Shhhh. Don’t tell Jenny and Walter.

My favorite florist agreed to grace us with her presence, her flowers, and most importantly, her story. This video of Nisha Kelen from Fleurish is from our recent Small and Special conference. Now you can see her entire talk. We’ll be posting a new video every week from the conference. Enjoy.

A few weeks ago we put on our first ever conference – Small and Special. It was an afternoon where we brought in eight entrepreneurs of businesses that were not only passion projects but financially successful entities in their own right. That combination (as you can imagine) is attractive to us and fundamentally a model for what we do here at Jackson Fish Market. Over 200 people attended the sold out event in person and we got lots of energetic and positive feedback from folks as well as a slew of excellent suggestions for improving future versions of the event. Check out the recap if you’re so inclined.

Thanks to the hard work of Bryan on the videos as well as Donald redoing the website, we’re now going to start posting the full videos of all the talks from the event. While I think the folks that attended in person got a singular experience, watching the videos should give you some flavor from the event as well as (hopefully) some inspiration. The first speaker at the event, Eric LeVine of CellarTracker is now ready for your viewing pleasure. Check it out, and if you like it, please tweet about it and tell your friends. Feedback welcome as always.

Small and Special was really the conference we wanted to attend. Hopefully after watching these videos you’ll feel the same way. We’ll release a new video each week. Enjoy.

Hey… we’re back at work today. Yay. Hope your summer was as lovely as ours. It took until the afternoon to write this blog post because I’m not entirely sure what to say other than that we’re back.

We’re busy working on all manner of software goodness for your enjoyment but we’re not ready to tell anyone about it. So, I guess we’re being teases. Sorry. We’ll try to be quiet until we have something interesting to talk about. Until then… back to work.

As we’ve mentioned before, twice a year here at Jackson Fish Market we go on break. It’s that time. We’ve been working hard since our last break concluded at the beginning of January 2009 and we’ve got some good progress. None that we can share with you right now, but suffice it to say, we’re not just sitting around eating donuts. (Rather, Jenny and Walter are not just sitting around eating donuts.)

We’ll be back in a few weeks, Monday, August 17, 2009 to be exact. Until then, have a lovely summer.

Last Tuesday, our little tech startup put on our own small business conference – Small and Special. You may wonder, why is a web startup still in its early development taking the time, effort, and resources to put on a small business conference. I could tell you how we increased our visibility in the community, how we got more experience at doing events, and how we did a bunch of networking as part of putting it together. And all those things would be true. But in reality, we did it because we felt like it.

And in fact, the ability to do what we feel like, even when it’s not 100% measurably on path to our eventual business success is part of why we started Jackson Fish Market and to this day remain 100% independent of investors and outside oversight.

We’ve each been to countless conferences as attendees, exhibitors, speakers, and organizers. Sometimes all of the above. And we each wanted to go to a conference that would address our needs in terms of being inspired and seeing others be successful in a model that we’re pursuing. And that’s how Small and Special was born. In terms of putting on a conference that we enjoyed, the event was a home run. Though, I would recommend anyone who wants to put on a conference cause the one they want to attend doesn’t exist to think really carefully. It’s a non-trivial amount of work. At various times the week before the even we would look at each other and say “why the hell did we do this?” Those comments were mostly kidding around. Mostly.

In the end, the conference achieved its goal which was to be the event that we wanted to attend. Luckily, 200 other people also felt similarly. Some factoids from the event:

• We sold out the conference on the previous Friday afternoon. 200 tickets at $25 a pop (plus the eventbrite service fee)
• The venue worked beautifully — the Georgetown Ballroom is a very cool space. Parking was a bit of a pain but people figured it out and nobody got ticketed or towed (i think/hope)
• We started 10 minutes later than we intended and ended 25 minutes later than we intended
• We had a 2 minute custom video from Governor Gregoire of Washington state kick off the event. Super cute. They have a form where you can request her coming to your event. Runners up get a video if she can’t show up in person.
• We had 8 speakers at the event and 7 sponsors. The sponsors got to speak for 2 minutes, the speakers for 15.
• Massive Monkees, who donated their services for a sponsorship did a breakdancing performance to open up the second half of the event. That seemed to get everyone pumped.
• We haven’t finished adding everything up yet, but we came pretty close to breaking even on the entire event in terms of cash we put out. This doesn’t count the time JFM full-timers spent on the event though. We’d definitely have to charge more money for this to be a non-trivial source of revenue.

