Stop the Insanity!

A new generation of dotcom entrepreneurs are creating companies that work -- without expecting people to spend every waking moment at work. Here's how to build a saner startup.

Dion Lim was your classic startup junkie. Hooked on the thrill of creating new businesses, Lim jumped from one startup to the next, working 90-hour weeks and mainlining email and take-out food. He always imagined that he would slow down -- eventually. Then one day, he came home from a string of business trips to an empty house. Amy, his wife of six years, was gone.

"I was totally frantic," Lim says. "There was no note, nothing." Later that evening, Amy phoned from a nearby hotel. She wasn't leaving him; she just wanted to give him a taste of what it was like to be married to a startup exec -- never knowing where he was or when he was coming home. Lim vowed then and there to make room in his work life for his real life. And so last fall (less than a year later), he and his wife started a business together -- an Internet incubator called Simians.com that they now run out of their home, in Los Altos, California. "It's great," says Lim, 32. "I get to develop new companies and see my wife every day."

Charlie Kim didn't wait for things to get quite so out of hand before coming to his senses about startup life. A grueling two-year stint at Morgan Stanley was enough to convince the young human-resources analyst that he'd do things differently when he left the company to run one of his own. Having studied turnover patterns at the blue-chip investment bank, Kim, 27, discovered that half of the employees who left did so to improve their personal lives, rather than to make more money. "People were working until 1 AM, drinking coffee, eating junk," he says, "and they were miserable."

Today, none of Kim's 115 employees at Next Jump Inc., a New York-based publisher of print and online college guides, are expected to work weekends or pull all-nighters -- except during rare crunch periods. "I don't want anyone to be drained or exhausted," says Kim about his colleagues.

More and more Internet entrepreneurs are starting to think like Kim and Lim. When it comes to startup life, it's time to reconsider old business plans. Forget about those macho, 24-7 firms where employees eat lunch at 5 PM, there's a futon room for all-nighters, and the only acceptable work ethic is a cheery I'm-ready-to-work-myself-to-death devotion to the job. Maybe it's because the sheer thrill of the startup is wearing off -- particularly for folks who have been through a few of them. Maybe it's because the potential for astronomical payoffs after just a few years of 100-hour workweeks seems like yesterday's news. Maybe it's because a new generation of people -- adults who have kids and more on their minds than playing Foosball at midnight -- are streaming into the dotcom sector. Or maybe it's because the ever-escalating battle for talent is forcing startups to become more humane with their human capital.

Whatever the reason, a new breed of startup is emerging -- call it the saner startup -- and its leaders are paying more than lip service to the idea that pursuing your business dreams shouldn't mean destroying your personal life.

Saner startups are abolishing many of the rituals that have come to define the life of an Internet entrepreneur. The daily all-hands meeting? Gee, I think we have real work to do. The Friday-afternoon beer blast? Hmmm, maybe it makes more sense for people to get home in time for dinner with their families. The every-other-month off-sites to coordinate strategic plans and build trust across departments? Here's an idea: Let's spend more time executing our current strategy rather than debating a new one. The all-nighter as a universal symbol of commitment and tenacity? News flash: People make better decisions when they're rested.

"It's all about working smarter and respecting people's time, so that everyone in the company becomes more productive," says Gregory Slayton, 40, president and CEO of ClickAction Inc., an online direct-marketing firm based in Palo Alto, California. Adds Slayton, who has worked at two previous startups: "You don't want to be burning and churning your people. It's counterproductive."

Make no mistake: The founders of saner startups are just as fervent about their companies as their more-crazed dotcom brethren are, and most of them still put in pretty long days. But they also believe that a company's viability depends on recruiting and retaining people who can work, change, and innovate over the long term. Pardon the familiar metaphor, but building a great company is a marathon, not a sprint, and many of the runners are dropping out early in the race.

