Giacomo ‘Peldi’ Guilizzoni founded Balsamiq in 2008 to “go for the smallest possible problem that I could solve by myself”. As a software programmer getting into entrepreneurship, he wanted a lifestyle business, something small enough that he’d be able to manage by himself for a long time.
Somewhat fortunately Balsamiq was too successful for that, and Giacomo was forced to hire more and more people. Balsamiq is now being built by 25 members, who service around 0.5M customers and manage 10,000 new transactions a month. All of it generating about $7M a year.
Not in a startup hub, with no desire to go in “stress mode” and with no investor, Peldi shares in this interview his perspective on building Balsamiq. “There is another way” he tells us while relating his experience in growing a federation of a team in a stress free environment.
A stress-free environment
Giacomo ‘Peldi’ Guilizzoni emphasizes his stumbling on a business niche was the foundation to building a stress-free environment. “We make an authoring / editing tool. We’re not in a marketplace position where you have a winner-takes-it-all situation. We’re not Amazon, we’re not Uber, we don’t need to be the only player in our niche. There can be several tools that can do similar things”, he explains. “And this niche is too small for venture capital and large companies. So for many years we did not have much competitive pressure and didn’t need to rush anything”.
1) Organic growth
Peldi goes on to explain how inspired he had been by the article “The Four Pillars of Organic Growth” by Joel Spolsky. “The quality of your product, its features, marketing efforts, the size of the company and the number of customers all have to follow the same growth curve if you want to grow organically – that’s kind of the philosophy of growth that we have. If one of the previous elements gets ahead of everything else then you’re in trouble. So if you have too many customers and not enough people to support them that’s a problem. If you have too many people and not enough customers it means you’re not running efficiently. If your product is not good, but you have great marketing you’re running ahead of troubles.”
“We especially kept this model in mind for the first years of Balsamiq. We could not keep up with demand and so with the Spolsky model in mind, I held back on features for instance, because we did not have anyone to support them.”
“Luis Arias, a Balsamiq employee, once told me that ‘money should never be a motivator, it should be a consequence’. It expresses my feelings very well” Peldi says. “If you’re doing everything right, the money will come. But you should do everything right because you want to do things right, not because you want the money.”
2) Focus on customer service
“We compete on usability customer service. We don’t do promotions, or bundles. We don’t want 1,000 new customers at once. That would be terrible, because we wouldn’t be able to support them as well as we want to. We’re here for the customers, it is what it is all about, so if they need us to hire more people to support them better, we do, but we want to do it gradually. And we don’t want coupon shoppers. We don’t want price sensitive customers. We want people who appreciate what we do, and we believe our pricing is fair for the value we provide.”
“Customer service has been on our company page from day one, and so on every release we focus on fixing a bunch of bugs and maybe a couple of features”, Peldi says. We realised people don’t want new features, they don’t want us to change things around once they’ve learned the tool. They want us to leave it alone.”
“For the first couple of years your product is still crappy, so you of course need to add new features all the time. But once you have enough customers that are happy with your product, you can slow down. Your customers will ask you to. We have around 0.5M customers with only 6 people in tech and sales support, so our product is solid enough by itself. We used to release every 2 weeks, and now we release once a month. Releases are also much smaller now that the product is more mature.”
3) Recruit ahead of time
Peldi describes how they would initially hire too late for lack of confidence in the future. “Now we hire a little earlier, we see we’re going to need a person 6 months from now and so we start looking for them, before it becomes a strain for the team. When we see we have a bunch of future projects and not enough people to work on them, we open new roles. It takes us a couple of months to recruit.”
“We usually put on a job posting on our website, advertise the role on different remote working websites and share it on our forums with our community”, Peldi reports. “We offer good benefits and we’re kind of a fun place to work. We usually get more senior people who have already proven themselves in other companies and now want to focus on the work itself and get really really good at it.”
A federation ins & outs
1) International individuals
“From day one, customer services has been something we like to compete on,” Peldi says. “So at the very beginning, as I found myself spending too much time doing customer services and not enough programming, I hired a programmer here in Italy. Then as more and more clients were calling from 9PM CET on, we hired a support person in California. And that sort of grew from there, we got set up in France, Germany, Holland, California, New York, Illinois…and we do want to be spread out globally for support.”
“But getting setup in a new country is a lot of work, you have to do a local contract, establish a presence as a company there, do local registration. Then you have to make sure you’re paying the right taxes and payroll taxes, so you need to find a local accountant and a local payroll person. So after going through all of it for a couple of years we really thought “this is crazy!”, so now we strongly favor hiring in locations we’re already set up in.”
“We have an office in Bologna, Italy with about 8 people working there. But most people at Balsamiq work from home most of the time,” Peldi points out. “So even in the office we try not to have conversations that are not in Slack. We have our channels on Slack, our weekly, our handbook and the internal tools we built to help us collaborate.”