Folks did a great job covering/representing the event on the web. Some coverage includes:

• Tweeting was pretty constant throughout the event. You can see the entire real-time stream from the event on Twitter at #SandS.
• While our official photographer Kevin Moore did a kickass job taking pictures (which I haven’t processed or uploaded yet), Charmaine Velasco, an attendee, also did a fantastic job taking photos and posting them quickly! Check them out on Flickr. (Kevin’s photos to come soon.)
• JF over at the No Friday blog writes their recap of the day.
• Matt Heinz turned his afternoon into 10 lessons he learned from the conference.
• Marcelo Calbucci put together his take on the conference and garnered a bunch of comments from attendees (and one of the speakers) as well.

The feedback on the web was very useful. But we were particularly proud of our event survey which had only one question: “Would you attend next year.” Some people added comments on the back. Of the folks who filled out our arduous survey, 111 said yes, 2 said maybe, and 1 said “no but I would recommend it to others.” I’m pretty sure we can’t complain about those numbers. That said, there was tons of good feedback on how to improve things for a further Small and Special event. I’ll list some of those thoughts here:

• Not enough mingling time. The break was too short.
• The after-event gathering was half-assed and only a tenth of the attendees and a couple of speakers made it. (The staff was busy cleaning up and couldn’t get there.) Also, the one 20 year old we had in the audience couldn’t go.
• Some folks wanted to ask their own questions instead of having me ask the questions of each speaker.
• Would have been nice to have a program listing the speakers so folks knew who was up next.
• Some folks wanted at least one of the speakers to talk more about failures and how to overcome them.
• A couple of attendees wished there were more specifics and “how-to”s from the speakers on how they created their businesses

Those were the main bits of feedback. All helpful should we put on another one of these.

Thanks need to go out to many folks:

• Our inaugural attendees. Thanks for your great energy, attendance, and feedback!
• Our inaugural speakers: Eric LeVine of CellarTracker, Nisha Kelen of Fleurish, Joe Mansfield of Engrave Your Tech, Rachel Venning of Babeland, Oliver Chin of Immedium, Jon Rimmerman of Garagiste, Andrew Bennett of Deneki Outdoors, and Steven Bristol of Less Everything.
• Our inaugural sponsors: Perkins Coie, First Sound Bank, Office Nomads, SmartSheet, Lilipip Studios, Massive Monkees, and the publisher of Small Giants.
• Our helpers for the day: Adina, M-A, Adrian, Kevin, Bryan, Brian, and Peyman who were so generous with their time (as were many of our friends who stuck around to help clean up).
• and most of all… part-time JFMer Donald, who’s been leading the coordination of the event for the past 3 months or so and really made it all come together calmly and smoothly.

That’s about all in terms of the recap. Bryan is working on producing the videos that were taken and those will all be posted at Small and Special in the next few weeks once they’re ready to go. We’ll obviously post/tweet when they are up. You can also follow @smallandspecial on Twitter and become a Facebook fan for updates. We were super happy with the afternoon, and glad that most everyone seemed to have felt it was a good use of their time.

I’ll leave you with this comment from one of the attendees that inspired us:

“This conference was very inspirational to me as a small business owner. I will bring 4-10 people with me [next time]. I know I will be invited to speak at this conference in a couple of years… even next year.”

Love that confidence. Super inspiring!

And to be honest, it was super fun. : )

We’re a little exhaustipated but feeling good about Small and Special and the tons of great and useful feedback we received. We need to do a proper recap of the event, but that might take a couple of days. Thanks to everyone who attended, participated, spoke, sponsored, vended, and staffed. Jenny, Walter, and I are very appreciative of all the support. The event wouldn’t have been possible without all your positivity and energy.

Stay tuned for a proper recap in few days once we recuperate. In the meantime, search for #SandS on Twitter if you want to see some of the real-time reporting from the conference.

Thanks!

Hmmm… what to put in a blog post where the title already says it all? If you have a ticket, we’ll see you next Tuesday. If you don’t have a ticket follow @smallandspecial or search #SandS on Twitter for updates from the event.

