The Broken Startup Process

What’s wrong and how we plan to fix it

Late in 2012, I found a cease and desist in my mailbox.

Over four years I had developed and ran a couple products around a popular classified site.

It started in 2008 with an image hosting site that grew quickly and at one point served 2 million unique visitors a month. Then in 2011 an Android app to search and post to the classified site, which has been installed over 200 thousand times.

The whole time I worked alone. I was the system admin, the database administrator, the PHP developer, the Perl developer, the Android developer, the marketing department, the support department, and now the legal department all in one. I did everything from manually deleting nude photos to setting up Bind servers.

As I read the cease and desist which referred to a clause in their terms of use that prohibited development of mobile applications, I reminisced over all the work I had done and became infuriated. However as a lone developer, I had little power and my work would eventually be squashed out of existence. I decided for my next venture I would form a company more resilient to such circumstances.

Building a team was imperative. When working alone you are forced to fill so many holes, that you rarely have the time to do anything properly. In a constant state of compromise which can demotivate and exhaust the most resilient, lone developers are often relegated to chase small ideas with an incredible inefficiency. Overly reliant on other companies, they stand at the bottom of the food chain. In my mind, a serious pursuit would require a team.

As I set out to build a team, I ran across a much bigger problem.

I began by scouring my personal network. Having worked alone for so many years and generally being an introvert, my network was small and contained few developers.

My pool was narrowed to three potential people : a friend who studied computer science, another friend who studied physics, and a friend of a friend who made a website once. We were nearing graduation, so I sat down with my friend from the CS department and pitched to him a partnership. He found the idea compelling but told me he was accepted to a strong master’s program and couldn’t handle the risk. My other friend was in a similar position except with physics. I didn’t bother contacting the third guy.

Maybe it was my fault the pool was so small. Generally I avoided anyone who would ask me what I did. And except for the occasional drunken night, I rarely professed my love of AWS in a public setting. Networking was repulsive to me, but I had to venture out of my comfort zone.

First step, was to set up a profile on MeetUp.com. I searched for groups related to web technologies and entrepreneurship. After a few moments of cringing at the photographs of people meeting each other, I booked two events.

One was an Android group and the other was an HTML5 group. For Android there was about 80 to 100 people and for HTML5 there was about 20 people in the room. In each room there was a couple of intimidating people, a recruiter, and a random group that wondered in for pizza.

After the talks ended, I walked around the room and jumped into some conversations. It was quickly apparent that most people in the room were either beginners or had never programmed. Except for the organizers, there were very few professional programmers in the room. And the few I found were older men who had long lost their inclination to pursue anything ambitious.

I was at a major disadvantage, I was in Dallas, Texas. The concentration of technical talent was small, and it could take me months to find and convince just one other person to partner with. For a second I entertained the thought of moving to San Francisco, joining a startup, going to conferences, and building up network. But I quickly realized how absurd the whole process was.

In an age where people can start revolutions via a tweet, I was going door to door to start a company.

The web is the best distribution system ever devised. It’s cheap, fast, and allows anyone to participate. Yet the companies building it, are formed out of closed, inefficient networks. Outside the network anyone can participate but major disadvantages arise that make many ventures moot. Even for those inside, pursuits often hinge on the willingness of venture capitalist to absorb immense amounts of risk.

The problem was real, I faced it head on and began working on a solution. I imagined a place that people could spontaneously come together and prototype an idea, possibly without any venture capital. A place where anyone in their spare time could participate in forming a company. A place where a completely dynamic workforce could reside.

Over 6 months I worked alone to build an alpha version. At which point I stopped to look for partners again.

Being new to Python and Django, I was constantly landing on StackOverflow threads. I would bookmark profiles of the people whose answers I found helpful. Looking to leverage the internet, this time, I began contacting them one by one. For those that provided contact information, I sent a general email stating I had an interesting project and if they were interested I could discuss it with them over Skype.

Out of around a 100 people, 15 responded, and out of those I Skyped with 10. Some got the idea immediately. Others provided an array of questions, just to have they idea comfortably settle in moments later. During the conversations, it was exhilarating to see the facial expression when the problem was fully highlighted and the realization kicked in. With a caution that I might wrong, I offered a solution and an invitation to peck away at the problem.

Working full time, this took nearly a month and a half. The vast majority did not respond to the initial email. And even though many of the people I Skyped with sounded convinced and mentioned that they wanted to contribute, none actually did. Also making things worse, busy recruiting, I was not coding during the time. It was an incredibly slow and at times demoralizing process. But it hit me, despite the time I had spent only 10 people knew of the idea. A thousand may be necessary just to get one to contribute.

Also the low response rate could be attributed to two things. First, I had no profile. When you Googled my name, buried under my cousin’s LinkedIn profile there was an empty StackOverflow profile where I occasionally answered questions and an even more desolate GitHub profile. No one was listening, and rightfully so. Ironically though I would only discuss the idea with people who had profiles and that would Skype with me. Leading to the second factor, I had fallen into a common trap. I was too protective of the idea. There was little of value built, and I was suffocating it.

Broadcasting the idea was the only way. It required opening up the doors. Revealing the idea and the unfinished code to the world. To seek feedback and contribution publicly.

What came about was Joltem.com, short for “jolt them”. We call it “an open incubator”. Founded on the idea that at least in the early stages many companies can benefit from being open. It was built to organize and compensate an open and dynamic workforce.

We chose against the conventional pull & fork model popularized on GitHub to develop a way for all contributors to work off of one repository. Having everyone work off of one repository facilitates and equips groups for much larger scales of collaboration. Running a simple `git fetch` provides you with all the code from all the contributors. There is no need to add a remote for each contributor and at all times there is only one `develop` or `master` branch to focus development.

To accomplish this we developed a task management model based on tasks and solutions and tied it closely with a custom git server that enforces branch level permissions. Trusted people are able to push to all branches, while all other contributors are only allowed to push to solution branches allocated to them.

For compensation, we simply tweaked a conventional tool — the stock option pool. In regular companies during each round of financing a certain number of stocks is allocated to be awarded to new hires. Hires are then promised a certain number of shares and placed on a vesting plan, where overtime if they stay employed they receive portions of the promised shares. At Joltem, when a company is founded a portion of the shares is allocated towards contributors. For the Joltem project this is 85% of the shares, and essentially represents the conventional stock option pool. The only thing we modified was the distribution of the pool.

Through a continuous process each person’s contribution to the project is tracked by a metric we call impact. Each time a person contributes something to the project they submit it along with the amount of impact they deem fair for the work. The other contributors determine whether the work is satisfactory and whether the evaluation is reasonable. When their is a disagreement, a bargaining process follows to determine a fair value. From experience on the Joltem project itself, there is rarely a disagreement. A contributor quickly develops a sense of what each contribution is worth. Then periodically, much like a vesting plan, a portion of earned impact is exchanged for shares in the company that is being built.

Now, Joltem, is open to anyone.

You can post a project. Collaborate privately by inviting others or completely openly. You can even contribute to the Joltem project itself.

Joltem didn’t work out, but the code is open sourced here. Feel free to fork and put it to use.