2) Project minded
“We hover at around 70 projects going on at the same time in all different teams, with no people managers. In some teams you would be a project lead and some other projects instead you’ll be a contributor, in some other projects you’ll be an advisor”.
“Some areas of the company are called teams. We have specific product teams, tech and sales support teams, a doc team, and admin & finance team, and a team that works on the company itself. Teams come and go. Not that often, but we had teams appear and disappear”, Peldi goes on to explain. “And then within the teams there are these projects. People come up with projects and invite people to work on them. So for instance I am on almost every team, while some other people are on 2 or 3 teams and still other people are only on one team. People have ongoing tasks for each team that they work for and also projects that they work on.”
3) Distributed power
“I work on projects for almost every team”, Peldi says. “I don’t orchestrate these teams, I help. Each team has quarterly meetings where they look at what’s coming up. As we have a tool where we write down our ideas for future projects, every quarter we pick from the future project list together, and we work on those.”
There is a good mix of styles at Balsamiq. “We have one senior developer who’s very much at the forefront of technologies. When something is in beta it’s already too late, he wants to use it when it’s in alpha, and he pushes us forward. Meanwhile I’m the complete opposite, I subscribe to the notion that if it’s exciting it does not belong in production”, Peldi laughs. “And I think it’s very healthy to have people all along the spectrum.”
“People want to be able to be the master of their domain, make their own decisions and know they’re good at it. They want to study and get better at their work. They want to know that what they do matters to the company and to the world.”
Balsamiq people try not to have a stressful life. And so they try to take it nice and easy and be ready for change. “I’ve come to understand that really, change is not only inevitable but also a big part of a business life”, Peldi says.
Peldi explains that when the company was 6 years old it kind of felt like a teenager, a couple of years later it felt like someone is their 20’s, and now it seems to be someone in their 30’s. “You’ve got to be open to change. Expect that nothing lasts forever and try to make the most of the privilege that you have right now,” he says.
Over the years Balsamiq teams started paying for services instead of trying to do it themselves because now they have the money to do that and feel it’s worth it. “As a bootstrapped company, in the beginning time was the only thing we had. So it was fine trying to setup ElasticSearch or Kibana on our own servers. Then we put that same technology on AWS. And now we use Logmatic.io to do it. We’ve done the same thing for different pieces of technology that are non core to what we do”, Peldi explains.
Peldi goes on “Now we use a number of online services to power our business, such as desk.com, discourse.org and pubnub.com. For our own product we use AWS and gradually migrated to Docker and started using Convox to manage deployments.”
And then there’s an extra layer of change: these tools change too. “We try to gamble and pick big vendors, established vendors or vendors that are on the rise but that are not gonna get acquired. If you gamble on the wrong horse and they go away, then you’re in trouble. For instance we use Stormpath for authentication and now they’ve been acquired and we need to migrate to another API. The same thing happened for payment processing, we gambled on one that was over time eclipsed by Stripe. So we had to put lots of efforts in migrating to Stripe. These movements do have a cost.”
“Change is kind of inevitable, even for core technology. We built our product in Flash and Flash has died over time”, Peldi says. “But when I started HTML/JS was not good enough, I couldn’t have built Balsamiq with it, it didn’t have the right APIs yet. Then you have to adapt. The majority of our development team has been working on rewriting the app to get off of Flash for a couple of years. Now it is finished and it looks just like what we had before” Peldi giggles. “So in the end, some choices have lasted a long time while some others we had to reconsider. But overall I think we’re doing pretty well.”
Balsamiq processes evolved too. “When you’re 20 people you cannot work as a team of 5. As we’re trying to make Balsamiq better and better, we have a team for continuous improvement called Kaizen. We meet once a month. People come up with projects for things to improve and we work on them together.”
“In the beginning we were 5 or 6 joining in these Keisen meeting and we would simply hash it out together. Now that we’re 25 people it has become too big of a group. Some people do not feel free to speak anymore. So now we call for volunteers that form small groups of 4-5 people to work together and report back with proposals to the larger Kaizen team.”
“Another example would be onboarding new team members. Initially our handbook was kind of all in my head and people got to know “the Balsamiq way of doing things” because we were such a small team. But as we hired more people it was more complicated for them to learn these informal policies. So when we were about 10, event if it initially felt too corporate, we spent a few months writing down our policies in a handbook. So now a new hire’s first week is basically spent reading the handbook”, Peldi says. In the end, accepting to repeatedly change the destination they had in mind was as instrumental to the growth of Balsamiq as its organic growth philosophy or its federation organisation had been. – And I personally cheer to such a lovingly refreshing company!
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