"If you pay people well and give them lots of stock options but then treat them like dogs, they will cash out when they can," says David Russo, 55, executive vice president of human resources at BuildNet, a Research Triangle Park, North Carolina-based company that sells management software to home builders and suppliers. "They'll leave because it's a toxic environment. And that turnover costs the company." Fran Rodgers, 53, founder of WFD Inc., a Boston-based work-family consultancy, agrees: "If you want to start a company that lasts, you have to ask yourself, 'Am I creating a culture that is sustainable?' "

So how do you build a saner startup? We posed that question (and many others) to some of the sanest and smartest startup experts we could find. Here, then, are six essential strategies for improving your company's mental health -- and its long-term prospects in the marketplace.

I Feel So Broke Up, I Wanna Go Home

With apologies to the Beach Boys, this is the first rule of life at saner startups: If you want to do truly great work, then you can't spend every waking hour of every day at the office. "You can't make good strategic decisions if you're exhausted," declares Charlie Kim. "Sooner or later, working 24-7 ends up burning you out."

Kim certainly understands the necessity of putting in an occasional late night or even pulling an all-nighter. But this kind of punishing schedule, he urges, should be a last resort, not part of everyday life. That's why he has banned sleeping at the office, and why there are absolutely no beds, cots, or futons allowed. "If you need to sleep, you should go home," says Kim, who has been known to shoo employees out of the office if he thinks they are working too much. "I don't want people here on weekends."

"It was a little strange to me at first," admits Alice Park, 26, Next Jump's director of product development. Park remembers being "kicked out of the office" by her boss on more than one occasion last summer, when she joined Next Jump. "I had come from an investment bank, where it seemed normal to work until 9 or 10 at night," she says. "But people here have a different style of working."

Park has since learned a lesson that seems obvious in retrospect but that is less obvious when you're in the middle of another 12-hour day: If she stays extremely focused, she can get her work done and still manage to leave the office by 7 PM. "At my old job, I'd take more breaks and procrastinate, because I knew I was going to be there all day," she says.

Equally important, the leaders of saner startups don't run what Carol Kruse calls "fire drills" -- those last-minute, do-or-die rush jobs ordered up by the brass. Kruse, 37, cofounder and vice president of marketing at RocketCash Corp., a shopping site for teens based in Mountain View, California, says that when she was a brand manager at a Fortune 500 company in the early 1990s, fire drills were the cause of many late nights, missed birthdays, and canceled vacations. "It was terrible and unnecessary," she says.

At RocketCash, Kruse and other executives try to give plenty of notice about deadlines, and they don't expect employees to work through the night to meet them. "The fact is, there is almost nothing that can't wait a day," Kruse says. "People think the whole world will collapse, but it never does."

Rather than stocking up on caffeine, urge saner CEOs, stock up on your self-worth. Pulling an all-nighter won't make you a hero at their startups; it will just make you a goat at home.

Justin Kitch agrees. In 1994, Kitch, then 21, founded a Menlo Park, California-based educational-software company called KartoffelSoft, which has since evolved into Homestead.com. Back in the early days, he recalls, he would work 100 hours a week -- and let everyone know about it. "I made sure I was visibly working all the time," he says. But in the summer of 1998, Kitch got married and realized that working round-the-clock was "just stupid." So he cut back on his hours, working 60 a week at the office and 20 more at home. (Kitch begged Fast Company to write that it's more like 10 hours at home. Sorry, Justin.) "I just don't want people to think that I expect them to work those idiotic hours," he says.

If You Want to Stay Fast, Let People Be Flexible

Last February, John Chang, 36, CEO of Mountain View-based seeUthere.com, pulled VP of marketing Helen Loh into a private meeting and gave her one of her most important assignments to date at the online events-services firm: MP3.com, the high-profile online music company, was about to become a major investor, and Chang wanted Loh to write the press announcement. Since MP3.com had initially been in talks to acquire seeUthere.com, it was critical from a marketing and investor-relations standpoint that the announcement be handled deftly, "because it definitely was good news," says Loh, 37. And it needed to be completed that day, so that it could go out on the morning news wires -- before word leaked out to the trade press.

At most any other Internet firm, that would have meant Loh staying glued to her desk until the press release was finished. But she had struck an agreement with Chang when she was hired: Loh, a mother of two, had to leave work at 2:30 PM a few days a week to pick up her 5-year-old daughter from school and get her settled at home. She would make up the hours by working at home before dinner and after she put her kids to bed.

