Rand On Scaling From 60 People To 120

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Rand of SEOmoz posted a really great article on the challenges of scaling their team from 60 to 120 people the past year. I’m a long time SEOmoz user/fan and he has a great blog that is a must read.

In the past year, as Moz has grown from ~60 people to ~120, we’ve been feeling some of that same pain. A dramatic portion of the time spent by executives, managers, and myself tending to the company goes toward adjusting team dynamics, fiddling with processes, soothing egos, coaching individuals on how to work well with each other, and investing in all the human infrastructure and support necessary to make 120 people function more like a small, nimble machine.

Read Rand’s full post here. Some good comments too…

I Built This? We Built This? Who Built This?

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A while back President Obama was giving a speech somewhere and stumbled while delivery of line and said:

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen.

The “that” in that line was the roads and bridges, but when delivered sounded like he was referring to the business. IE, you didn’t build that business. Republicans have used this in ads and as a theme. This is very similar to something Elizabeth Warren said a while back too:

“I think the basic notion is right. Nobody got rich on their own. Nobody. People worked hard, they build a business, God bless, but they moved their goods on roads the rest of us helped build, they hired employees the rest of us helped educate, they plugged into a power grid the rest of us helped build,”

So why does this annoy the hell out of me?

Because it’s true! The United States is the greatest business platform in the world right now. And I’m lucky enough to be able to launch my business on that platform.

The USA is like the app platform you use with your smart phone. Apple/Google provide the hardware infrastructure that delivers your product to consumers. The USA provides the road, power, and other infrastructure that make commerce possible. Apple/Google provide the software that runs those apps and the standards that enable a good playing field. The USA provides the standards through the FDA, Health Department, FBI, etc to provide a good playing field to business. Apple/Google take ~30% to cover that infrastructure, and so does the USA (less actually).

I totally understand and love the independent vibe, its part of what makes us Americans. That raw wild freedom that is our hero story, the American who goes west, who rides off into the dark wilderness to tame, build, and master. Who creates something out of nothing. I personally have an incredible addiction to this image, it is a struggle for me to find and develop a community because I so value being highly independent.

BUT… It’s simply not true. The modern global world is one that is built on everyone’s strengths and is interwoven beyond everyone’s comprehension.

I’m a business owner and entrepreneur.
I work my ass off to create and built my business.
But, I didn’t build this all by myself.

PS.
Each year I pay taxes and invest in the American system. I’m not happy with a lot of the regulations on small businesses, and a lot of the licenses that states create, but it is idiotic to imply you are building this on your own. I’m embarrassed for Republicans, the Republican party used to have good ideas, I used to like parts of their platform, just like I only like part of the Democratic platform. But in the last 10 years the Republican party has jumped into the crazy pool. This really sucks because there is no real debate on a macro level any longer. And I find that worrisome as there are some really important macro problems that need to be solved. But the choice in most national elections now is to vote for crazy idiots who don’t say anything but soundbites, or the Democrats who are floundering because they have no one to debate real ideas with. Eeek.

$23,800 Dollar Bug Bite

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Greg Knauss posted a great piece why we need health insurance for everyone in the USA, his son faced a really scary scenario caused by a bug bite and the bill was $23,800. Here is part of his post:

I don’t normally like to talk politics. Not real politics. I’ll smart-ass on Twitter, but I get uncomfortable as soon as I feel the need to be earnest. I don’t trust myself when I actually care. But the Republican convention just finished up, and tens of thousands of people gathered in Tampa to cheer every mention of reversing the Patient Protection and Affordable Care Act. The PPACA is how literally tens of millions of Americans can avoid having a bug bite wipe them out financially. It’s how I and my kidney stones and my bad back and my big ol’ gut may end up protecting ourselves, and our small business to boot. Yes, it’s expensive. Yes, it’s complicated. Yes, it’s ugly. Welcome to running a country.

Read the full post here. I’ve had similar problems in the past caused by sports and other injuries, if my parents hadn’t had insurance they would have been in massive financial trouble. We need a change, we need coverage for everyone in the USA so they don’t have to worry about getting sick or getting hurt. And we definitely need protection so that something like this doesn’t wipe out a families future.

Busy Email Month Compared To Last…

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Please Let This Pass: “Bill would force patent trolls to pay defendants’ legal bills”

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A new bill introduced in the House of Representatives attempts to deter frivolous patent litigation by forcing unsuccessful patent plaintiffs to cover defendants’ legal costs. Introduced by Rep. Peter DeFazio (D-OR) and co-sponsored by Rep. Jason Chaffetz (R-UT), the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act is limited to patents related to computer hardware and software.

“Patent trolls don’t create new technology and they don’t create American jobs,” DeFazio said in a news release. “They pad their pockets by buying patents on products they didn’t create and then suing the innovators who did the hard work and created the product.”

So true, it has gotten out of hand and is hurting Mr. Economy. Please call your reps!

Read more about the bill at Ars Technica.

Call your Senators, Congressional Reps, etc!

Fun Analysis of United Internet (1&1): The Largest Hosting Company In The World…

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United Internet is most likely the largest hosting company in the world, and since United Internet is a public company I decided to take a look at their 2008-2011 end of year summaries.

