The Naive Optimist

I’m using a pretty powerful execution ‘operating system’ to really crank on my fitness goals. It’s called The 4 Disciplines of Execution. We’re using it at Treehouse and it’s freaking awesome, but I’ve also applied it to my personal life.

My WIGs (Wildly Important Goals) are:

1. 180 lbs
2. 12% Body Fat

My Lead Measurements (what I can control every day) are:

1. Lift weights 3x per week
2. Run 0.25 miles and do 10 burpees (4 sets), 3x per week
3. Eat 270g protein per day (body weight x 1.5)
4. Do 400 situps per week
5. Avoid alcohol, 3x per week

And my Scoreboard is here.

If you don’t know what 4DX is, I’d highly recommend reading the book. It’s had a huge affect on my business and my personal life.

I’ve been running my own businesses for 10 years and I’ve learned something:

Entrepreneurs who change the world aren’t self-made. They’re just …

1. Born at the right time, when large world-wide patterns are changing
2. Passionate about one of these world-changing patterns
3. Able to create or raise capital
4. Happy to take risks

We like to believe is that there’s some secret formula to building a big world-changing business. We believe that if we can just turn the dials just right, our graphs will hockey-stick upwards and our company will change the world.

Not true. 

I know because I’ve experienced it.

My Experience

My three first business were small time:

1. FlightDeck - A tool to send large files to clients for approval. Just me, doing less than $12,000 per year in revenue. Fizzled out because I priced it too high for a self-serve model.
2. DropSend - A freemium tool for sending large files. Just me and a part-time Developer, doing $300,000 per year in revenue. Sold the whole business for around $450,000.
3. Carsonified - An in-person training company for Web Designers and Developers. Grew to about 12 full-time folks, doing around $2m per year in revenue. Sold in 2011 for a pretty poor multiple on revenue.

Treehouse is a completely different beast. 75 full-time employees (hiring a ton more), on track to change millions of people’s lives, raised $13m+ of capital, working towards doing $100m+ of revenue, etc.

I’m the same guy, so what’s the difference? Why am I on the cover of a magazine all the sudden?

Here’s why: I’m passionate about a world-changing pattern, at the right time in history. Notice the cover talks about igniting a revolution, not tweaking the numbers to increase EBITDA by 1.2%.

The world-changing pattern is this: The ability to become job-ready and get a job is being de-coupled from the university degree and simultaneously, there is an explosion of related well-paying tech jobs.

I’m hell-bent on creating an online school that actually makes people job-ready, without debt, and then helps them find a job.

There’s no guarantee we’ll succeed, but I’m going to die trying. I can’t wait to see what the future holds - it’s going to be one freaking exciting ride.

I’m old enough to finally realize that I’m not leading Treehouse because I’m a baddass entrepreneur. I’m just fucking lucky.

Recently I finally hit some sort of exhaustion with always being distracted by my phone. Every time I stood still I would grab it out of my pocket. Every time I went to the bathroom, I would check some email. Every time I had a minute to think, I would open an app.

The problem with all these micro-phone-checks is that they were never long enough to really process anything mentally. A couple Tweets here, a quick email response there, but no sustained thought or focus.

So I deleted Facebook, Twitter, Instagram and my Gmail off my iPhone.

So far it’s been shockingly nice. I thought I would be fine without the social networks, but I didn’t think I’d be able to get by without email on my phone. Crazily, I’m doing just fine.

When I come home from work, I just leave my phone by the door because there’s nothing to do on my phone. I’m finding it’s easier to focus on my two boys (age 3 and 6) and my wonderful wife. I’m just more present.

I went to a Chinese restaurant last night to pick up some food and while it was cooking, I just sat at the bar and drank a beer. There wasn’t anything to do on my phone so I didn’t get it out. It was such a refreshing and strange feeling to just look around and soak in the environment. I noticed a huge amount of detail I would’ve never seen previously.

I hope this is another nail in the coffin of all the work-till-your-eyes-bleed-and-your-wife-leaves-you crap that most ‘successful’ entrepreneurs spout.