So on the day of the big MP3.com news, Loh left the office on schedule, put on her car-phone headset, and, while driving her daughter home from school, fielded calls from Chang, MP3.com, and seeUthere's publicist. She finished the press release that night -- at home. "It all comes down to trust," says Chang, who spent five years as an executive at Hewlett-Packard, an early proponent of flexible schedules. "Do you trust that people will get the job done, even if you're not around? I do."

Of course, flextime, telecommuting, and part-time schedules are nothing new. Many "Fortune" 500 companies have embraced such alternatives for years, primarily as staff-retention tools. And study after study has shown that flexibility in the workplace is key to work-life balance. But most Web startups -- despite operating on the cutting edge of technology -- continue to be almost pathologically primitive when it comes to face time. Nobody blinks if programmers and engineers come and go at odd hours, but a senior executive at a young Net company leaving at midday? For Chang, that request was so unusual that he checked with his board of directors before hiring Loh.

Today, flextime is the norm at seeUthere.com. To avoid a torturous rush-hour commute -- two hours each way for many employees -- some top managers work from home until about 11 AM, while others come in early and leave at 3 PM or 4 PM. But few employees are on a set schedule. "I can't promise people that they'll only have to work a 40-hour week here, but at least I can give them flexibility so they can balance their lives better," Chang says.

More and more startups are adopting that mind-set. Sure, Internet time is real, and meeting deadlines matters. But results are what count, not crowded cubicles and obsolete rituals. By working flexibly, people can work fast -- without working themselves to the bone. And at saner startups, the commitment to flexibility extends to all employees, not just to those at the top or to parents with young children. At RocketCash, for example, one marketing manager negotiated a four-day week (with 20% less pay). And it's not unusual for an employee to leave a meeting early to attend "a book-club gathering or a wine-tasting class," says marketing VP Kruse.

A wine-tasting class? "We think it's good for people to have lives outside of work," says Kruse, who, as a mother of two young children, has plenty to do outside of work. And anyway, what counts is not the schedule people keep but the results they produce. "We're not clock-watchers here," she adds. "We know people are professionals and that they'll do what they need to do."

Don't Cover Up Pressures; Cover for One Another

Last year, Marianne Cooper, a graduate student studying sociology at the University of California, Berkeley, began interviewing male Silicon Valley software engineers to find out how they balance fatherhood and work. She noticed a disturbing pattern: At work, hardly anyone ever spoke truthfully about family responsibilities.

One engineer told Cooper that when his boss told him he had to attend a meeting in New York on the same day that he was scheduled to meet with his priest about his son's christening, he barely uttered a word of protest. (Later, he secretly appealed to his boss's secretary to change the date of the meeting.) "While it was acceptable to bring work to the home," Cooper says, "it was not acceptable to bring home to the work."

But at saner startups, attending to family needs is not considered a sign of disloyalty to the company or a lack of commitment to the job. "If I want to help out at my son's school, I say, 'I've got to run. I'm going to my son's school,' " says RocketCash's Kruse. "I don't apologize. It's not a big deal."

At the same time, respecting outside priorities eliminates the need for cover-ups. Instead, people cover for one another. Recently, when a major client asked Kruse to fly to Chicago to hammer out a partnership agreement, she was up-front: She wouldn't be able to make the meeting because she was on single-parent duty while her husband was out of town. She called RocketCash's vice president of business development, who immediately agreed to fill in for her at the Chicago meeting. "I didn't give it a second thought to ask her," says Kruse, who herself has pinch-hit for coworkers. "We try to be team players here."

Some Internet entrepreneurs are taking their commitment to work-family balance a step further by launching Net companies with their spouses. After all, one way to spend lots of time at the office without neglecting your partner is to work with your partner. Plenty of people are "married to their jobs" in a figurative sense. For some Internet entrepreneurs, that idea has taken on a whole new meaning.

Free Time Is My Time

"Work is personal." "My colleagues feel like family." "If it ain't fun, I don't want to do it." Those are all legitimate, worthwhile, genuine sentiments. They're what make today's workplace, at its best, feel so different from the workplace of 10 or 15 years ago. But that doesn't mean that work should be expected to take the place of family or that common "bonding" rituals such as ski weekends, Friday-night barbecues, and keg parties should be allowed to steal time from something much more important -- the bond between employees and their families. Even good ideas can be taken to extremes.

