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5 Tech Companies That Work Differentlyby@malkovko
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25,605 reads

5 Tech Companies That Work Differently

by Konstantin MalkovMarch 28th, 2024
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While the tech industry is obsessed with growth, it often requires compromising on quality, team, and values. Yet, some companies approach growth differently by imposing arbitrary constraints, practicing radical transparency, focusing on solving hard problems and thinking 20 years ahead.
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In the world of tech startups, the term «growth» has become almost the epitome of success. Exponential growth, growth hacking, growth mindset, growth team, growth engine, hypergrowth. If a startup doesn’t show enough growth, it’s doing it wrong.


In his article published in 2012, the founder of the startup accelerator Y Combinator Paul Graham argued that growth is the very essence of a startup:


Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit. The only essential thing is growth. Everything else we associate with startups follows from growth.


It comes as no surprise why growth is so coveted. We all know the success stories of Dropbox, Uber, Airbnb, Slack, and Revolut. They are the role models of startup growth.


But few companies succeed. Exploding Topics say that 9 out of 10 startups fail. In 2021, AngelList expected 2.5% of venture-backed seed-stage startups to become a unicorn.


Yet, most startups still commit themselves to growth, ignoring the inevitable sacrifices it takes from both the product and the people who build it. Bugs that never get fixed because they are low priority, misalignment between different teams, ever-changing processes and organizational structure, growing tech debt that will be reworked as soon as a company finds its Ideal Customer Profile, inherently outdated documentation, abandoned features, neglected career development plans, poor work-life balance, chaotic environment, lack of focus — these are all side-effects of startup growth. But it doesn’t have to be this way.


In this article, I explore 5 tech companies that approach growth differently, resulting in healthier business and working environments.

37signals

The original rebel of the tech industry, 37signals is the company behind the project management platform Basecamp, email service HEY, and the recently launched line of purchasable (instead of renting) software Once. Initially a web design firm founded in 1999, the company switched to the development of Basecamp out of necessity to take on more projects. 20 years later, they have over 100,000 paying customers and make tens of millions of dollars in profit.


We run a very different kind of business. We are focused on efficiency, we're not focused on growth. They're focused on growth. — Jason Fried on Lenny’s Podcast


Almost everything about 37signals is different. It is a private company, with no venture capital involved. Under 100 employees, all working remotely (company founders even wrote a book aptly named Remote). They invented a product development framework called Shape Up that focuses on small, 2–3 person teams delivering meaningful impacts in 6-week cycles (they wrote a book about it too). They don’t have growth targets or OKRs; the only thing that matters is whether the company makes more than it spends. As 37signals founders Jason Fried and David Heinemeier Hansson put it, It Doesn’t Have To Be Crazy At Work. Yes, it’s the name of a book as well.


Image: 37signals


I find this quote by Jason Fried summarizes the 37signals’ approach best:


I think one of the most important things though to remember … is just like, humans tend to complicate things. A lot of things are hard but they're still simple until you make them complicated. Just keep in mind that you can make a lot of progress with two people, you can do a lot of great work four weeks at a time max, and you can figure things out as you go, and you don't need to know exactly where you're going, and you can be a profitable business, and you can find customers who are willing to pay for things. These are all possible things to do. And you don't need to be a big huge company to be successful. And you don't need to be a big huge company to make significant amounts of money. You don't need to do that. — Jason Fried on Lenny’s Podcast

Linear

A company doesn’t have to be private or go through the dot-com crash to work out an alternative approach to work. Take Linear, a venture-backed project management tool for software development founded in 2019.


Jori Lallo, Karri Saarinen, and Tuomas Artman started a company on the simple premise that software lost its magic. The computing power of today is far beyond what could be imagined 20 years ago. Yet, modern software is slow, distracting, and boring. Linear strives to bring back the magic by crafting a planning tool for teams that care about quality.

The founders go beyond just building a tool. They think of it as a “way” to craft quality software. They call it opinionated software and they have Linear Method to build it.


One example of a strong opinion is working in cycles instead of sprints. As Karri Saarinen puts it, “We are not really sprinting anywhere”. The goal is to create a healthy momentum instead of reaching a finish line.


Another point is building in public. Besides being vocal about how it works with Linear Method, the company advocates for public changelogs and lists all of its employees openly.


Linear’s opinion on growth? Hire less, but more experienced professionals and solve customer problems instead of moving metrics.


…sometimes the high growth, especially on the employee side, is not that great. It can create a lot of chaos or just messiness. … We just believe that you can actually build better with less people than you can with more people. — Karri Saarinen on Lenny’s Podcast

Wise

It’s not just smaller companies that approach growth and work differently. Wise, a product for international money transfers, employs over 5,000 people and moves about $12 billion a month across borders.


The company's mission to build the best way to move and manage the world’s money is refined with four key attributes: speed of transfers, convenience of transferring money internationally, transparency of fares, and lowest possible cost. But these attributes extend beyond just the product.


