events.

Then something unexpected happened.

Automattic did indeed grow to over 500 employees, but the number of Bay Area based employees never got above the 20-30 range. The company scaled beautifully, yet we never needed all that new headquarter office space. We did use it for many events, including a week long all-company get-together in 2013, but in terms of co-working we never came close to growing into it. So when the time came to renew our lease, we opted out and will move out soon. We might try a co-working space next or find a much smaller office, more like our old Pier 38 space.

Why did this happen? There are a few factors that we failed to take into account:

  1. Even when we hire people in the Bay Area, some will move away from San Francisco, or no longer want to commute even if they worked in San Francisco before, once that commute becomes optional. For example, of the current 32 Bay Area based employees, fewer than half come into the office on a busy day.
  2. International growth has accelerated as the company has grown, with our US versus international mix going from 65/35 five years ago to approaching 50/50 this year (!).
  3. We planned to use the headquarters for a lot of team meetups, but hotels and rentals in San Francisco got so expensive that it was cheaper to hold meetups elsewhere despite having “free” office space in San Francisco.
  4. Employee turn over in San Francisco ended up being higher than elsewhere for us, 9.6% in the Bay Area versus just 4.4% everywhere else. I won’t speculate about the reasons behind that gap, but it has obvious cumulative effects that we didn’t anticipate.

I’m going to miss our awesome space in SOMA, but it’s the right call to go smaller. If you are building a distributed tech company, I’m guessing you might see a similar pattern where your initial employee growth is higher near your headquarters and then gets more and more distributed as you get bigger. A good thing to keep in mind when you do your office space planning!

Related Reading: Why True Ventures doesn’t believe in geographic limitations either on the True Blog.


Why I think “Marketplaces” are not just software, but a human opportunity


Many people are worried that software automates human jobs out of existence. But not all software is like that. There are software businesses that have created many thousands of new jobs, and not just jobs at software companies, but new, independent jobs for people all over the world. These businesses use software to create marketplaces, and on those marketplaces sellers of goods and services can thrive: Hundreds of thousands of small businesses who sell on eBay or Etsy, tens of thousands of bands who sell music and merchandise on Bandcamp, tens of thousands of designers who sell web site designs on WordPress, to name a few. This is software used for a great purpose, to attract a large group of buyers and then open up that aggregated buying power to third party vendors instead of keeping it all to yourself. It’s the digital equivalent of using the town center to open a farmers market instead of a box store.

Let me dig into WordPress as an example because I know it well. WordPress helps people create and run web sites and currently powers over 27% of all sites on the internet. The design, building, and hosting of all those millions of sites has created tens of thousands of jobs for WordPress consultants and businesses – good jobs that pay well and can be held anywhere. Those jobs exist because WordPress is an open platform designed to let anyone participate and offer their services. The software itself is not that different from other web site tools – Blogger, Wix, Squarespace, they all offer features similar to WordPress – but none of them have created so many jobs. Some have tried. Blogger gives site owners a cut when showing Google Ads. Wix has some third party plugins. But those are not true marketplaces, they are just add-ons designed to boost the host’s core revenues – a digital share cropping arrangement that does not lead to independent jobs and businesses.

There is nothing inherent in all software that automates and kills jobs, it’s the business model that we choose to sell that software that dictates how the money flows and which services get valued and paid for. In my capacity as an investor at True Ventures, I love meeting entrepreneurs who want to pursue building marketplace businesses. If you have a seed stage startup with an open, marketplace-based business model, I’d love to talk to you to learn more about it.

Photo credit: CC by SMcGarnigle

Comparing the Vive to the Rift

Rift Vive.png

I’m a big Virtual Reality fan and have had the opportunity to try out many VR systems, including the two best ones currently on the market, the HTC Vive and the Oculus Rift. Here’s my review:

tl;dr: They’re both great and deliver a compelling experience far ahead of everyone else. Graphics are strong on both devices, the Rift has better sound and ergonomics, the Vive has better tracking and controllers. In the end, the Vive is slightly more exciting because tracking your body’s motion is the key to VR, but you can’t go wrong with either device.

Continue reading Comparing the Vive to the Rift