John Cook over at TechFlash was nice enough to ask me to do a guest post on bootstrapping. This one is on how much runway you need to get your business over the hump.

“The single biggest enemy of an indeterminate amount of time needed for success is a deadline. And nothing gives you a deadline like taking money from venture capitalists who need a liquidity event within a specific timeframe.”

Not to be outdone, Marcello Calbucci over at Seattle 2.0 was also nice enough to ask me to do a guest post on bootstrapping as part of a series of posts this week. This one is on the specifics of doing consulting as a mechanism for bootstrapping your non-consulting tech startup (like we’re doing).

“…odds are, that the job you do today five days a week can be a consulting gig for some other company (or maybe even the company that currently employs you full time). If you’ve determined that you in fact do have some skills that people will pay you for on a consulting basis, then it’s time to go get those gigs.”

Both John and Marcello are very kind to invite me to blab on their fine websites. But the NWEN folks have one-upped them by having me come in person to their bootstrapping workshop tomorrow to give a talk on lessons learned from the real world. I should have posted about this earlier (apologies NWEN) but it looks like you can still register.

Believe it or not, I try to shy away from giving advice on topics where I don’t feel like I have much to point to that I’ve personally accomplished (my friends may debate this assertion). But I suppose, when it comes to bootstrapping, (at least the part where you are making self-sustaining revenue that lets you try to establish your core business), Jenny, Walter, and I are making it work and have a couple of observations that are worth sharing. I encourage you to check out the posts and workshop listed above.

But if that’s not enough, you should attend our mini-conference next week – Small and Special. It’s a bootstrapper’s dream. First, my speaking will be at a minimum. The main attraction is eight founders of passionate small businesses who have created entities that not only let them do what they love, but also make them a real living. Tickets are limited and we are starting to run out. It’s only $25 for the entire afternoon and that includes a free copy of Small Giants by Bo Burlingham as well as a chance to win an almost $8000 custom animation provided by Lilipip Studios. Buy your tickets now if you want to attend.

I’m thrilled to welcome Seattle’s very own Massive Monkees, as our newest sponsor for our event. This energetic group of break dancers will be giving attendees a quick performance at Small and Special, (less than two weeks away!)

This crew of award-winning b-boy dancers turned their passion for break dancing into a business – performing at high-profile gigs, doing theatre, commercial acting, teaching dance classes, and doing merchandising. In addition to being teachers and artists, they are dedicated to giving back to the community, focusing on growing local youth culture through dance programs.

Get your tickets at now before we run out!

As we mentioned when we announced our Small and Special conference focused on passionate small businesses and aspiring entrepreneurs, a good chunk of our inspiration came from a single book. That book is Small Giants, Companies That Choose to Be Great Instead of Big by Bo Burlingham.

While the conference speaker roster is limited to founders of small passionate businesses who are making a success of themselves, we were immediately willing to make an exception to get Bo himself to come talk at the event. Bo’s schedule didn’t allow it this time. And then on a lark we suggested that Bo convince his publisher to give us free copies of his book for every attendee of the event. We were almost laughing when we suggested this as we knew it was unlikely. Bo laughed too but passed it on to his publisher.

Much to both of our surprise and delight, the kind folks at Penguin said yes. And as a result, every attendee at Small and Special will receive their own copy of Small Giants courtesy of Penguin (and Bo Burlingham). Thanks Penguin. These books can be autographed. Not by Bo himself of course as he won’t be attending, but I’m sure one of your fellow attendees would be happy to do the honor.

We try not to do the hard sell on this blog, but we can’t help but pointing out the following two numbers. A ticket to Small and Special costs $25 (plus the $0.99 service charge from EventBrite). The cover price of Small and Giants is $14.95. You could pay Amazon $10.40 but then you’ll pay for shipping. Alright… not to get too detailed but hopefully you get the point. Buying a ticket to Small and Special is a kickass deal. Well… we think so, and hopefully you will too.

Head over to the Small and Special website to get your ticket now before we run out.

And if you just can’t attend the conference, go buy your own copy of Small Giants, Companies That Choose to Be Great Instead of Big by Bo Burlingham. Of all the books I read before we founded Jackson Fish Market (and there were many), this was the single most inspiring and influential of the bunch.