Take transparency for example. A Wise customer can see the total breakdown of a transfer’s fare in advance, split by what goes to a bank and what goes to Wise. But the company took a step further by making its roadmap public, with quarterly updates on the progress towards the mission.

Another thing about Wise is how the company builds a conviction on what matters the most for customers. On Lenny’s Podcast, Nilan Peiris, Chief Product Officer at Wise, calls it customer-led growth:


Every business I've ever worked in, it's always got these two lists, a list of things to do for your customers, and then it's got a list of things to do to make money. And you generally do everything you need to do to make money, and you do two things with the customer list. The neat thing about Wise is that we just have one list of things that you need to do to make customers happy, and it's prioritized by impact on the really hard things. If you do these really hard things, they have an incredible impact on customers, but hence on your growth, and on your shareholder value.


This approach of building a strong understanding of customer problems instead of experimenting with incremental results enabled Wise to reach profitability while still growing by 30%–40% yearly.

Buffer

One company that took the idea of doing things differently to the next level is Buffer, a social media management platform for small businesses. While some companies share their roadmaps or changelogs publicly, Buffer opens up its key metrics and employee salaries.


You can go to the Buffer website now and see for yourself that CEO makes $298,958 a year, whilst a content writer earns between $114,672 and $132,782 a year. Or you can see how the subscription fee is distributed between marketing spending, merchant fees, operational expenses, and salaries. You might want to know that Buffer’s Annual Recurring Revenue dropped from $22M in January 2020 to $18M in January 2023 and remained stable throughout 2023. It’s that open.

One might argue that having ARR not growing for four years isn’t exactly an example of growth. Well, it depends on the time horizon. According to ChartMogul, only 13% of SaaS startups make $10M in ARR after 10 years in business. Buffer is way beyond that already. And the company CEO Joel Gascoigne intends to continue growing sustainably:


We will strive for the kind of healthy, long-term growth that we believe will naturally follow as we focus on creating trustworthy products and providing unexpectedly delightful customer service.


In the 2023 Annual Shareholder Letter, Joel elaborates on how this vision allows the company to adapt its strategy without compromising on the mission to serve and help more entrepreneurs and small businesses thrive:


Beyond seeing the challenges ahead in growing this way, I personally felt a real conflict in my own sense of purpose when we dabbled with going up-market. This is one factor which led to my decision to double down on individuals, the free plan, and our down-and-wide strategy.


In the world of B2B SaaS, where traditionally companies are forced to go up-market by investors, it is indeed a privilege to be able to choose growth by going in the opposite direction. Even more so when the times get tough.

Ghost

I’d like to end this article with an extreme example.


We have only two goals at Ghost: To create a product we're incredibly proud of, and a company that provides a great life to the team building it. To achieve those goals we've thrown away most other traditional measures of success.


John O’Nolan started Ghost in 2013 to bring back the ease of publishing content online that WordPress once had until, in the process of growth, it turned from a blogging platform into a Content Management System. The idea proved to be so lucrative that a landing page that described it brought John 30,000 email subscribers followed by $300,000 raised through a Kickstarter campaign. 10 years later, despite venture-backed competitors like Medium and Substack, Ghost is still non-profit and open source, making around $6.4M in ARR. Just this month the company announced the First Round Review website is now powered by Ghost.

Just like Basecamp and Buffer, Ghost ditches short-term growth in favor of creating a company that will be around in 20 years. In a world where startups come and go, such longevity is a competitive advantage in itself. But how does Ghost actually do this? Largely, through the concept of arbitrary constraints.


Impose upon yourself an arbitrary constraint and watch how creativity suddenly flows from you in ways that you didn't know were possible before. Because the human brain, as it turns out, likes to get out of annoying, arbitrary constraints and find ways around. Find loopholes in things. It's been a remarkable source of creativity for me. — John O’Nolan on the Indie Hackers podcast


Regarding growth, there is one arbitrary constraint that worked out surprisingly well for Ghost. Setting up a business as a non-profit foundation constrains the company from running for growth just for the sake of it. Because if there are no investors and a company can’t be sold, then its valuation doesn’t really matter. What was imposed as a constraint gives the company the freedom to focus on what matters — a strong product that helps publishers grow and a happy team that enjoys building it.

Afterword

This is by no means an exhaustive list of companies that approach growth and work in general differently (please leave more examples of such companies in the comments!). Nor is it a call for companies to stop and reconsider the way they work.


Just like people, every company is unique, and there is no right or wrong way to do it. What these examples prove is that there are alternatives to common practices that prevail in the tech industry. Fortunately, these alternative approaches are driven by people behind companies, not products or industries. And people can be inspired to think differently too.


Thank you for giving this a read. Please share your thoughts in the comments. Would love to hear your thoughts on healthy and sustainable growth.