How does a founder who has trouble hiring end up building a multimillion dollar talent acquisition company?
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Here’s the program. Hey there, freedom fighters, my name is Andrew Warner. I’m the founder of Mixergy. Home of the ambitious upstart. You have to be ambitious to watch an hour long interview in the world of quick, 30 second videos on YouTube. Here you are watching an hour. And you must be watching an hour because you want an in depth interview with someone whose success and progress you admire. I know that’s what I come to these interviews for. I want to understand how they did it. Let’s do it together here. In this interview, what I want to find out is how does a founder who has trouble hiring people end up building a multimillion dollar talent acquisition company? Breanden Benechott is the co-founder of TopTal, which connects startups, businesses and other organizations with the growing network of bedded developers around the world. He helps them hire bedded developers. I want to find out how he built up this business. Breanden, welcome.
Breanden: Thank you.
Andrew: I said multimillion dollar at the top of this interview. You knew that question was coming, and before we started, when you got a sense that was going to be my first question, you said, “Are you going to do any editing?” Let me just ask it straight up, what’s your revenue?
Breanden: It’s a little over five million a year right now.
Andrew: You’re not going to ask me to edit that out? You feel comfortable having that go out to all your competitors, all your future customers?
Breanden: Well, hopefully that will be an outdated number by the time this goes live. So, I think it will be OK.
Andrew: You know what, it must be, because when I first started doing research on you, the number was lower. Then I look at April’s numbers and I see that in April, when we did the pre-interview with you, and I see the number is higher. So maybe by the time it’s posted, even this will be outdated. How old is your company?
Breanden: We are a little over two years old. We were founded in November of 2010.
Andrew: Superfast growth. Unreal. You started this business because you were running another company. Which I’ll ask you about in a moment. Called smsPREP. You had some big issue. What was that issue?
Breanden: Hiring. I think everybody in the tech world, and even outside of the tech world has had this issue. Where, there’s a huge shortage of qualified software developers all over the world. With smsPREP, particularly, it wasn’t the first time I’d felt this. I’d been a developer before that, as a free lancer. And was able to take advantage of that shortage. Because you can call your own shots, a lot of the time, which is nice. With smsPREP, when it came time, after incubating and everything, to take some funding and trying to scale a team. It was incredibly difficult. We did all the normal routes. Say, “OK, do I know anybody?” No, at least, not who’s available. After that you go to friends and personal network. Nobody’s available, because all those people have great opportunities all the time. So then you go with these open platforms. Odesk, elances, things like that. You definitely get lots of interest. It’s just not necessarily the interest that you’re looking for. Very hard to bed people, so you’re having to go through dozens or maybe even hundreds of applications.
Andrew: Let’s be specific. I’ve had success on all those sites that you’ve talked about. Hiring people to develop for me. But, you’ve had a different experience. What was it?
Breanden: I’ve had success, too, though. It’s just…
Andrew: Give me a specific time that you went to hire and you didn’t get what you were looking for. From either those sites, or from another channel.
Breanden: Sure. With smsPREP, I needed somebody to take over the lead position there. Because I was doing so many other things. It’s a LAMP stack, so what you think is fairly common, in Linux, Apache, MySQL, PHP, et cetera. We’d find every time we posted anywhere, we’d get tons and tons of applications. A lot of them, we’d said we were looking for experience within adaptive learning, at least online learning, things like that. That ruled out almost anybody. So most of the people hadn’t read that requirement in the application. That was a red flag, there. That happens a lot. And then we’d start interviewing people, et cetera.
And then we start interviewing people, etc. We start working really, really well, were excited with a couple people, and then they just drop off the face of the earth. And that happened repeatedly. And it was for a huge range of different reasons, but it just kept happening. And so, OK, now we’re back to the drawing board. Let’s talk and try to hire those guys that were, like, next in line to interview, but they were no longer available, so we have to repost something and go through hundreds of applications again, and, you know, do these interviews, and do background checks, and talk to these kind of references and stuff like that, which is . . . it took a lot of time, when we really thought that . . . you know, I mean, it would have been awesome if there were just a turnkey solution there. We could do one or two interviews, know that somebody’s going to be great, and then be able to start and stop as we needed as a company. Because if you’re hiring independent freelancers, they need constant employment. And so if you need to shut things down for a couple of weeks while you’re doing some fundraising or something, you know, you’re really likely to lose them, and that’s only fair.
Andrew: All right. We’re going to get deeper into what this business does — what toptal does — because frankly, they even say they’re like ODesk is. It’s not true. It’s different in the level of engagement, in the level of vetting that goes into the people that you hire. I would think of them as two different sites.
Andrew: So I want to understand, in a moment, how you built up this business. But first, we mentioned this site SMS Prep, and it’s one of many businesses that you launched.
Andrew: What are some of the other businesses that you launched before toptal?
Breanden: My first formal start-up was a company called Zandigo, and that was with a group of Princeton guys, actually, in Princeton, New Jersey. Before that, I’d done littler companies that were kind of consulting shops, dev shops, things like that. And I paid my way through school, and so did that through an LLC. Before that, in high school, I started a non-profit company with one of my friends who ended up at Stanford, and that was refurbishing old computers and donating them to kids who needed them. And before that was doing an even smaller dev shop where my parents’ friends were doctors and things like that, and we did little web sites, and I could spin them off as a 12-year-old. And that felt like a lot of money.
Andrew: You had some that didn’t go so well. That didn’t make a lot of money. Right?
Andrew: There was one that actually fell apart after a year?
Andrew: Which one was that?
Breanden: That was Zandigo.
Andrew: So at the end of that, you must feel bad. Later on, do you ever look back and say, “Hey, you know what, there was some value in that”? Or do you feel . . . I mean, really being honest with yourself. Do you feel like, “No. You know what? It’s kind of like tripping when you’re walking over to the refrigerator. There’s nothing really to be gained from it. It sucks. You don’t want to repeat it. Let’s not glorify it by saying that I learned a great lesson.” Which is it? Did you learn a great lesson, or is it like tripping on the way to the fridge?
Breanden: I learned many great lessons.
Andrew: Like what?
Breanden: I think I made every mistake that you can make, in terms of just putting investing and too much time and energy and resources into a product, and then hoping that once it’s finally built, like, if we build it, they will come, and I’ll just be instantly successful, instead of just doing a more leading type approach, like an Eric Reyes-type approach. Having lots of just politics. Like, not getting along with co-founders, and just paying too much attention to little things that didn’t matter. And, I mean, every possible thing there. I just made a lot of . . . there were mistakes that I definitely learned from. And I think validating, like, the concept to even begin with was probably the biggest one. Because we were . . . what made sense to us at the time was to build this big product that was just going to . . . when people saw it, it would just take off, because we thought it was so great. And at least in our heads, it was so great. And it just doesn’t work like that. We should have started with some simple landing pages. We should have started with throwing some traffic at it and just seeing how it responded and go from there.
