Company Ownership or Upside?

Clint Argyle, a friend of mine who is also a very successful entrepreneur shared a while back how he handles that awkward and inevitable moment when a key employee comes to him and asks for ownership in the company. Invariably, these employees feel like they have put a lot into making the company successful, and they want to have a piece of it.

Clint tells them, “You do not want ownership. What you want is ‘upside.’” They look at him funny and ask what he means. He asks, “If our company has it rough next month, are you willing to go off salary?” The employee invariably says, “No, I want to get paid for my work.” He then asks, “Are you willing to mortgage your house if we need help to cover the rent on the building? If things go bad, are you going to help do the layoffs? Are you willing to only be paid on the good months so that we can make sure our employees are taken care of?” The employee usually responds, “No!” Then Clint explains, “What you really want is upside. You don’t want ownership.”

Ownership involves ultimate responsibility. This responsibility is there through thick and thin. And as Clint went on to point out, there’s a vast difference between upside and ownership. Most people want rewards, not responsibilities. That’s why companies set plans up that give upside bonuses as they achieve success. Profit-sharing plans and goal-oriented rewards are great upside plans. However, those who are willing to sign the personal guarantees and put the money in up front are the ones who should be the ones that own the business.

Ownership or Upside?

  • You must have an honest (and documented) conversation with all potential partners about ownership vs. upside. Who is willing to risk what? How will the tough decisions be resolved?
  • Do not put yourself in a position to be responsible for one hundred percent of the downside and a smaller percent of the upside. Partners share upside and downside equally.

This post is a part of the book Bootstrap Business: A Step-by-Step Business Survival Guide. You can get the book at http://bootstrapbusiness.org/book.php

Create Fun And A Little Weirdness – Core Values of a Billion Dollar Online Shoe Company

One of the things that makes Zappos different from a lot of other companies is that they value being fun and being a little weird. They don’t want to become one of those big companies that feels corporate and boring. They want to be able to laugh at ourselves. We look for both fun and humor in their daily work.

This means that many things they do might be a little unconventional — or else it wouldn’t be a little weird. They are not looking for crazy or extreme weirdness though. They want just a touch of weirdness to make life more interesting and fun for everyone. They want the company to have a unique and memorable personality.

The company culture is what makes them successful, and in their culture, they celebrate and embrace diversity and each person’s individuality. They want people to express their personality in their work. To outsiders, that might come across as inconsistent or weird. But the consistency is in their belief that they function best when we can be themselves. They want the weirdness in each of their employees to be expressed in our interactions with each other and in their work.

One of the side effects of encouraging weirdness is that it encourages people to think outside the box and be more innovative. When you combine a little weirdness with making sure everyone is also having fun at work, it ends up being a win-win for everyone: Employees are more engaged in the work that they do, and the company as a whole becomes more innovative.

Embrace and Drive Change – Core Values of a Billion Dollar Online Shoe Company

Part Of Being In A Growing Company Is That Change Is Constant.

For some people, especially those who come from bigger companies, the constant change can be somewhat unsettling at first. If you are not prepared to deal with constant change, then you probably are not a good fit for the company.

We must all learn not only to not fear change, but to also embrace it enthusiastically, and perhaps even more importantly, to encourage and drive it. We must always plan for and be prepared for constant change.

Although change can and will come from all directions, it’s important that most of the changes in the company are driven from the bottom up — from the people who are on the front lines and closest to the customers and/or issues.

Never accept or be too comfortable with the status quo because, historically, the companies that get into trouble are the ones that aren’t able to respond quickly enough and adapt to change.

We are ever evolving. If we want to continue to stay ahead of our competition, we must continually change and keep them guessing. They can copy our images, our shipping, and the overall look of our web site, but they cannot copy our people, our culture, or our service. As long as embracing constant change is a part of our culture, they will not be able to evolve as fast as we can.

Zappos Core Value #2

Core Values of a Billion Dollar Online Shoe Company

After reading about the company culture at Google over 10 years ago I have since been interested in the many varieties of business culture. I recently took a Business Organizational Effectiveness course and my interest has been reinvigorated. One of the companies I have admired for the last couple of years is Zappos.com. Zappos is a company that sells shoes online and was started in 1999. In just under 10 years Zappos has grown to become the largest online shoe store and this last year grossed over a billion dollars. They were just recently acquired by Amazon for 940 million dollars.

The reason I have been interested in Zappos all these years is because I have wondered how the heck a company that sells shoes and has a weird name has been able to achieve so much. The main reason I believe they are so successful is their focus on customer service. I have once read where they call themselves a Customer Service Company that sells shoes. This is the perfect explanation of who they are.

Zappos is special and I am going to try to share how. For the next 10 weeks I am going to share each one of the Zappos Core Values. If you want to jump ahead of the weekly posts go to http://about.zappos.com/our-unique-culture/zappos-core-values

Zappos Core Value #1 – Deliver WOW Through Service

At Zappos, Anything Worth Doing Is Worth Doing With WOW.

WOW is such a short, simple word, but it really encompasses a lot of things. To WOW, you must differentiate yourself, which means doing something a little unconventional and innovative. You must do something that’s above and beyond what’s expected. And whatever you do must have an emotional impact on the receiver. We are not an average company, our service is not average, and we don’t want our people to be average. We expect every employee to deliver WOW.

Whether internally with co-workers or externally with our customers and partners, delivering WOW results in word of mouth. Our philosophy at Zappos is to WOW with service and experience, not with anything that relates directly to monetary compensation (for example, we don’t offer blanket discounts or promotions to customers).

We seek to WOW our customers, our co-workers, our vendors, our partners, and in the long run, our investors.