"If you have young kids or a spouse -- or even if you just don't ski -- how happy are you going to be about having to participate in this stuff during your off hours?" asks WFD's Fran Rodgers.

In today's frantic, 24-hour dotcom economy, free time is becoming as valuable as stock options. What does that mean for saner startups? "Never presume to know how people want to spend their time," says Slayton at ClickAction. That's why social events at ClickAction are brief, take place during work hours, and always have a specific purpose -- whether it's to celebrate a success or to make a company announcement. When the company landed a Sprint account last year -- "a big, big win for us," says Slayton -- there was no company-wide jaunt to Las Vegas or all-night beer fest. Instead, the CEO called all 150 employees into the conference room at 5 PM for some wine and cheese and a few short speeches. Thirty minutes later, the "party" was over. Hardly exciting, but Slayton believes that is all the company social time anyone really needs or wants. "Success is what bonds people, not beer blasts," he says.

Indeed, some startups are going out of their way to curb organized socializing on the job. Last fall, when Dion and Amy Lim of Simians.com were developing Wantifieds.com, the first company created by their incubator, they began holding daily 30-minute "smoothie breaks." At 4 PM every afternoon, the Lims' seven-person team would get together for a shake, some chitchat, and a video game or two. Then it was back to work. The message was clear: This was a time for goofing off -- the only such time during the day. "At other companies I've worked at, people would play video games at all hours, because they knew they'd be there all the time," Lim says. "I wanted people to be extremely focused on work during the week so that nobody worked on weekends."

Other companies are trying to infuse team-building activities with "deep meaning" -- play with a purpose. For William Rosenzweig, 41, an entrepreneur who has worked at several startups, that translates into off-sites that revolve around volunteerism. Rosenzweig, now CEO of Hambrecht Vineyards and Wineries, a 22-year-old company in Healdsburg, California that is in the midst of a reinvention initiative, recently invited 22 staff members to spend a day planting oak trees along a mile-long thoroughfare that runs through vineyard property in Sonoma County.

Traditionally, vineyard owners have cleared away trees to make harvesting easier, much to the dismay of environmentalists, who argue that the practice has a devastating effect on local ecosystems. By working with a Sonoma environmental group that promotes the tree-restoration practice known as "greening the land," Rosenzweig says the winery is making a powerful statement about the company's values -- to the community at large as well as to the community of Hambrecht employees. "It was incredibly empowering and healing," says Rosenzweig, adding that everyone on his team was equally enthusiastic about the tree-planting experience.

"At other companies that I've been at, people would complain that they didn't have the time when they had to go to off-sites or parties," he says. But no one complained about the tree-planting event. In fact, soon after that day, a bookkeeper at the firm volunteered to organize an Earth Day celebration. "When someone takes initiative like that, you see how an event can really be transformative," says Rosenzweig.

Less Email, More Communication

One reason why people spend so much time at the office is that so little of their time there is spent on actual work. It's not just that they're spending too much time at beer blasts; they're also spending too much time reading, sending, and responding to email. It is yet another example of the double-edged sword of startup life: Who doesn't want to be "in the loop" on critical decisions? How can people make smart decisions if they don't know everything there is to know?

Saner startups are coming up with answers to those admittedly tough questions. "Email can take up your whole day if you let it," warns Next Jump's Kim. "Meetings are the biggest time sink there is," says ClickAction's Slayton, who spent part of his career at McKinsey & Co., the management-consulting firm. Saner startups live by a basic principle: There's a difference between a democratic workplace and a debating society.

When it comes to email, for example, some saner startups have adopted a few simple practices. They discourage people from sending email messages to generic lists that may include recipients who are not integral to the task at hand. Instead, it makes more sense to solicit input from as few people as possible; otherwise you're just wasting everyone's time. When Next Jump's chief information officer emailed a dozen employees asking for comments on the company's plan to move its server off-site, Kim suggested a different approach. "I trust your judgment," Kim told him. "Just talk to the CFO, and then make the decision."