Andrew: I see. OK. So you realized, “Hey, I’m not going to make that kind of mistake again.” Here you have a new idea. You say, “Finding talent developers is insanely hard. All my friends already have jobs and they don’t want to be pestered by yet another one of their friends to work for them. The quick sites where you find a freelancer are going to get you quick results, but aren’t going to be strong results. People who you’re going to get to work with and hand over your business to. I have this great idea. I don’t want to make the same mistake I made before.” With that in mind, what’s the first thing that you do?
Breanden: Well, with toptal specifically, toptal was not my idea originally. So this was (inaudible [04:30]) idea. When I had this hiring problem at SMS Prep, I actually bumped into him in Palo Alto, and he solved it for me. And he said, “You know, I’m flirting with this idea here, because I left the previous company I was at, and I can hook you up with somebody awesome.” And he did, and the person I still work with every day. They’re part of toptal now, and a big part of smsPREP, and is just extraordinary. And he’s in Argentina. And I didn’t know what this thing was that (inaudible [05:00]) was flirting with at the time, but I know that he solved my problem instantly and it was amazing. It was a few months later that his father became very ill in New York City, and I’m sitting in my dorm room in Princeton running this and finishing my senior year in chemical engineering and Taso came to New York City having a really hard time with his father’s illness and Taso asked if he could come stay with me in my dorm room. So we’re just sitting on the couch and we’re talking more and more about how we found this awesome person, because I spent months doing this and it was what felt like a dead-end after dead-end. And he told me this was something he was interested in and thought that he could fix. And just the more and more we talked about it I thought it was something that we could fix, and so we decided that we wanted to…
Andrew: He was telling you how he was fixing it, and you said we could do a really good job with this [???].
Breanden: Sort of, I mean it wasn’t exactly…
Andrew: But he was working on this already, he started working on this problem. What was he doing and how far along had he gotten with this idea?
Breanden: He had a small group of developers and as he, like me, was getting pinged for jobs all the time, just being a developer that happens a lot [???], and instead of just turning people down he would turn around and say “No, but I can help you find somebody”. He had a strong background and was able to do the [???] process and then if you were willing to work under this model where I’m essentially functioning as a high-end agency. And that worked several times and so…
Andrew: And so he would just say, “I don’t know someone, but I can help you find that person.” Then what would he do to go find that person?
Breanden: Well, Taso had a big network of people from IRC and his Skype list must be a mile long so I think he would go and find people he already knew quite well. But in terms of how he found the first people, I think there was a lot through IRC and he was reading blogs, and he’s a very animated person and doesn’t hesitate for a second. If he finds something interesting on your blog, he’ll reach out to you like, “Hey let’s go to get coffee, I’ll fly to Argentina. Let’s talk about this. This is really interesting.” And he does stuff like that all the time.
Andrew: With just developers whose blogs he might be interested in he might call them up, fly out to see them in person, and connect with them?
Andrew: I got to meet this guy, that’s incredible. So basically what he was running is a headhunting firm, right?
Breanden: Kind of, yeah. But it was in before these one-off where you pay thirty grand and you get a developer then it’s up to you to do it. It was this high-end version of these open marketplaces that exist currently. So everybody’s very rigorously pre-screened but clients can come in, and once they join they can sort of [???] from this kind of high touch experience with the developer who knows all his guys well saying, “Juan’s going to be good for this, Ignacio’s gonna be good for this, and Sergei is going to be good for this.”
Andrew: Somewhere between a headhunting firm and a dev shop where in a dev shop you hire them and they point one of their employees out and say that’s the guy that’s going to work on this problem and when you have another problem someone else will do it. And he was already running this? He was charging how?
Breanden: Weekly. So it’s sort of an agency-type model where the clients are paying toptal, toptal is paying the developers, and then there is a slight markup there and that’s how toptal functions as a business.
Andrew: Gotcha, I see.
Breanden: And so it’s eliminating a payment hassle for the developers and making a streamline of guarantees they’re going to get paid and etc. And for clients it’s straightforward and they’re saving a lot of time in the hiring process.
Andrew: So, I see how he’s got something good going. He sounds like a really bright guy, well connected, successful already. How do you say to him “Hey, you need me.”
Breanden: Well, so he’s sleeping on my couch in Princeton and his dad is unfortunately terminally ill at the time, and his dad suddenly passes away and he, quite understandably, is lost for a little while. So I volunteered. I said, “Hey Taso, make a list of everybody involved in your company; name, email, company, and a two-sentence description and I will take over for as long as you need.” And I did for a few weeks while he took care of what he needed to take care of in New York and by the time he came back it was just obvious that this was going to work and I’ve grown it in the meantime, sustained it in the meantime, and it was just a thing that we knew was going to take off so we said we’re definitely doing this together now.
Andrew: I see here on your website it says that he was the lead engineer of Fotolog, which was acquired by Hi-Media for 100 million dollars, and Slide which was acquired by Google, of course. Was he doing financially well?
Breanden: I don’t think Docil [SP] has ever been hurting; I mean he’s not making 100 angel investments or anything like that. The company was just the nature of what it is, in that, you’re not having to invest a lot in terms of product and then hope that you make money later down the road or get money from an acquisition or something. There’s money the day you start operating, essentially. He was fine.
Andrew: You’re ready now to launch into this new business of yours, the one that you’re the co-founder of, that you’re running. I can see why this is on path to be a hit, and we’re going to discover why in more depth in this interview, but I’m wondering why smsPREP didn’t become that big hit for you. I looked at the website; seems like a clever idea. You send me text messages with sample questions from standardized tests; I respond; it’s more interactive, it’s much more engaging than a book. God knows there’s a ton of money to be made in that space. Why didn’t that become the huge hit that I imagine it could have been?
Breanden: We initially started it with the idea that it would be a subscription business. So it’s fairly simple to make a successful subscription business, at least on paper, where you just have to pay x dollars to get a user then you have to count on the lifetime value being something higher than that and then be able to scale that.
For us, in terms of the marketing channels that we had identified, SEM, partnerships, and things like that, the economics just never scaled the way that we were thinking. It’s kind of a cool lifestyle company, etc. but we were figuring out what we wanted to do, what the vision was, we were thinking, “Maybe, we should make it free and just open source” because we got great feedback from users and things like that; it wasn’t going to be a huge success in terms of it just wasn’t going to be a billion dollar company. That being said, we are just about to announce a very big partnership with one of the leading test prep providers in the U.S. where we will be their technology arm for their mobile platform. So it is going to be a lot bigger than I was thinking over the last year or two. That’s been really awesome.
Andrew: And you still own it but the developer that [??] found for you is running it.
Breanden: For the most part, yes.
Andrew: OK. So you’re building out the business that he was starting to build out, and it’s time for you to grow it. What do you do next?
Breanden: We were growing nicely at the time. The day I took over and started emailing people, I was still getting the pings from friends hiring at different start-ups and stuff like that. Instead of saying, “No, sorry I’m not available,” I said, “No I’m not available but I think we can help you.” So it grew steadily that way for a long time, by word-of-mouth, and almost every client became a repeat client. Then clients referred other clients at a tremendous rate as well. That took us a long way. You have this marketplace here so you have to be very careful about balancing the number of developers you have with the number of clients you have. If one of those is out of sync, it causes problems at a point in time.
