Growth and Bureaucracy: Destroying Fun, Creating Value

“Once your company grows to a certain complexity, bureaucracy inevitably emerges. Similarly, for sufficiently complex organisms, cancer inevitably appears. Both will rapidly spread through their host before mercilessly destroying from within. In either case, there is no known cure.”

Including revenue from continuous app sales (and net of lawyer fees), Tootly had $5,200,000 in the bank, and they meant to spend it, but not without input from their venture capitalists. Jacob’s voice barely masked his frustration as he recalled their first board meeting. “It was...eventful. Jim and Tim, who had seemed quite friendly when they were screwing us out of equity, argued on every point. They had vastly different views on ‘next steps.’ Jim wanted to focus all our energy on marketing Tootly, while Tim wanted us to start expanding to other novelty apps. Eventually Ben convinced them that we could do both -- if only we focused on hiring more people first.” The venture capitalists found common ground, and recommended that Ben and Jacob hire someone...who knew how to hire people. To escape this chicken-or-egg problem, their first hire was an HR director, only she demanded the title “Chief People Person.”

Exhibit: Chief People Person

A euphemistic name for the executive in charge of human resources. Typically, this title is demanded by an especially fake former HR employee, trying to re-brand themselves as a “hip and approachable dude” as opposed to a destroyer of dreams and harbinger of a career’s death. They tend to be inexplicably cheerful.

Tootly’s Chief People Person was found through TOAD’s network of disgruntled executives at late stage startups, and she fit the standard bill for an HR executive: a mask of nauseous friendliness to hide that she’s absolutely judging you all the time. Jacob was concerned initially, as he always felt a distinctive chill whenever around her, but Ben reassured him that “it was the chill of progress.” Either way, they couldn’t argue with her methods; both Ben and Jacob’s network of potential employees paled in comparison to hers, and before long she had screened hundreds of potential applicants. Pretty soon they were ready to interview dozens of employees, but not before Jacob brought up more red flags with Ben. “Many of the interview questions gave me flashbacks to my consulting interviews...not to mention her ridiculous job branding. ‘Social Media Ninja’ for our head of marketing? Really?”

Exhibit: Ninjas, Pirates, Gurus, etc.

Terms thrown around the Valley to fool prospective employees into believing they’ll be some sort of super-sleuthy mega-master when they join the company. Routine examples include ‘Ruby on Rails Ninja,’ ‘Marketing Rockstar,’ or ‘Search Engine Optimization Guru.’ Inadvertently leads to disappointment when a new employee discovers no one else wears eye patches or ninja outfits.

Ben defended their newly hired Chief People Person. “Jacob knew that I didn’t like some of these tactics either, but that’s the way you hire good people in the Valley. Though I can’t say I was entirely pleased with some of the job titles...Designer Savant was okay, but Mobile Developer Asperger seemed mildly offensive.” In the end, Ben convinced Jacob to let the CPP do her magic; besides, both were too afraid to critique her. She could be pretty judgey.

After a month of frantic recruiting, Tootly was reorganized with CPP-approved organization and titles, along with a shiny new office space in downtown Palo Alto. Jacob was rebranded as the “Chief Business Person,” while Ben became the “Chief Technology Person.” They hired one “Chief Finance Dude,” two “Social Media Ninjas,” two “Product Management Pirates,” four “Designer Savants,” four “Data Junkies,” and four “Mobile Developer Aspergers.” There was no “organizational chart” to demonstrate hierarchy, as Tootly wanted to remain a “flat” organization (which meant you could be blamed for something going wrong by anybody, rather than just your boss). Unfortunately, lack of hierarchy on paper did little to prevent hierarchy from manifesting itself out of subconscious pragmatism.

An ordered process out of chaos emerged where the Product Management Pirates naturally ordered themselves as supervisors for the developers and designers, while the Social Media Ninjas and Data Junkies operated independently and reported to the Committee of Chiefs. As he saw the bureaucracy develop, Jacob’s resentment of their funding situation resurfaced. “We wanted to keep it flat, but with more than a few people the structure appears out of much as we hated the idea, we were stuck with it; there’s no other way to run a company beyond a certain size. I just wish we hadn’t been forced to grow so quickly...which is what happens when you have too much money and overzealous investors.”