I know this is not necessarily on topic, but this blog is sort of about whatever we like anyway so why not. I stopped being a Jay Leno fan decades ago when he decided to stop doing smart political humor and started doing dumbed down middle of the road humor and ass-kissery. I’ve always loved Conan, and not because he went to my high-school (I don’t think we overlapped), but because his self-deprecating articulate humor is more up my alley. Between Carson and Leno the Tonight Show has never been exactly for me. And while I don’t watch much late night TV (and when I do it’s Stewart/Colbert on Hulu) but I did watch Conan’s opener (also on the net).

I’m always curious about the design of the set, the logo, the broadcast graphics, etc. I immediately noticed this cool art deco pattern on Conan’s curtain backdrop. It so fit in with my pre-conceived notions of how cool Conan is that it would be lifted from Super Mario Bros.

Well… he didn’t. Credit to Serious Lunch for the great photoshopping. But maybe the motifs from Super Mario Bros. have so embedded themselves in our minds (and the minds of the Tonight Show set designers) that credit is really due to a video game. (Or maybe they both share a common art deco ancestor.)

Conan addresses it, gets some laughs, and his whole backdrop lights up with Super Mario Bros. Cool! The right thing happened after all.

…Joe Mansfield of Engrave Your Tech. Gorgeous moleskine notebook covers with beautiful original designs is what got our attention. The fact that Joe is making a successful business out of this passionate enterprise is what pushed us to invite him to tell his story.

Joe and seven other passionate small business founders will be speaking on Tuesday June 30, 2009 at 2pm at the Georgetown Ballroom. See all the details on the Small and Special website. Over half the tickets are already gone for this limited space event and there are only four weeks left. It’s only $25 for a four hour event, and there even some unannounced goodies. Get your ticket now.

I wrote three posts over the past while:

• A new definition of “lifestyle business”.
• The reality of your life as a founder once you take VC
• Your odds of making money if you take VC

Thanks to Rajat for pointing me to this video of DHH giving a talk last year. It’s not that I didn’t know the guys from 37 Signals were saying these things. Of course we’ve taken a fair share of inspiration from their success. However, it’s nice to see the same sentiments coming from somewhere else in easy to digest video form.

The fantasy goes something like this:

• come up with an idea
• take venture money
• align with the VCs to grow the business as best you can with the firm target of an exit
• hold on to enough equity so that when the exit comes you and the VCs both get rich
• maybe some of your employees hang on to enough equity that they get rich too
• retire on your boat

It’s a reasonable fantasy. I get it. In a recent post we discussed the difficulty for founders in holding on to equity and control in their own companies once they involve venture capitalists. And as you can imagine, if it’s hard for founders to hang on to equity, then employees have an even slimmer chance. But what about the money?

I tend to not factor in the money that you get from the mythical huge exit because they’re so rare. But what kind of money can you expect to earn in terms of profit?

A couple of blog posts have gone around citing profit per employee figures from 2008. This one and this one.

Some tidbits:

Now I’m not saying making 200k in profit per year per employee is an easy feat. And frankly, even making the 12k that Sun has made is an accomplishment in my opinion. But I do know this, making 200k in profit per employee is a lot easier when you five or ten employees than when you have 20,164 like Google does in the chart. Even getting to 100k per profit per FTE will help you kick Oracle, Amazon, and Dell’s asses.

Now, critics will point out that that profit per that many FTEs ends up being quite a bit of money. And that’s fair. Except for one small problem. How much of that profit ends up in the hands of the hands of founders? Well, it depends. It’s often a surprisingly small amount. Remember, these founders often (not always) end up without huge percentages of their businesses.

I believe that profit per FTE is one of the single most important metrics there can be in a business. And I hope someday to get our number to very high. The main difference is that I hope to make that number high not only by earning lots of revenue, but by aggressively keeping the number of employees it has to be divided by as small as possible. And since there will be no investors, there are only two remaining constituencies to split the money between: employee-owners and employees. If I can pull 500k a year out of my business, it’s like I have 10 million dollars in the bank.

The astute (and even not so astute) may point out that for my 10 mil equivalent I have to keep working. Fair enough. I don’t get it in one lump sum. However, so many entrepreneurs tell me how they love working and will be doing it the rest of their lives. So why not do it the rest of your life, pull the cash out of your business with lots of profit and very few employees, and ultimately retain significant control over your own destiny?