I have 75 employees and 90,000 Students and it’s working just fine.

I get a lot of emails, phone calls and tweets that can be summarized like this …

If you don’t have managers, and the team is distributed around the World, who decides priorities and makes decisions about the product?

Great question! We have 70+ full-time employees, 70,000 Students and are doing over $10,000,000 in revenue a year, so let’s dive in …

I’ve already blogged about how we set company-wide priorities but what we’ve discovered is that everyone needs three views:

1. 30,000 foot - What are our company-wide goals? What’s our market and our business plan?
2. 5,000 foot - What are our current, next and near-future Projects, broken down by ‘Focus Areas’ (more on that below)
3. 10 foot - What should I do today?

30,000 foot

My Co-Founder, Alan, and I set our company-wide goals and mission. We communicate this in two ways:

1. Company-wide meetups once a year where we all get together for a week at a hotel to hang out, drink, and go in hot tubs (a lot).
2. Monthly 15-minute videos where we talk about big-picture things we see happening.

5,000 foot

We use three primary tools for project management and communication at Treehouse: Flow, Convoy and HipChat.

Flow is our project management software, Convoy is our company-wide forum and HipChat is for chat.

What Convoy and Flow weren’t doing is helping people understand what everyone else was planning on doing next, and in the near future. A lot of companies use a 90-day plan but we don’t do that because there isn’t a management team to decide what’s important - everyone decides. However, this leads to a ton of conversations that went like this:

I see this big problem/opportunity over here. Does anyone know about this? Is anyone planning on tackling this at some point? What’s our plan in this area?

Eventually we’ll wind this into Flow, but for now, we’re using a very simple Google Doc that’s broken down like this:

Marketing

1. Current Projects that are high priority
2. Next Projects that are high priority
3. Future priorities

Education

1. Current Projects that are high priority
2. Next Projects that are high priority
3. Future priorities

Operations

1. Current Projects that are high priority
2. Next Projects that are high priority
3. Future priorities

etc …

Focus Areas

The above three areas (Marketing, Content, Operations) are examples of what we call Focus Areas. They are teams of people that tend to focus on specific parts of the business. They are comprised of many different types of job roles like Designers, Developers, Teachers, etc.

People choose to join or leave these Focus Areas as they see fit (providing that it won’t hurt the team). Realistically that doesn’t happen very much. People seem to be staying inside their chosen Focus Area.

When a Focus Area wants to add more people to itself, they OK it with me and my Co-Founder and then when we hire new people, they can choose which open slots they want on Focus Areas with open slots.

10 foot

Since we don’t have managers, everyone decides what they do with their time, 100% of the time. If you want to read more about how we decide what to do every day, and communicate that to others, head over here to my post on Quartz.

What about the Product?

We have a way to set priorities and communicate them clearly, but isn’t our Product going to end up disjointed because there isn’t one strong vision? 

I can only speak from experience and I have to say that, in my humble opinion, the user experience on Treehouse is great. Do we have problems? Yes. But on the whole, I’m very proud of what we’ve built - all without 90-day plans, managers and a big office that everyone has to commute to every day.

[Thanks for the photo gerrydincher]

This is the fifth article in my series on why we removed all managers at Treehouse. Here are the other articles … 

• Part 1
  • Why we removed our managers
  • What managers actually do
  • What really motivates people
• Part 2
  • How people choose what to work on
  • How priorities are determined
  • How Projects work and what tools we use
  • How budgeting works
• Part 3
  • How career progression works
  • How compensation works
  • How reviews and discipline work
• Part 4
  • The tools we use for communication (I only answer around 10 emails per day)
• Part 5 (this article)
  • The six cons of a #NoManager company

Negative #1: Lots of chaos

Normally companies have a tightly controlled priority list (determined by the executives and communicated down the ranks) and all activity is focused on this.