That sort of steady growth gave us a lot of time to make sure our screening process was as good as it could be so we could scale it quickly. Essentially, what that did was, we said, “OK. This is really working. What we need to do now is spend a lot of time and resources finding really awesome people on all ends of the earth and fund them and support them to basically not be developers any more, but turn around and find people exactly like themselves.” Their job was . . .
Andrew: Let’s hold off on that because that is a clever thing that you guys did instead of hiring sales people, in fact after trying to hire MBAs, you ended up going in this direction. But let me see if I understand this. Eric Ries talks about a concept called Valet Minimum Viable Product, Valet MVP. In which, when you have a business idea, instead of coding it up, have people do it for the customer; give them that first-class valet service. Then, when you get that right, you find a way to automate it and grow that into a real business. But at first, give them that. Is that what you were in at that stage of this business? Where you guys were personally matching up customers with developers?
Breanden: Yeah. It was very high-touch, very manual. Let’s not build anything even though we’re all developers. Let’s not build anything until we know what we’re going to build.
Andrew: So it’s just basically a Rolodex, to use that old term, and a website and a phone. So you guys are still doing that. Now it’s time to grow just a little bit beyond that. Were you, at that point, tempted to say, “Hey, you know what? This is a freakin’ marketplace. Let’s throw up a website; let’s make the matchmaking work. This is going to be the OK cupid for longer term development hires. We are going to be the kings of the earth with this.” Were you tempted to do that or did you not even want to do it?
Breanden: No, definitely. We started. We took a group of the toptal developers and they became core toptal developers and we started building; that has been an ongoing process ever since and a lot of clients and developers use it. We use it for everything from managing screenings, so it’s a crowdsource model, to handling all the billings, commissions, things like that.
Andrew: So this whole software that was supposed to help make sure that people were vetted properly, it was supposed to help match people up; you guys started building that once the valet MVP proved that it was working.
Andrew: I see, ok. Who built it? Was it you or some people who you guys hired?
Breanden: It’s a core team of toptal guys; we all touched it a little bit but they’re the lead.
Andrew: What did the first version of this software that we just described look like?
Breanden: Like a fancy CRM.
Andrew: How do you mean? What were some of the features that you had in there?
Breanden: You have tags, developer profiles, a search for developers, and some sort of flag for availability. This is just a way, once you get into dozens or hundreds of developers, you need to be able to find them very quickly because you can’t do it all through your Skype history anymore and spreadsheets aren’t going to work either. You need a way to be able to present developers to clients as well. So here’s two profiles, we think these are [??] guys who match exactly what you’re looking for, here’s a work history, etc., who would you like to interview?
Andrew: I see. So I, as a customer, would get this beautiful report, maybe not so beautiful in the beginning, but I get this report. Internally, you guys would have a CRM that would help you find the right person for me. Was the matchmaking done by you guys looking at the CRM or was it, even at that point, software that was starting to do the matchmaking?
Breanden: Software wasn’t doing much of the matchmaking beyond just simple key words. It’s really kind of a technical art where we have a core team of recruiters and we look at everybody and say “OK. We know this guy well because we’ve all taken him through a week long screening process. Would he be a good fit for this?” Not only “Would he be a good technical fit” but, “Is he going to match culturally in the time zones and is he going to be passionate about this? Does he care about music or whatever the application is that he’s working on, et cetera.” So there’s a lot of intangibles there that we found to be very, very valuable in this process that are still done manually.
Andrew: In a marketplace, I’ve learned talking to other interviewees, there’s a huge challenge of course in that you have to go after two new people at the same time and hope they “Bam”, meet up just at the right time. But I remember talking to Jason Fried of 37signals about this problem. He said that you find one group of people and you focus on them and it’s usually, I think he said the people with the money. For you, did you put most of your attention on one group and then the other or did you operate in a different way?
Breanden: We didn’t go after the people with the money at first; we definitely did the opposite. Like I said before, we spent a bunch of time and resources vetting thousands of developers to build this initial core team of what would be engineer recruiters; then once we had them, we spent all of our energy supporting them. Their jobs were to go to math competitions and local hackathons, wherever they were in the world, and read-ups and reach out to bloggers who were reading these blogs anyway, etc. This was a big ramp-up period where we were preparing to then go approach clients. Ever since then it has been sort of the ‘trying to keep things on the even’ like you said.
Andrew: You did, as I mentioned earlier, hire business types to help you find developers. What happened when you did that?
Breanden: It was not the outcome we were hoping for. I think we’re operating in a space that doesn’t have a very good reputation for the most part, especially outsource software development or remote software development; there are just so many things that can go wrong and they often do, and a lot of people have had bad experiences here. So, for us, we’re like, “OK. We have this machine of invite-only network of great developers, a great screening process and everything and have tons of amazing talent. OK. Let’s go get the clients now. How do we hit the accelerator here and do it where we have control over it as well?” If we have five C# developers available, we don’t want only IOS engagements coming in because that doesn’t balance your network. We hired a couple of different MBA types, like CMO’s, business developer types, and our idea was let’s hire experts to do this; we’re developers, engineers, we’re not sales people. Let’s hire sales people and then all they have to do is sell this, and everything will be amazing.
The normal process that most salespeople do is they get some leads, they qualify them somehow, and then after that they use a CRM type system, maybe Salesforce or something. And it’s just kind of, like, smile and dial and just be on top of peoples’ minds and then sell people. It just never works. And I think it’s because, for our business, an outbound sales process just doesn’t work very well. What we ultimately realized was that it doesn’t make sense to do it this way. We’ve always had success with our referrals and people coming to us themselves. So how do we massage and make this process work really well.
Andrew: How do you do that? How do you have proven developers contact you?
Breanden: On the developers side, that’s sort of is taken care of by the invite-only nature of what we do, for the most part. And on the client side, how you get the clients coming in the door asking for help is you have great relations with existing clients to the point where they’re willing to come back and also refer their friends. And we give some incentives for them to do that. We also have some other lead nurturing campaigns, and things like that, where we know people are interested and then you give them lots of materials and the educational thing is to make sure that they can make good hiring choices and build software correctly, etc. We build up trust, and it’s more of a long term commitment there, but it works very well for us.
Andrew: Just because it’s invitation only you’re able to lure in developers? There must be more to it than that. How do you bring in such top developers?
Breanden: We have great developers finding other great developers.
Andrew: Are they full time hunters for developers, to use a word that I like to use when we look for entrepreneurs?
Breanden: Sure. Yeah, I mean, most of them are full time, some of them are part time . And as developers ourselves, we wanted to be sure that we were not coming off as recruiters. Especially non-technical recruiters. So the type that sprays and prays every resume that has the key word “python” in it, and asks you if you’re interested in doing this thing.
We try to do things very organically, where it’s kind of a conversation, where we invite you to coffee, like, let’s talk about what you’re up to and talk about interesting things. I’m technical, so I’ll talk to you about the things that I’m was working on, etc. And build up trust. And if there’s interest then it’s, you know, “This is what I’m working on. We’re trying to build this elite network.”
