Balsamiq is continually a great example for other entrepreneurs as well as an example for a small independent web business. Another great post welcoming the new employee and updating us on how it will change and improve the business further!
Why not just get a couple support couple people at a low salary and put all that profit away? If sales keep going the way they're going for the next couple years you'll have more money than you'll ever need. And you can always sell it off for a lump sum whenever you want. If you take the risk of trying to build a bigger company you could end up walking away with much less.
I'm definitely not opposed to sharing slices of a bigger pie, but in this case it seems unnecessary.
I've found a lot of startups seem to think that support is a lower level task and should be outsourced to the lowest bidder. The thing is, your customer support is your company. It's how your customers interact with you as a company, and it's how they form opinions of whether they like you or not.
In my experience, great customer support is often far more valuable than a bug-free product. Bugs happen, but if a customer runs into a bug and then gets great support from your support staff -- they switch from a skeptic to a passionate customer who tells everyone about your product.
I completely agree. I meant low pay relative to the kind of money/equity a COO generally receives. That doesn't mean you have to provide low quality support.
Hi staunch, although Valerie's job title accurately describes what she's going to be doing, it's also meant as a bit of an inside joke since she won't be managing anyone. And while she's not getting any equity nor a big salary yet, I hope to be able to offer her both one day!
Hi Peldi, thanks for the replies. My goal was just to bring up the topic for discussion generally because it's an issue everyone deals with at some point and there's no "right" answer. Everyone has to make their own decisions and I'm sure you're making the right ones for you. Thanks again and good luck.
I think most founders (who are not already wealthy) would rather get rich than have a good time doing their startups. I think you really do have to choose sometimes. If you always choose to do the easy thing (like hire people to do things you could do yourself) you're not going to do as well as if you chose to suffer some pain.
Scenario one: Pocket $500k/year profit over 4 years. At the end you've got $2 million saved up and can probably sell the business for another couple million because it's lean, proven, and profitable.
Scenario two: Spend that $500k/year on salaries while trying to build a much larger business. If you fail you could walk away with nothing and selling the business isn't all that profitable because the burn rate seems to be high. Even if you succeed you've likely given a lot of equity away, it may take much longer, and your share might not even be as much as if you had taken the other route.
That may be true for 'most' founders (although I suspect it is far from universal), but I think it is fairly evident that Peldi has chosen the latter path. See:
http://www.balsamiq.com/blog/?p=587
Peldi doesn't seem to be viewing Balsamiq as a stepping stone to getting rich and working on his next project in pursuit of some unknown end state; for him, Balsamiq IS the end state (or he hopes it will be).
If you really truly enjoy what you're doing - and it is clear he is - is there really any point to suffering some optional pain in exchange for a greater payout at the end?
(Standard caveat - Peldi, if you're reading this and I am way off base, please feel free to correct!)
Hi gwc, Peldi here. You go it exactly right, Balsamiq is not a 'startup' in the pg sense, but rather a lifestyle business...I hope to be working on/for Balsamiq Studios for as long as possible, and to continue to have a great time doing it. The goal is to build a small company of rock-stars who do great work, delight our customers and love to work together every day. What's not to like? ;)
Congrats, you should do a year wrap up post(I'm pretty sure you haven't done one yet, and you hit the 1 year milestone recently) and list all the accomplishments for Balsamiq from start to finish.
Hi vaskel, thanks for the idea. I consider launch date (6/19) to be the yearly milestone, so we're not quite there yet. I already have something planned for that day, but I probably will do a yearly summary at the end of 2009, just like I did for 2008: http://www.balsamiq.com/blog/?p=531
I think he mentioned it somewhere on his blog before, but does anyone know what financial software he uses/used to generate the charts and graphics for his earning posts?
Actually I hope that you can transition to a nonstandard "big" business. Maybe one like 3M - a lot of products, with a lot of autonomy in each product division.