Being a part of a #NoManager company feels like being part of an ant colony. Everyone is really busy doing something. It’s not entirely clear what’s happening, but there is a lot of activity and eventually large structures/tunnels get built. 

I know for a fact that we have Projects that were started and eventually abandoned because another Project was conflicting or duplicating their work. This is obviously a waste, but we feel that some waste is inevitable and we’d rather take a slight hit on productivity than happiness.

The chaos comes from the fact employees in a #NoManager company do something because they think it’s important, not because someone asked them to do it. There isn’t someone above them that can say “I know exactly why PersonX is working on ProjectY”. This feels chaotic because as a CEO, I want to know and control what everyone is working on, but I can’t.

Negative #2: Coordination is very hard

We don’t have Managers to coordinate across Projects so it’s up to individuals to take time to communicate what’s happening on their Project and how it affects others. Non-Managers aren’t used to the level of communication needed to coordinate with other Teams and Projects so there often is not enough proactive communication and coordination.

What is supposed to happen is that folks can read the status updates from other Projects to get a sense of what is happening and how they should act. People get busy though and this often doesn’t happen.

We’re learning that we need to decide as a company what our quarterly goals are, and then propose Projects accordingly. That high level coordination happens at the beginning of each quarter as we set our goals and priorities.

An example of this is that me and my Co-Founder decided we could probably hit a goal of $X million in revenue in Q1 of 2014. We then asked the Team to set their own priorities for how they can make that happen. It took us about two days to hash this out over Convoy and Google Hangouts. Once that was done, then each Team communicated to the whole company what they were planning on doing in Q1.

Negative #3: Starting Projects can be slow

In the past the executives would create a 90-day plan, communicate down to the managers and people would start working. It didn’t matter if the troops thought the priorities were good or bad - they just did what they were told.

Now you have to propose a Project, explain it thoroughly and convince people to join. This process can take weeks or months. Often no one wants to work on your Project and it dies. 

Negative #4: I can’t make people do things

Pre #NoManager all I had to do to get something done was ask someone. As the CEO they had to do what I said. Now I have to convince people that they should do something. It’s much better for the company but extremely frustrating for me. I’ve had people tell me they don’t have time or aren’t interested in my ideas. It sucks but it’s part of running a #NoManager company.

Occasionally my Co-Founder and I will absolutely need something to happen. If that’s the case, we “pull our Co-Founder card” and politely ask someone to get something done. We try to do this as little as possible but it does happen occasionally.

Negative #5: It takes longer to understand what’s going on

In normal companies all the CEO has to do is have a meeting with his executive team, and he’s up to speed. Not in a #NoManager company. When I return from holiday and I’m out of the loop, I have to spend about two days reading through status updates and chatting to people. 

It’s frustrating. I’m not going to lie.

Negative #6: Harder to hire people

Hiring people in a #NoManager company is a collective decision so it takes longer. Tommy Morgan describes our general process for hiring Developers (which is similar to other roles) in this post. The final step in that process is that the team (for instance the Design Team) has to all agree they should hire this person. If anyone has doubts, then we don’t hire.

A lot of people think they want to work without managers, but actually they like the security of someone telling them what to do every day. This means working at a #NoManager company isn’t right for everyone, therefore cutting down the potential number of people we can hire. 

I just completed Jim Stoppani’s Shortcut to Size program and I’m really happy with the results! The goal was to get to 185lbs and gain as little fat as possible.

Here’s the data:

Measurements (inches) Aug 19 to Dec 9

• Pecs 38.75 -> 40.75 = +2.00 (+5.16%)
• Bicep 11.875 -> 12.7953 = +0.92 (+7.75%)
• Waist 35.25 -> 37.0079 = +1.76 (+4.99%)
• Thigh 19.75 -> 21.4567 = +1.71 (+8.64%)
• Calf 13.375 -> 14.4685 = +1.09 (+8.18%)
• Weight 172.6 -> 188.0000 = +15.40 (+8.92%)
• Body Fat 12.90 -> 14.00 = +1.10 (+8.53%)

I used the BodyMetrix Personal to measure my body fat.