The “elite”, I think, resonates with a lot of people, and a lot of people have had trouble freelancing themselves as an independent person, no matter how good they are, because they have to spend half their time bidding on projects, and doing [??], and then doing billing, then managing potentially bad clients, etc. And we eliminate a lot of that. So they’re saying, “OK. I could spend all my time doing what I’m really best at and get compensated for all that time as well. And this is sort of an elite thing and I care about that as well. I am going to be surrounded by other smart people. This sounds interesting. Let’s give it a shot.”
Andrew: OK. Then for businesses, can you tell me a little bit more about how do you get businesses? Well, actually, no. Let me see if I understand this. So basically it’s because you say, “I don’t have a job for you. I’m a developer like you. I want to get to know you and then I want to invite you to the online exclusive community.” That’s why developers come?
Breanden: That’s a big part of it, and a lot of times we do have jobs for them. I mean, now we’re at the point where there are open jobs. Where you can talk some of the really cool startups that we’re working with right now, and maybe they’d love to work on this project or take over this role, et cetera. That’s certainly helps the process now.
Andrew: Then it’s cold calling but you’re saying it’s cold calling that starts off with a real developer who then takes you out for coffee sometimes and gets to know you every time, and brings you into this community.
Breanden: Yeah. And also we’re big enough now, with hundreds of developers, that each developer has their own network, so just by doing right by them and creating an awesome experience, their friends hear about us, you know, from going out and having a beer, or something like that. And they say, “Well, can I get involved with Toptal?” And that happens a lot with us now.
Andrew: I see. I’m looking at Glassdoor and on of the people who I guess you hired to find developers for you says, ‘It’s a great job.’ He actually gives it four out of five stars and he says that, “It’s a job where you never know when lightening could strike. You have a hard time figuring out when that big developer comes in the door.” Right? Because they only get paid when they bring in a top talent. Or a big portion of their payment comes that way, right?
Andrew: I see. So what do they, the ones who do an especially good job, what do they do different from the ones who don’t have lightning strike as often?
Breanden: The recruiters?
Breanden: I think it’s persistence. You just have enough irons in the fire at all times that you’re always kind of reached a [??] state and maybe what that individual is referring to is that they just get swamped at random times. I know we all get swamped at random times; it feels like when it rains, it pours and all of a sudden I have 50 interviews to do in the next two days whereas yesterday I did three; that happens all the time. So I’m not sure that that’s a characteristic that’s unique between a good recruiter and a not-so-good recruiter.
Andrew: So you pay people on commission, right?
Andrew: I just realized that I screwed up. I typed in top talent for glass door; I ended up with another company that had top talent in it and I only discovered it as you were talking, when I said, “Whoa. There are a whole lot of reviews here for a two year old company.” At least, that led me to an understanding of part of the process which is that you incentivize the people who you bring in the door, who bring in the talent. Going back to the other side, entrepreneurs like many of the people who are listing to us, who now say, “Hey. There’s a huge team of developers that are there. I don’t have to hire fulltime; I can work with toptal on a weekly engagement.” How do you get those people, beyond doing Mixergy interviews?
Breanden: Well, it’s part of our secret sauce, I guess. We have all sorts of ways that we get leads. The obvious things are going to conferences and referrals; we incentivize referrals from existing clients. So that’s number one for us.
Andrew: So I don’t take affiliate commission or referral commission but if I did, and this interview led to some customers for you, what would I earn per business who does work with you? How would you pay me and what would I earn?
Breanden: There’s a huge range. If you referred a developer or a client and they started working, you could be making anywhere between a few dollars a week to $100+ per week from each of those commissions.
Andrew: Each per week of the time that they’re working?
Andrew: Oh. So I get you a developer, I get $100 maybe a week for every week that the person is working.
Andrew: OK. What’s on the other side? If I refer a business that hires?
Breanden: It’s the same equation for everything.
Andrew: What’s the top that I could earn per person, on either side?
Breanden: Maybe a little over $100.
Andrew: A little over $100.
Breanden: Per week. We haven’t put any lifetime on that or anything. A lot of people have done very well by just referring a couple of their friends and then it’s just residual income in the background. It’s great for us because those are people we would never have met otherwise, or not for a long time otherwise. And for them, they got a very lucrative email.
Andrew: You know, Breanden, I know that I’m missing out on some revenue from here, and I know it because there are other interviewers who listen to the way that I do the interview process, who have had me even walk them through the interview process, by showing them the whole software and the whole thing. Then they show me how much revenue they’re getting, they boast to me about how much revenue they’re getting from affiliate commissions. I know that there’s a lot of money to be made there and I’ve got to tell the audience, at this point, why I say “No” to it. The reason I say “No” is because, if I puff up Breanden, you understand as an audience that there are two reasons why I do it. Either because Breanden is very shy and I need to puff him up so that he feels confident, tells his story instead of hiding it, and that often happens. Or on the other side, I’m genuinely excited about the story and the person and I need the audience to feel that.
What you also know is I’m not puffing him up because I’m getting a commission. That would change the whole story. I can find people who have businesses that aren’t doing so well, but I promote them as successful entrepreneurs and I promote how they do things, and why they’re doing things so well and then take a commission from all the people who get suckered into that story line. Meanwhile, the story line would be fake. So that’s why I don’t do it. Are you nervous at all? You seem a little bit nervous for a guy who does a lot of sales.
Breanden: Yeah. I’m a little bit nervous. You told me there was no editing so . . .
Andrew: Believe me, that makes me nervous, too.
Breanden: I’m also in [??] right now where it’s quite warm so maybe that is . . .
Andrew: It’s all a tactic that I learned from watching the way investigators get down to the bottom of a crime. It’s heavy lights, no editing, you can’t leave to even go to the bathroom if you have to; got to get down to the bottom of this. Here’s something else that you told April who pre-interviewed you. You said that you started out with an automated test to weed people out, and then you just had to go to a manual test. What was wrong with the automated process?
Breanden: I think she misunderstood that a little bit. What I was talking about, we still have automated tests, but when you’re talking about a funnel, and scaling things to hundreds of thousands of developers, you need a way that you can quickly weed out the people that aren’t going to make the cut. And so, we start with automated tests, like timed algorithm tests that are very, very difficult. We only accept super high scores there. And that cuts off a huge percentage. And then it becomes more high-touch as you go through. And I think that only makes sense, because we did the opposite, and, well, you couldn’t scale.
Andrew: And how did you figure out what the right test was? How do you know how to test people?
Breanden: When we’ve interviewed ourselves at various companies, we did a lot of interviewing, and the interviewers at other companies, in our experiences, what they thought worked and didn’t work. A lot of people here have very strong CS backgrounds, and so we say, “OK, what do we care about, and what can we automate in terms of testing?” And luckily some other companies had created some tools that made that helpful for us, and that were easy for us in the very beginning.
Andrew: I see a blog post by a guy named Cameron Barr.
Andrew: Very complimentary. He’s a developer who went through your process. He’s now working through you guys, I guess.
Andrew: He is. And he said, “We started out with a coding test at codility.com.”