Email also has a way of multiplying like cancer cells, defeating the purpose of sending an electronic message in the first place: fast, effective, well-targeted communication. At seeUthere.com, says CEO Chang, the unofficial policy is this: "If you go back and forth on an email more than three times, then you need to go ahead and have an actual conversation."

Saner startups take an equally ruthless approach to meetings. Smaller companies are limiting the ubiquitous all-hands meetings to once a week, while larger companies are scheduling them once a month, at most. Other meetings are called only when there is a specific problem to resolve and involve as few employees as possible. "Before you attend a meeting, you need to ask yourself, 'Will this keep me from doing something more important?' " says John D. Wagner, 42, executive director of corporate communications at BuildNet. "Am I needed to make this decision, or could I just get a recap after the meeting?"

Indeed, at saner startups, meeting machismo is perceived as a negative, not as an indication of status or value at the company. Slayton, for instance, often drops in on meetings at ClickAction, and if he sees too many people in attendance -- "too much intellectual firepower in the room for the question being addressed" -- he immediately voices his disapproval.

One final guiding principle: If a meeting drags on for hours and still doesn't seem to be long enough, it probably means that you're just sharing information (read: talking too much), without making any decisions. That's a lesson that BuildNet learned last year. The company's bimonthly sales-and-marketing meetings were already running two hours long when someone proposed extending them to four hours -- and bringing in lunch. "Everyone just said, 'No!' There was this recognition that we were having meeting inflation," Wagner recalls. The result: The meeting was canceled -- permanently. And no one is lobbying for its return. "It turned out we were already sharing so much information during the day that we didn't need the meeting at all," says Wagner.

What's the Point of the Exercise?

We've saved the most basic point for last. There's a dirty little secret behind the madness at many dotcom companies. Why are so many people in so many companies running so fast, for so long, with such reckless abandon? Because they don't really know where they're going -- or they're not going anywhere special. If your destination is the same as everyone else's, the only way to get there first is to run faster.

As Dion Lim notes, "If you're competing against 5 or 10 other startups, all of which are working incredibly hard, then you have to work just as hard in order to keep up."

That's why, when Lim and his wife started their Internet incubator, they decided they would only develop businesses that allowed them to run on what Lim calls a "5-60 schedule" -- a 5-day, 60-hour workweek. And since what appealed to them most was not so much running a company as developing an idea for a company and then bringing that idea to life, their initial goal wasn't to create a giant company with a huge market cap but a product that they could launch and then sell to someone else.

Their first project was Wantifieds.com, a request-for-quote technology that enables consumers to solicit vendor quotes on whatever product they might want to buy. With a team of six engineers and one product manager, the Lims built the technology in just six months (and, at press time, were in negotiations to sell it). The Wantifieds.com team worked with blazing speed. But by staying small, it was able to maintain a 5-60 work schedule throughout the whole process. "We didn't have to raise millions of dollars from a name-brand VC," Lim says, "and we didn't have to staff up and hire every single quality person we knew."

The Lims were able to keep their wits about them as they developed their new product because they stayed focused on success -- and because they had a definition of success that made sense to them. The problem with many startups is, they're so focused on their IPOs that they lose sight of their real values. Or worse, they never really figure out what their values are in the first place.

"You see so many companies that keep changing direction because they don't know what their business model is," says Sunny Bates, 44, founder and CEO of Sunny Bates Associates, a New York-based executive-search firm that specializes in Net companies. "They don't know where the external revenue is going to come from, and that's where the internal chaos comes from."

Of course, even with a clear perspective on the future, it isn't easy to stay sane when you're being second-guessed by nervous investors. Many company founders, including Next Jump's Charlie Kim, face skepticism when they tell venture capitalists about their commitment to a healthier company culture. Spooked by the volatility of the stock market and consumed by the need for quick returns, few investors are thrilled to learn that a company's CEO leaves the office every day at 7 PM, encourages employees to do the same, and has virtually outlawed all-nighters.

"When they hear that I get eight hours of sleep every night, they say, 'Oh my God, this company is going to fail!' " Kim says. He reminds investors that it's the results that matter. "You don't have to work the longest hours," he says, "just the smartest ones."