Increase in strength

Those are exciting results for me but the thing that blows my mind is how much stronger I am now. Here’s some sample data (pounds, 3-5 reps):

• Bench 95 -> 190 = +95 (+100%)
• Squat 95 -> 220 = +125 (+132%)
• Lat Pull Down 75 -> 180 = +105 (+140%)

My shoulder is healing so I skipped Shoulder days, so I only worked out three times a week, instead of the prescribed four times.

I followed the nutrition and supplement advice pretty strictly. It was not comfortable to increase to 3200 healthy calories per day but after awhile my body started to need the calories as I was more and more hungry.

The major cons to this program are time (6 hours per week, including travel to/from the gym) and the cost for eating a lot of protein/supplements.

My next goal is to get to 195 lbs and 12% body fat. I’ll be doing this with Stoppani’s Shortcut to Shred program.

Jim has been very supportive and responsive over Twitter. He’s a breath of fresh air in the murky world of weight lifting and fitness. He’s got a PHD, he’s ripped and he’s open and real.

Has anyone else had experiences they’d like at share?

This is the fourth article in my series on why we removed all managers at Treehouse. Here are the other articles …

• Part 1
  • Why we removed our managers
  • What managers actually do
  • What really motivates people
• Part 2
  • How people choose what to work on
  • How priorities are determined
  • How Projects work and what tools we use
  • How budgeting works
• Part 3
  • How career progression works
  • How compensation works
  • How reviews and discipline work
• Part 4 (this article)
  • The tools we use for communication (I only answer around 10 emails per day)
• Future articles
  • The pros
  • The cons
  • The future

Communication Tools

We actively discourage use of email because it silos information, discourages accountability and causes busywork. The default mode of communication at Treehouse is ‘public’. This is important because without managers, everyone needs to be able to drop into a Project and understand where it’s at. If all the progress and information is hidden away in email, no one can access it except the sender and receiver.

We have four primary tools:

1. Convoy - General discussions, celebrations, animated GIFs, banter and trolling
2. Flow - Project status
3. HipChat - Group chat and IM
4. Email and Docs - Google Apps

Our hope is to open source Convoy and Flow at some point, but it’s not high on our priority list right now.

Convoy

We’ve found that the forum model works really well for company-wide discussions. We built a simple Reddit-clone to do this (read more on that here) called Convoy.

Email is a terrible tool for group discussion because …

1. It clutters everyone’s inbox
2. It’s hard to parse discussions because of the lack of threading
3. You have to evaluate if you should open/archive/delete/star each incoming email

Convoy is great for company-wide discussions because …

1. You only read/interact with things that interest you
2. Voting up/down adds a subtle and quick way to interact with other people without having to type
3. We have person-tagging so that if you want someone to see something, you simply type @persons-name and they get a notification inside Convoy (not email).

Convoy has worked wonderfully for us. We use it for …

1. Discussing competitors
2. Throwing around ideas
3. Trolling each other and having fun
4. Celebrating victories
5. Discussing industry news or trends

The drawback of Convoy is that it can be distracting. You need to have a highly disciplined team to self-police themselves. This is a general drawback of #NoManagers - it’s noisier and more chaotic. Our belief, however, is that creativity and innovation arise from the chaos.

Flow

Since we don’t have Managers to decide which ideas get implemented, we had to build a simple tool to allow anyone to propose ideas and tell the whole Team.

I explained how we use Flow in this post, so if you want details, please head there.

Once a Project is started, there is a discussion forum attached to the Flow project. If you want to discuss something then you create a new discussion thread. Everyone who’s joined the Project is then emailed so they can stay in the loop. We felt email was necessary because if you’ve joined a Project, then you should be aware of all discussions related to the Project. 

Every day, you update your status on the Project in Flow. This way anyone can drop by the Project page and see what’s happening, without bothering anyone.