I could have done better at math, but I need some help designing an equation that includes all these factors:

• chance of your idea taking off
• chance of you retaining control while your idea takes off
• chance of you retaining enough ownership to make money when your idea takes off
• chance of your company getting to a liquidity event
• chance of your business becoming profitable year-over-year
• amount of profit your business generates
• number of people who have the right to some of that profit
• likely amount of money you’ll get in such a liquidity event
• likely amount of money you’ll be able to pull out of the business each year
• number of years it will take for the money you pull out of the business to equal the amount you’d get in a liquidity event
• likely number of years you’ll have to work to create a business that reaches a liquidity event

You get the point. I think I need to hire Umair Haque to figure out how to turn this into an apples to apples comparison.

To me, taking that longshot at a venture backed liquidity event that leaves you with enough money to be rich is akin to playing the lottery. But building your own business that you control feels a lot more like the ideal of entrepreneurship that many people claim to espouse. And I claim, that in the latter case, not only can your odds of succeeding be higher, but when you do succeed, instead of having won the lottery, you’ve created your own personal cash printing press. Cash that you can use as if it were dividends from some big payout, or that you can reinvest in new projects to scratch your entrepreneurial itch. And in our future, hopefully, both!

As usual, I have no problem with the VC –> “liquidity event” standard path. But I am fascinated by people who think that it’s the only path to creating a “real” business or “real” wealth. I am always genuinely surprised by how many people take the VC path, especially for businesses that don’t seem to require it. It feels to me like they’re choosing to take the low percentage shot. But maybe I’m missing something.

On Earth Day in 2008 we launched Carbon Grove — it’s an e-mail reminder service that helps you remember to complete carbon reducing tasks. A little virtual tree grows every time you complete your task. And thanks to our inaugural sponsor, Internet Explorer, over 10,000 people not only grew their virtual trees for at least six weeks, but the same number of actual trees were planted. Thank you Microsoft.

And while Microsoft chose to make Carbon Grove a special perk for Internet Explorer users, now that their sponsorship has ended, we’re opening up Carbon Grove to everyone – Internet Explorer, Firefox, Chrome, and Safari users can all use the site now. You can still sign up for reminders, and watch your virtual tree grow. The added bonus of having a real tree planted in your honor will have to wait for a bit until we find a new sponsor to cover the cost of the trees (let us know if you’re interested). But until then, you can feel good that even just the carbon reducing activities you’re doing every week are having impact all on their own.

Thank you Microsoft for your sponsorship and planting all those trees. Thanks everyone who used the service over the past year. And thanks in advance to everyone new who can now try Carbon Grove. Enjoy!

…albeit I haven’t said it nearly as well as well as Georges van Hoegaerden over at Venture Company.

I’ve been saying, by the time many venture funded startups have gone through their rounds of funding, even the founders are lucky to make any money. And that’s in the rare case that they actually make it to a reasonable exit:

“This alternatively funded CEO describes other CEO’s that seek VC funding as idiots – with a 1 in a 1000 shot at a lousy valuation (52% Round A, 25% Round B and 15% Round C). He continues that many of the serial entrepreneurs trumpeted by VC’s have no money themselves despite “successful” previous exits.”

and

“Great entrepreneurs are known for their passion to pursue their dreams at virtually any cost, and sub-prime VCs smell their blood and desperation. Those companies become owned by VCs quickly and because of the investors’ lack of relevant operating experience yields a further deflation of the valuation of the company. We’ve seen many companies with end-game founder stock way below 5%, which is unlikely to become life-changing. So, why would you take the scrutiny of the CEO job with that outcome in mind? ”

I’ve been saying, almost every entrepreneur I meet who has left a big company tells me they want to work for themselves. And yet, the first thing they do is go and find a new boss at a venture fund. What’s so funny to me, is that especially in Seattle, some of the partners at venture funds are the very same big company execs that these entrepreneurs left BigCo to avoid.

