Olson’s Observations

Reading time: 3 minutes (I know it looks long but it only took me 3 minutes to run through it which is why I added this helpful “reading time” guide.)

I think that may be the longest headline I have ever written and it is an equally big question. Through my teenage years when I spent a lot of my free time researching companies, new technologies and stocks (Don’t get the wrong idea. I did get outside, had my own rock band (we had an EP - oh yes, we did) and even dated my share of girls, I swear!) and then subsequently through my college years studying business, finance and technology at Bentley College I came to believe that the corporation was where it’s at.

By “it” I mean wealth, prestige, challenges, fulfillment, big problems to solve, the ability to be creative, you know, everything one wants out of business. Now I don’t doubt that there are people that find a lot of these things, if not all of them, in large corporations. I am not saying that you can’t find fulfillment there but what I am wondering is whether every company should strive to attain “giant multi-national corporation” status.

I began to really think about this question more as I delved into the world of web start-ups. Web start-ups in particular are a place in which you can do very well with a small team of people and a good idea. There are a lot of examples of this. Business that throw off lots of cash for minimal work from a small team. Sure, they aren’t Google but they provide their founders and their employees a great life and, if the founders are smart, a great work environment.

A lot of these “lifestyle” businesses or what used to simply be called small businesses have another characteristic in common as well. If the founders wanted to try and make them huge corporations they may not work as well anymore.

I have to say that even I thought I was a little crazy for picking this up. I mean, this is anti-capitalist talk. Right? I don’t think it is. I am simply just not convinced that the modern corporation is the be all and end all pinnacle of business.

At the same time I was coming to these conclusions I happened to catch a piece by Saul Hansell on Bits (the New York Times’ tech blog). Hansell ws inspired by the talk about Twitter’s business model that was a hot topic a few weeks ago and the topic of Mozilla perhaps going public.

I think Hansell sums up my thoughts in the second paragraph of his piece which I will quote here:

Behind both of these [Twitter and Mozilla] is the presumption that the highest form of organization is a company valued at billions of dollars. The Internet now creates so much leverage for certain activities, that it is possible to create services that are incredibly useful, widespread and economically self-sustaining, yet involve very few people and not many dollars. This can sometimes be better for customers, business partners, and even founders, than trying to turn every good idea into a giant company.

The Internet does create a lot of opportunities for companies to form with small teams that, while running on small dollars (as Hansell says above), still take in big dollars. Look at the latest example that is the buzz of the blogosphere, PlentyOfFish.com. That site is by all accounts ugly and hard to use but it was built by one guy and it hit a niche. He works on it 10 hours a week and, wait for it….., takes in $10mm a year in revenues. Now that’s the power of the web. (Of course there are more examples - like 37signals - but if I listed them all this post would be way too long. Heck, it probably is too long as it is!)

I also feel like the web is a place where you can build a business that is geared toward a niche which is simultaneously a passion. This niche may have not supported in a business in one particular town or in a handful of towns but when exposed to the world on the web it can garner enough mass to make things work.

The web is to the virtual world like New York City is to the real world in that there are so many NYC businesses that couldn’t exist anywhere else but due to NYC dense and diverse population niche businesses can work (case in point: the shop near my office that sells only rice pudding - over 30 flavors of it - and always seems to have a line around the block). I hope that analogy makes sense.

Hmmmmm I don’t really have a good segue here and I am too tired to really think of one so I will just jump into it (Mind blowing moment: Is that non-segue I wrote in fact really a segue? You decide…). The other thing I love about building a smaller or niche business and not trying to make it a huge corporation (if it isn’t meant to be one) is that you can keep your culture in tact.

You can now truly build the environment that you, your founders, your employees and your future employees always wanted to work in and you can also make sure that it stays that way. You don’t answer to shareholders you only answer to your customers, partners and employees and that creates a good situation for all stakeholders.

This is the place where building a business really starts to meet zen for me. Ok, that was a little new age… My apologies. However, I think its true. I know the reason I always wanted to build a company was to create an entity that embodied me. My beliefs, my thoughts about work, etc. Create my perfect workplace and the perfect workplace for people like me (it’s scary I know but I believe there are actually others like me out there).

After all, a person spends most of their waking hours at work so trying to make work a better and more enriching experience should be something we all strive for. Sadly, I feel those ideals get lost in the shuffle of shareholder issues, quarterly analyst calls, profits and the like once big corporation status comes into play.

I’ll leave you with a link to an article Yvon Chouinard penned for Outside Magazine (thanks JZ) which outlines his thoughts on company building which he expands on further in his new book Let My People Go Surfing. For those that don’t know Chouinard is the founder of Patagonia. Patagonia did $241mm in sales last year, is still private, still allows their employees to check out early if the waves are good, donates 1% of gross sales to eco/conservation based charities (even if they are losing money that year) and a host of other good things. He has to be one of the poster children for doing good by doing good.

Here’s one of my favorite lines from the Chouinard’s piece that I had to put in this post:

This kind of independent thinking applies to our management philosophy as well. In fact, our employees are so independent, we’ve been told by psychologists, that they would be considered unemployable in a typical company [emphasis is mine]. We don’t want drones who will simply follow directions. We want the kind of employees who will question the wisdom of something they regard as a bad decision but, once they buy into something, will work like demons to produce something of the highest possible quality—whether a shirt, a catalog, a store display, or a computer program.

Who wouldn’t want to work hard for a guy like that? This guy really cares about and trusts his employees to do right by him and the company. How about that? There is clearly a reason why Patagonia does so well and I have to figure that the paragraph above is a big piece of it.

In my mind at least Chouinard proves you can build a company that is a platform for a rich life for not only you but also for your employees while also making lots of money. I am not sure if this is as possible if you are a publicly traded company or if you strive to be a big corporation when you are building a company that shouldn’t go that route.

Next time you have a chance to think about things you should ask yourself what kind of business you are building (or want to build), listen to the answer and then move forward with the new information in hand. Remember, we all don’t have to strive to build the next big corporation to do well in business especially with the advent of the Internet.