The actually project management happens outside Flow. Each Project chooses whatever software or system they feel is best suited for the Project. This has caused some friction in the company as some people want Flow to also offer Project Management functionality (like Basecamp or Trello). I’ve been against this idea as I feel it could bloat pretty quickly into a Trello/Basecamp clone, which is overkill.

Flow is basically a simple communication tool: Which Projects are happening, who is working on them and what their current status is.

HipChat

We use a group-chat/IM tool called HipChat. It’s a desktop/mobile/web app for private group chat. We currently have 23 rooms spanning everything from 'Design’, 'Marketing’, 'Audio’ to 'The Nerd Herd’.

Anyone can create a room and they’re primarily used for quick-fire chat related to Projects. Because I’m the CEO, I join almost all rooms so I can get a birds-eye view of what’s happening.

We ask everyone in the company to log into HipChat during work hours. We’re spread out over the World so everyone needs to be contactable.

Email and Docs

We use Google Apps for our email and documents. We use commenting and live-editing in Google Docs quite a bit. We only use Excel for finances (Google Spreadsheets can’t handle the complex spreadsheets we need for financial models).

Email is email. Blech. Here are the email rules …

1. Don’t use it unless it’s your last resort
2. Never discuss Projects in email. Use the discussion forum in the Flow Project. All information should be as public as possible.
3. Don’t worry about inbox zero. Focus on your Projects in Flow. Ideally check your email only once or twice a day.

Urgency

We use this rubric to determine the urgency of communication …

• Phone or Google Hangout: Need an answer immediately
• IM or Text: Need an answer in the next hour
• Flow Discussion: Need an answer in next day or two
• Email: Need an answer in next day or two
• Convoy: No answer required

Next time ….

I’ll cover the large Pros and Cons to a #NoManager company.

[Thanks to chrisperriman for the photo.]

This is the third article in my series on why we removed all managers at Treehouse. Here are the other articles …

• Part 1
  • Why we removed our managers
  • What managers actually do
  • What really motivates people
• Part 2
  • How people choose what to work on
  • How priorities are determined
  • How Projects work and what tools we use
  • How budgeting works
• Part 3 (this article)
  • How career progression works
  • How compensation works
  • How reviews and discipline work
• Part 4
  • The tools we use for communication (I only answer around 10 emails per day)
• Future articles
  • The pros
  • The cons
  • The future

No Ladder to Climb

Now that we’ve removed managers, there isn’t a traditional career ladder to climb. At most companies the way to get more money and influence is by becoming a manager. How does this work in a #NoManagers company?

Everyone is hired at Treehouse at an industry-standard salary level that matches their job description. Most of our team is distributed and outside of expensive outlier markets (like Silicon Valley or NYC). 

The only way to get a salary increase is by performing consistently well in reviews. We don’t have a profit-sharing plan or bonuses (other than the sales team which has a traditional sales team bonus structure).

One of the great advantages of a #NoManager company is that people aren’t forced to go into management to get more money or increase their power. Instead of climbing the corporate ladder they can focus on getting better and better at what they love and were hired to do.

Peer Reviews

Accountability is vital for #NoManager companies to succeed. Since no one is telling anyone what to do, slackers could just sit around and do nothing, right? Peer Reviews make sure that bad folks are rooted out and asked to leave the company. We chose to implement a system that’s similar to the 360 Degree Review but with a twist. I’ll explain how it works below.

How Reviews Work: The Review Cycle

A Review Cycle will occur every three months. Each person writes anonymous reviews of colleagues that they’ve worked with closely since the last review period*. For example, if you were a Developer and you worked with a Designer and a Customer Support person on a Project, you’d review both of them and they’d both review you.

* What does “worked with closely” mean? Typically this would include anyone you worked with on a Project or product since the last reviews occurred. It will also include people you collaborate with closely even if you aren’t explicitly involved on a Project with them - for example, Designers are going to be in constant communication and will collaborate with each other on ideas even if they’re not officially on Projects with each other, and we want to be sure to capture that interaction in our review process. If a Project is extremely quick (for example, less than a day) then a review isn’t needed.