“The powers of the CEO are further restricted by clauses on expenditures in either the articles of incorporation, termsheets, voting rights or other legal documents. We’ve seen restrictions requiring board approval for expenditures as little as $5,000. That means a CEO can’t make pressing decisions until a next board meeting or when there is an ability to call an impromptu session. These restrictions are further evidence that a CEO does not have the trust of the board. “

and

“Many VCs do not have the credentials and relevant operating experience to lead an experienced CEO. Yet it behooves the CEO to listen to the idiosyncrasies of the VC in order for them to endorse a CEO’s leadership. Nothing is worse for a company’s future than having to wait for the investor to validate every step along the way.”

Lest I be mistaken for an anti-VC guy, I am not. If JFM ever had a project that needed funding and had goals that were aligned with the VC business model, we would pursue that type of funding.I have no doubt there are smart and talented folks in VC who add real value to the startup ecosystem, give their CEOs room to make mistakes and grow, and are doing their best to help each of their companies succeed. That said, often, even these quality folks have goals that are simply not aligned with those of the founders (and the employees) of their startups.

What bothers me is that many entrepreneurs I talk to seem to be oblivious to the realities of how VCs make their money and how that often (but not always) misaligns the CEO and the VC. I did talk to one CEO who described the startup funding process as follows:

“I go around to dozens of venture capitalists asking them if they’re interested in buying my company, and oh btw… may I have a job there once you own it?”

He was kidding a little bit, but he was also not kidding at all.I think if more entrepreneurs had a realistic attitude about their relationship with VCs we’d see a lot better group of venture funded tech startups. And who knows, maybe Georges van Hoegaerden will succeed in his new mission: “In the meantime I’ll do my best to help fund-managers revive Venture Capital. It is about time the fund-managers hear the entrepreneur’s point of view. That has become my new mission. ” Good luck Georges!

Conan was interviewed in the New York Times about his shift to the Tonight show. The following quote is about entertainment, but I think it applies to any creative endeavor, or possibly, any human interaction:

“In entertainment, you have to stake out what you think is right, you have to put out that signal, make sure it’s pure and then do it and do it and do it and know that they will come. And if they don’t, you have to pack up your bags and say: ‘I enjoyed my time here. Sorry it didn’t work out.’ But the biggest mistake would be to alter my signal to make sure that I reach all these different people. Because then you’re lost.”

Agreed. This is why I always bristle when I hear people who are making some product for a “target audience” that’s not them. I’m not saying it’s impossible, but to me it’s hard to be genuine, and if you’re off by a millimeter, as Conan says, “then you’re lost”.

One of my favorite things about working at Jackson Fish Market is that we don’t have performance reviews. I suppose it’s easy cause there are three of us and we’re all founder/owners of the company. But i believe that even once we do have more traditional employees we won’t have performance reviews. Mainly because I believe they do way more harm than good.

Ask yourselves these question: does my company set a budget in advance for how much money they’ll award in bonus, salary increase, other compensation (stock) they’ll give across all the employees?

If your company does this, then the performance review’s main objective is to figure out how to divide up a pre-defined limited amount of money. Let’s play it out.

If you have 10 employees, where 2 people are super stars, 7 people are solid contributors, and 1 person is flailing, then you may be able to distribute the money equitably. But what if you have 5 stars and 5 solid contributors. Essentially, everyone is doing a good job. And shouldn’t they be? After all, you took the time to screen them carefully in the interview process. So now you can either peanut butter the money across them making no distinctions or you can grade everyone on a curve. If you do the curve, then your least solid contributor, who may be quite a good solid contributor (cause after all, you are great at hiring) is now treated like they’re flailing. And after all, we’re a capitalist society, and competition is good. Right? It makes everyone try harder. Right? But guess what, it’s hard to find good people. Treat that least good solid contributor like they’re flailing and they may leave. Or even worse, they’ll stay and turn into a flailing employee. If you take the other tack and peanut butter the rewards across your employees, then you’ve told the superstars that there’s no incentive for being a superstar and they may start flailing. And the only reason you’re in that pickle is because you told the superstars that they’d be rewarded individually in the performance review process.

Essentially, the performance review process incentivizes managers to always have only a small handful of super stars and a steady stable of bottom of the rung performers who can take the shitty reviews. There’s no incentive for having a balanced team of good performers. As a manager it’ll just screw you at review time.

