Pay for performance. The key differences between someone who is paid to produce a product and someone paid to work, is that shippers don’t get paid until they complete the job. When you’re bootstrapping you can only afford to pay for what ships.
This morning, while I was doing the email-twitter-facebook-coffee ritual that I do every morning (and promising myself that it wouldn’t turn into a 4-hour event) I read a very interesting article about how Seth Godin blogs. For once, Mr. Godin had something pretty savvy to say.
“For example, a short-order cook gets paid to ship. They’re paid to cook hamburgers. If he or she doesn’t cook hamburgers, they don’t get paid.” (10 Lessons Seth Godin Can Teach You About Blogging)
His point was, some people are paid to work, and others are paid to produce. In technology terms, to ship a product to market. This becomes a critical distinction in a startup, where budgets are tiny and time-spans are even shorter.
Workers vs Shippers
The key differences between someone who is paid to produce a product and someone paid to work, is that shippers don’t get paid until they complete the job. Workers are paid for every hour, no matter what. It is a simple fact of human nature that we work for rewards. If your reward is a paycheck when you hand over the product, then you’ll work harder and faster to get to that reward.
Remove the reward, and all that’s left is avoiding being fired. A poor incentive.
Especially in Technology, Shipping is All That Matters
The nature of my industry is that we tinker. We call it “iterating” but really it’s tinkering. We try it this way, then that way, then another way to see which works best. All technology creators have a keen interest in the details–in playing around with how things work. That’s a great way to invent. But it’s also a great way to waste time. Without an incentive to launch a product, we might spend hours, weeks, months working without ever shipping.
Designers can be the worst at this. We want it pixel-perfect, and there always seems to be another pixel to move. That’s no good for anyone. I like shippers, because I’m a shipper. And that’s why I started a design business that is paid to ship, not to work.
Start-ups Should Work with Shippers
I run businesses, which means it’s my money on the line (or my investor’s money) and ultimately, my reputation, my business, my future. If I don’t ship, I don’t get paid. I need to work with others whose goals are aligned with mine.
I learned this Lesson the Hard Way
I’ve been in the situation too many times where I’m anxiously eyeing my dwindling bank account as workers who appear to be working hard never actually complete anything. It’s destroyed a business of mine. I won’t let that happen again.
So those of you just starting out in a new business, I highly recommend you hire shippers, not workers. Here are some good guidelines I’ve learned to follow:
Five Guidelines for Shipping
- Contract with the freelancer that gets paid when the product is in your hand (it’s okay to pay an advance, or in stages, as long as the last big payment comes when you’re satisfied with the product).
- Don’t hire employees until you have a lot of regular income and you simply can’t avoid it.
- Work with other small business people who know your pain and aren’t out to gouge you.
- Know how much you’ll have to pay before you start.
- Then do the same for your clients.
If we were all more focused on shipping excellent products instead of getting a steady paycheck each week, we’d all make more cash in the long run–and the world would be full of excellent products.