Pamela Kruger (pkruger@fastcompany.com) is a Fast Company contributing editor. She is one of the sanest people we know.

Sidebar: Family Affair

Dion Lim, a self-confessed startup junkie, learned the consequences of being married to your work the hard way. His wife, Amy, left home for a night, without leaving a note, to show him what it felt like to live with his crazy schedule. The couple's next move? Dion and Amy started an Internet incubator together.

Paul Entin and his wife, Shannon, made a similar decision. Frustrated by how little time he got to spend with his family, Paul, 31, quit his job at an advertising agency last fall and began working with Shannon, also 31, on her now 4-year-old health-care Web site, FitnessLink. Since then, the Entins have been working split shifts, so that one of them can take care of their young son, Logan, while the other is working. (They use a baby-sitter about 15 hours a week.) "Most men don't get to see their kids much," says Paul. "They're missing out on the joys of raising their children. I really feel lucky."

He isn't alone. According to Paul and Sarah Edwards, who have written 12 books on entrepreneurship together, a growing number of couples are joining forces to launch companies so that they can spend more time together. "It gives people more time and gives them much more control of their priorities," says Paul Edwards, who has been working with his wife since 1980.

When Paul Entin worked at the ad agency, for instance, he often didn't get home until 9 PM or 10 PM, long after Logan was asleep. And he barely ever saw Shannon, who worked (or slept) whenever the baby was asleep. These days, while Paul still works about 70 hours a week and often on weekends, he and Shannon carve out family time every day. They always have lunch and dinner together, and sometimes they take a midday stroll through the park. And when there's work to do at night, it isn't so much a hardship as a night out together as a couple. "One bonus of working together is that you develop a real synergy between your personal and professional lives," says Paul.

Just ask Dion and Amy Lim. Since working together on their Internet incubator, Simians.com, their marriage has never been better. "We used to spend just 15 minutes a day talking, and I was so caught up in what I was doing that I wasn't really mentally there," says Dion. "Work used to be something that pulled us apart. Now it's drawing us closer together."

Sidebar: How to Join a Saner Startup

One way to work at a saner startup is to start one yourself. But most of us choose to work for Internet companies, rather than launch them on our own. Which raises a related set of questions: How do you know a saner startup when you see one? How do you differentiate between companies that talk a good game when it comes to building organizations that work for the people in them and those that actually get the job done? Here are some suggestions.

Be up-front about what you want.

When Jody Kramer, 31, director of communications at Homestead.com, began job-hunting soon after she gave birth to her son, she told interviewers that she had a new baby and that work-life balance was important to her. If an interviewer reacted coldly or uncomfortably, Kramer considered it a warning sign. If an interviewer asked her what it was like to be a new mom, she was impressed. "I wanted a company that would consider a baby a wonderful thing, not a liability," says Kramer, who met with about 15 startups before joining Homestead.com.

What you see is what you get.

Instead of having all meetings with company executives at outside locations, make sure that you have at least one on-site meeting, so that you can look around. Trust your eyes: Is the office empty at 7 PM, or is it still bustling with activity? The CEO may say that you can leave at 7 PM, but how comfortable would you feel doing that if everyone else was working until 9 PM or 10 PM? Kramer, for instance, took it as a positive sign when Justin Kitch, Homestead.com's CEO, left the interview at 6 PM to do volunteer work. "That told me that he respects people's outside commitments," she says.

Pay close attention to the interviewer's behavior.

Does the interviewer seem organized and focused, or scattered and indecisive? You can tell a lot about people's work styles just by watching how they conduct themselves during a meeting. Sunny Bates, founder and CEO of the eponymous New York-based recruitment firm, recalls meeting with one hyperactive executive who was "choosing carpeting and paint color, talking on the phone, and talking to me -- all at the same time." It was clear, Bates says, "that this was her style and that no one who worked for her would have a life."

Work the grapevine.

Most job-hunters know enough to talk to current employees. But if you want a full picture of your prospective employer's work style, cast a wider net. Talk to investors and advisory-board members, if possible, as well as to ex-colleagues of your boss-to-be. Don't put too much weight on what any one person says. By the end of the process, you'll be able to determine whether the startup can give you a job and let you have a life.

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