The worst part of performance reviews is the message you send overall — that work is an employee vs. employee competition. I can think of countless senior managers who lament how their employees don’t work well together and don’t collaborate. I can think of countless line employees (and senior managers) who complain about the brutal and vicious politics in their workplace. How surprising that people don’t work as a team when their personal compensation (and more importantly, their sense of self-worth) is impacted so directly by a system of employee vs. employee competition. One where the expectations are set in advance. There is a top, there is a middle, and there is a bottom. And believe me, no matter what spin your manager puts on it, you’ll know exactly where you are when you get that performance review. Disappointment is almost impossible to avoid except for those consistently landing on top.

(BTW… this is all assuming that the manager in charge of the review process has the ability to distinguish talent from good politicians and ass-kissers. Often they don’t. Frankly, I’m not sure I was always able to make the distinction.)

And for those of you who work in companies that have obfuscated the curve in your review process, I guarantee there is one. Unless your company has an incredibly elastic compensation budget every year, you’re being graded on a curve, competing with your fellow employees, and yet you’re expected to be a team player.

Here’s an idea — how about eliminating performance reviews altogether. Instead, how about firing poor performers in a timely fashion rather than waiting for the forcing function of an annual performance review. That way the remaining folks can all go on with their lives of contributing and feeling good without the specter of individual performance review. Every day an employee still has their job means they’re doing it well. And if it’s important to reward people, how about we reward them as a team since that’s how we expect them to operate.

I used to run a big corporate review process for as many as 135 people. Not only was it hugely destructive, but it wasted an enormous amount of time that could have been spent shipping software. It also created even more work trying to undo much of the damage that it would cause every year.

Ultimately, I believe that performance reviews are a blunt object by which large corporations compensate for poor hiring, terrible line managers, and ultimately bad firing (i.e. not often enough and not soon enough). Basically, the corporation doesn’t trust its own managers to make quality hiring and firing decisions. When companies can constrain their manager ranks to only those that have a talent for leadership and a compassion for employees, they’ll be able to jettison performance reviews in no time.

UPDATES (based on feedback):

• I don’t believe that employees shouldn’t get feedback from their managers. Of course they should, consistently, honestly, openly, specifically, and compassionately. My main point is that performance reviews are a poor (and damaging) substitute for regular quality feedback and discussion
• It’s been pointed out to me that the curve is a way to spread talent around a company. I have heard this rationale before. I think that’s also destructive. Should good leaders who attract a talented team be punished? Should talented folks be forced to work for a poor leader just to get a decent review? A salary cap may be a good thing in professional sports. I don’t think it has a place here.
• Many people have asked… so if you get rid of performance reviews, how do you give critical regular feedback to employees? Good question. I’ll cover that in a future post.

Our mini-conference is just a few short weeks away. Small and Special, an afternoon for passionate small business owners (and aspiring entrepreneurs) is happening on Tuesday June 30, 2009 from 2pm-6pm in the Georgetown Ballroom in Seattle. We’ll have a total of eight speakers for the afternoon, six of which have already been announced. We’re psyched to announce the 7th speaker (hmmm… the “Seventh Speaker” sounds like the new M. Night Shyamalan movie) here on the JFM blog.

Nisha Kelen, founder of Seattle flower shop Fleurish has agreed to share her story at Small and Special. In a world filled with cheap corporate flowers available on the internet, Nisha’s designs are striking and, well… special. In Nisha’s case, the title florist is truly a combination of the words floral and artist.

We hope you’ll join us to hear Nisha’s story as well as those of the other founders. You’ll have a chance to win a custom digital animation from Lilipip Studios worth almost $8,000! All this for only $25. Register soon.

The popular and prolific Malcolm Gladwell writes about underdogs in the New Yorker:

“What happened, Arreguín-Toft wondered, when the underdogs likewise acknowledged their weakness and chose an unconventional strategy? He went back and re-analyzed his data. In those cases, David’s winning percentage went from 28.5 to 63.6. When underdogs choose not to play by Goliath’s rules, they win, Arreguín-Toft concluded, “even when everything we think we know about power says they shouldn’t.””

