 approaches. Boy, this one is really creaming the other one so it must be better. There’s actually quite complicated formula for doing split testing and I know that when you use Google website optimizer and it’s now actually integrated in to Google Analytics that you’re supposed to wait until the end of the term. They actually declare a winner at some point but it always takes longer than you think it’s going to and so what he’s saying is you have to wait until they declare. You can’t just can’t make a call early on. Is that —
[19:37] Mike: Yeah.
[19:38] Rob: Is that a big takeaway? Okay.
[19:38] Mike: Yeah, they really is and he added a link. We’ll link to it in the show notes but it was basically the A/B hamster where there’s a hamster and they show it. They given an organic carrot and a regular carrot and it’s over this course of like ten different choices for the hamster. And 8 out of 10 or, you know, something like that, it chooses the organic carrot. So you’ll think, oh well hamsters like organic carrots but the fact is that it wasn’t a statistically significant margin. So unless you waited long enough, you really wouldn’t get an answer.
[20:12] Rob: Very cool and you know, I think we should know as we’ve — you and I have just been assuming people know who the speakers are like Kathy Sierra is an author and a consultant and she is a big time in the UI and UX user experience stuff. Jason Cohen is well a serial entrepreneur and he just raised funding for WordPress Engine. He has sold a couple of companies for cash and is just a super intelligent capable dude who’s done a lot of good thing for entrepreneurship and he shares that with people on his blog and at SmartBear.com. So Dharmesh Shah, he’s the founder of HubSpot in addition to he had a company before that but I think they cashed out on as well. It was retro funded but he also blogs it on at Startups.com and has one of the largest startup followerships, you know, online. So he speaks every year. I mean he’s a fixture of Business of Software and I always get tons of value out of his. So what he talk about this year?
[21:03] Mike: Well, he talks a lot about setting the culture for your company and determining, you know, the future of your company based on who you hire. And one of — I took on a couple of different quotes from him and one of them was “Strive not just to build a great startup but strive to build great entrepreneurs” and his comment about that was that when you’re hiring, you’re not just competing against other startups when you’re hiring. So for example, you’re not just competing against Google or Microsoft or Fog Creek or any of these other places, you’re also competed against people doing their own thing. So they may decide, well I don’t want to work for you, I’m going to build my own stuff. So that’s something to keep in mind when you’re hiring because, you know, you have to be able to offer an entrepreneurial culture to people so that they don’t want to go create their own stuff. They essentially want to work within your own company and be paid to do it as oppose to saying, “Oh well I’ll take a really, really low salary for a while and build my own thing.”
[21:56] Rob: Right. So for those of us who don’t plan on hiring employees soon, were there takeaways not regarding like company culture and that kind of stuff?
[22:04] Mike: Well there is one about finding the right types of customers and he said you don’t just want customers, you want crazy loyal fans and it kind of related to setting up barriers of entry and he related it back to HubSpot where they’ve grown the company. And one of their big barriers to entry for other people is that people who sign on with HubSpot love HubSpot. They love HubSpot for not only in what they do but for what they allow them to do and you know, he basically said that this is a strong barrier to entry because it dissuades competition. When you suck and your customers hate you, it’s really easy for competitors to pop up but you’re going to have a lot less competition by virtue of the fact that your customers love you because when people are out there looking for ideas of things to build, they’re essentially drawn to these companies that suck. They’re like, “Oh well, I can build something better than them because they’re terrible and their customer support is awful,” or “Their product sucks.” If you are really good in a lot of different areas, people are just dissuaded from building a competitive products to whatever it is that you have because not only is your company good but your product is good as well.
[23:12] Rob: Right and then people like you and so they don’t want to jump ship. I mean I think PayPal is a great example of this and so is Quicken or QuickBooks. I guess it’s Intuit that makes them but you know, you see — I mean there’s Stripe and Square coming out of the woodwork. There’s several other payment processes that are coming out the woodwork to kind of compete with the dislike of PayPal as well as — well, I won’t say everyone, most people don’t like QuickBooks and so there’s all kinds of, you know, financial apps that come out including Mint and inDinero which we talked about before, LessAccounting, all those guys. I mean they’re just a really wide open market. But if QuickBooks which owned like 90% of the business market at one point, the small business market, if they were obviously delighting their fans and making their users awesome, it would be much, much harder to get in to that market. So that’s cool.
[23:58] Mike: Next was Peldi from Balsamiq and he talked about a lot of different things. Most of it was things that I’ve heard from him before. The two takeaways I got from his talk was that right now he’s in a midst of researching organizations that have a flat hierarchy because one of the issues that he’s running in to is that as he’s trying to grow Balsamiq, he’s running in to problems where he’s the bottleneck. He’s basically making a lot of the high level decisions and he’s trying to move more to a situation where the employees are making the decisions and he is trying to remove himself from those day to day things. He’s looking at other companies where they have much more of a flat organization and one of the things that he pointed out was I think Valve Software has like a PDF or an employee handbook or something like that where it tells developers what their life is going to be like when they’re working at Valve and it pointed out, you know, that there is much more of a flat organization where there is not as much management and that the employees essentially dictate the direction of the company, not some top level management and you know, he’s looking at that just kind of a model and was asking some people in the audience for feedback and said, “Hey, if anyone wants to come talk to me about this particular type of arrangement for business, now it’s working out. You know, I’d love to talk with other people about it.”
[25:14] So I thought that was really cool. I hadn’t really considered the idea of building out a company in a very flat organization like that and I’m really curious to see what sorts of companies are possible with that arrangement. I mean could you imagine being in a, you know, a 500 or 1,000-employee company where there isn’t really a level of middle management it’s just like everybody is kind of doing their own thing and doing what’s best for the company and the management is just kind of air?
[25:39] Rob: I can’t imagine that but only because I’m never seen it done. But I believe it’s possible. I just believe — I don’t know that it’s ever been done before but it’s certainly cool to see Peldi thinking about it because he’s the kind of visionary that could put something like that in place. You know, it would definitely be — I mean that’d be something that would turn to a Harvard Business School case study if he could pull that off. I’ve heard of some companies and I’m trying to think — I think Xerox PARC was one guy, the Palo Alto Research Center and they invented the, you know, what — Ethernet and the laser printers and the mouse and that’s what Bill Gates and Steve Jobs had walked through when they picked up on that stuff. That was I’m pretty sure a flat hierarchy and I think there was one guy leading it and there was a bunch of researchers. And he only got up to — he got up at about 75 people, maybe a hundred and he could manage them and they were all doing their own little individual research projects. You know, you just don’t know because they weren’t turning a profit, right? They were funded by Xerox to do a research whereas Peldi is looking at creating an actual like a for-profit company that does that. So obviously, interested to see