Andrew: So is that a service that you guys use?
Breanden: Sometimes we do use it still. So that’s where we started with, as sort of a turnkey solution. And since then, we’ve moved to some of our own tests, just because Codility is really awesome at what it does, and as it’s gotten more popular, you can Google some of the answers for these things, and so you can get some people pass when they shouldn’t otherwise.
Andrew: I see. And so what they do is just test coders.
Andrew: Gotcha. And then when someone passed that test, you then had them do an internal conversation. Something that’s a little more personal.
Breanden: Yeah. So we’re doing English interviews like this, where we jump on Skype and we just rapid-fire back and forth, make sure people are not super shy, that they have a sense of humor, and all these . . . we want to find people that are driven and high-energy and that we want to work with. And after that we would do multiple technical interviews with other developers of similar backgrounds. And this is kind of like . . . live coding exercises on a whiteboard, or something like this. We’re talking about their resumes, what worked and what didn’t work for them in the past. We’ll be diving into GitHub and things like that. And then after that, we do a small project with everybody, and that takes anywhere from a few days to a few weeks, depending on availability.
Andrew: I see. So using Codility actually seems like it’s very much in line with the way that Eric Reese talks about building up products. If you can find something that’s already existing, use that.
Andrew: Beyond the fact that Codility . . . that people were already familiar with it, and maybe some people knew how to game it, what else did you want to change when you decided to create your own version of . . . your own automated test?
Breanden: We want to be able to be very flexible in terms of the skill set we were actually screening there.
Breanden: So this isn’t an intelligence test, where maybe with one test you can just get smart people through there.
Breanden: Different developers focus on different things. They’re going to have different abilities when it comes to algorithms. And admittedly, developers don’t use algorithms very often in their day-to-day jobs. So a Rails developer working on applications, he could be super-top and working with tons of great companies in the US and Silicon Valley, and he may not have reversed a string or done something like that in a very, very long time since college. So we have a lot of flexibilities in our own system. Front-end developers and different types like that may have a much lower bar, because it just isn’t necessary when it comes to fully automated stuff.
Andrew: I see. And I’m guessing, because you have so many people, then, in the door who are taking these tests, many of whom end up working with you, then you have a big pool of developers who could have friends who are also looking for some work. So all these people who do work for you are also recruiting for you?
Andrew: To some degree.
Breanden: There’s a big network effect there, where every person who comes in, we know, is going to bring other people.
Andrew: And then I also see that . . . I hope I’m picking up on all this now. I wish I’d talked to the person who introduced us even further, because I want to fully understand this business. Because here’s another thing that I see, that your developers then have their resumes online, so not only are they part of this internal community, but they have a LinkedIn- type profile that’s a lot more customized to developers.
Breanden: Yeah. Those aren’t public. We’ve made a handful of them public, just so people know what they’re getting into when they are looking at us. But that is what we send clients when they come in the door. They decide they want to work with toptal, they like the model, they like the flexibility and everything like that. They sit down with the Director of Engineering here. We learn their requirements, everything from time zone to maybe they need to speak other languages and to interface with a team in Russia or something, and technical backgrounds. And then, from there, we turn around and work together as a team, and we make matches amongst the guys that we know well. And then, once we have people, we send these same profiles to the client or clients, the client decides who they want to interview, and then they would ideally start a trial period after that, where they’re working directly with an engineer who’s integrated into their team, or is their team, if it’s just a (inaudible [00:20]) co-founder or something like that.
Andrew: And here’s something else that you told April. This is one I’m not completely clear about. When you started recruiting developers for your team, you noticed that everyone had their own little system. Some scripts, some spreadsheets. What do you mean by that? You’re talking about the developers?
Breanden: Sure. So, I mean, when we had the initial batch of engineers that are now doing recruiting, we didn’t have a super-robust platform or something where we were managing everything. And so, for a little while, it was very much, you know, “Here’s your job. Come up with a system that works for you, and then let’s see how it goes in the next couple of weeks.” And during that time, we had people setting up their own instance of, like, a base camp or something like that, or a high-rise, or a spreadsheet, and emailing spreadsheets back and forth, or Google Doc, whatever. So that’s what I was referring to there.
Breanden: And then it was after, saying, “OK, let’s look at what you guys all did and what we’re doing ourselves” — because we were on the ground too, at that point — “and decide what we like best here, and let’s build something around that.”
Andrew: I see. All right. That makes sense. A lot of entrepreneurs, I feel, do that. At first, we’re running so quickly, or we’re so relaxed, that we say, “Hey, figure out how to do the job.” And then we really have to bring everyone together and say, “Here’s a system that we’re all going to have to work with, and I’ll teach it to everyone. Some of you are going to be a little upset, but eventually we’ll all at least be on the same page.”
Breanden: [laughs] Yeah.
Andrew: Were people upset when you told them to stop using their scripts and their own base camp instances?
Breanden: No. I think that they were happy. I think a lot of them maybe didn’t understand, in the beginning, like, “Why haven’t you already built this for me? A spreadsheet? Really?”
Andrew: [laughs] “As a professional operation, they don’t even have a base camp account for us to use?”
Breanden: Yeah. Yeah.
Andrew: Yeah, I get that, too.
Breanden: “We just talked about all this development stuff, when you sold me on the idea of toptal. Obviously you can build this. Why don’t you?”
Andrew: I heard a rumor that, at one point in your life, you were working out of a cave. Is that . . . [laughs]
Breanden: [laughs] I know who told you that.
Andrew: Is there any truth to that?
Breanden: Somewhat. After this failed startup experience at Princeton, a friend, who I was there with, Rockman Blake, we moved across the country. My family had a cabin in Lake Tahoe. And I guess I had been away for a long time. I didn’t really realize what that was going to be like. But it’s a fairly small cabin. Only a couple of bedrooms. And we get there, and we’re pretty down, not really thinking very highly of ourselves and everything, and not . . . you know, a few weeks ago we were thinking we were doing multimillion dollar rounds of fundraising, etc., and all that’s gone all of a sudden. And that was really hard to swallow and kind of go back home with your tail between your legs and figure out what you’re going to do. So I’m going to go back to Princeton, I’m going to figure out how to pay for it, so let’s set up a dev shop. We know we can do this.
And the morning after we got there the first time, we were like, oh, we’re in Tahoe. Let’s be excited about this, because it’s the prettiest place! So we open up the front door, and there’s . . . you can’t even see because there’s so much snow. And that didn’t stop for months. [laughs] And it was very much a cave. Got hit by a snowplow a few weeks later, so there was cars, like, in the shop and everything. Basically abandoned in this wilderness, it felt like. And so we’re having to, like, walk to the grocery store. Eventually that became very difficult and stuff. And then luckily there was some casinos and things nearby. We’re, like, eating at the casinos for weeks at the same time we’re on the phone trying to sell services as a dev shop and freelancers and everything. It was quite a learning experience.
Andrew: [laughs] Was it as exciting as it sounds? I would frankly, at times in my life, would love to be stuck in a cave, to just focus on my work without any outside distractions.