And while with many of Gladwell’s pieces I think it’s important to keep perspective, the spirit of the piece is certainly inspiring. But beyond the basic message, the more interesting lesson is how our image of how we should win affects our ability to continue winning. It reminds me of the team that comes from behind in a sports contest, plays with nothing to lose, is aggressive, only to get the lead and then start playing conservatively trying to maintain their lead only to lose it and lose the game. It’s like we’re willing to do whatever it takes to win until we’re actually winning and then our expectations of how we should be winning starts getting in the way.

“George Washington did the same in the American Revolution, abandoning the guerrilla tactics that had served the colonists so well in the conflict’s early stages. “As quickly as he could,” William Polk writes in “Violent Politics,” a history of unconventional warfare, Washington “devoted his energies to creating a British-type army, the Continental Line. As a result, he was defeated time after time and almost lost the war.””

Of course, I’m getting a little ahead of myself. Right now we’re firmly in the underdog position. Resting on our laurels after great success is a problem we’ll hope to have down the road.

There’s nothing we love more than more companies like us. And we say that humbly hoping that said companies won’t be insulted by the comparison. The criteria are typically that the company is small, tech-focused/savvy, experimenting with lots of new products to see what works, and focused on being profitable and having a great workplace, etc. As a bonus we particularly like companies that are bootstrapped, and not looking for some kind of exit of liquidity event. They just want to make good scratch making great products and working with awesome people.

As far as I can tell, Particle meets most of the criteria. According to TechCrunch they’ve taken investment from Justin Timberlake but they also appear to offer some consulting services on their site. More importantly, they’re pumping out all sorts of adorable products that focus on the small! And much like us, they decided they needed to write their own online invite service – Crusher. (We built Invitastic.)

Bottom line, these seem like cool folks making excellent products. And while TechCrunch calls their multiple product strategy “disjointed” we call it balanced and smart. Who wants to only work on one thing? We’re rooting for them as we feel like every small company that makes a success out of themselves building bunches of great products on a shoestring is another example for people to follow.

(And of course, as if you didn’t know, we’ve created a showcase for small companies doing cool things — Small and Special. It’s only $25 to attend for this inspirational afternoon mini-conference. Hope to see you there.)

“Today, Walter Smith is a co-founder of Jackson Fish Market a producer of aesthetically sophisticated web sites.”

A little view into Walter’s past.

I am a big fan of vegetables. Fresh, flavorful, crispy, juicy vegetables can’t be beat. One of my favorite meals of all time was almost entirely composed of vegetables. (The meal was prepared emphasizing the greatness of the vegetables themselves rather than trying to simulate some sort of meat-based dish.) I would eat a lot more vegetables at home if this country was better designed for fresh vegetable consumption (1. Americans need to demand vegetables that have great flavor, not just ones that look good and are cheap, 2. these mythical vegetables need to be available within walking distance from your house, so you can buy them fresh every day.)

Pending a major restructuring of this country’s priorities when it comes to fresh vegetables, I had been resigned to mediocre veggies once a week from the supermarket, and eating expensive quality veggies from Wholefoods once every two weeks. But, I still yearn for better. The econapocolypse and the inevitable crumbling of society has brought all this into focus for me — I need to grow my own vegetables. Unfortunately, if I gauged my ability to nurture living things based on my history with plants then I never would have had children. Past performance would have indicated that they never would have made it to their first birthdays. In addition, the pacific northwest is not exactly prime vegetable growing territory.

Enter Seattle Farm.

For a minimum of $250 they’ll come set up a raised bed in a sunny spot in your yard, fill it with good dirt, run automatic drip irrigation lines so you don’t have to water it every day (this is key for me!!!). And then, even better, for $35 a week they’ll come and maintain your vegetable garden, pick the vegetables, plant new ones, and then walk the freshly picked veggies the 10 feet from the garden to the door to our kitchen. This is my kind of vegetable gardening!!! As for the $35, I spend that much on vegetables just driving by Wholefoods.

Here’s a shot of our new garden:

Over the next few weeks/months we’ll be swimming in: cucumbers, tomatoes, golden beets, sugar snap peas, red cabbage, arugula, ratte potatoes, broccoli, cauliflower, spinach, purple carrots, scallions, radishes, shallots, cilantro, basil, garlic, and kohlrabi. Be nice and you might get some.

This company is adorable. They’re providing an awesome and convenient service. While it’s too early to tell you about the quality of my veggies, so far they’ve been doing a great job. I hope they become a huge success.