The great thing about only reviewing people that you actually worked with, is that you know if they were any good at their job. You experience it first hand, instead of through a manager’s report or through occasional interaction.

Everyone is expected to write a solid review in ~15-20 mins, per person. It could take much less time if we’re organized about keeping notes between review cycles. 

Reviews are submitted to a Review Committee made up of myself, Alan (my Co-Founder), Mike (CFO) and Rich (Accounts). The Review Committee then reviews all submissions and asks for clarification if needed. Afterwards, they anonymize and consolidate all reviews on an individual into one Review Document. That document will be used to guide the review (in-person or Google Hangout between person being reviewed and the review committee). Each person gets a copy of their review documents. 

The Review Questions

You rate your colleague on the review form (we use a password protected form on Wufoo) on the following things:

1. Objective judgement
2. Communication
3. Energy giver, positive working style, attitude and effort
4. Level of skill

You have to choose between 1 - 5 for each area and can add accompanying text to explain your answer.

1. Outstanding
2. Exceeds expectations
3. Meets expectations
4. Below expectations
5. Unsatisfactory
6. Not applicable

We also have an optional text field for additional comments and/or constructive criticism for the person you’re reviewing. 

We also ask everyone to answer the following questions about themselves:

1. How do you think you are doing?
2. How do you think Treehouse is doing?
3. How do you think your team is doing?
4. What’s keeping you from doing the best work of your life?
5. Is there anything else you think the Review Committee should be aware of?

Good vs Bad Reviews

If someone performs below expectations they will most likely not be recommended for a raise. Depending on the circumstances for why they performed below expectations, they may be issued with a formal warning to improve performance. If subsequent reviews are below expectations again and performance hasn’t improved, they will probably be asked to leave Treehouse.

Major Cons

Two large drawbacks to this Peer Review system so far are:

1. It is very time consuming. As we grow the company we’ll need to find a way to make this as seamless and easy as possible. Theoretically it should scale as there’s a practical limit to the number of people you can work closely with during a 3-month period - no matter how large the company grows.
2. People weren’t as harsh on each other as they should’ve been. Our belief is that because we only finished the first review cycle that people are just getting used the the system. In the future however, feedback will need to be much more constructively critical to be valuable.

Raises

Alan and I are in control of raises. Recommendations from the Review Committee and Treehouse’s financial situation will be the key determining drivers of whether or not a raise will be given. As of now, there are two types of raises that can be awarded at Treehouse: 

1. Good Performance Increase

The key input to determining performance is the peer review process. The review committee will look at all the feedback compiled, and contextualize each individual performance within the company. People who perform well will be awarded with increases to their salary. We may also take into account other factors, for example student feedback. The Review Committee has established basic salary bands for each job role and when a salary increase is awarded, the person goes up to the next level. There is an eventual ceiling to the salary level for a job role. If someone wants more money once they’ve hit the ceiling, then they either have to change jobs to a more lucrative position (but they’ll have to apply for the job like normal candidates) or leave the company.

2. Cost of Living Increase

Everyone who is performing well will receive a cost of living increase for their hard work. In Q1 of each calendar year, everyone that is performing at or above expectations will be awarded with an increase in their annual salary. This increase will most likely be based on inflation, but will also take into account market rates and conditions. 

Confidentiality

It’s important to keep reviews confidential. This encourages more direct feedback. People shouldn’t share the content of their reviews with anyone other than the Review Committee. Sharing reviews with anyone outside this group will mean you’ll get an automatic official warning, and possibly be asked to leave Treehouse immediately.

Next time …

I’ll cover how we hire and fire, more detail on how we coordinate Projects and finally, Pros and Cons.

[Thanks to nickstone333 for the photo]

I decided to tattoo things on my body that are core to who I am. My wife is the first on that list. Got the outlines done and today I’m going back for the color.

The Lion and Unicorn are from the British Passport and the Teacup symbolizes England, as she’s from St. Helens, UK.