With Tootly’s team in place, Ben and Jacob set themselves to running the company and executing on their cheeseburger-fueled business plan. Instead of furiously coding and trading ideas back and forth, Ben and Jacob found themselves acting as random arbitrators -- they would vet ideas presented by the Product Pirates, judge wireframes provided by the Designer Savants, test prototype apps by the Developer Aspergers, and run through analytics with the Data Junkies. They spent time talking about performance and process with the Chief People Person, and poured over accounting and run-rate projections with the Chief Finance Dude.

Jacob was less enthused with his updated role than Ben. “I felt completely disconnected with the actual business. I spent an entire two hour meeting with the Data Junkies talking about optimizing our keywords on the app store to marginally increase downloads. That’s not innovative disruption; that’s being a miserly efficiency hound.”

Ben disagreed, and simply viewed the change as the necessary maturation of business. “In the months following funding, Jacob and I started to disagree on some of the material aspects of running Tootly. We didn’t argue on anything major, but it became increasingly clear that we had very different perspectives on growing a company.” Jacob put it less politely: “Ultimately, I wanted to build something different. Ben wanted to lead a cookie-cutter company, while I wanted to build a company that didn’t yet exist. Granted, we both wanted to build this company off the coattails of a fart app, so perhaps we were both misguided.”

Despite their minor disagreements, Tootly’s flagship $0.99 app continued to grow at a stunning rate, reaching nearly 600,000 downloads by the end of 2008. As 2009 dawned with positive momentum, Tootly launched new mobile apps. Based on (a surprisingly expansive) research Powerpoint done by the Social Media Ninjas and backed up by the Data Junkies, Tootly released three new novelty sound apps for the same $0.99 price point: Tootly Burp, Tootly Kazoo, and Tootly Wilhelm Scream. Tootly was renamed Tootly Fart, per the branding plan agreed by the Committee of Chiefs. Additionally, they created a combination app called Tootly Plus, which had all four novelty sounds for $1.99 (a 50% savings!).

It took them four rounds of development review for each app, three separate design reviews, several passes by the Data Junkies (who wanted to track app usage for some poorly defined, ominous ‘user action analysis report’), two rounds of Terms of Service modification with outsourced lawyers to ensure that Tootly could violate users’ privacy with impunity by secretly tracking them, and several post-mortems on each employee’s performance with the Chief People Person. All in all, four busy months passed between assembling the team and building the suite of apps. Ben was happy with the results; Jacob was somewhat less ecstatic. “It took us nearly a fifth of our funding to get to four novelty apps that Ben and I could have done on Jack-in-the-Box-level capital in a few weeks. Not to mention the stupid, baseless marketing validations and undefinable data collection strategy; why the hell would we want to know how many times per day someone was fake-farting? Oh, and somehow, we were convinced to run that goddamn Super Bowl ad.”

At the last minute, Tootly received a Super Bowl ad spot after some large bank pulled out (apparently it had just recently collapsed). It was a relative bargain; indeed, the only better deal that January was the purchase of said collapsed bank by the US Government. Sadly, both the Feds and Tootly discovered their great bargains carried hidden costs.

Ben somberly remembered the fiasco. “The Super Bowl ad was a costly mistake. Perhaps the costliest mistake. We spent $2 million on the spot, which turned out thoroughly offensive. Apparently mashed-up historic footage of famous dictators using Tootly was only successful at drumming up controversy rather than positive buzz. We were just trying to show how a little levity could brighten up anybody’s day, but clearly the contrast was lost. We had to pay another $500k to run a full-page apology letter in the New York Times.”

Jacob pulled no punches. “That ad agency should have been wiped off the map, to paraphrase Ahmadinejad, whose computer-generated visage featured prominently in the commercial.” Ben and Jacob had been convinced to run the ad after their Social Media Ninjas and Data Junkies showed an astronomically high return based on a fancy, indecipherable projection. Any time Ben or Jacob asked for the assumptions, the Data Junkies assured them the underlying model was sound. Unfortunately, their model didn’t take into account their Super Bowl ad falling flat; worse, no one stopped to think that perhaps Tootly’s momentum would die...because why would it die when things were going so well? With millions of dollars spent, a team assembled, and a new suite of diverse products, no one expected the downloads to stop. And then they did.

Copyleft MMXIV Josh Cincinnati