[disclaimer - I'm still learning how to read these reports, so I apologize for any mistakes. ]

Total Hosting Contracts. Keep in mind they use this term to identify any contract, so it doesn’t mean customers. Especially post 2009 when they switched the term to application contracts (which is a smart move given they are really a saas platform that introduces themselves to customers through a website proposition).

2008 – 3.62 Million
2009 – 4.14 Million

    Customer breakdown out of the 2009 number:
    Germany 1.95 Million (47%)
    UK 1 Million (24%)
    France 0.26 Million (6%)
    USA 0.82 Million (20%)
    Spain 0.11 Million (3%)
    *This is interesting as I didn’t know they were so huge in Germany but not quite so big in the USA.

After 2009 they switched to measuring this per application contracts instead of “customer contracts”, which inflates the number a bit…

2009 – 5.65 Million Fee Based Contracts
2010 – 6.13 Million
2011 – 6.59 Million

Total Employees:
2007 – 3,954
2008 – 4,565
2009 – 4,571
2010 – 5,018
2011 – 5,593 (3,701 of those for the hosting/app group)

Servers Reported:
2008 – 65,000
2009 – 67,000
*After that nothing mentioned.

A couple interesting points:

1. For 2011 out of their “Application” aka hosting / software group their profit margins were 25%. For 2010 they were around 34% (ebita).

2. They describe a lot of their internal hosting setup in these releases. For example they split their hosting setup into frontend servers and backend storage. And in the last couple years have moved to spread these over multiple data centers so that if one goes lights out the other should serve their clients pages (although a few glitches in this in 2011 it appears).

3. In 2011 34.7% of the entire companies gross revenue came from the Applications / Hosting group. It grew 7% over the previous year on a financial basis.

4. The only hosting acquisition I could find was their purchase of FastHost’s assets from Dollamore Ltd in 2008. You can find more on that sale here.

5. In 2011 the Applications / Hosting Group of the company generated around ~$874 Million dollars. Making them the largest hosting company in the world to my knowledge. With EIG/GoDaddy a close second and third.

You can download the reports here. Google search for the year + Annual Financial Report United Internet.

Come On Craigslist…

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I can’t believe this BS, Craigslist, which is supposed to be a “good” company is sueing PadMapper. Read the story here, insane, all because someone tried to make a usable interface for the data that Craigslist still manages to collect.

Craigslist you disappoint me, and I see this as a violation of your ideals. Please reassess your decision!

Great Interview On The Skills Gap And Why Good People Can’t Find Get Jobs

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Check out this fantastic podcast interview (+text) with the author of the new book Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It. I just bought it as the topic is really interesting. With unemployment in the USA hovering right below 9% a lot of people are trying to get jobs while at the same time you hear a lot of small businesses complaining they can’t find people with the skills they need. Small businesses say they are too small to create training programs for the skills they need and they don’t want to create training programs because employees no longer have loyalty to the company and they can’t justify the expense. They expect the US government and schools to teach those skills or employees to pursue those on their own time. And employees counter explaining that job jumping is what moves them up the ladder and why would they have loyalty when so many companies over the past decade have outsource or committed outright fraud (Enron etc). The author of the book talks about this and some ideas on how to fix the problems that exist (few of them in the podcast interview too)…

At our hosting company we try to hire people that are already trained and have worked in the industry for a few years. If they haven’t we only hire people that have a very similar skill set that can catch up in a few weeks. Since we hire globally and everyone works from home this model works great. If we were stuck hiring in one or a few small geographic regions it would be tougher.

What do we currently do in terms of training for customer service at our web hosting company (Site5)?

We are small enough to do a lot of one on one training. For someone’s first week they are paired up with a work buddy + they get a lot of time with our full time trainer. Then they are set loose, and everyone can talk to shift manager when questions come up, or with others in a general chat room. Plus we have a lot of internal KB pages they can read. The downside is that this requires a lot of drive on the individual’s part, and its designed for people who can digest information through reading. Although with the constant tickets the time on the job training is pretty quick.

We hope to put together a robust training program next year (2013) and we would like to make it free for anyone to use. The hope is that people with the drive can take the classes / tests and than secure a job with us or another company.

Awesome Online University – Coursera

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I am incredibly impressed with Coursera and recommend everyone check it out. Right now I’m taking a free 5 week class from Stanford professor Scott Klemmer on Human Computer Interaction. If this get’s going it could be a great way to bring cheaper universities with higher quality classes.

I’m going to take a finance class and some other classes in July too.

Chomsky: “Jobs aren’t coming back”

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I highly recommend an article on why Jobs aren’t coming back (by Noam Chomsky) over at Salon.com.

I don’t agree with some of his conclusions but I do like his point that when a lot of money is concentrated in the hands of fewer people they have a lot more political power. And that can lead to some very big problems. Watching the giant slush funds that the supreme court approved battle it out on issues that don’t really matter has been incredibly frustrating, plus the 30 second takes on complex issues that does a disservice to those issues. It will be interesting to see where this leads over the next decade.

I think he is crazy on some of his turn it over to the workers thought, it just doesn’t work well in practice and unions are a majority of why the American auto industry is such a mess. For example in Canada workers are heavily protected which is good, in France too, but from a business perspective the balance has gone a little too far. The USA is a good balance from my experiences so far.

But I do like that he is so gung ho from that side, it really keeps that line down the middle instead of slipping too pro business.

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