Breanden: It was exciting, definitely, especially looking back on. I mean, it was super stressful at that time, because it was . . . we put everything into the startup before that, including savings and all of that, and so there was no . . . it wasn’t cushy at all, after that. I mean, you had to work to be paying rent or, you know, feeding yourselves and everything in the next week. And so selling clients all the time and stuff like that was what we were doing. We weren’t building something really cool that we were excited about. We were building things for other people, a lot of times regardless of what that was.
Andrew: What else. What else do I want to know about you? Oh, and that guy was Rockman Blake, whom I’ll find out a little bit more about soon. Is this what you wanted to do growing up? Like, for me, Mixergy is the thing. I grew up with this idea that I was going to build something like a . . . Forbes, for a while there, had a magazine called Audacity. I got my hands on all the old issues of it. It quickly went out of print, but I’ve got them. And I used to love going through them, and to me, this is the equivalent of audacity, where they would just give you these long, biographical stories of entrepreneurs. I’m doing that here. And by the way, there’s a reason they went out of business. There aren’t too many people that want to read page after page of stories about entrepreneurs who died centuries before they were born. Or, let’s say, decades before.
Andrew: Is this what you want to do, toptal?
Breanden: In a way, yes. When I was very young and I wanted to be a plastic surgeon, and then I got to University and realized that I didn’t want to do that for very long. It was while I was there I started to get in a bunch of more serious startups, doing development and stuff like that. And realized that this is what I really want to be doing. But I’ve always really liked the idea of a for-profit think tank. Or an accelerator, or something like that. And this isn’t exactly that, but the elements of that are here. Where I wanted to be surrounded by extremely sharp, extremely motivated people who are smarter than I was. I could learn from them and constantly be pushed. And that’s exactly what toptal is. There’s hundreds and hundreds of extremely smart people here and even if I’m not working directly with them all of the time, because they’re working with a client that I know nothing about, I interact with them all of the time, anyway.
Andrew: And you can do this from anywhere, from a cave.
Andrew: Where in the world are you today?
Breanden: I’m in Rio de Janeiro.
Andrew: You’re in Rio?
Breanden: Yea, I’m in Rio.
Andrew: Dude, the connection’s coming to me from Rio, better than people who are just five blocks away from me. Do you live in Rio?
Breanden: Yeah, I just set up shop here after Christmas, actually. So I have an apartment right on the beach. I’m working with tons of developers down here. Actually since I’ve graduated, we’ve lived all over the place. I immediately picked up and moved to Budapest, which was strategic for us. We wanted to have great lives, being in our 20′s, but also not have to take up a big salary, or set up an office in San Francisco, it would just be a big expense. So we paid 1,000 Euros a month for this humungous penthouse apartment in downtown Budapest. Pay ourselves a couple thousand dollars a month and you feel like one of the richest people in the city. And you can do anything that you would be able to do in San Francisco. If we were in San Francisco, we probably wouldn’t even be able to meet with many clients, we’d probably hop on Skype. And that’s what we realized when we were running this out of my dorm room, and so we continued it in Budapest and used it for the lifestyle. And we were able to basically reinvest everything,, or almost everything, back into the company which delights funding, which is very, very good. Also you have tons of untapped resources, in terms of developers there. They have the opposite problem, where the supply exceeds the demand. And they just have trouble standing out and marketing themselves.
Andrew: I remember when I lived in Argentina, that I would see these people who were brilliant, but earning nothing compared to U. S. salaries that people half as smart were earning. Did you see that, too, outside of the U.S.?
Breanden: Oh everywhere we go. Absolutely.
Andrew: Now one of the problems was, I remember going out to drinks with entrepreneurs who were Americans or even Argentinians, who were building businesses in Argentina. They’d go, “Let me tell you how I pay people”. And it would basically be this whole oddly rigged system, sometimes, of, ” I have a cousin, who takes my credit card, or I give him my credit card and he goes into a CVS and he buys an American Express gift card for 100 bucks, and then he does 20 of them and then when he flies in here…” What the, how are you paying people?
Breanden: That’s been one of the most challenging aspects at toptal. And I’m not even sure that this would’ve been possible before the last few years. We have jokes all the time when people are coming in and asking about how we do payments. We’re like “OK we can pay you via Payoneer, via PayPal, or we can send you a bank wire, or food drops or camels”. It’s basically just a joke about how difficult it is, and it still is very difficult in a lot of these places, but, luckily, PayPal has made it a little bit easier. Payoneer has made it a little easier. Various things like that. It’s in no way simple. It’s very complicated how we manage all of this now, even. But it’s doable. Getting payments to people is largely figured out.
Andrew: There aren’t big tax issues or other issues with getting cash into a company like Argentina?
Breanden: Sometimes, usually not for us. Usually, it’s certain methods are quite expensive for the recipients, so they have to set up companies and do things correctly themselves. And they’re independent freelancers with us so that’s simplifies a lot of stuff on our end. But two different banks, where you’re sending money to Argentina may have very different exchange rates, like 30% difference for a dollar to Argentinean Peso. So that’s something that we have to take into account, because we don’t want people getting things into the wrong one. That rate might switch sometimes so we have to switch everyone over. But it’s very complicated.
Andrew: Yeah. I was working with someone in the Philippines. I found a way to get cash to her, because when we sent the check, it never made it there. Even though we used a system that was supposed to get checks to her.
Breanden: Oh, yeah.
Andrew: So I found a way to get cash to her. But you could only send so much cash . . . well, what.
Breanden: Yeah. Yeah.
Andrew: That’s one of the reasons why people work with companies like yours, that they don’t have to deal with this headache.
Breanden: Yeah. Definitely.
Andrew: Especially when a person’s been paid by you. You did everything OK. You know they’re counting on the money, because some people count on it, you know, to get through the week. And some crazy part of the system that you’ve rigged up, that worked for a while, just broke down. That’s all I need.
Breanden: Yeah. Zoom was like that for us. Zoom is a great transfer system, and then all of the sudden they made it so that businesses couldn’t use it. It’s only for personal transactions. And so half of our guys are in a crunch, all of a sudden. We have to figure out something, and probably not the same thing for all of them, because they’re all in different locations.
Andrew: And you got to meet the Prime Minister of Georgia while you were working somewhere overseas? How’d you do that?
Breanden: Yeah. So in Budapest, there’s this great expat community there. I just met tons of really awesome people. Met a Georgian family who had also gone to Princeton, or one of them had gone to Princeton. I didn’t know him from there, but we met in the city, like, at a bar. There’s this amazing nightclub scene in Budapest. Just became really good friends and had lots of dinners and things like that. And his family was intimately involved with the Bank of Georgia, which had just gone public, and so we had lots of resources and things. They were very interested in sort of setting up an incubator-type system in either Budapest or Georgia or something.
Breanden: So we were invited to go there, and we were very heavily wined and also dined, and had all this amazing, like, you know, half a week in Georgia. We met all the members of Parliament, the Prime Minister, and maybe taking a toast or a shot every couple of minutes. [laughs] It was really . . . it was awesome.
Andrew: Are you rich now? You started out really, it seems like, in financial trouble. Are you . . . how do I ask that question? That’s not a good way to ask the question, is it?
Andrew: What portion of this company do you have?
Breanden: A generous founder’s portion.
Andrew: More than . . . roughly the same as your co-founder? Is it the same as your co-founder?
Breanden: No, it’s a bit less. I mean, admittedly, I came later, so it’s a bit less. But we’re the two major stakeholders.
Andrew: And you guys have outside funding?
Andrew: You know, how much?
Breanden: We’ve taken a little over $1.5 million.
Andrew: Were you able to take anything off the table during the funding?
Breanden: We could. I mean, given the nature of what we do, we’re pretty profitable now. So, I mean, we pay ourselves salaries and everything, and we’ve also chosen to live in very cheap places, and so a little salary goes a very long way. And so, rich? You know, we’re not buying estates or anything like that, but we’re pretty much able to do whatever we want wherever we go.
Andrew: You know what? It’s amazing. If people go back and watch some — or listen to — some of my earlier interviews — because they were all audio — any time this idea of working overseas or anything related to the Tim Ferriss . . . I forget what Tim Ferriss’ . . . how he called it. But the idea that you can go overseas, and you can live incredibly well, and you can still get work done . . . I was so skeptical of it. This was way before I even met Tim Ferriss. And then, when I lived in Argentina, I mean, it is a good life! I mean, we had, for about $1,000 a month, this huge apartment overlooking the park. If you look at my wife’s Twitter profile — anyone listening to us, go to twitter.com/okl . . .
Andrew: . . . you’ll see the photo of where we were, right at the top there, overlooking the park. Hot tub outside, huge outdoor area that’s bigger than my office here. Several times bigger. And it was $1,000. And you go and get your cafe con leche with media lunes for practically nothing. If I was late and needed a cab to come home, it cost me $3, $5 tops.
Andrew: Great life. Smart people. You’re still connected to the US. I mean, look at how clearly you are coming in to me. So let me say this. First of all, I’ve changed my outlook on this. But I want to quickly do a plug, and then I’ve got to ask you for tools and people and maybe even books that have helped you. We’ll do a quick round of that.
Andrew: But the plug, of course, is for Mixergy Premium. If you’re into outsourcing, you want to understand how to systemize your business so that you can hand over responsibilities to outsourcers, or, as Breanden talked about, if you want to just hand it to people who work for you full-time, we have great courses at Mixergy Premium that will show you how to organize what you do, how to systemize it, how to hand it to other people, and if you’re looking to do it with outsourcers, how you can find the right outsourcers. If you’re looking for a virtual assistant, if you’re looking for someone to do just about anything, they’re out there. We bring on experienced entrepreneurs to teach you how to find them, how to train them, how to give them a system that actually makes some frigging sense so that they can be productive instead of expanding on your dis-organization. It’s all at MixergyPremium.com. All right. So let’s do a quick round of tools, people, and maybe, even books that have helped you.
Andrew: Before we start it, do you want me to throw out the names of the tools that you use and then I’ll ask you why they’re useful, or do you know which ones they are?
Breanden: Yeah. I think I listed off Kindle Straker (?) which we use as a task manager or project manager.
Andrew: What is Pivotal Kockrock (?) ? Why is that something the founders should pay attention to as opposed to so many other alternatives?
Breanden: I think it’s fairly easy for people to learn, and it also scales in terms of adding a lot of people to your team, and also we recommend it to clients a lot. Some clients are coming in, “How do you guys work with developers” or “How do your successful clients work with developers?” We usually say, “Pivotal or (?) or Asana or something like that, pretty much because of the learning curve and then that doesn’t fail you. It doesn’t fail you when you’re proceeding into something more complicated. You can’t with this.
Andrew: Why do you like Asana?
Breanden: A lot of top functions are through Asana on the recruiting side and matching and managing clients (?) meetings each week, and that is all done through Asana. I love (?) because it’s extremely simple. I love the one window, one page experience. It’s very fast and collaboratively works on tasks and things and you can get something done with six people or 12 people on a recruiting call. It just is very efficient and it’s no clicking. You’re like, oh wait, it’s just loading or something. It’s just always there, and you go fast.
Andrew: Asana, they describe it on their website as a shared task list for your team, and you’re right, it’s all on one page, easy for anyone to learn. When you guys use it at the same time, does it update in real time the way Google Docs does?
Breanden: It’s about the same delay as Google Docs, maybe a second or so less.
Andrew: All right. If you want to talk to people the way you and I are, do you use a meeting program or just using Skype?
Breanden: We use Skype.
Andrew: Why do you prefer Skype to some of the meeting programs that are out there?
Breanden: It’s universal. We’re using it on our phones for getting a chance to meet a developer and have a chance at a restaurant or something to step outside and jump on Skype. Everybody has it. It’s a required field on most of our stuff for the developers, and it’s even an optional field for clients on a website and everybody puts it in because uses it. It’s just become so universal in terms of jumping on like this or doing a call and then being able to chat back and forth. It’s extremely useful, and it doesn’t cost much money.
Andrew: All right. You mentioned Trello. I even had the founder on. Organize anything together. Trello is a collaboration tool that organizes your projects into boards. We use Trello, too. You have these boards. Each board has a series of cards on it. How do you use it, and why do you recommend it?
Breanden: I have a little less experience here, but our clients are big fans of it so we do recommend it. When I’ve used it, it’s been to manage a software project, and it’s very visual and it’s all in front of you. It feels like it’s different in terms of it not being just text. Like Asana, there’s more that’s there, so you can look at it for different projects and how they relate.
Honestly. I think the three of those could be used somewhat interchangeably unless you’re doing stuff really on the fringes (?). It’s another great resource that we recommend.
Andrew: What about for banking since we talked about that? What do you recommend there?
Breanden: Unfortunately, we don’t have great experiences with Bank of America, but their online applications for most of the payment providers that we use oddly enough are very, very poor, and we spend a lot of time doing this as we talked about before because that’s a big part of our business. And we (?) the IOS or iPad applications for these things are far superior to the organization’s main website. I’m not sure why that is, if they outsourced it properly or it’s just some day they see the future as mobile, and that’s where they’re investing their time and resources. But it works better than pulling up the (?) interface for most of these companies.
Andrew: So PayPal, Bank of America, apps generally, any type of banking software, you prefer the app because it’s cleaner and it’s more updated on the website. It seems like it gets more love though, doesn’t it?
Breanden: Yeah, yeah, for sure.
Andrew: Do you recommend Codility for anyone who wants to hire a full-time developer as a way of taking tests quickly?
Breanden: Sure. You can definitely beat out some people, but you’ll have to take it for what it is. It’s not a catch-all. It’s not perfect. It’s gotten pretty easy to cheat there, and so that’s something you really have to look out for. There can be a sanity check. Maybe if you want to watch somebody do it as they’re doing it, that might be helpful, but then that doesn’t really replicate, simulate a real coding environment. If somebody doesn’t perform well under pressure, or something like that, they’re going to get all these false positives or negatives. It is [equal] to all there’s a lot of interesting stuff there, and it’s fun to do some of the exercises, so I definitely still recommend it.
Andrew: All right. Here’s one that I hadn’t heard of before this interview. It’s called CollabShot. You guys created it. What is CollabShot?
Breanden: Yeah. CollabShot’s a totally free image sharing and editing tool. It’s something you install on your computer and it just runs in the background. You can press a hot key and take a screenshot of an image. It uploads to a site. You can instantly paste the link to you right now if you wanted and then we’d both see the same page. We can both draw on it, edit the image, talk about it on this page in real time. It updates faster than [??] and Google Docs and all those.
Andrew: I see, like Skitch, but real time collaboration.
Breanden: Yeah, exactly. The user interface is similar to Skitch, in terms of the hot key and upload paste the link, but then there’s the editing and the back and forth through there. We built this and it’s free just because we wanted it as a tool for ourselves because we thought it was missing from everything else out there.
Andrew: I’m going to say like Skitch before EverNote screwed it up.
Andrew: [laughs] The audience knows what I’m talking about, too. That’s collabshot.com. All right, for people. How about three people who helped? Then we’ll go into books. I’m asking you for list after list, here. Maybe this is too much.
Andrew: I’m experimenting.
Andrew: People. Who’s Rockman Blake? How did he help you?
Breanden: Rockman Blake was a close friend of mine at Princeton. He was at this startup that ultimately didn’t work out, [Zandergo]. He was my roommate in a cave in Tahoe. His sense of humor got me through probably a lot. I mean, he introduced us for this interview, et cetera. Rockman’s just been a great friend and I’ve learned a lot from him and I’m very grateful.
Andrew: All right. Eric Ries. How do you rethink the way to do a business? Why should people go and check out his book, or his process?
Breanden: I think it just is a. . . You don’t have to make a lot of the same mistakes that everybody seems to make the first time doing anything, like starting a company. I think I unfortunately had to learn a lot of those lessons on my own before, obviously, “The Lean Startup” was published. It certainly helped reinforce a lot of the ideas that I had and be more disciplined about my approach to things as I do them.
Andrew: How much money did you spend on the previous business, on. . . Well, what was the biggest expense, something that feels just really painful that you said, “You know, if I read Eric Ries’s book, or if I understood the Lean philosophy, I wouldn’t have made that mistake?”
Breanden: Hundreds of thousands of dollars on everything, like development and having an office. We probably didn’t need an office, and all the things we thought we needed to start a company. A year and a half of, I don’t know how old I was, like 19 or 18 at the time, but good time, I could’ve been doing more fun things, I guess.
Andrew: [laughs] How about one other person?
Breanden: My parents. I mean, my mother and father have just been very supportive this whole time. As a crazy kid going across the country at 16 to do chemical engineering at Princeton, and then all the sudden turning around and sort of reneging, saying, “I want to take time off and get into startups,” and taking, ultimately, three years off there and going back and forth and changing my mind a lot and all of that, they’ve been nothing but supportive always.
Andrew: Any books that we should read as entrepreneurs?
Breanden: I like “The Leadership Pill.” I like “Rework.” I like. . . I think those are my favorites right now, actually.
Andrew: What’s that? The Leadership what?
Breanden: “The Leadership Pill.”
Andrew: Bill? Why that one?
Breanden: It’s this parable that you can read in a couple of hours. It’s about this pharma company in the U. S., I guess, that creates his pill that makes you be able to stay up all night and makes you super motivated and you’re just this ridiculous worker, and your productivity would shoot up and you become this amazing machine. It talks about what that. . . There’s this guy that they call the effective leader in the book. He proposes this A/B test where he takes a group of people that aren’t taking the test and then the people that are taking it and says, “I can outperform them without taking the pill. Absolutely.” It just kind of very [succinctly] goes through why that isn’t good at all and I think that’s. . . It’s just a matter of working smarter and planning more for medium and long-term gains rather than and knowing that entrepreneurship is very much a marathon, not a sprint.
Andrew: Do you actually use it as you lead this company?
Breanden: For sure, all the time. I mean, a lot of times we are. I mean, a simple example would be you want to pull an all-nighter to do something because you’re excited and you want to stay up. We do that sometimes, and it is fun, but realizing that it probably isn’t going to get you the gains that you’re looking for, and it’s not a smart thing to do for a long period of time.
Not pushing people and not having crazy expectations. That’s helped me a lot and I talk to clients a lot about it too. I sort of work with them, educate them that just because they set an impossible deadline… The developer says it’s something that’s going to take a week. They want it done faster, so they say, “OK, well, if I tell (?) three days, then I know maybe I can expect it in five days,” and things like that are really not good recipes.
Andrew: “Rework,” Jason Fried who co-wrote that book, I saw him get ripped by some of his own fans who said, “I already know these ideas.” What’d you expect, that Jason Freed in his new book was going to say, “Hey, guess what? You know what I told you about simplicity before? In the book I’m telling you, “Don’t simplify, complicate. That’s where the real money is. Those suckers who got my stuff for free, ha ha! Congratulations on paying for the real truth.” No, obviously he’s going to say more of what he said before, and to clarify it, I liked the book. What did you get out of the book?
Breanden: Again, some very simple… I think a lot of that stuff is…
Andrew: I should ask this. How is your life better for having read “Rework”?
Breanden: It just reinforced a lot of things that I hadn’t really internalized before, and one example is he has a great passage in there about, “Workaholics are the Devil,” and that’s just a terrible idea, and it’s not as if leadership gets guised in a different way. He talks about that they’re not heroes at all. They’re not the heroes we make them out to be, and in start-up land, it feels like they are all the time. Those guys are just pulling all-nighters and doing crazy amounts of funding and da-da- da-da-da. It’s very easy to get caught up in that. It’s really, it’s not like that. The better or smarter person is already at home because he figured out a good way to do it. That was more valuable to him. He’s going to come in ready to do stuff tomorrow and he’ll ultimately outpace you significantly.
Andrew: Great books, and this has been a great interview. If people want to say “thank you” to you for having done this interview. What’s a good way for them connect with you?
Breanden: I live on Skype. My ID is…
Andrew: Wait, wait. I’m not editing anything out. You’re about to give out your Skype ID?
Breanden: Yeah, if people can find me on Skype, that’s good. I get new pings all the time. My ID is smsPREP. You can also ping me on email. It’s email@example.com. I’m happy to talk to anybody, whether it’s about hiring or hiring specific developers or about toptal, or past experience, you want to play polo in Budapest. Any of these things.
Andrew: All right. smsPREP That’s the name I use to connect with you on Skype. I was checking to see, did he give the audience some other name? No, you gave them your full-on info. That’s a gutsy thing. That might be the gutsiest thing I’ve seen here. I hope, and in fact I know, we’ve got a good audience, and I’ve seen in the past that what people do, they just say “thank you,” and connect for a bit, and hopefully they won’t start hitting you up for help right away. I’m going to say what I’m hoping they’re going to say, which is, “Thanks for doing this interview.”
Breanden: Thanks so much for having me. It’s been a pleasure
Andrew: Thank you all for being a part of it.